WTO E‐Learning – Copyright © November 2010
Agriculture in the WTO
The Agreement on Agriculture was negotiated during the Uruguay Round and entered into force on 1st January 1995. Its main objective is to undertake a market-oriented reform trade in agricultural products. This course will introduce you to the multilateral disciplines on trade in agricultural products and it is organized according to the three pillars of the Agreement: à à à Market Access Domestic Support Export Competition
Furthermore, you will study the special and differential treatment provisions available for developing and least-developed countries. In addition, you will learn about the particular provisions that deal with the interests of countries that rely on imports for their food supplies, as well as the ongoing negotiations in the Doha Development Agenda.
List of Figures
MODULE 1 INTRODUCTION TO THE WORLD TRADE ORGANIZATION (WTO), BASIC PRINCIPLES AND MARKET ACCESS RULES IN THE WTO............................................11
Figure 1 Figure 2 Figure 3 WTO Organizational Structure ..................................................................... 16 Tariff-Quota.............................................................................................. 33 TBT and SPS measures relating to the international trade of oranges ............... 36
EXCEPTIONS TO THE BASIC PRINCIPLES, TRADE REMEDIES AND DISPUTE SETTLEMENT IN THE WTO ................................................................................45
Figure 1 WTO dispute settlement timeline ................................................................. 68
INTRODUCTION TO THE AGREEMENT ON AGRICULTURE .............................................81
Figure 1 Structure of the Agreement on Agriculture.................................................... 91
MARKET ACCESS IN THE AGREEMENT ON AGRICULTURE ..........................................117
Figure 1 Figure 2 Figure 3 Tarrif-Quota.............................................................................................124 Market Access: Tariff Escalation .................................................................145 Effect of the SSG as it partially compensates for the decline in the import price .....150
DOMESTIC SUPPORT .....................................................................................161
Figure 1 Amber Box and de minimis: Current Total Aggregate Measurement of Support .....175
EXPORT RESTRICTIONS AND PROHIBITIONS ........................................................223
Figure1 Figure 2 Food aid deliveries to LDCs and NFIDCs, 1995-2005 .....................................234 The International Grains Council Wheat Price Index (1987-2006) ...................241
NEGOTIATIONS ON AGRICULTURE .....................................................................249
Figure 1 The negotiating groups .............................................................................261
Figure 1 Uruguay Round cuts .................................................................................273
146 Price-based Special Agricultural Safeguard Action........................81
Table 1 The reductions in agricultural subsidies and protection agreed in the Uruguay Round ...............................................................202
.............................165 Green Box .....................................169 Blue Box ...174
EXPORT COMPETITION...................................................................................................................................................................................................................................... 97
MARKET ACCESS IN THE AGREEMENT ON AGRICULTURE ..........................144 Tariffs................................142 Complex Tariff Forms......................................................................................131 Table 4 Table 5 Table 6 Table 7 Table 8 Table 9 Table 10 Average Applied vs Bound Tariffs .................................................................................... Agriculture..................................117
Table 1 Table 2 The Starting-point for Tariff Reductions....171 Development Programmes.................................................................................................................................................172 Current Total AMS ............................152 Volume-based Special Agricultural Safeguard Action ...............................................................................................................................................................................191
Table 1 Table 2 Product groupings ....................................11
Table 1 The basic structure of the WTO Agreements . 2000-2004 .............128 Table 3 Tariff Quotas – Simple Average Fill Rates by Principal Administration Method.............. 1995-2004 ..........119 Tariff Quotas by Principal Administration Method and Number of Quotas.................................................................................................141 Average Applied vs Bound Rates ..............................................................................153
DOMESTIC SUPPORT ...143 Agriculture Tariffs 2000-2002 ............................................................................................................................ 21
INTRODUCTION TO THE AGREEMENT ON AGRICULTURE ..........................................................................................................201 Product specific reduction commitments ...................................................................................List of Tables
MODULE 1 INTRODUCTION TO THE WORLD TRADE ORGANIZATION (WTO)............................................................. BASIC PRINCIPLES AND MARKET ACCESS RULES IN THE WTO..............................161
Table 1 Table 2 Table 3 Table 4 Table 5 Domestic Support Structure.....................................
Table 1 Key Elemetns of the Agreement on Agriculture.......................................................245
Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Articles 12 and 12.................................2 .........235 Composition of global food aid deliveries ........236 Proportion of food aid provided in fully grant form to LDCs and NFIDCs.................. 1995-2005 .....................................................................................................................................................226 Minimum Annual Contributions and Shipments under the Food Aid Convention ........................MODULE 7
EXPORT RESTRICTIONS AND PROHIBITIONS ....................232 Evolution of food aid deliveries..278
......................................238 Compliance with notification requirements (Table NF:1) ......
New Zealand. Myanmar. Malawi.
ATC BSE CAP
The WTO Agreement on Textiles and Clothing. Zambia and Zimbabwe. the Philippines. Japan.
Asia-Pacific Economic Cooperation. United States of America. Singapore and Thailand — often speak in the WTO as one group on general issues. Brunei Darussalam. Hong Kong.
CLMV CNUCED COMECON
The WTO Committee on Trade and Development. Concluded in 1973 under the auspices of the International Union for the Conservation of Nature and Natural Resources (IUCN). Ethiopia. The Republic of the Philippines. Sudan. The Russian Federation. Democratic Republic of Congo. Republic of Korea. Singapore. Common Agricultural Policy — The EU's comprehensive system of production targets and marketing mechanisms designed to Manage agricultural trade within the EU and with the rest of the world.
Latin American Integration Association.Acronyms
African. The treaty establishing COMESA was signed at Kampala on 5 November 1993. Group of countries with preferential trading relations with the European Union (EU) under the former Lomé Treaty now replaced by the Cotonou Agreement.
. Council for Mutual Economic Assistance. Seychelles. includes both budgetary outlays as well as revenue transfers from consumers to producers as a result of policies that distort market prices. CITES regulates international trade in wild animals and plants. Myanmar (Burma) and Vietnam. The Convention entered into force on 1 July 1975. Uganda. Chile. Peru. Burundi. Thailand. Djibouti. Swaziland. The AMS refers to an index that measures the monetary value of the extent of government support to a sector. APEC was established in 1989 to further enhance economic growth and prosperity for the region and to strengthen the Asia-Pacific community. Indonesia. Viet Nam. Its members are Angola. it was dissolved in February 1991. as defined in the WTO Agreement on Agriculture.
Association of Southeast Asian Nations. Papua New Guinea. The AMS. Madagascar. Conférence des Nations Unies sur le Commerce et le Développement. The other ASEAN members are Laos and Vietnam. China. Chinese Taipei. or "Mad Cow Disease". People's Republic of China. Indonesia. Egypt. Caribbean and Pacific Countries. Laos. Malaysia. Mauritius. Rwanda. Established in January 1949.
Common Market for Eastern and Southern Africa. Eritrea. Namibia. Comoros. Canada. Kenya. It is the successor to the Preferential Trade Area for Eastern and Southern African States (PTA). Bovine Spongiform Encephalopathy. Mexico. Lesotho. The seven ASEAN members of the WTO — Brunei. Malaysia.Australia.
Convention on Biological Diversity Convention on International Trade in Endangered Species of Wild Fauna and Flora. APEC has 21 members .
Liechtenstein. IBRD and IMF heads are considered to be helpful in promoting coherence of economic policy between countries. Niger and Senegal). Food and Agricultural Organization.e. It was established in 1990. Established in 1975. Economic Cooperation between Developing Countries. The three partners making up the EAC are Kenya.
Economic Commission for Latin America and the Caribbean. India. The Gambia. Switzerland and the United Kingdom. They were followed by Portugal in 1985 and Austria. Malaysia.
"The Economic and Social Commission for the Asia-Pacific. i. It was established in 1947 as the Economic Commission for Asia and the Far East (ECAFE) and given its present name in 1974. Côte d'Ivoire. The Dispute Settlement Body. A mechanism operating mainly within the United Nations system of developing countries through cooperative activities. Burkina Faso. Iceland joined in 1970. Its annual high-level sessions of WTO. A mechanism within the Common Market for Eastern and Southern Africa established in 1996. Ghana. Founding members were Austria. and Cape Verde. Also called Western Hemisphere Free Trade Agreement. Senegal. It consists of the members of the West African Economic Community (Benin. The transfer of data in a standardized electronic form between companies through the use of networks such as the internet.
East African Cooperation.
Electronic Data Interchange. Argentina. Iran. Mauritania. EFTA now comprises Iceland.
Economic Community of West African States. Guinea-Bissau. Tanzania and Uganda. Chile. The Uruguay Round Understanding on Rules and Procedures Governing the Settlement of Disputes. Entered into force on 3 May 1960 through the Convention of Stockholm. Its members now are: Algeria.
United Nations Economic and Social Council. Council for Trade in Goods. Finland and Sweden on 1 January 1995. Denmark. Peru. the WTO General Council meeting to settle trade disputes. Sweden. It aims to promote faster trade and investment liberalization. Sri Lanka. Does not make rules. Norway. the members of the Mano River Union (Guinea. Egypt. Mexico. Indonesia. A group originally of fifteen developing countries acting as the main political organ for the Non-Aligned Movement. Jamaica. Free Trade Area of the Americas. Norway and Switzerland. One of the United Nations regional economic commissions. Brazil. Finland became a full member in 1986 after having been an associate member.
European Free Trade Association. Portugal.
See EU.CTE CTG DSB DSU
The WTO Committee on Trade and Environment. Foreign direct investment. Kenya. It was established in 1948 as the Economic Commission for Latin America (ECLA) and given its current name in 1985. Mali. Venezuela and Zimbabwe. Nigeria. Denmark and the United Kingdom left on 31 December 1972 to join the European Economic Community. Dispute Settlement Understanding. Liberia and Sierra Leone). One of the United Nations regional economic commissions. Nigeria and Togo. Colombia.
EU FAO FDI FTAA G15
European Union. Its longer-term objectives are the establishment of a customs union and an East African Federation.
United States. Nigeria and South Africa. Italy. have reduced the importance of the GSP to many developing country exporters. Colombia. It entered into force in 1989. Non-tariff preferences may also be exchanged. Region III (Asia and developing countries of Europe) is represented by India. France.
Global System of Trade Preferences Among Developing Countries. General Agreement on Tariffs and Trade. The massive tariff reductions since 1971 as a result of multilateral trade negotiations and unilateral actions. General Agreement on Trade in Services. Least developed countries do not have to offer reciprocal concessions. Philippines.
An expression implying imposition or acceptance of international trade disciplines more stringent than those prescribed by the GATT or extending the GATT rules to areas beyond trade in goods. According to its proponents. Members are divided into three regions. Ethiopia.
Generalized System of Preferences. the benefits would have been extended to all GATT members according to the most-favoured-nation clause. Established in 1919 as part of the Treaty of Versailles.
International Labour Organization. Negotiations are conducted under UNCTAD auspices. The code would also have been open to new members willing to accept its obligations. established in 1971. It gives developing countries a margin of preference in the tariff rates their goods face in the markets of developed countries and in this way increases their competitiveness. as well as changes in productivity.
The Group of Latin American and Caribbean Countries which operates informally within the WTO. Mexico.
Group of developing countries set up in 1964 at the end of the first UNCTAD (originally 77. 44 countries participate in the GSTP. incorporated into the WTO. which governs trade in goods. Membership of the GSTP is open to members of the Group of 77. It became a United Nations specialized agency in 1946. but only code members would have been able to initiate tariff negotiations with another code member. Lebanon. Germany. Japan. Region I (Africa) is represented by Algeria. Region II (Latin America and the Caribbean) is represented by Argentina. United Kingdom. Guatemala. General Agreement on Tariffs and Trade 1947. Trinidad and Tobago and Venezuela.
G8 GATS GATT GATT 1947 GATT 1994
G7 plus Russia. Côte d'Ivoire. Ghana. Pakistan. Brazil. UNCTAD is the main forum for a discussion of GSP issues. Its aim is to promote the development of economic cooperation among developing countries through the exchange of tariff preferences. Democratic Republic of Congo.G24
Intergovernmental Group of Twenty-Four on International Monetary Affairs. The proposal did not find favour with GATT members as a whole. Its objectives are to improve working
Group of seven leading industrial countries: Canada. Peru. Iran. but it remains an important plank in the trade policies of many developing countries. The new version of the General Agreement. First proposed at UNCTAD II in 1968. Entered into force in 1971. Sri Lanka and Syrian Arab Republic. Gabon. One of the most ambitious examples of "GATT plus" was the proposal by the Atlantic Council of the United States that there should be a code of trade liberalization within the GATT framework with stronger rules for the conduct of trade relations between industrialized countries willing to accept them. but now more than 130 countries).
International Patent Classification. social security.and living conditions through the adoption of international conventions and recommendations setting minimum standards for wages. life cycle assessment. Netherlands. It is associated with the WTO especially through work concerning the Agreement on Technical Barriers to Trade which is aimed at ensuring that standards are not used as disguised barriers to trade. It consists of OECD member countries. Spain. Guatemala.
IDB OR IADB
Inter-American Development Bank. It does so mainly through lending to public institutions. France. http://www. Costa Rica. contains specifications for certification or registration purposes. scientific. Peru.
ILO IMO ISO
International Labour Organization. It is located in Geneva. etc. Barbados. An intergovernmental organization established in 1974 after the first oil shock. Switzerland. Germany. conditions of employment. Denmark. Jamaica. Suriname. Italy. Mexico.
Negotiations aimed at expanding ITA's product coverage. including literary and artistic works (protected by copyright). Belgium. International Organization for Standardization. environmental labelling. Portugal. Bolivia. Haiti. Intellectual Property Rights. inventions (protected by patents). the Inter-American Development Bank (IDB) supports economic and social development and regional integration in Latin America and the Caribbean. Dominican Republic. or formally the Ministerial-Declaration on Trade in Information Technology Products. El Salvador. Established in 1959. signs for distinguishing goods of an enterprise (protected by trademarks) and other elements of industrial property. but it also funds some private projects. technological and economic activities. Finland. Colombia. Ownership of ideas. The Bahamas.iadb. United States. They should not be confused with product standards. Guyana.
A series of environmental management standards prepared by the International Organization for Standardization (ISO) covering six areas: environmental managing systems. ISO 14001 on environmental management systems. Israel. The ISO also promotes the development of cooperation in intellectual. Japan. Croatia. Paraguay. Honduras. hours of work. environmental performance evaluation. Most of the standards are intended as guidance documents on environmental tools and systems to help companies and other organizations integrate environmental considerations into their normal business processes. United Kingdom. Panama. typically in infrastructure and capital markets development.org
International Energy Agency. A world-wide federation of national standards bodies established in 1947 to promote the development of standardization and related activities with a view to facilitating the international exchange of goods and services. Nicaragua.
Information Technology Agreement. terms and definitions. Members (46) include: Argentina. Norway. Only one of the standards. International Maritime Organization. Each country is represented by one organization only. Sweden. Trinidad and Tobago. Slovenia. Canada.
environmental auditing. Ecuador. Uruguay and Venezuela. These are standards for evaluating the way a firm works. Belize. Quality systems standards enable firms to identify the means of meeting consistently the requirements of its customers.
A series of quality systems standards developed by the International Organization for Standardization (ISO).
Czech Republic. Non-tariff barriers. Grenada. and the Grenadines. Finland. implemented on 1 January 1994. Currently a customs union covering trade in goods except sugar and automobiles.
ITU LAFTA LAIA LDCS LLDC MEA MERCOSUL MERCOSUR
International Telecommunication Union. import licensing systems. Dominica. etc. http://www. sanitary regulations. international purchasing and supply management and trade promotion needs. Austria. It superseded the East Caribbean Common Market. the principle of not discriminating between one's trading partners. human resource development. Latin American Integration Association. Maritime transport services. Multilateral Environmental Agreement. Chile and Bolivia signed an association agreement on 1 October 1996 and 1 March 1997 respectively. Greece. Least developed of the Least Developed Countries.
The Organization for Economic Cooperation and Development (OECD) groups 30 member countries. The British Virgin Islands and Anguilla are associate members. Negotiating Group on Basic Telecommunications. Southern Common Market. Organization of Eastern Caribbean States. Organization of African Unity. Mexico. such as quotas. Germany. Same as "non-tariff barriers".
OAS OAU OECS
Organization of American States. St Vincent. Italy. GATS Article II and TRIPS Article IV). Montserrat. OECS members are Antigua and Barbuda. Same as "non-tariff measures". development of trade support services. trade information. Least Developed Countries. St Lucia.org
NEPAD NGBT NGMTS NGO NTBS
New Partnership for Africa's Development.
Most-favoured-nation treatment (GATT Article I. Membership is open to ALADI members. Hungary. Denmark. Superseded in July 2001 by the African Union. Its work program now covers product and market development. Mercado Comum do Sul.
Non-tariff measures. import licensing systems. Brazil. Established in 1964 as the focal point in the United Nations system for technical cooperation with developing countries in trade promotion. St Kitts and Nevis. Non-governmental Organization. Canada. Iceland. The name in Portuguese of Mercosur. etc. It includes Argentina. such as quotas. Ireland.
Multi Fibre Arrangement (1974-94) under which countries whose markets are disrupted by increased imports of textiles and clothing from another country were able to negotiate quota restrictions. Paraguay and Uruguay. Belgium. Mercado Común del Sur (Southern Common Market). Members (30) include: Australia. Latin American Free Trade Association.
The North American Free Trade Agreement (NAFTA) is a free trade agreement involving Canada. prohibitions.nafta-sec-alena. and the United States. sanitary regulations. France. Japan.ITC
International Trade Centre UNCTAD/WTO.
Cook Islands. price discrimination.
Organization of Petroleum Exporting Countries. The Textiles Monitoring Body consists of a chairman plus 10 members and oversees the implementation of ATC commitments. but it allows for the establishment of free-trade areas. Namibia. Norway. Lesotho. Republic of the Marshall Islands.
Pacific Islands Forum. Saudi Arabia.
Quantitative restrictions — specific limits on the quantity or value of goods that can be imported (or exported) during a specific period. Iran. Sanitary and Phytosanitary measures or regulations — implemented by governments to protect human.
Restrictive Business Practices. Australia and New Zealand are eligible to join if they wish. Its members are Australia.
Australia. http://www. resale price maintenance.
United States. Some say that the formation of APEC has made PAFTA redundant. Nauru. One of these is the Pacific Island Countries Trade Agreement. vertical and horizontal arrangements. PICTA will enter into force after six countries have ratified it.South Korea. Turkey. New Zealand. Kiribati.
TARIC TBT TMB
Integrated Tariff of the European Union. Fiji. Federated States of Micronesia. Its current members are Algeria. Portugal. These can include collusion. Indonesia. Iraq. Anti-competitive behaviour by private firms of the type dealt with by national competition laws and policies.
Pacific Free Trade Area. Spain. An idea for a regional preferential trade arrangement that has been around since the 1960s.
Preshipment Inspection — the practice of employing specialized private companies to check shipment details of goods ordered overseas — i. Mexico. Switzerland. Niue. Netherlands.oecd.
Chile. United Kingdom and the United States. Poland. quantity. and to help ensure that food is safe for consumption. abuse of dominant position. An agreement adopted in August 2001 by the Pacific Islands Forum which sets out the framework for the development of trade relations between the Forum members. The WTO Agreement on Technical Barriers to Trade. etc. Kuwait. refusals to deal. South Africa and Swaziland.
TPRB. Trade-Related Aspects of Intellectual Property Rights.
Pacific Agreement on Closer Economic Relations. quality. Libya.e. Sweden. Nigeria.org. Samoa. Tonga. PACER entered into force on 3 October 2002. Tuvalu and Vanuatu. exclusive dealing. animal and plant life and health.
Latin American Economic System. TPRM
The Trade Policy Review Body is General Council operating under special procedures for meetings to review trade policies and practices of individual WTO members under the Trade Policy Review Mechanism. Papua New guinea. and so forth. Solomon Islands.
. It is not a free-trade agreement. Slovakia. New Zealand. United Arab Emirates and Venezuela.
Southern African Customs Union comprising Botswana. price. Palau.
Trade-Related Investment Measures.
Pacific Island Countries Free Trade Agreement. Luxembourg.
It provides for the grant of patents or special titles of protection to breeders of new plant varieties.UNCTAD UPOV
The United Nations Conference on Trade and Development.
Restraint. It is administered by the International Union for the Protection of New Varieties of Plants (UPOV).
World Intellectual Property Organization. VER. Bilateral arrangements whereby an exporting country (government or industry) agrees to reduce or restrict exports without the importing country having to make use of quotas. a multilateral organization located in Brussels through which participating countries seek to simplify and rationalize customs procedures. OMA Voluntary
World Customs Organization.
. International Union for the Protection of New Varieties of Plants (Union Internationale pour la Protection des Obtentions Végétales).
Arrangement. rather than by WIPO. Concluded in 1961 in Paris and revised in 1978 in Geneva. tariffs or other import controls.
....................... 31 OTHER NON-TARIFF BARRIERS ....... I........................................................................................................................................
USER AGREEMENT ........................................................................ II.........D...................................B.... 35
V....................................... V.............A...................................................................................... 13 OBJECTIVES OF THE WTO ............... 4 WHO IS WHO? ........ 7 III....................... BASIC PRINCIPLES AND MARKET ACCESS RULES IN THE WTO.................................................................D..................................................................
COURSE GUIDE ..................................... III.............................. I..........C.......................................B..................... 3 COURSE ORGANIZATION .......................... INTRODUCTION ............................................................ 1
INTRODUCTION........ I....................................................................... 40 RULES ON MARKET ACCESS ...................... 4 STRUCTURE AND DURATION OF THE COURSE .....................................................
THE WTO AGREEMENTS .......................... II...................C............. 19
II.................... 7 INTERACTIVE TOOLS ............. 23 III.....................................................A............... WHAT IS THE WTO? ....... 13 FUNCTIONS OF THE WTO .....
INTRODUCTION TO THE WTO.............................................
RULES ON MARKET ACCESS...................................................................................... II...................................................E............................................................................................... IV............. 4 II.....................................
SUMMARY.......... IV.............. 11
I........ 13 I... 14 WTO ORGANIZATIONAL STRUCTURE .A...... 26 TARIFFS............................................................................................ V..................................D.......... III.........................C.. 24
IV........B....B........................................... OBJECTIVES .............. 20 NON-DISCRIMINATION ..............B.................................................................................... 39 V............... 26 IV.......................................................... MFN UNDER GATT ................... II.......................................................C..........................A....... IV... 6 EVALUATION AND CERTIFICATE...A....................................................... 8
E-LEARNING WEBSITE ..................................A.................................... 39 PRINCIPLES............................... 41
...................................................................................................... TRAINING MATERIALS .......................................... I............................B.............................................................................................. THE WTO ............. 9
INTRODUCTION TO THE WORLD TRADE ORGANIZATION (WTO)......................................................................................... 6
III........... III........................ 26 NON-TARIFF BARRIERS...........Table of Contents
I.............. 16 DECISION-MAKING IN THE WTO .................... 23 NATIONAL TREATMENT UNDER GATT ......
DISPUTE SETTLEMENT AT THE WTO............. 69 PANELS..........
RELATIONSHIP OF THE AGREEMENT ON AGRICULTURE TO OTHER WTO AGREEMENTS .K............................C....
SUMMARY....A........................ 75 IV..........................B..................................... INTRODUCTION .................................................................................MODULE 2
EXCEPTIONS TO THE BASIC PRINCIPLES................ AGRICULTURAL TRADE .................................................................102 III...............................................................................................................................................C........................................ 81
I................................... 70 ADOPTION AND IMPLEMENTATION OF THE REPORT..................................................................E............................................. III.....................................................
THE AGREEMENT ON AGRICULTURE..............................F............... 70 COMPENSATION.......................... 83 AGRICULTURE TRADE RULES UNDER THE GATT ......................... 91 AGREEMENT ON AGRICULTURE'S STRUCTURE .................................................................A............ II.....................................................................................B............D....A.... INTRODUCTION ......E............................................................. 70 WITHDRAWAL / AMENDMENT OF THE INCONSISTENT MEASURES ...................A.................................................. 52 SAFEGUARD MEASURES ....114
............................................ 72 GOOD OFFICES.............................. 83 URUGUAY ROUND AGRICULTURE NEGOTIATIONS .........................G....... 77
I...... III.................. I..........
RULES ON UNFAIR TRADE .................... II........ I...............................
EXCEPTIONS TO THE BASIC PRINCIPLES ..... II...........................B............. 57 WAIVERS ............................
INTRODUCTION TO THE AGREEMENT ON AGRICULTURE .. 70 REMEDIES ...................................... II................................................................ 47 SUBSIDIES & COUNTERVAILING DUTIES................. II...................D.........102
IV..................................... 76 DISPUTE SETTLEMENT ................................. IV...........................A...................I...................................... 47 I............. 73
IV................................... III.......... III..................................................................................................A.................................B...................................... TRADE REMEDIES AND DISPUTE SETTLEMENT IN THE WTO ............................................................ III...................................... 67 III................................ CONSULTATIONS ....... 75 EXCEPTIONS TO THE BASIC PRINCIPLES .................. RULES ON UNFAIR TRADE ........ 91
III.......................................... 52 II...... 65
III..... I...............J.......... 86
II............................. III...................................................................... 71 SUSPENSION OF CONCESSION (RETALIATION) .....................................H..................... III............................................................ III..................................................... 71 ARBITRATION ................ 72 TYPES OF COMPLAINTS............. ANTI-DUMPING MEASURES ... 83 I............................................ HORIZONTAL EXCEPTIONS ..............B........ III.......................A.. 69 APPEAL ..... 62 REGIONAL INTEGRATION .................................................. III..B............C...... IV.............................C....................................................................................... 91 II. 63 SPECIAL & DIFFERENTIAL TREATMENT FOR DEVELOPING COUNTRIES ....... 48
II................................... CONCILIATION AND MEDIATION ....
SPECIAL TREATMENT ...... VIII................... TRQ ADMINISTRATION ..........................................C.........123 III.......149 VOLUME-BASED SSG ............................166 DIRECT PAYMENTS TO PRODUCERS...........E...................C.............148 PRICE-BASED SSG ...........................................................................................................154 IX.................................... TARIFFS AND TARIFF QUOTA NOTIFICATION OBLIGATIONS .148 VIII....................................................A..................154
X........ BLUE BOX .......B............................................ INTRODUCTION ...... II..................................... INTRODUCTION ...........A......................................142 WHAT THEN WERE THE BENEFITS OF THE URUGUAY ROUND? ........
DOMESTIC SUPPORT ............152
NOTIFICATION OBLIGATIONS ........................B....... WHO HAS THE RIGHT TO USE THE SSG?........................................................... VII.....................................147
SCHEDULE OF TARIFF CONCESSIONS & TARIFF QUOTA COMMITMENTS..................................166 GOVERNMENT SERVICE PROGRAMMES ..119 CEILING BINDINGS AND TARIFFICATION ...........B.............................154 NOTIFICATIONS FOR THE SPECIAL SAFEGUARD .....................................167
I.....................A................... IX.....................................C..............................................135 EXCEPTIONS TO THE PROHIBITION OF NTBS.................................................................... V....................139 HORIZONTAL EXCEPTIONS .............................................B..................121 BINDINGS AND REDUCTIONS ..............................................................................................................A..............127 GATT ARTICLE XIII ..................................
OTHER EXEMPT SUPPORT .................... 117
CONCEPTUAL FRAMEWORK ............D..........163 THE BOXES..........152 VIII...................... VIII...................
TARIFF-RATE QUOTAS..................................................................................................................................141 SOME PROBLEMS WITH TARIFFS.....................C.......... IX................ ARTICLE 4 OF THE AGREEMENT ON AGRICULTURE ......................................................A.......................................................................................................................................................................125 IV............................................................A...................... VII.............. II......120 II....................................MODULE 4
VI.A....135 V..............129 AGREEMENT ON IMPORT LICENSING PROCEDURES ........................................123
IV.............................................................166 II.............................B................. III....................... II...............................140 VII..................................... VII........................................................
THE PROHIBITION OF NON-TARIFF BORDER MEASURES.............164
MARKET ACCESS IN THE AGREEMENT ON AGRICULTURE ..........
SPECIAL SAFEGUARD PROVISIONS.B........................................................ 161
CONCEPTUAL FRAMEWORK .....151
SUMMARY................170 III....................... IV....130
V............................................................. WHEN CAN THE SSG BE USED?......................................
THE GREEN BOX.....................B.......................................... II............................................................................................123 MODIFICATION OF SCHEDULES .....................................................170
................ IMPLEMENTATION ...................................... IV......... GENERAL REQUIREMENTS .............................................................................................................................................A..................A... CEILING BINDINGS ...................................
........................................ INTRODUCTION ...................252 ARTICLE 20 ...............................................175 AGGREGATE MEASUREMENT OF SUPPORT (AMS) .....171 DE MINIMIS............................. V..............
NOTIFICATION OBLIGATIONS .............253
EXPORT COMPETITION....................252 II..................................................... IV..................178
NEGOTIATIONS ON AGRICULTURE .........................A..................... IV...C....................................... II.251 NEGOTIATING MANDATES ..............................................
ANTI-CIRCUMVENTION..............173 IV.......225 I............ IV................................................. ARTICLE 9 (SUBSIDIES TO BE REDUCED) ...... VI....F. 191
CONCEPTUAL FRAMEWORK .................................................... I.....................A...................................................................187
I.... II................................... II...................................................................D..........................230
EXPORT RESTRICTIONS AND PROHIBITIONS AND NET FOOD-IMPORTING DEVELOPING COUNTRIES ..............................................4....................................A.........A...................................... II.....................................................184 SUMMARY.........
DEVELOPMENT PROGRAMMES..........................228 IMPLEMENTATION OF THE NFIDC DECISION.......................................B...................................B...................... ANALYSIS AND INFORMATION EXCHANGE. 223
NET FOOD-IMPORTING DEVELOPING COUNTRIES.............................................................................................................................................................................................................B......................................175 EQUIVALENT MEASUREMENT OF SUPPORT ..........E...............C....................................................
NOTIFICATION REQUIREMENTS ..B.....................................................................................................B........................................................... IV...................
EXPORT RESTRICTIONS AND PROHIBITIONS ................................................................................................................... II........212 SUMMARY.................................. II.......................204
III................................ IV......201 REDUCTION RATES ....................................................... WHAT IS DE MINIMIS?.....................................228 II......................... II.................................A.............197 EXCEPTION IN ARTICLE 9...............199 WHO CAN SUBSIDIZE EXPORTS? .........202 ROLL-OVER OF COMMITMENTS .244 SUMMARY.. II...................................................................................................................................................................199 PRODUCT CATEGORIES..........247
I............................................................................................................197 II............225 DISCIPLINES ON EXPORT RESTRICTIONS AND PROHIBITIONS .205 EXPORT SUBSIDY NOTIFICATION OBLIGATIONS ......................172
DOMESTIC SUPPORT SUBJECT TO REDUCTION COMMITMENTS ........ III........ 249
INTRODUCTION...................................................211 DISPUTE SETTLEMENT CASES ...... INTRODUCTION ................193 EXPORT SUBSIDIES RULES FOR AGRICULTURE ..............................................................
....................B............................263 III..........272 SCHEDULES.......................... II......................................................... I..............................................................................................
CONCLUSION .....257 HONG KONG MINISTERIAL DECLARATION .........
DOHA DEVELOPMENT AGENDA................................................................................................................A........................267
I.................................................................C................................................................................................................. I.............................E..............................................A......................................... 269
NEGOTIATIONS ......... INTRODUCTION ..............C.................... III.......................................260
THE COTTON INITIATIVE ............. SUPPORTING TABLES & THE MODALITIES DOCUMENT .............
SUMMARY.................................................................................. II.. III..254 CANCÚN MINISTERIAL CONFERENCE ...256 GENERAL COUNCIL DECISION OF 1ST AUGUST 2004 ............................... III....271 AGRICULTURE IN THE URUGUAY ROUND................263 GENERAL COUNCIL DECISION OF 1ST AUGUST 2004 ............................................................B...................................................II.............263 COTTON SUB-COMMITTEE......................264 HONG KONG MINISTERIAL DECLARATION ...... THE WTO ...281
SUPPORT DOCUMENTS ....................... 283
. main functions of the E-Learning platform.MODULE
ESTIMATED TIME: ½ hour
Organization of your course. and. the User Agreement.
At the end of the Course Guide. you will find the User Agreement.I. which was initially sent with your username and password. as well as of the main functions of the E-Learning platform.
Welcome to the course "Agriculture in the WTO"! This Course Guide is envisaged to give you an overview of the organization of your course. We advise you to print this Guide and have it readily available throughout the course.
Once your registration process is complete.org/english/tratop_e/devel_e/teccop_e/pls_e. To know more about the WTO PLS: http://www. you have to register and submit the nomination form in order to access the course exams and obtain a WTO certificate.A.
TO KNOW MORE
The PLS is the progressive.org/english/tratop_e/devel_e/teccop_e/tct_e. This course is a level 2 (intermediate level) course in the specialist path of the PLS. WTO E-Learning is available for government officials. improved ability to interpret relevant information and documents on WTO-related issues. Your access codes will be available for a three month period. The primary aim of the PLS is to promote higher levels of learning. During these three months a Trainer will be available to assist you with any questions you may have. background documents and the interactive tools of the E-Learning platform. multi modular sequencing of products aimed at improving the delivery of WTO technical assistance and training. you will have access to training materials. OBJECTIVES
After successfully completing the elements of the E-Learning course "Agriculture in the WTO" you will have: enhanced knowledge of the basic principles of the WTO.
II. you will be able to wholly benefit from interactive activities such as Chat Sessions with WTO Experts.
STRUCTURE AND DURATION OF THE COURSE
WTO E-Learning courses give you the flexibility to combine your training activities and professional responsibilities.pdf To know more about WTO technical assistance and training. and to use the WTO legal texts and related background materials benefited from the establishment of a network of useful contacts between course participants and experts from the WTO Secretariat. In this period. with a view to sustaining the human and institutional capacity of beneficiary countries to participate more effectively in the WTO.htm
II.wto. you will have to complete AND submit all exams. To facilitate the achievement the objectives of the course. Furthermore.
. WTO E-Learning courses are part of the WTO Progressive Learning Strategy (PLS). a username and password will be sent to you by email. please refer to: http://www. While the WTO E-Learning material is freely available on the WTO E-Learning website.II. enhanced knowledge of the WTO disciplines regarding agriculture.wto.B.
which take two forms: Illustrations: A simplified explanation of WTO provisions or theoretical points developed throughout the module.The estimated study time per course is 50-60 hours. Case studies extracted from WTO jurisprudence.
You will have access to the E-Learning website during the duration of the course and your account will expire at 23:59 (Geneva time) of the last day. Take your time to complete and submit it.
Self-assessment exercises are available in each module.
Please note that you may take the end-of-module exam only once and it will count towards your final average. including explanatory texts and examples. you should submit the Final Exam before this deadline. In order to finalise the course in a timely manner. since you will only be able to do it once and it counts double in the calculation of your final average. They allow you to measure your personal progress in the course. Your academic profile allows you track your progress.
The final Exam is the exam at the end of the last module of your course. Therefore. the course requires around 2 hours of study per working day. using graphs and charts. Each module contains training materials on a specific issue. This exam covers all the issues addressed during the course.
Structure of the course
The course is divided into 9 Modules. which show how WTO rules have been interpreted by the Dispute Settlement Body.
a final average above 90% and no exam below 50%) will receive a Certificate with Distinction. you have to have 8 exams above 50%. if you: à à reach a final average of at least 60% of correct answers. Feel free to contact your Trainer using the Internal Email Service.C. These exams contain multiple-choice questions addressing the substantive content. you will have to complete and submit an exam.
Who is who?
Government officials who are taking part in the course and have the potential to interact and build a network. Should you have questions on the evaluation of your exams. you will have the opportunity to interact with colleagues from other WTO Members and Observers.
.D. signed by the Director General.
WHO IS WHO?
During your course. of the pertinent Module. à have taken part in the interactive activities (chat and/or forum).).
II.II. who is available to guide you and respond to your queries on the academic content of the course. as well as case studies.
Upon successful completion of the course.
The E-Learning Help Desk is ready to assist you on technical issues related to the functioning of the website. which counts double in the calculation of your final average. you will find the Final Exam. (This means: If the course has 9 Modules. The results of each exam will be taken into account for the calculation of your final average.e. as well as with WTO experts in the subject matter of the course and the E-Learning Unit.
Your Trainer is a WTO expert.
You may only take the end-of-module exams once and they count towards the calculation of your final average. the WTO Institute for Training and Technical Cooperation will issue and send you a certificate. have more than 50% in each exam except in one.
EVALUATION AND CERTIFICATE
At the end of each module. which you will see together with your test results.
Participants with outstanding results (i. After completing the last module. whenever you need some clarification. please remember to first carefully read the reasoning for correct answer.
as well as useful links to complement your study. List of WTO members and Information on WTO Negotiations).
The E-Learning website has been designed for you and to foster an efficient training experience and allow you to interact with other participants and WTO experts. Access to further information through hyperlinks or the module support documents. you will have access to the eLibrary. Each module consist of the following elements: à à à à à à Training and theoretical materials on the WTO and its Agreements. Case studies and exercises.
In order to login.
. Text of the WTO Agreements and Official Documents.
Furthermore. Illustrations and examples.A. the Analytical Index of jurisprudence. as well as background documentation and interactive tools. which contains background documents (WTO Agreements. to get familiar with the different functions and interactive tools. You may take the Online Tutorial available on the website. It contains the training materials for your course. Trade Policy Review Reports. End-of-module exam.
III. Glossary of Trade Terms. TRAINING MATERIALS
E-Learning offers comprehensive courses.III. you should always enter the username and password that were sent to you.
.III. as well as between participants and WTO experts. and build-up your network.
This is the place to discuss the latest WTO news of interest for you by exchanging comments and views with other participants and trainers..
The E-Learning website offers interactive tools to foster the exchange among course participants.
Chat Sessions with WTO Experts and Special Guests will be organized during the course. Please refer to the Online Tutorial for more detailed information on:
Internal Email Service:
Your own E-Learning email account! Use it to contact your Trainer... other participants.
. An invitation with the date and time will be sent to you.
Do not wait to fully benefit from the interactive features of the E-Learning website! Take the first step in contacting your Trainer and take the initiative in the process. talk about the most important trade issues for your country and region with colleagues and share your knowledge and experiences. Help Desk.B.
The use of the E-Learning platform, the training materials and interactive features is subject to the terms and conditions contained in the User Agreement. You have automatically agreed to the User Agreement by using the log-in details (username and password) that were sent to you. The User Agreement reads as follows: 1. The E-Learning platform is property of the World Trade Organization. It is managed by the E-Learning Unit of the Institute for Training and Technical Cooperation and its objective is to deliver online courses on the WTO and its Agreements, while taking full advantage of the internet and the latest multimedia technologies. 2. The User is a trade official from a developing country or economy in transition, nominated by his/her respective government. The User enjoys access to the E-Learning platform during the duration of the course, under the following terms and conditions: a. The WTO is the copyright holder of the content of the E-Learning platform. Training materials and other tools available online shall not be disseminated without prior written authorization from the WTO E-Learning Unit; b. During the course, the User may print the training materials and documents available on the ELearning platform for his/her personal use only; c. Citations and references to the course materials available on the E-Learning platform shall fully acknowledge the source (i.e. WTO E-Learning course); d. Only authorized Users (i.e. participants, nominated by their governments, who have received a username and password) are entitled to use the E-Learning platform; e. The User is responsible for maintaining the confidentiality of the username and password to access the E-Learning platform. If you become aware of any unauthorized use of your account, you shall notify the E-Learning Unit (firstname.lastname@example.org) immediately; f. The utilization of the E-Learning platform and its contents shall be exclusively in relation to the course that is being followed by the User; g. Communications through email and the Discussion Forum may be monitored by the WTO to ensure civility and compliance with the User Agreement; h. If the User breaches the terms and conditions of this User Agreement, his/her right to access the ELearning Platform will be revoked unilaterally by the WTO.
Introduction to the World Trade Organization (WTO), Basic Principles and Market Access Rules in the WTO
ESTIMATED TIME: 4 hours
OBJECTIVES OF MODULE 1
Explain the objectives, functions, principles and organizational structure of the WTO;
Introduce the WTO agreements and the WTO legal framework; Explain the non-discrimination rules: Most Favoured Nation (MFN) Principle and National Treatment (NT) Principle;
Explain the market-access rules.
INTRODUCTION TO THE WTO
WHAT IS THE WTO?
The WTO is the only international organization dealing with multilateral rules of trade between nations. At its heart are the Uruguay Round agreements, which were negotiated and signed by governments and ratified in their respective parliaments.
GATT AND WTO
"GATT" is the acronym of General Agreement on Tariffs and Trade. The GATT is an international agreement concluded in 1947. It contains the rules and obligations that governed trade in goods for almost fifty years between the nations, which signed and ratified it and which were normally called "the Contracting Parties". Until the creation of the WTO in 1995, the GATT provided the legal framework for the bulk of world trade. From 1947 to 1994, Contracting Parties organized eight rounds of negotiations. The longest (1986-1994) and most comprehensive of them was the Uruguay Round, which incorporated negotiations on services and intellectual property. The Contracting Parties concluded the Round by adopting the "Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations". The Final Act includes the "Marrakesh Agreement Establishing the World Trade Organization" (the "WTO Agreement") and its four Annexes (Annexes 1 (1A, 1B, 1C); 2; 3 and 4). The WTO Agreement is the constitutive agreement which established a new organizational body, the World Trade Organization. Therefore, the WTO came into being in 1995, and though legally distinct from the "GATT", both are interrelated. The WTO is in charge of administering the Uruguay Round Agreements.
OBJECTIVES OF THE WTO
In the Preamble to the Marrakesh Agreement establishing the WTO ("the WTO Agreement"), the parties to the Agreement recognize certain objectives they wish to attain through the multilateral trading system: à à à à raise living standards; ensure full employment; ensure a large and steadily growing volume of real income and effective demand; and expand the production of and trade in, goods and services, while allowing for the optimal use of the world's resources in accordance with the objective of sustainable development. The Preamble of the Agreement also recognizes the need for "positive efforts to ensure that developing countries, and especially the least-developed among them, secure a share in the growth in international trade commensurate with … their economic development".
FUNCTIONS OF THE WTO
The main functions of the WTO are to: à à à à à administer trade agreements; serve as a forum for trade negotiations; settle trade disputes; review Member's trade policies; assist developing countries with trade policy issues, through technical assistance and training programmes; and à cooperate with other international organizations.
Article III of the WTO Agreement contains the functions of the WTO. Paragraphs 1 to 2 refer to the role of the WTO of providing a permanent institutional forum for trade negotiations among its Members. These negotiations may be on subjects already covered under the various WTO agreements or in respect of "new issues" to be disciplined by those agreements. Paragraph 3 of Article III of the WTO Agreement obliges the WTO to administer the Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU") in Annex 2 of the WTO Agreement. It refers to the role of the WTO as a forum for the settlement of disputes between its Members in accordance with the disciplines and procedures elaborated in the DSU. Paragraph 4 of Article III of the WTO Agreement obliges the WTO to administer the Trade Policy Review Mechanism ("TPRM") contained in Annex 3 to the WTO Agreement. This function underscores the role of the WTO in the transparency mechanism designed by Members during the Uruguay Round. The TPRM was one of the few elements of the WTO Agreement that formed part of the "Early Harvest" realized before the Uruguay Round ended. Early Harvest is an expression which was used in the Uruguay Round negotiations when at the "Mid Term Review" Ministerial Meeting, held in Montreal in 1988, GATT Contracting Parties agreed that certain results of the negotiations, on which a clear consensus already existed, would enter into force immediately, although on a provisional basis. In other words, some fruits (of the negotiations) would be "harvested early". This final paragraph of Article III of the WTO Agreement, Paragraph 5 contains the "coherence mandate", which states that the WTO should cooperate with other multilateral agencies (World Bank, International Monetary Fund, etc.).
TIP The WTO rights and obligations constitute one part of the Multilateral Trading System (also referred to as "MTS") which regulates and affects most international trade transactions. Other organizations and agreements may also affect trade. For example, regulations of the International Monetary Fund ("IMF") influence how countries trade.
3.EXERCISES: 1. What are the objectives of the WTO? What are some of the achievements of the Uruguay Round? What is the Final Act?
WTO ORGANIZATIONAL STRUCTURE
WTO Organizational Structure
mostly on behalf of the Ministerial Conference when the Conference is not in session. There are three: à The Council for Trade in Goods (the "Goods Council") oversees all the issues related to the Agreements on trade in goods. à The Council for Trade in Services (the "GATS Council") oversees all issues related to the GATS Agreement. oversee the implementation of rulings and recommendations. to carry out trade policy reviews as mandated by the Trade Policy Review Mechanism (Annex 3 of the WTO Agreement). which in turn assigned it to create subsidiary negotiating bodies to handle negotiations for different topics. adopt Panel and Appellate Body Reports.). Its sessions must take place at least once every two years and deals with all matters under the WTO agreements. with its own Chairperson. and authorize the suspension of concessions and other obligations under the agreements for which disputes can be settled by the DSU . among them the Special Sessions of various Committees that have a mandate to negotiate (such as Agriculture.
THE MINISTERIAL CONFERENCE
The Ministerial Conference is the highest decision-making body in the WTO.
I. It meets regularly (approximately once a month) to adopt decisions. usually Ambassadors/Permanent Representatives based in Geneva.2. Trade and Environment. à The Council for Trade-Related Aspects of Intellectual Property Rights (the "TRIPS Council") administers the TRIPS Agreement.3. etc. which is in charge of the negotiations mandated by the Doha Development Agenda. It comprises representatives from all Member countries.
THE TRADE NEGOTIATIONS COMMITTEE
The Trade Negotiations Committee (TNC) was set up by the Doha Ministerial Declaration. The General Council also meets as: à The Trade Policy Review Body ("TPRB"). Subsidies. The General Council has authority over the Trade Negotiations Committee ("TNC").D. its chairperson is Mr.
THE COUNCILS & SUBSIDIARY BODIES
The Councils can be described as subsidiary bodies to the General Council.
I.D. with its own Chairperson to administer the rules in the Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU"). à The Dispute Settlement Body ("DSB"). The TNC reports directly to the General Council.the "covered agreements". the Director-General of the WTO. The DSB has the authority to establish panels. Pascal Lamy. They are composed of all WTO Members. At present.
THE GENERAL COUNCIL
The General Council constitutes the second tier in the WTO Structure.1.D.4.
etc. Working Parties on Accession. Subsidiary bodies of the Services Council's deal with financial services. they are: à à à à à à à à Committee on Trade and Development ("CTD"). Committee on Regional Trade Agreements ("CRTA"). All of these committees are composed of all Members. The Goods Council has 11 committees working on specific subjects (such as agriculture. They are usually called Committees. Please state the function of the following WTO bodies: (a) Ministerial Conference (b) General Council (c) Council for Trade in Goods (d) Committee on Technical Barriers to Trade
. market access. Please arrange the following WTO bodies in hierarchical order: (a) General Council (b) Committee on Technical Barriers to Trade (c) Council for Trade in Goods (d) Ministerial Conference 5. and specific commitments. anti-dumping measures. subsidies. Committee on Balance-of-Payment Restrictions ("BOP Committee"). Working Group on Trade. Several other bodies. Working Groups or Working Parties. This Council does not have a permanently fixed number of subsidiary bodies. Debt and Finance.
EXERCISES: 4. and Working Group on Trade and Technology Transfer. For example. report to the General Council. Finance and Administration ("CBFA"). domestic regulations. which focus on specific issues.). and Committee on Budget.The Goods and Services Councils have subsidiary bodies. GATS rules. Committee on Trade and Environment ("CTE"). the Negotiating Group on Basic Telecommunications was dissolved in February 1997 when its work ended.
The WTO is a Member-driven. one vote".
DECISION‐MAKING IN THE WTO
CONSENSUS VERSUS. à all Members or a two-thirds majority (depending on the provision of the agreement) can take a decision to amend provisions of the multilateral agreements.
. by a three-quarters majority. and à a two-thirds majority in the Ministerial Conference or the General Council in between conferences can take a decision to admit a new Member. However. consensus-based organization."
Where consensus is not possible.. and based on "one country. can waive an obligation imposed on a Member by a multilateral agreement. formally objects to the proposed decision. Consensus is defined in footnote 1 to Article IX of the WTO Agreement. à the Ministerial Conference. the WTO Agreement permits voting — a vote being won by a tally of the majority of votes cast. the amendments only apply to WTO Members that accept them. The WTO Agreement envisages voting in four specific situations: à a three-quarters majority of WTO Members can adopt an interpretation of any of a multilateral trade agreements.E. which states: "The Body concerned shall be deemed to have decided by consensus on a matter submitted for its consideration. if no Member present at the meeting when the decision is taken.
denunciation and final provisions. Additionally. acceptance. functions and structure of the WTO. The WTO Agreement has four Annexes. Next. its secretariat. it presents information on the definition of original Members. budget and contributions. it serves as an umbrella agreement. which are subsequently attached. non application. Annex 1 is divided into three sections: à à à Annex 1A (The Multilateral Agreements on Trade in Goods). Negotiations since 1994 have produced additional legal texts such as the Information Technology Agreement Services and Accession Protocols.A. entry into force and deposit. legal status. The WTO Agreement includes provisions on establishment. Annex 4 contains the Plurilateral trade agreements. accession.II. There are about 60 agreements and Decisions totalling 550 pages.
THE WTO AGREEMENTS
II. scope. 3) are applicable to all Members and as such are deemed a "single undertaking". 2. 2. The Multilateral Trade Agreements (Annex 1. and decision-making and amendment procedures (including special voting procedures). INTRODUCTION
The WTO agreements are the result of the 1986–1994 Uruguay Round negotiations signed at the Marrakesh Ministerial Meeting in April 1994. The schedules of commitments also form part of the Uruguay Round package. It also included a major revision of the original GATT text. Annex 1B (General Agreement on Trade in Services). This is a departure from GATT practice. Annexes 1. and 3 are termed "Multilateral Trade Agreements" and Annex 4 is termed "Plurilateral Trade Agreements".
The Final Act of the Uruguay Round was signed in Marrakesh in 1994. and Annex 1C (Agreement on Trade-related Aspects of Intellectual Property Rights). is the Marrakesh Agreement establishing the World Trade Organization ("the WTO Agreement").
Annex 2 governs the Understanding on Rules and Procedures Governing the Settlement of Disputes. It defines the WTO relationship with other organizations. Annex 3 is entitled Trade Policy Review Mechanism. It works like a cover note to all WTO Agreements.
the General Agreement on Trade in Services. However. some agreements on non-tariff barriers were negotiated during the Tokyo Round. they applied only to those countries who agreed to be bound by them. The latter two were terminated at the end of 1997. there are four plurilateral trade agreements (Uruguay Round Agreements) that bind only those Members who negotiated them. the Agreement on Agriculture. the International Dairy Agreement and the International Bovine Meat Agreement.
AGREEMENT ESTABLISHING WTO
Goods (Annex 1A)
Services (Annex 1B)
Intellectual (Annex 1C)
Other agreements annexes
Market access commitments
Countries' schedules commitments of
Countries' schedules of commitments (and MFN exemptions)
Dispute Settlement (Annex 2)
Trade Policy Review Mechanism (Annex 3)
Plurilateral commitments Table 1:
Plurilateral Agreements (Annex 4) The basic structure of the WTO Agreements
. it was decided that the multilateral agreements negotiated were to be accepted as a whole. In particular. as well as most of the other agreements negotiated during the Uruguay Round are part of this "single undertaking". a different approach was adopted. the Agreement on Government Procurement.
In a nutshell: The basic structure of the WTO agreements. The GATT. These are the Agreement on Trade in Civil Aircraft. the Agreement on Trade Related Aspects of Intellectual Property Rights. these agreements were not adopted by all GATT Contracting Parties. However. In the Uruguay Round.WHAT IS THE ʺSINGLE UNDERTAKINGʺ?
Agreements related to GATT 1947 were negotiated during negotiating rounds prior to the Uruguay Round.
.wto. there is a self-training module on the WTO site at the following address: http://www.org/english/tratop_e/serv_e/cbt_course_e/signin_e.htm
EXERCISES: 6. What is the WTO Agreement and what does its annexes cover?
.htm For more information on the DSU.org/english/tratop_e/dispu_e/disp_settlement_cbt_e/signin_e.
For more information on the GATS.IF YOU WANT TO KNOW MORE. there is a self-training module available on the WTO site at the following address: http://www..wto.
1 says: "With respect to customs duties … any advantage … granted by any Member to any product originating in or destined for any other COUNTRY shall be accorded immediately and unconditionally … etc…" Why did the drafters of Article I. GATT Art.III. non-discrimination is a key concept of the multilateral trading system. the obligation is found in GATT Article I:1:
"With respect to customs duties and charges of any kind imposed on or in connection with importation or exportation or imposed on the international transfer of payments for imports or exports and with respect to the method of levying such duties and charges and with respect to all rules and formalities in connection with importation and exportation and with respect to all matters referred to in paragraphs 2 and 4 of Article III any advantage favour privilege or immunity granted by any Member to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other Members. MFN UNDER GATT
The Most Favoured Nation (MFN) principle prohibits discrimination between imports irrespective of their origin or destination and requires each Member to extend to all other Members. For goods. treatment no less favourable than it accords to imports from any other country.A. I."
EXERCISES: 7. It is based on the most favoured-nation clause and national treatment.
As you know.1 of the GATT refer to "any other COUNTRY" and not "any other MEMBER"?
. At all times. National treatment is regulated for trade in goods by GATT Art. regulations. The national treatment principle prohibits a Member from favouring its locally-produced goods (as well as services and intellectual property rights such as patents or copyrights) over the ones imported from other Members. If the law (regulations) is the same for both the domestic and the imported product. affecting the sale of the imported product should not be discriminatory. the first being the MFN principle already discussed. an imported product should be charged the same taxes as domestic products. 2. the charges should not afford protection to domestic production. 4. Like MFN.III. The provisions of this paragraph shall not prevent the application of differential internal transportation charges which are based exclusively on the economic operation of the means of transport and not on the nationality of the product. trade in services.. the application of laws. regulation and requirements affecting the sale of the imported product "…should not be applied to imported or domestic products so as to afford protection to domestic production". internal charges. The products of the territory of any Member imported in to the territory of any other Member shall not be subject directly or indirectly to internal taxes or other internal charges of any kind in excess of those applied directly or indirectly to like domestic products.
Three key objectives underpin the national treatment principle. III:
1. In other words. To explicate. NATIONAL TREATMENT UNDER GATT
The national treatment principle constitutes the second component of the non-discrimination pillar. Members recognize that internal taxes and other internal charges
and laws regulations and requirements
affecting the internal sale offering for sale purchase transportation distribution or use of products and internal quantitative regulations requiring the mixture processing or use of products in specified amounts or proportions should not be applied to imported or domestic products so as to afford protection to domestic production. to like domestic products". laws. First. the national treatment principle applies to trade in goods.
. The products of the territory of any Member imported into the territory of any other Member shall be accorded treatment no less favourable than that accorded to like products of national origin in respect of all laws regulations transportation and requirements affecting their internal sale offering for sale purchase transportation distribution or use.B. it nevertheless offends this provision because it can be viewed as affording "protection to domestic production". directly or indirectly. Moreover no Member shall otherwise apply internal taxes or other internal charges to imported or domestic products in a manner contrary to the principles set forth in paragraph 1. and trade-related aspects of intellectual property rights. the charges and internal taxes that Member countries' products are subjected to should not be "in excess of those applied. but is discriminatory in its application. Second. etc. .
Third, the principle applies to "like products". What is understood by "like domestic products"? Traditionally, "likeness" is to be determined on a case-by-case analysis, involving but not limited to the following criteria: à à à the properties, nature and quality of the products; the end-uses of the products; consumer tastes and habits, and/or consumers' perception and behaviour in respect of the products; and à the tariff classification of the products.
EXERCISES: 8. 9. Country A prohibits advertisements of foreign watches. Is this compatible with the GATT? A new Country A regulation requires that watches sold in that country have a minimum of 10% "local content", i.e. at least 10% of the value of watches must be made of material originating in Country A. Is this compatible with the GATT?
RULES ON MARKET ACCESS
There are many possible impediments to market access for goods, services and intellectual property. The two main categories of barriers to market access for goods are (1) tariff and (2) non tariff barriers.
The reduction of tariff and non-tariff barriers to market access, is together with non-discrimination principle, a key instrument to achieve the objectives of the WTO. The various WTO agreements have rules on market access. Agriculture, a subset of goods, has specific rules on market access, which will be studied in Module 4.
Tariffs, also called "customs duties" are the most common and widely used barrier to market access for goods. A tariff is a financial charge in the form of a tax, imposed on merchandise imports. Tariffs can also be imposed on exports.
Tariffs give a price advantage to similar local goods and raise revenue for governments, as market access is conditional upon the payment of the custom duty. In addition, a tariff can be used to promote a rational allocation of scarce foreign exchange. Tariffs can be specific, ad valorem, or mixed. A specific tariff is an amount based on the weight, volume or quantity of product, for example, US$ 7 per kilo. Ad valorem tariffs refer to the tax levied as a percentage of value, for example, a 7% duty on cars. So the duty on a car worth US$ 7,000.00 would be US$ 490.00. A mixed or compound tariff is the combination of a specific and an ad valorem tariff.
IV.B.1. NEGOTIATIONS ON TARIFF REDUCTIONS
The WTO does not prohibit the use of tariffs, however, there is the recognition that they often constitute obstacle to trade, hence there is the obligation on Members to negotiate on tariff reductions. Article XXVIIIbis of the GATT 1947 contains the original mandate on tariff negotiations. Current negotiations under the Doha
Development Agenda focus on the reduction of tariffs in agriculture and non-agricultural market access (NAMA). One result of the Uruguay Round was countries' commitments to cut tariffs and to "bind" their customs duty rates. Module 3 will explain the special rules on agricultural tariffs.
A "bound" tariff is a tariff for which there is a legal commitment not to raise it above the bound level. The bound level of the tariff is maximum level of customs duty to be levied on products imported into a Member. Each Member is responsible for negotiating its "bound levels" (maximum levels of tariffs to be collected at the border). The "bound levels" are agreed upon during "market access negotiations", which are often bilateral but which sometimes are determined by "target levels" or reduction objectives that are to be met by "tariff cuts". The bound level for each item is registered in each Member's Schedule of Concessions. An example of such a schedule can be printed from the Online Library. A bound tariff can differ from an applied tariff as a Member can apply a different (lower) tariff than that which it committed to apply as a maximum. Members can apply lower customs duties ("applied tariff level") but they cannot apply customs duty at a level higher than that in their Schedule of Tariff Concession.
IV.B.2. NATIONAL TARIFFS
The word "tariff" also has a second meaning. It sometimes refers to a structured list of products description and their corresponding customs duties. Most "national tariffs" reflect the structure in the Harmonized Commodity Description and Coding System (HS) an international commodity classification system. This comes from the International Convention on the Harmonized Commodity Description and Coding System which entered into force on 1 January 1988 and to which most WTO Members are a party.
IV.B.3. SCHEDULE OF CONCESSIONS (ARTICLE II)
The tariff concessions or "bindings" of each WTO Member are set out in the pertinent Member's Schedule of Tariff Concessions. Each Member has a schedule, except for Members that are part of a customs union, who sometimes share a common schedule together with other Members of the Union. GATT Article II regulates the Schedule of Tariff Concessions for trade in goods.
GATT Article II.1(b) - first sentence: Schedule of Concessions.
"The products described in Part I of the Schedule relating to any Member which are the products of territories of other Members shall on their importation into the territory to which the Schedule relates and subject to the terms conditions or qualifications set forth in that Schedule be exempt from ordinary customs duties in excess of those set forth and provided therein. …"
The Schedules consist of a list of products for which a maximum applicable customs duty has been agreed by the Member concerned. The product is identified by a code and its description is usually based on the Harmonized Commodity Description and Coding System of Classification (HS). This maximum applicable customs duty represents the "bound" level of the tariff. Article II of GATT applies to imported products. Consequently, economic operators are guaranteed that the ordinary customs duty which will be levied on their imports will not be higher than the level indicated as the "bound level" in the Schedule of Tariff Concessions of the importing Member. Schedules of Tariff Concessions are legal instruments attached to the Marrakesh Agreement - through the "Marrakesh Protocol" - and form an integral part of the legally binding commitments made by Members. A thorough reading of the Schedule - including footnotes and head notes – is necessary for one to get a precise understanding of what was agreed by the WTO Member. Specific limitations or particular conditions may be agreed during the negotiations and inscribed as part of, or as limitation to, commitments in the Schedule.
Remember: A Member's Customs Tariffs or National Tariffs include applied duties for a specific year. A Member's List of Tariff Concessions or Schedule contains the bound duties and other market access commitments for this Member.
IV.B.4. RENEGOTIATION OF CONCESSIONS/MODIFICATION OF SCHEDULES
GATT Article XXVIII governs the rules on renegotiations of concessions. If a Member wishes to withdraw its previous commitment and impose a higher customs duty than the bound rate, two alternatives are available: à the obligation to respect the bound level can be TEMPORARILY "waived" - where the Member has, under exceptional circumstances, received specific authorization from all the other Members for a limited time;
the level of the tariff concession can be PERMANENTLY changed,(decreased or increased). This change will create an imbalance between rights and concessions of one Member vis-à-vis other Members. Additionally, - at least potentially - Members exporting the goods that were subject to higher customs duty than that which applied prior to the change of concession will experience losses.
For that reason, the renegotiation of any tariff concession necessitates compensating the exporting Members. One must renegotiate with: à the principal suppliers-Member with a principal supplying interest; and those Members with "initial negotiating rights. The Member must also consult with the: à Member that has a substantial interest in such concession.
Members with "initial negotiating rights are those Members with which the concessions was bilaterally negotiated initially. The Understanding on GATT Article XXVIII explains that any Member having a principal supplying interest in a concession which is to be modified or withdrawn shall be accorded an initial negotiating right. According to the Understanding, the Member which has the highest ratio of exports affected by the concession shall be deemed to have a principal supplying interest if it does not already have an initial negotiating right or a principal supplying interest as provided for in paragraph 1 of Article XXVIII. This renegotiation is governed by the rules and provisions in GATT Article XXVIII and XXVIIIbis and GATT 1994 Understanding on the interpretation of Article XXVIII as well as the Note AD Article XXVIII.
IV.B.5. OTHER DUTIES AND CHARGES
As you studied earlier, the "protection" that may be granted to domestically produced goods vis à vis imported products should consist of "ordinary customs duties", often referred to as "tariffs". This is the main objective of Article II of GATT. Hence it also provides that "The products … shall on their importation … be exempt from ordinary customs duties in excess of those set forth and provided therein". In practice, this principle is quite simple: the "bound rate" of customs duty indicated in the Schedule of Tariff Concessions represents the maximum customs duty that WTO Members have committed to levy on products originating in other Members. "Other duties and charges" (ODCs) may be imposed in addition to the "ordinary customs duty". In such circumstances, charges can exceed the "bound level" inscribed in the Schedule of Tariff Concessions. However, for ODCs to be applicable, they MUST be registered in the Schedule and they must not exceed the level recorded in the schedules. Other duties and charges are governed by GATT Article II:1(b) - second sentence. The Understanding on the Interpretation of GATT Article II:1(b) which is attached to the WTO Agreement, aims to clarify the types of duties and charges that can be collected in addition to the "ordinary customs duties". Examples of these ODCs are: à Import surcharges, i.e. a duty imposed on an imported product in addition to the ordinary custom's duties; à security deposits to be made on the importation of goods;
a statistical tax imposed to finance the collection of statistical information; and a customs fees charged for processing the goods.
They are exceptions to the rule that one might not impose other duties and charges in excess of the recorded level. Despite their obligations under Article II:1(b) of the GATT 1994, Members may impose on imported products: à à à Any financial charge not in excess of the internal tax imposed on the like domestic product; WTO consistent anti-dumping duties; safeguards duties; countervailing duties; and fees or other charges commensurate with services rendered (see also Article VIII:1(a) of the GATT 1994). Examples of the above are: consular transactions (such as invoices and certificates), quantitative restrictions, licensing, exchange control, statistical services, documents, documentation, and certification, analysis and inspection, quarantine, sanitation and fumigation. Internal taxes, anti-dumping and countervailing duties, and customs fees imposed in addition to the bound rate must also respect specific rules in GATT Article III (internal taxes); GATT Article VI (and the subsequent agreements) (anti dumping, subsidies and countervailing measures); and GATT Article VIII (customs fees).
EXERCISES: 10. 11. List three purposes of customs duties? In Tristat's Schedule of Tariff Concessions, the bound duty for television set is 10%. Can Tristat apply a tariff different from the 10% listed in its Schedule? 12. Read Article XXVIIIbis of the GATT 1947. What are the basic principles and rules governing tariff negotiations? 13. Is the "bound tariff" the only charge Tristat may levy on imported television set?
bilateral quota (i. mixing regulation. This list includes: prohibition. QUANTITATIVE RESTRICTIONS
What is a quantitative restriction (QR)? Can Members apply QRs? There is no explicit definition of the term quantitative restriction in the WTO Agreements.IV. The prohibition means that only import duties can be used to regulate goods trade at customs. quantitative restriction made effective through state-trading operations. non-automatic licensing. technical barriers to trade and government procurement practices). An implicit definition is provided by GATT Article XI:1. taxes or other charges.C.C.3.2. minimum price triggering a quantitative restriction. NON‐TARIFF BARRIERS
IV. GENERAL ELIMINATION OF QUANTITATIVE RESTRICTIONS (ARTICLE XI)
Quantitative restrictions on imports are a ban on imports (or exports) after a determined quantity (the quota) has entered the territory. and "voluntary" export restraint. automatic licensing. import or export licences or other measures.
Non-tariff barriers may also restrict market access of goods.e. they should not be maintained by WTO Members. They include quantitative restrictions (such as quotas) and other non-tariff barriers (for example.
The Council for Trade in Goods.
IV.C. in a 1996 Decision (G/L/59. customs formalities. whether made effective through quotas. unfair and arbitrary application of trade regulation.C. prohibition except under defined conditions. lack of transparency of trade regulation. According to Article XI of GATT. global quota allocated by country. The "General Elimination of Quantitative Restrictions (QRs) is regulated by GATT Article XI (for trade in goods) and GATS Article XVI (for trade in services). which proscribes any prohibition or restriction other than duties. Annex) provides a list of quantitative restrictions.1. anything less than a global quota).
IV. global quota.
"quantitative restrictions". The only protective barriers that WTO Members can institute or maintain are "duties. the Member imposing the quantitative restrictions is not allowed to favour any country over another. In applying import restrictions to any product Members shall aim at a distribution of trade in such product approaching as closely as possible the shares which the various Members might be expected to obtain in the absence of such restrictions…
This provision focuses on the allocation of quotas between exporting Members and aims to ensure that when imposed.
Where authorized by the GATT quantitative restrictions must be imposed on a non-discriminatory basis. SPECIFIC EXCEPTIONS The specific exceptions to the general prohibition against the use of QRs are to: (i) (ii) Prevent critical shortage of foodstuffs or other essential products (GATT Article XI:2(a)) Remove temporary surpluses of a like domestic product for which the imported product is a direct substitute (GATT Article XI:2(b))
. taxes or other charges" compatible with the GATT rules already discussed.IN DETAIL
A WTO Member cannot. we must also note GATT Article XIII: Non-discriminatory Administration of Quantitative Restrictions
1. as a general rule. import or export charges or other measures". such measure might be prohibited under Article IX and cannot be applied. State trading enterprises (Article XVII) are also prohibited from imposing quantitative restrictions. In other words. No prohibitions or restrictions shall be applied by any Member on the importation of any product of the territory of any other Member or on the exportation of any product destined for the territory of any other Member unless the importation of the like product of all third countries or the exportation of the like product to all third countries is similarly prohibited or restricted. impose import or export prohibitions or restrictions in quantities or value on the goods of another Member. The general prohibition on quantitative restrictions applies equally to import and export measures. Thus. agreements between the importing Member and its principal suppliers are possible. Consequently.
2. quantitative restrictions do not distort ordinary trade flows. quotas should be applied equally to goods from all origins and their allocations should correspond as closely as possible to the expected market shares that would have existed in the absence of quotas. In other words. The Member is expected to impose them across the board. are a violation of the rule in Article XI. The list of measures in the provision above is an indication and is not exhaustive. if a measure would have an effect similar to those noted in the provision. Nevertheless. whether "quotas. Finally.
Consequently. Imports entering outside the tariff-quota are charged 80%.000 tons) are generally charged 10%. that quotas must be transformed into tariffs ( in a process called "tariffication"). specific quantities of goods may be imported at different tariff levels. This is what a tariff-quota might look like:
Imports entering under the tariff-quota (up to 1. Tariff quotas are also called "tariff-rate quotas". but at a higher tariff rate ("out-of-quota Tariff Rate"). The "agricultural exception" ended when the WTO Agreement on Agriculture entered into force in 1995. The exception contained in GATT Article XI:2(c) and which creates a quasi-general derogation for agricultural policies and measures relating to fishery products constituted the essential provision which led to "special treatment" for agriculture. one can continue to import the product without limitation . The allocation of the TRQ should obey disciplines in GATT Article XIII (Non-discriminatory Administration of Quantitative Restrictions) which provides that TRQs should be applied similarly to products from all origins.so it is not a quantitative restriction in the sense of GATT Article XI.
.The drafters of the GATT realized that in specific circumstances (shortages or surplus of goods domestically produced) one could derogate from the "no QRs" principles to prevent or deal with critical situations. Agreements with principal suppliers are also possible. One must distinguish between quotas – which are generally prohibited – and tariff-rate quotas (TRQs). Under the Uruguay Round agreement. TRQs are predetermined quantities of goods which can be imported at a "preferential" rate of customs duty ("in quota Tariff Rate"). the 1. Once the TRQ has been filled. In a TRQ.000 tons would be based on actual imports in the base period or an agreed "minimum access" formula. quantitative restrictions remain possible only on fishery products. Article 4 of the Agreement on Agriculture provides. under the WTO. among other things. but allocations should also respond as closely as possible to the expected markets share that would have existed in the absence of TRQs. The WTO Agreement on Agriculture superseded GATT Article XI:2(c). The "out-of-quota Tariff Rate" is generally the MFN rate.
GATT Article XI:1 requires Members to eliminate quantitative restrictions in the form of quotas. or other measures. the government of Alba could introduce a quota of 10MT of salmons. For example. quantitative restrictions can be applied to fisheries products. A typical violation occurs where an importing Member seeks to limit the amount of a good imported into the country.000 watches).e. Therefore. Tristat applies a tariff rate quota of 1MT on paper. The government of Alba is simply providing better market access through a preferential duty for imported watches up to a certain quantity (from 1 to 400. In such circumstances. there are no numerical limitation on the amount of watches that can be imported. This policy would be permitted under Article XI. usually to protect a competing domestic industry. this would be a violation of Article XI:1. Mediatia wants to impose import quotas on fresh tuna and frozen lamb meat? Are these measures in line with its rights and obligations under the WTO? 15. if Alba determined that the potential market for watches in Alba was 1 million per year and decided that in order to ensure dominance of the domestic industry it will limit the number of Vanin watches imported to 400.000. Nevertheless. importers cannot import more than 10MT of salmons per year into the country. They applied the regular duty after the quota is filled i. import or export licenses. Alba could instead allow 400. a violation of the GATT can take several forms.ILLUSTRATION Prohibition of Quantitative Restrictions (for Goods)
Let us assume that Alba and Vanin are WTO Members. a distinction can be made between prohibited quotas and Tariff-Rate Quotas (TRQs). in the example.000 Vanin watches to be imported at a preferential tariff rate and collect a higher rate of duties on watches exceeding the 400.
EXERCISES: 14. For example. because. Alba could impose a quota on how many salmons Alba import.001st watch imported in the country. Therefore. What does this mean?
. There was therefore no trade restriction. However. starting on the 400.000 limit (though not higher than Alba's bound rate).
TECHNICAL REGULATIONS AND STANDARDS
Technical regulations and industrial standards are important. They apply to domestically produced food or local animal and plant diseases. The SPS Agreement entered into force in 1995 and supplements Article XX(b) of the GATT 1994 and goes beyond the general principle of non-discrimination. requiring products to come from a disease-free area. The SPS Agreement recognises that governments have the right to take SPS measures. the environment or to meet other consumer interests. animal or plant life or health. and quantitative restrictions. SPS measures should not arbitrarily or unjustifiably discriminate between countries where identical or similar conditions prevail.D. It also says regulations must be based on science and that they should be applied only to the extent necessary to protect human.
IV. SANITARY AND PHYTOSANITARY MEASURES
Sanitary (human and animal health) and phytosanitary (plant health) measures can take many forms.2. customs formalities and procedures.1. which can be divided in to (a) sanitary and phytosanitary measures covered by the Agreement on the Application of Sanitary and Phytosanitary Measures (the "SPS Agreement") and (b) the general category of technical barriers to trade set out in the Technical Barrier ("TBT") Agreement. such as: (1) technical barriers to trade. standards. it tries to ensure that sovereign rights are not misused for protectionist purposes and do not result in unnecessary barriers to international trade. (3) and government procurement practices. and other measures or actions such as pre-shipment inspection. The TBT Agreement tries to ensure that regulations.D. animal or plant life or health.D. testing and certification procedures do not create unnecessary obstacles to trade. regulations. marks of origin. they could be used as an excuse for protectionism and can become obstacles to trade. procedures and practises. OTHER NON‐TARIFF BARRIERS
In addition to customs duties and other charges (tariff barriers). as well as to products coming from other countries.
IV. trade in goods may also be impeded by other non-tariff barriers. unfair and arbitrary application of trade measures.IV. However. setting of allowable maximum levels of pesticide residues or permitted use of only certain additives in food. Lack of transparency. (2) customs formalities and procedures. as well as other forms of inaction (failure to inform about applicable trade laws. It does not prevent Members from taking measures necessary to ensure their standards are met. It still allows countries to use different standards and different methods of inspecting products. The TBT Agreement recognizes WTO Members' rights to adopt the standards they consider appropriate — for example to protect human.
. Furthermore. but they may vary from country to country. such as. and measures relating to transit shipments. If the standards are set arbitrarily. inspection of products. timely and accurately) may constitute a barrier to trade. The SPS Agreement builds on previous GATT rules to restrict the use of unjustified sanitary and phytosanitary measures for the purpose of trade protection and sets out the basic rules for food safety and animal and plant health standards.
including industrial and agricultural products.. In contrast.. but not measures subject to the SPS Agreement.Figure 3:
TBT and SPS measures relating to the international trade of oranges
IF YOU WANT TO KNOW MORE. paragraph 2)
. The TBT Agreement covers all products. based on scientific principles and not maintained without sufficient scientific evidence" (Article 2 and 3. animal or plant life or health. Article 2. whilst TBT measures may be applied and maintained for other reasons. SPS measures may only be applied to "the extent necessary to protect human. including technological difficulties or geographical issues.
SPS AGREEMENT VS THE TBT AGREEMENT The SPS Agreement and the TBT Agreement exclude each other from their scope. Furthermore.4 of the SPS Agreement). Both agreements direct WTO Members to use international standards. but under the SPS Agreement. as well as the TBT Agreement. Article 2. paragraph 2. including national security or to prevent deceptive practices. (See the SPS Agreement. WTO Members are compelled to use these standards unless they can show a specific scientific justification based on an assessment of the possible risk. WTO Members may set TBT measures that deviate from international standards for other reasons.
IV. The obligations placed on PSI-user governments include non discrimination. for instance) and to compensate for inadequacies in administrative infrastructures. quantity.D. and à Article VIII:3 which provides that: "No Member shall impose substantial penalties for minor breaches of customs regulations or procedural requirements. In particular. MARKS OF ORIGIN. avoidance of unreasonable delay.
IV. protection of confidential business information. The obligations of exporting contracting parties towards PSI users include non-discrimination in the application of domestic laws and regulations.4. the fees and formalities connected with importation and exportation. PRE‐SHIPMENT INSPECTION. quality — of goods ordered overseas. The purpose is to safeguard national financial interests (prevention of customs duty evasion. the use of specific guidelines for conducting price verification and the avoidance of conflicts of interest by the PSI agencies.5."
IV. CUSTOMS FORMALITIES AND PROCEDURES
To regulate administrative barriers to trade in the form of customs formalities and procedures such as. Article VIII has two relevant provisions: à Article VIII:1(c) in which WTO Members recognize the need for minimizing the incidence and complexity of import and export formalities and for decreasing and simplifying import and export documentation requirements.
. The Agreement on PSI recognizes that GATT principles and obligations apply to the activities of pre-shipment inspection agencies mandated by governments."
Hence the administration of laws regulations decisions and rulings must be uniform impartial and reasonable.D. LACK OF TRANSPARENCY. AND MEASURES RELATING TO TRANSIT SHIPMENTS
Pre-shipment inspection (PSI) is the practice of employing specialized private companies to check shipment details — essentially price.D. transparency. and to facilitate customs formalities and procedures. It provides:
"Each contracting party shall administer in a uniform impartial and reasonable manner all its laws regulations decisions and rulings of the kind described in paragraph 1 of this Article. no penalty in respect of any omission or mistake in customs documentation which is easily rectifiable and obviously made without fraudulent intent or gross negligence shall be greater than necessary to serve merely as a warning. prompt publication of such laws and regulations and the provision of technical assistance where requested.3. unfair and arbitrary application of trade measures. UNFAIR AND ARBITRARY APPLICATION OF TRADE MEASURES
GATT Article X:3(a) contains rules to eliminate the barriers to market access associated with the lack of transparency.
WTO Members are required to notify the WTO of whether and how the tariff quotas listed in their tariff schedules are administered.
. For example.D. For more information. Until the completion of the harmonization programme. AGREEMENT ON IMPORT LICENSING PROCEDURES
The Agreement on Import Licensing Procedures says import licensing should be simple. There are two basic licensing procedures: automatic and non automatic.5.7. The negotiating texts are contained in documents G/RO/45 series and the consolidated text is contained in document G/RO/W/111/Rev. G/AG/NG/S/8. The harmonization programme was to be initiated as soon as possible after the completion of the Uruguay Round and to be completed within three years of initiation.D. are still going on. the Agreement identifies seven principal methods of TRQ administration.
IV. see the WTO background paper "Tariff quota administration methods and tariff quota fill". they should state what does confer origin rather than what does not).The Agreement also establishes an independent review procedure — administered jointly by an organization representing PSI agencies and an organization representing exporters — to resolve disputes between an exporter and a PSI agency. the agreement requires Members to publish sufficient information for traders to know how and why the licences are granted. distorting or disruptive effects on international trade. and that they are based on a positive standard (in other words.6. transparent and predictable. contracting parties are expected to ensure that their rules of origin are transparent. that they are administered in a consistent. uniform. that they do not have restricting. Negotiations however. impartial and reasonable manner. AGREEMENT ON RULES OF ORIGIN
The Agreement on Rules of Origin aims at long-term harmonization of non-preferential rules of origin and to ensure that such rules do not themselves create unnecessary obstacles to trade.
IV. With respect to TRQ administration.
The objective of the WTO.
V. goods and service.
You also saw that the WTO has many functions. employment. à à à à Serve as a forum for trade negotiations. There are various organs and bodies that make up the structure of the WTO: Ministerial Conference | General Council (also DSB and TPRB) | Councils for Goods. and Cooperate inter alia with the IMF and the IBRD (World Bank) to achieve coherence in global economic policy making. 3 and 4. and trade in. Administer the Dispute Settlement Understanding (DSU).) by expanding the production of. and furthering of the objectives of the WTO Agreements (including the Plurilateral Agreements).the WTO Agreement contains 4 Annexes .
. some of them are to: à Facilitate the implementation. Intellectual Property | Committees | Sub-Committees
The are also many agreements in the WTO framework.V.A. 2. administration and operation. The umbrella agreement. etc. Services.Annexes 1. income. Administer the Trade Policy Review Mechanism (TPRM). as encapsulated in the Preamble to the WTO Agreement is to improve the welfare of the peoples of its Member countries (standard of living.
accord immediately and unconditionally to services and service providers of any other Party.the "Multilateral Trade Agreements". treatment no less favourable than that it accords to like services and service providers of any other country". the national treatment principle prohibits a Member from favouring its domestic products over the imported products of other Members. and Annex 1C (Agreement on Trade-related Aspects of Intellectual Property Rights). the principle for goods is GATT Article I. Annex 1 is divided into three sections: à à à Annex 1A (The Multilateral Agreements on Trade in Goods). The MFN Principle for services obliges WTO Members to ". These agreements in it are ONLY binding on Members that accept them. the MFN and the national treatment principles. In Part 2 we will look at two principles of the WTO system: the most-favoured-nation (MFN) principle.
. For MFN. the subject of MFN treatment is "nationals".. for intellectual property -Article 4 of the TRIPS Agreement and for services . Annex 3 covers the Trade Policy Review Mechanism Annex 4 is termed "Plurilateral Trade Agreements". and the national treatment principle.B. 2.GATS Article II:1. Whilst the MFN principle seeks to ensure that a WTO Member does not discriminate between like products originating in or destined for WTO Members. Annex 1B (Agreement on Trade in services). the subject of MFN treatment is goods and under GATS the subjects of is services or service providers. in the context of the TRIPS Agreement. The national treatment principle (as well as the provisions on market access) commit Members to giving no less favourable treatment to foreign services and service suppliers than provided for in the relevant columns of their Schedule. which prohibits discrimination between imports irrespective of their origin or destination. and 3 .
V. Under GATT. which prohibits discrimination between imported and locally produced products.. The MFN principle prohibits discrimination between imports irrespective of their origin or destination while the national treatment principle prohibits discrimination between imported and locally produced products.
Annex 2 covers the Dispute Settlement Understanding.
As you have seen there are two main principles of non-discrimination.Annexes 1.
services and intellectual property rights.C. For trade in services. each WTO Member is required to have a Schedule of Specific Commitments that identifies the services for which the Member guarantees market access. Obligation on the bound tariff level can be found in GATT Article II. which also constitute a derogation to other rules. For services GATS Article XVII and for TRIPS Article 3. These horizontal exceptions and protective measures includes fro examples the general and security exceptions). taxes or other charges.For TRIPS. there are other exceptions of a horizontal nature. For goods. and safeguards or emergency actions in limited circumstances.
RULES ON MARKET ACCESS
WTO Members are obliged to adhere to the bound rates in their Schedules of Tariff Concessions. The rules on quantitative restrictions are governed by Articles XI and XIII. The only restrictions on free trade that the WTO permits are duties. the national treatment principle prohibits treatment of foreign nationals on less favourable terms than that accorded to nationals in the context of the implementation of national or international intellectual property laws or regulations.
V. GATS Article XVI (Market Access) and XVII (national treatment) commit Members to giving no less favourable treatment to foreign services and service suppliers than provided for in the relevant columns of their Schedule. XXVIIIbis and the Understanding on Article XXVIII. WTO rules prohibit the introduction or maintenance of quantitative restrictions. will be examined in Module 2. XXVIII. Members may also modify pursuant to the provision in Article XXI of the GATS Agreement. but do not prevent Members from being more open (or less discriminatory) in practice. national treatment. Commitments thus guarantee minimum levels of treatment. and any limitations that may be attached. However. WTO Members can modify the concessions in the Schedules of Tariff Concessions can be modified by using the procedures outlined in GATT Article XXVIII for trade in goods. GATT Article III governs national treatment. It is important to note that in addition to the specific exceptions that you have seen for the principles for goods.
The Ministerial Conference is the highest authority of the WTO. usually at the Geneva Headquarters. The Final Act (Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations) is like a cover note. and it reports to the General Council. Below the Ministerial Conference in rank is the General Council. (b) General Council. All Members participate in the work of all WTO Bodies. It takes all decisions on behalf of the Ministerial Conference when the Ministerial Conference is not in session. The General Council reports to the Ministerial Conference. It is responsible for the implementation of specific provisions and agreements. (c) Council for Trade in Goods. It can take decisions on all matters under all multilateral trade agreements. The attainment of full employment. The expansion of production of. Some of the achievements of the Uruguay Round are: (i) creation of the WTO. (ii) transformation of the plurilateral codes (agreements) from the Tokyo Round into multilateral agreements. (d) Committee on Technical Barriers to Trade. The growth of real income and effective demand. The increase of standards of living. The Final Act includes the "Marrakesh Agreement Establishing the World Trade Organization" ("the WTO Agreement") and its Annexes. It meets at least once every two years. The General Council meets regularly (in principle. The Committee on Agriculture is one of several subsidiary bodies of the CTG. 2. (a) Ministerial Conference.
. It was signed in 1994.PROPOSED ANSWERS: 1. monthly). and trade in goods and services. Below the General Council is the Council for Trade in Goods ("CTG"). 5. It oversees the implementation of the multilateral agreements on trade in goods (Annex 1A of the Marrakesh Agreement). and (iv) incorporation of the new agreements on trade in services and trade-related aspects of intellectual property rights. 4. it is the Agreement which the participants in the Uruguay Round of Multilateral Trade Negotiations adopted to conclude the Round. (iii) strengthened dispute settlement system. such as the Agreement on Agriculture. 3.
9. 8. Discriminatory treatment would be contrary to Article III.5. Since this new Country A regulation would favour the domestic production of material for watches (it forces foreign watches to include a minimum quantity of domestic content) it is contrary to GATT Article III. because the prohibition on the advertising of foreign watches amounts to treating imported goods less favourable than "like" domestic goods. This measure would be a violation of Article III. Annex 1B (Agreement on Trade in Services). WTO Members get the best treatment except for derogations permitted by the WTO agreements.4 if foreign and domestic watches are "like products" under Article III. Note that generally.
Annex 2 contains the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).4. It has four Annexes. The advantages given to products from non-WTO Members must also be extended to products from all WTO Members. (1) To give a price advantage to similarly produce local goods (2) To raise revenue for governments (3) To promote a rational allocation of scarce foreign resource. and unless the Member benefits from a transitional period under the Trade Related Investment Measures (TRIMs) Agreement. I. this would mean that Members need only ensure that the best treatment. Annex 3 is dedicated to rules governing the Trade Policy Review Mechanism (TPRM) in the WTO.1. given to products originating in one of the Members. This could therefore mean that a Member (A) could grant an advantage to products originating in a country which is not a WTO Member (Country M) without having to extend this "Most-Favoured" treatment to the other WTO Members. If the text referred to any other MEMBER. To the extent that imported and domestic watches are "like products".
The WTO Agreement is the 1994 Marrakesh Agreement Establishing the WTO.
. imported watches cannot be treated less favourably than domestic watches.4. It is dedicated to rules governing the dispute settlement system in the WTO. Consequently. 7. and Annex 1C (Agreement on Trade-related Aspects of Intellectual Property Rights). Annex 1 includes the Multilateral Agreements on Trade. which prohibits domestic regulations that favour domestic production.4. nor conversely can domestic watches be treated more favourably than imported watches.6. any form of local-content requirement is contrary to GATT Article III. be extended to the other Members. 10. Alba would need to apply "Most Favoured Member" treatment but not as it is stipulated in GATT Art.4. The ban on advertising constitutes a measure "affecting the internal sale" of imported "like products" under GATT Article III. In other words. It is divided into three sections: à à à Annex 1A (The Multilateral Agreements on Trade in Goods). Annex 4 governs the Plurilateral Trade Agreements.
since WTO obligations do not extend to non-Members. paper can be imported at the MFN rate of 10% (out of quota bound duty). Value Added Tax).
Medatia can impose an import quota on fresh tuna. there is not restriction on the quantity of paper than can be imported. Once that amount has been exceeded. However.
. In our example. Medatia cannot impose a quantitative import restriction on agricultural products such as frozen lamb meat. However.
(1) The principle of reciprocity and mutual advantage. if they are listed in its Schedule. In reality there is no maximum limit on imports.
Yes. if Tristat offers a lower rate to Vanin for example. Tristat has a tariff rate quota of 1 MT on paper. Tristat may. Trade remedy measures (i.e.
No. agricultural products were not subject to the prohibition on quantitative restrictions. However.11.
12.e. all additional imports are subject to a higher rate (usually the MFN or "bound" rate). (1) Tristat may have an applied tariff lower than the bound tariff in its Schedule. 2% (in quota bound duty). in addition to tariffs. countervailing or anti-dumping duties). Internal taxes (i. and (2) The Most Favoured Nation Treatment obligation. Fisheries product is an exception to the prohibition in Article XI on quantitative restrictions for imports. but this provision has been superseded by Article 4 of the Agreement on Agriculture. When the 1MT quota is filled. such as Ruritania. which now forbids quantitative restrictions on agricultural products. According to GATT 1947 Article XI:2(c).
Tariff-Rate Quotas (TRQs) allow for a two-tiered administration of customs duties. Tristat can apply a tariff different than the one listed in its Schedule of Tariff Concessions in two circumstances. Paper from 0 to 1MT can be imported at a preferential rate of. for example.
13. also charge: à à à à "Other duties and charges". A predetermined amount of a given product can be imported at a "preferential" rate. it must apply this rate to all Members.
15. since the Uruguay Round. (2) Tristat may charge a higher tariff that the bound rate in its Schedule to any non-Member. and Customs fees for services rendered.
Exceptions to the Basic Principles. Trade Remedies and Dispute Settlement in the WTO
ESTIMATED TIME: 4 hours
OBJECTIVES OF MODULE 2
Present WTO rules on trade remedies and unfair trade: Anti-dumping measures and subsidies and countervailing measures.
Explain the exceptions to the basic principles. Give an overview of the Dispute Settlement System in the WTO.
where the price of a product when sold in the importing country is less than the price of that product in the market of the country exporting the product.
RULES ON UNFAIR TRADE
Increased imports from one country can be caused by changes in consumer preferences or by improvements in the competitiveness of the companies producing the imports vis-à-vis national companies producing like products. GATT Article VI governs the use of anti-dumping measures and also constitutes the basis for the use of countervailing measures. In addition to rules governing the determination of dumping. and application.
Dumping is. to restore. duration and review of measures. and the imposition. However.A. in a targeted manner. a situation of international price discrimination. injury. determination.
The Agreement on Implementation of Article VI of the GATT 1994 (The Anti-dumping Agreement) defines dumping as the introduction of a product into the commerce of another country at less than its normal value. and the multilateral agreement on the Implementation of Article VI of GATT 1994 (the Anti-dumping Agreement) further elaborated the principles in Article VI on the investigation. and the Agreement on Subsidies and Countervailing Measures ("SCM Agreement") adopted in the Uruguay Round. and causal link. the Agreement sets forth detailed procedural rules for the initiation and conduct of investigations. This section looks at the WTO rules with respect to dumping and subsidization as elaborated by the Anti dumping and SCM Agreements. WTO Members have retained their right to take protective measures to correct the competitive imbalances created by unfair practices. GATT Article VI governs the use of anti-dumping measures.I. The rationale behind the idea is not to create additional barriers to trade but rather. "fair" competitive conditions as if the cause of the unfair competition were eliminated.
. increasing imports can be cause by "unfair" practices or "unfair" competition. of anti-dumping duties (after the Uruguay Round). It is complemented by the Agreement on the Implementation of Article VI of GATT 1994 (the Anti-dumping Agreement) for anti-dumping measures. in general.
which confers a benefit. The SCM Agreement applies to agricultural and industrial products. Article VI of GATT and the Anti-dumping Agreement explicitly authorize a Member to impose specific anti dumping duties on imports (in addition to import tariffs)."
The definition of subsidies under the SCM Agreement contains three elements which must be satisfied in order for a subsidy to exist: à à à a financial contribution. It is complemented by the Agreement on Subsidies and Countervailing Measures (SCM Agreement). However. directly or indirectly. which expired at the end of 2003.
Article VI:3 of the GATT 1994 defines "countervailing duties": "The term countervailing duty shall be understood to mean a special duty levied for the purpose of offsetting any bounty or subsidy bestowed.
The SCM Agreement is intended to complement the Agreement on Interpretation and Application of Articles VI.In the simplest scenario. by a government or any public body within the territory of a Member. production or exports of any merchandise. while the Agreement on Agriculture contains specific rules governing the use of agricultural subsidies (to be studied from Module 3 onwards).
. XVI and XXIII which was negotiated in the Tokyo Round (the Subsidies Code) and GATT Article XVI.
SUBSIDIES & COUNTERVAILING DUTIES
GATT Article VI also constitutes the basis for the use of countervailing measures. upon the manufacture. except for the subsidies exempt under the Agriculture Agreement's "Peace Clause". and in most cases it is necessary to undertake complex analytical steps to determine the appropriate price in the market of the exporting country (the "normal value") and the appropriate price in the market of the importing country (the "export price") to be able to make a comparison. the situation is rarely that simple. They can be production or export subsidies. when the importing Member demonstrates that dumping is causing or is threatening to cause material injury to a domestic industry. one can identify dumping by comparing the price of a product in two markets to determine whether there is a difference in prices in those markets. The SCM Agreement contains the rules on subsidies.
The disciplines in the agreement only apply to specific subsidies. or would materially retard the establishment of a domestic industry.B.
upon export performance. it must be immediately withdrawn. i. or to use domestic goods instead of imported goods.The SCM Agreement initially established three categories of subsidies. The SCM Agreement stipulated that no Member should use subsidies to cause "adverse effects" to the interests of other signatories. it deemed the green subsidies to be "non-actionable". or specific subsidies for research and pre-competitive development activity. Firstly. all subsidies are either prohibited (red) or actionable (yellow) The SCM Agreement states that a country can: à use the WTO dispute settlement procedure to seek the withdrawal of the subsidy or the removal of its adverse effects.
Prohibited subsidies are subsidies that require recipients to meet certain export targets.) They are subject to dispute settlement procedures and if it is found that the subsidy is indeed prohibited. so the provisions lapsed. nullification or impairment to benefits accruing directly or indirectly to other signatories under the General Agreement (in particular the benefits of bound tariff concessions). A detailed list of export subsidies is annexed to the SCM Agreement (Annex I). upon the use of domestic over imported goods ("local content subsidies"). it deemed the "yellow" subsidies to be "actionable". or specific subsidies involving assistance to industrial research and pre-competitive development activity. In the event that it is determined that such adverse effects exist. the category of non-actionable subsidies ended as of the year 2000.e. the subsidizing Member must withdraw the subsidy or remove the adverse effects. These are subsidies which are either nonspecific. it deemed the "red" subsidies or "prohibited". the Member imposing them must first conduct an investigation and must find from the investigation that the conditions for the application of the measure meet the criteria in the SCM Agreement. which are: à à contingent. it should not cause: à à injury to the domestic industry of another Member. (Non-actionable subsidies are non-specific subsidies. assistance to disadvantaged regions. or certain types of assistance for adapting existing facilities to new environmental requirements imposed by law and/or regulations. Under the provision of Article 31 of the SCM Agreement. whether solely or as one of several other conditions. in law or in fact. contingent upon the use of domestic over imported goods.
. Second. Countervailing measures do not need to be pre-authorized by the WTO membership before a Member can impose them. The SCM Committee was to review the operation of these categories of subsidies before the end of 1999. assistance to disadvantaged regions. à serious prejudice to the interests of another Member. Members were not able to reach consensus on this matter.
Actionable subsidies are subsidies contingent. Therefore presently. Members affected by actionable subsidies may refer the matter to the Dispute Settlement Body. or certain types of assistance for adapting existing facilities to new environmental laws or regulations. And third. However. or à launch its own investigation and ultimately charge extra duties ("countervailing duty") on subsidized imports that are found to be hurting domestic producers.
although they remain countervailable. special rules regarding subsidies for agricultural products are to be applied.e. A Member may also want to complain about the subsidized product in an export market or in a third-market where two or more Members' exports compete. There are detailed procedural rules governing the conduct of countervailing investigations. i. countervailing duties may not be the appropriate way to correct imbalances created by subsidies granted by a government to products. Thus: à Export subsidies which are in full conformity with the Agreement on Agriculture are not prohibited by the SCM Agreement. and should not last more than 18 months. Article 13 of the Agreement on Agriculture establishes that. the only way to redress and recreate a "fair" competitive environment is for the country granting the subsidies to suspend or modify its subsidization program. during the implementation period specified in that Agreement (until 1 January 2004). is occurring. Generally.
. although they also may be subject to unilateral countervailing duties on proof of injury and causation. except in exceptional circumstances. that the removal of the duty would be likely to lead to a continuation or recurrence of subsidization and injury. For instance: à Countervailing duties are to be terminated immediately where the amount of a subsidy is de minimis (less than 1% ad valorem) or where the volume of (actual or potential) subsidized imports or the injury is negligible. à Countervailing duties have to be terminated within five years of their imposition (sunset clause) unless the authorities determine. Part V of the SCM Agreement provides that WTO Members may resort to countervailing duties to counteract the effects of two categories of subsidies: prohibited and actionable. except when the subsidies conform to the Agreement on Agriculture. However. injury to a like domestic industry. that is. It applies to agricultural goods as well as industrial products. in some cases. and
(iii) a causal link between the subsidized imports and the injury. a countervailing duty can be charged by the importing country if damage is proved. through the WTO dispute settlement procedures. The provisions of the Agreement on Subsidies and Countervailing Measures firmly state that issues of agricultural subsidies are subject primary to the Agreement on Agriculture and only secondary to the SCM Agreement. on review. countervailing duties are used when a Member wants to protect its domestic market against subsidized imports.
The level of the countervailing duty should be only what is necessary to offset the subsidization. or threat thereof. à Investigations are to be concluded within one year after they are imposed. In these cases. as well as the imposition and continuation of countervailing measures.The substantive criteria requires a Member not to impose a countervailing measure unless it determines that there exists: (i) (ii) subsidized imports. à Domestic support measures which are in full conformity with the Agreement on Agriculture are not actionable multilaterally.
the SCM Agreement will apply to subsidies for agricultural products subject to the provisions of the Agreement on Agriculture. After the implementation period. What are the three things that Tristat must find in its investigation before it can impose the countervailing measure? 2.
Finally. as set forth in its Article 21. Tristat would like to impose a countervailing measure on wood paste under the SCM Agreement. What methods can Tristat use to correct imbalances created by subsidies?
. domestic support measures which fall under the "Green box" of the Agreement on Agriculture are not actionable multilaterally nor can they be subject to unilateral countervailing measures.
economic emergency exceptions – safeguards & balance of payment exceptions. they cannot withdraw "liberalization commitments/concessions" without following pre-determined rules. explain how a Member's obligations can be "waived" in exceptional circumstances. security exceptions. such as those which were mentioned in relation to MFN and National Treatment).A.II.
. Nevertheless. waivers. HORIZONTAL EXCEPTIONS
This section illustrates the circumstances under which a WTO Member can invoke the general exception and security exceptions. GATS and TRIPS obligations (as opposed to the specific exceptions. explain how the WTO Agreements regulate Regional Trade Agreements (RTAs) and how RTAs and the multilateral trade rules are linked. In the category of horizontal exceptions. in certain circumstances. Members have the right to derogate from these obligations.
WTO Members shall not discriminate (MFN and national treatment) and follow certain rules. GENERAL EXCEPTIONS IN THE GATT
GATT Article XX governs the use of the General Exception for trade in goods. for example.A. The category of exceptions discussed in this module is horizontal in nature . Article XX recognizes that governments may need to apply and enforce measures for purposes such as the protection of public morals. we will examine: a) b) c) d) e) general exceptions. and the protection of national treasures.1. However measures adopted under the general exceptions provisions must not constitute a means of arbitrary or unjustifiable discrimination nor should they be disguised restrictions on international trade. The GATT 1994 does not prevent governments from adopting and enforcing such measures.
II.they allow a Member to derogate from any of the GATT. and regional integration exceptions – the rules governing regional and free trade agreements.
EXCEPTIONS TO THE BASIC PRINCIPLES
II. human animal or plant life and health.
which are inconsistent with the other provisions of the Agreement shall be discontinued as soon as the conditions giving rise to them have ceased to exist. necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement. the protection of patents. (h) undertaken in pursuance of obligations under any intergovernmental commodity agreement which conforms to criteria submitted to Members and not disapproved by them or which is itself so submitted and not so disapproved. and the prevention of deceptive practices. including those relating to customs enforcement. trade marks and copyrights. historic or archaeological value. and that any such measures. subject to stipulated conditions. necessary to protect human. relating to the importations or exportations of gold or silver. imposed for the protection of national treasures or artistic.
GATT Article XX permits Members to take certain measures. nothing in this Agreement shall be construed to prevent the adoption or enforcement by any Member of measures: (a) (b) (c) (d) necessary to protect public morals. Provided that such restrictions shall not operate to increase the exports of or the protection afforded to such domestic industry. otherwise prohibited by GATT provisions.GATT Article XX: General Exceptions Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail. (e) (f) (g) relating to the products of prison labour. The Members shall review the need for this subparagraph no later than 30 June 1960.
. (i) involving restrictions on exports of domestic materials necessary to ensure essential quantities of such materials to a domestic processing industry during periods when the domestic price of such materials is held below the world price as part of a governmental stabilization plan. relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption. the enforcement of monopolies operated under paragraph 4 of Article II and Article XVII. Provided that any such measures shall be consistent with the principle that all Members are entitled to an equitable share of the international supply of such products. and shall not depart from the provisions of this Agreement relating to nondiscrimination. (j) essential to the acquisition or distribution of products in general or local short supply. animal or plant life or health. or a disguised restriction on international trade.
Consequently.1) The first condition is that the contemplated measure must fit under one of the 10 categories in sub paragraphs (a)-(j) of Article XX. (b). That is. involves a weighing and balancing of factors. protect public morals. "unjustifiably". These provisions attempt to strike a "balance" between the market access rights of some Members and the need to ensure that other Members' right to invoke these exceptions are not rendered illusory. The impact of the measure (law or regulation) on imports especially vis-à-vis its like domestic products. The combined effect of the chapeau and the enumerated provisions of Article XX are to set out a two-level test that a proposed measure must pass before it is deemed consistent with Article XX. there is no requirement in Article XX of the GATT 1994 to quantify the risk to human life or health. The second test is whether. For those three categories. Frequent references are also made to the exception governing measures aimed at protecting the environment in paragraphs (b) and (g). when it fulfils those criteria. such as: à à à The importance of the common interests or values protected by the measure. it satisfies the "Chapeau test". The determination of whether a measure. sub-paragraphs (a). or to secure compliance with certain laws or regulations. or as a "disguised restriction on trade"? (The latter being the most stringent test).
Specific instances of Members invoking Article XX include reference to paragraph (a) (public morals) to justify import bans on religious grounds. For example. WTO jurisprudence has established that Members have the right to determine the level of health or environmental protection they deem appropriate. animal or plant life or health. may nevertheless be considered "necessary". human. Furthermore. 2) The second condition refers to the opening paragraph of Article XX (the "chapeau of Article XX"). there is an imperative "necessity" test that must be satisfied for the measures to be consistent with Article XX. is the measure being applied "arbitrarily". A risk may be evaluated in either quantitative or qualitative terms. or a disguised restriction on international trade. While Members have a prima facie right to maintain measures necessary to enforce health policies for example. criteria have been developed to ensure that Members demonstrate their good faith and not apply measures in a discriminatory manner or as a disguised restriction on trade. and therefore qualify as an exception to the obligations in the GATT: à à The first test is whether the policy fulfils the criteria in Article XX (a)-(j). they have to be "applied" in a manner that does not create "arbitrary or unjustifiable discrimination".e. Measures covered under the General Exceptions must not be applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail. they must meet the requirements of the chapeau i. before certain measures are used to derogate from GATT rules. The chapeau of Article XX of GATT aims to prevent the use of derogation measures to unjustifiably impede the market access rights of other Members. This Principle is reiterated in the TBT and SPS Agreements for the measures covered by those agreements. and (d) indicate that the measures sought to be taken by Members must be necessary either to. The efficacy of the measure in achieving the intended policies. though not indispensable.
Can Vanin maintain an environmental measure banning the imports from some.EXERCISES: 3. but not all WTO Members?
EXERCISES: 4.2. which it considers necessary for the protection of its essential security interests or in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.II. SECURITY EXCEPTION IN THE GATT
A Member is allowed to take any action. the disclosure of which would be contrary to their essential security interests. What is a security exception?
. Members are not required to furnish information.
In principle. Safeguard measures were always available under the GATT (Article XIX). or a quota. which is an integral part of the WTO Agreement (Special Safeguard for some agricultural products).e. To ensure that this right to take safeguard measures does not undermine the basic market access disciplines central to the WTO system. as safeguard measures have to be applied irrespective of the source of imports.B. "voluntary" export restraint arrangements on products such as cars. INTRODUCTION
WTO Members have the right to take safeguard measures.
.1. Unlike anti-dumping and countervailing measures. steel and semiconductors). However.
A WTO member may impose a safeguard measure (i. and temporarily protect domestic industry against unforeseeable and unexpected economic circumstances. the application of safeguards do not depend on "unfair trade" actions. temporarily restrict imports of a product) to protect a domestic industry from an increase in imports of a product which causes or threatens to cause serious injury to the domestic industry. XII and XVIIIB (Balance-of-Payment provisions). and Article 5 of the Agreement on Agriculture. for trade in goods.
II. The right to apply safeguard measures reflects the recognition that in some situations. and placed limits on their use. Specific safeguard provisions are found in the GATT and sectoral agreements.II. the MFN Principle must be observed.). they were infrequently used. certain measures (tariffs that exceed bindings or quantitative restrictions) may be available to WTO Members to conditionally.2. The conditions and applicable principles are included in: à GATT Article XIX (General Safeguard) which is clarified and complemented by the Agreement on Safeguards (an integral part of the WTO Agreement). à à GATT Arts. GENERAL SAFEGUARDS
Safeguard measures can take the form of an increased tariff (customs duty) at a higher level than the bound rate. which derogate from obligations on a temporary basis and under certain conditions. Members have outlined conditions for.B. and some governments preferred to protect their industries through "grey area" measures (for example. as well as in the GATS for trade in services.B.
absolute or relative to domestic production. A Member may apply a safeguard measure only following an investigation…
Recognition of the Exception
The core principle is in Article 2. the Member shall be free. a Member may only invoke a safeguard measure if the situation is unforeseen. (a) If.
GATT ARTICLE XIX
GATT Article XIX contains the provisions on general safeguards. and under such conditions as to cause or threaten to cause serious injury to the domestic industry that produces like or directly competitive products.IN DETAIL
a. and was clarified and reinforced by the adoption of the WTO Agreement on Safeguards in the Uruguay Round. that such product is being imported into its territory in such increased quantities. Article 2 (Conditions): 1. The WTO Safeguards Agreement broke new ground in prohibiting grey area measures and setting time limits ("sunset clause") on all safeguard actions. and to the extent and for such time as may be necessary to prevent or remedy such injury. as a result of unforeseen developments and of the effect of the obligations incurred by a Member under this Agreement. in respect of such product.
AGREEMENT ON SAFEGUARDS
The Agreement on Safeguards. Safeguard measures shall be applied to a product being imported irrespective of its source. stipulates:
Article 1 (General Provision): This Agreement establishes rules for the application of safeguard measures which shall be understood to mean those measures provided for in Article XIX of GATT 1994.
. not reasonably foreseen when the Member bound its tariff levels. pursuant to the provisions set out below. 2. Article 3 (Investigation): 1. Hence. b) Conditions for its application
The reference to unforeseen developments in GATT Article XIX indicates that safeguard measures cannot be taken in normal economic situations but only in circumstances. including tariff concessions. A Member may apply a safeguard measure to a product only if that Member has determined. It provides that "A Member may apply a safeguard measure…" establishing the right to derogate from the disciplines (in GATT Article II and GATT Article XI). to suspend the obligation in whole or in part or to withdraw or modify the concession. any product is being imported into the territory of that Member in such increased quantities and under such conditions as to cause or threaten serious injury to domestic producers in that territory of like or directly competitive products.
Emergency Action on Imports of Particular Products 1.
1 provides: "… if. A Member may apply safeguard measures only for the time necessary to prevent or remedy serious injury and to facilitate adjustment. The domestic industry that produces like or directly competitive products is suffering serious injury or is there is a threat it will suffer serious injury. initial application. is an indication of a surge in imports. and à The cause of the serious injury (or threat thereof) is the increase in imports (causality link). a provisional safeguard measure may be imposed if there is a preliminary determination that an industry suffers serious injury.
Agreement on Safeguards Article 5. including the period of application of any provisional measure. "… A Member may apply a safeguard measure only following an investigation …" A crucial pre-condition to be satisfied before a safeguard measure can be imposed is that an "investigation" must be conducted. The period shall not exceed four years. the Member must have determined that: à à The quantity of imported products has increased (see above). it must include public notice for hearings and other appropriate means for interested parties to present evidence.1 – level of the safeguard measure "A Member shall apply safeguard measures only to the extent necessary to prevent or remedy serious injury and to facilitate adjustment…"
. either in absolute or in relative terms. The purpose of the investigation is to determine. including on whether a measure is in the public interest. GATT Article XIX and Agreement on Safeguards Article 2. Article 3 of the Agreement on Safeguards contains the detail of the procedure. The period may be extended if the safeguard measure continues to be necessary to prevent or remedy serious injury and that there is evidence that the industry is adjusting. and any extension thereof. The provisional measure should not exceed 200 days. unless it is extended under paragraph 2 of Article 7. Surge in imports should be examined in the light of: (1) the relevant period prior to the safeguard measure to be undertaken and (2) like domestic product. any product is being imported … in such increased quantities and under such conditions …". whether the situation in a Member country warrants the imposition of a safeguard measure. shall not exceed eight years. absolute or relative to domestic production.GATT Article XIX in addition provides: "… if. In critical circumstances. and under such conditions …" The reference to increased quantities being imported. … that such product is being imported … in such increased quantities.1 provides: "… to cause or threaten (to cause) serious injury to domestic producers…" "Serious injury" is another concept central to the use of safeguard measures. According to Article 3. Safeguard investigations under the Agreement on Safeguards has to fulfil certain requirements such as. The total period a safeguard measure is applied.
"Serious injury or threat thereof" is described in more detail in the Agreement on Safeguards. Before a safeguard measure can be imposed. at a preliminary stage. and the Agreement on Safeguards Article 2. ….
The basic condition for invoking Article XII is to "safeguard the [Member's] external financial position and its balance-of-payments".
. XVIII:B and the "Understanding of the Balance-of-Payments Provisions of the GATT 1994". economic development. and other purposes. It was amended in 1955 when Section B of Article XVIII was added to clarify how developing countries could use safeguard measures for BOP purposes. "extent necessary to prevent or remedy serious injury" is not easy to determine. The text of Article XII was part of the initial text of the GATT 1947. A Member can impose a safeguard measure only after it has determined that all the requirements for its imposition have been satisfied.
GATT Contracting Parties considered that it was appropriate to have this exception as some Contracting Parties encountered balance-of-payments problems. They require Members to relax restrictions as conditions improve. The Safeguards Agreement also introduced a "sunset clause" limiting the duration of WTO safeguard measures to a maximum of four years. XII ‐ SAFEGUARD MEASURES IN SITUATIONS OF BALANCE OF PAYMENT (BOP) DIFFICULTIES
Pursuant to Article XII.The level of the safeguard measure is strictly limited and is determined by the extent necessary to remedy or prevent the threat of serious injury to a Member's market.
c. Generally. a working party was established to report on specific proposals regarding the use of quantitative restrictions for BOP. At that time. a Member may apply import restrictions for balance-of-payments reasons. where quantitative restrictions are imposed. For a developing country. unless clear justification is given that a different level of restriction is necessary to prevent or remedy the serious injury or threat thereof. the safeguard measures it adopts may last a maximum of 10 years. Article XVIII:B mentions the need to "safeguard the [Member's] external financial position and ensure a level of reserves adequate for the implementation of its programme of economic development". Both Articles refer to the need to "restore equilibrium on a sound and lasting basis". GATT Article XII and GATT Article XVIII contain disciplines on measures that can be taken by Members to safeguard their balance of payments. and to eliminate them when conditions no longer justify that they be maintained. These provisions entered into effect in 1957.
Together with the Understanding on Balance-of-Payments. However. they should normally not reduce the quantities of imports below the annual average for the last three representative years for which statistics are available.
which sought to clarify the "BOP Provisions". and take a decision to impose a general safeguard measure in the form of quantitative restrictions against products from Vanin? 6. rely on newspaper statements relating to increased quantities of imports. Article XII and XVIII:B were amplified by: à à à detailed consultation procedures introduced in 1970. What are the main differences between Article XII and Article XVIII:B?
.In addition. During the Uruguay Round negotiations. and provisions on the application of the Articles and consultation procedures in the 1979 Declaration on Trade Measures Taken for Balance-of-Payment Purposes. Members "confirmed that they shall" seek to avoid the imposition of new quantitative restrictions for balance-of-payments purposes unless.
EXERCISES: 5. price-based measures cannot arrest a sharp deterioration in the external payments position. the final complementary provision was added through the Understanding on BOP Provisions. Can Alba. In it. This extended GATT examination from quantitative restrictions alone to all trade measures taken for BOP purposes. They also agreed that "not more than one type of restrictive import measure taken for balance-of-payments purposes may be applied on the same product". because of a critical balance-of-payments situation. "simplified" consultation procedures for developing countries introduced in 1972.
They can also derogate from their obligations where they obtain waivers. Waivers are governed by Article IX of the Marrakesh Agreement (establishing the WTO). Waivers are usually temporary so. They have time limits and extensions have to be justified. If granted for more than a one-year period. While a provision of the general (or security) exceptions may be invoked to justify a measure otherwise inconsistent with GATT. a waiver may be viewed as a "negotiated right". a definite time-period is set for termination. the decision is adopted by the General Council in between Conference sessions). when they are granted. Waivers may be granted in exchange for compensation. Consequently.
EXERCISES: 7. These derogations. security exceptions and safeguards are not the only provisions which Members can use to maintain measures inconsistent with the WTO principles. A waiver is used when there are no other provisions which would allow a Member to derogate from a WTO principle or a specific provision. are governed by the WTO Agreement and are applicable to trade in goods. trade in services and trade-related aspects of intellectual property rights.
What is a waiver? A waiver is a permission granted by WTO Members allowing another WTO Member to not comply with its normal commitments.
General exceptions. for a specific time and under certain conditions.C.
In "exceptional circumstances". whereas there is no need to negotiate to take a general exception in GATT Article XX and GATS Article XIV. from any provision of the WTO Agreements. called "waivers". through a decision of the Ministerial Conference (in most cases. Waivers are time-bound. a WTO Member may be authorized by the other Members to derogate. a waiver (granted by the WTO membership) should generally not be disputed unless the Member fails to comply with the conditions of the waiver or if its application leads to a non-violation complaint. Can a WTO Member waive its obligations for more than one year?
. a waiver must be reviewed annually to establish if the exceptional circumstances warranting its grant still exist. which we are about study.II. Waivers are granted by the WTO membership.
as did the GATT. However. for example non-reciprocal preferential agreements involving developing and developed countries. under the rules and conditions in: à GATT Article XXIV (paragraphs 4-10). Vanin and Medatia must be removed. Unlike in the GATT. require Members to seek a waiver from WTO rules. Without this.II. for customs unions and free trade areas covering trade in goods. Tariff preferences which they give to each other. Article II of GATS. Reciprocity and Fuller Participation of Developing Countries (the "Enabling Clause". the duties and trade barriers applicable to "substantially all the trade" between Alba. Other non-generalized preferential schemes. governing economic integration agreements liberalizing trade in services (for both developed and developing countries). 3 and 4). in the GATS the special and differential treatment for developing countries is contained in the text of Article V.
. but not to Tristat (another WTO Member).
Generally a WTO Member is in breach of its obligations where it grants preferential and more favourable treatment to products originating in a select group of countries. GATT Article XXIV allows Alba. allows its Members to enter into RTAs.
ILLUSTRATION GATT Article XXIV
Let us assume that Alba. à the 1979 GATT Decision on Differential and More Favourable Treatment. and that they concluded an interim agreement to establish a Customs Union (CU) in which the tariffs on all imports between them are to be brought to zero within a transitional 10-year period. and second the tariff preference (or any other measure inconsistent with GATT rules) must be "necessary" for the formation of the CU. the CU could not be formed. Vanin and Medatia to form a CU and to grant preferences to each other if two main conditions are respected: first. within a transitional period of 10 years. Nevertheless the WTO.D. For a CU to be GATT compatible. it normally grants more favourable conditions to trade from other parties to that arrangement than to trade from other Members. and in other provisions in the WTO Agreement. would appear contrary to the MFN Principle. Vanin and Medatia are WTO Members. complemented by the Understanding on the Interpretation of Article XXIV of the GATT 1994 (the "Understanding"). it departs from the guiding principle of non-discrimination in Article I of GATT. paragraphs 2(d). the CU must be fully compatible with GATT Article XXIV. REGIONAL INTEGRATION
When a WTO Member joins a regional trade agreement (RTA). and à GATS Article V.
Secondly. Medatia and Vanin enter into an RTA whereby they reduce the tariff rate applicable to all the trade between them. they must all apply "substantially the same" duties. Thirdly. Can Alba. tariffs and so forth. from 10% to 5%?
. they must demonstrate that the duties and other regulations of commerce applicable by CU members to states not parties to the CU are not overall "higher or more restrictive" than the trade barriers that were applied prior to formation of the CU. for example through a Common External Tariff). to trade from other WTO Members (harmonization of the external trade policy of the CU members.
and technical assistance. The waiver was authorized to the extent necessary to permit developed Contracting Parties (subject to several paragraphs of the 1971 Decision) to accord preferential tariff treatment to products originating in developing
.E.2. Unlike these two terms. Developing and least developed country status in the WTO brings certain rights. The preamble to the agreement stressed the importance of substantially reducing discriminatory treatment and emphasised the importance of reciprocal and mutually advantageous arrangements. issues relating to economic development were taken up in the negotiations that took place in Havana from November 1947 to March 1948 and this resulted in Article XVIII entitled "Government Assistance to Economic Development and Reconstruction". B and C of the revised Article. preferences. It now encompasses non-reciprocity. Members decide for themselves if they are developed or developing countries (principle of "self-election"). least-developed countries (LDCs) refer to countries that were designated as such by the United Nations Economic and Social Council. as negotiated in October 1947. INTRODUCTION
The majority of WTO Members are developing countries. GATT AND DEVELOPING COUNTRIES
PART IV OF THE GATT
The GATT. the GATT Contracting Parties adopted a waiver for the Generalized System of Preferences (GSP) to give legal effect through GATT rules to the unanimous agreement reached in UNCTAD for a mutually acceptable system of generalized. did not separately recognize differences among Contracting Parties. non-reciprocal and non-discriminatory preferences (BISD 8S/24). in the WTO. there are provisions in some WTO Agreements which provide developing countries with longer time periods to implement certain provisions of the agreements or the right to receive technical assistance. it initially provided the basis only for flexibility for the developing countries in the use of their trade policy instruments. For example.1. This waiver was for 10 years. Special and differential treatment of developing countries have been a cornerstone of the GATT system for decades. However. Only a contracting party ("the economy of which can only support low standards of living and is in the early stages of development") could have recourse to Sections A.E.
SPECIAL & DIFFERENTIAL TREATMENT FOR DEVELOPING COUNTRIES
In the WTO agreements. How is a country classified as "developing" or "least developed"?
. Reciprocity and Fuller Participation of Developing Countries". and especially the least developed among them. the Enabling Clause is a permanent provision and it constitutes a concrete contribution to the emergence of special and differential treatment (S&D) for developing countries.
II. The Enabling Clause "enables" Members to derogate from the MFN principle when they grant tariff preferences to imports from developing and LDC country Members under certain conditions. This was an initial temporary measure derogating from GATT MFN requirements. These provisions.
THE ENABLING CLAUSE
The adoption in 1979 in the Tokyo Round of the "Decision on Differential and More Favourable Treatment. called "special and differential treatment" provisions. (the "Enabling Clause") marked a qualitative jump forward for developing countries as the right of developed countries to provide preferences to imports from developing countries was made permanent.countries and territories with a view to extending the preferential tariff treatment to their products without according such treatment to like products of other Contracting Parties.E. secure a share in the growth in international trade commensurate with the needs of their economic development". In the WTO. For example. They grant special rights to developing countries. and allow developed countries to treat developing countries more favourably than other Members. Unlike the Waiver in the 1971 Decision.
EXERCISES: 9. THE OUTCOME OF THE URUGUAY ROUND
The WTO Agreements reflect an increased recognition of the need to integrate developing countries into the trading system by extending benefits to them. the Preamble to the Marrakesh Agreement recognizes "that there is need for positive efforts designed to ensure that developing countries. The Uruguay Round marked a new approach to the "development dimension".3. various sections. and simple references are devoted to special rights for developing countries. special and differential treatment ("S&D") provisions grant special treatment to developing country and LDC Member states and rights for developed countries to treat developing and LDC countries favourably. specific provisions.
Below the chart. There are three main stages to the WTO dispute settlement process: (i) consultations between the parties. WTO Members can settle their disputes in four ways: (i) consultation or negotiations.
DISPUTE SETTLEMENT AT THE WTO
The function of the Dispute Settlement Understanding is to preserve the rights and obligations of Members.they must rely on their government to bring or defend an action.III. Private parties have no standing in WTO procedures. there is a short explanation of all the various stages through which a dispute can pass in the (WTO) dispute settlement system. and (iii) the implementation of the ruling. including the subsequent implementation of the panel and Appellate Body reports. (ii) adjudication by panels and. There are two main ways to settle a dispute once a complaint has been filed in the WTO: (i) the parties find a mutually agreed solution. particularly during the phase of bilateral consultations. and (ii) through adjudication. Only Member governments (states or custom's territories) can be party to disputes in the WTO. and (iv) good offices. or to intervene as a third party. The flow chart of the WTO Dispute Settlement Process below shows the stages in a typical WTO dispute settlement case. by the Appellate Body. which includes the possibility of countermeasures in the event of failure by the losing party to implement the ruling. if applicable. (iii) arbitration. which are binding upon the parties once adopted by the DSB.
. conciliation and mediation. (ii) adjudication by panels and the Appellate Body (in cases where there is an appeal).
WTO dispute settlement timeline
and are not citizens of Members party to the dispute or third parties. the complaining Member may request the establishment of a "panel" to examine the matter and make such findings as will assist the DSB in making recommendations to secure a positive solution to the dispute. Other Member governments with a substantial interest in the matter can join the dispute as third parties (Article 10. the dispute can be settled. Members must consult in good faith within 30 days of a formal request for consultations. During this time.B. A WTO Member must prove its claims before an impartial ad hoc panel. All requests for consultations are circulated to all Members and are available to the public on the WTO website.
. the parties to the dispute may reach a mutually agreed solution (Article 3.
WTO Members cannot unilaterally determine that another member has violated their Agreement on Agriculture (or other) obligation. upon request (Article 8. Other Member governments can request to join the consultations. failing which the Director-General can determine its composition in consultation with the parties to the dispute. At any stage. CONSULTATIONS
The procedures start with consultations between the parties. unless the parties agree otherwise or the Member addressed by the request refuses to consult. the contested issues can be clarified and. the DSB will request the offending Member to bring its measures into conformity with its obligations under the Agreement on Agriculture.2 of the DSU). They are never serving WTO Secretariat officials.
Panels are normally comprised of three persons of appropriate background and experience. it can be proposed for adoption by the DSB. with its conclusions. A panel will normally complete its work within six months. by publishing a report containing findings of fact and law.III. The parties to the dispute make written submissions and oral statements at meetings with the panel.7 of the DSU). Third parties can also make submissions and an oral statement. The parties to the dispute attempt to agree on the composition of the panel based on names proposed by the Secretariat. The report is circulated to all Members and made available to the public on the WTO website. and the consultations must last at least 60 days from the date of receipt of the request. PANELS
If consultations fail to settle a dispute. unless the parties to the dispute agree otherwise. and on appeal if required through the WTO's dispute settlement procedure.7 of the DSU).
III. Where its claims are upheld. The names of the panellists are published on the WTO website. hopefully. If there is no appeal. They serve in their individual capacity and not as government representatives.A.
There are three type of remedies available for breaches of the Agreement on Agriculture: à à à à withdrawal or amendment of the inconsistent measures (final remedy). and two temporary remedies (in the case of non-compliance with the DSB decision) compensation.14 of the DSU). (Articles 16.D. The Appellate Body completes its work within 90 days.
A party to the dispute may appeal the Panel's findings to the Appellate Body.F. after it has been circulated to the Members and adopts them unless there is consensus not to do so. It varies with the complexity of the cases.6 of the DSU). The reasonable period is agreed by the parties and by arbitration where they do not agree. Appeals are limited to issues of law covered in the panel report and legal interpretations developed by the Panel. The Report is circulated to all Members and made available to the public on the WTO website. which is a standing body of seven individuals. by publishing a Report containing its findings on the issues raised in the appeal. modify or reverse the legal findings and conclusions of the panel. there is a "recommendation and ruling" by the DSB addressed to the losing party (in the case of a successful violation complaint) to bring itself into compliance with (WTO) law or to find a mutually satisfactory adjustment. The Member concerned must provide regular status reports on implementation from at least six months after the date on which the reasonable period of time is established until the issue is resolved (Article 21.E. The parties make written submissions and oral statements at a meeting with the Appellate Body and third parties may also participate.C.III. and suspension of concession (retaliation) (Article 22.
III. or the Appellate Body report. Member governments appoint Appellate Body Members in the DSB for four years terms. The Member is given a reasonable period in which to bring the measure into conformity with that agreement.1 of the DSU). ADOPTION AND IMPLEMENTATION OF THE REPORT
The DSB considers the panel report. WITHDRAWAL / AMENDMENT OF THE INCONSISTENT MEASURES
With the DSB's adoption of the panel (and Appellate Body) report(s).
. which may uphold.4 and 17. three of whom serve on any one case.
which normally completes its work within a further 90 days (Article 21.
III. The complainant is thus allowed to impose countermeasures that would otherwise be inconsistent with the WTO Agreements. Retaliation is the final and most serious consequence a non-implementing Member may face in the WTO dispute settlement system (Article 3.H. in response to a violation or to non violation nullification or impairment. Such suspension of obligations takes place on a discriminatory basis only against the Member that failed to implement. if there is disagreement as to whether a Member has complied (such as disagreement as to whether amendments made to the law to comply were themselves WTO consistent). This is informally called "retaliation" or "sanctions".
III. The panel normally completes its work within 90 days. which is equivalent to the benefit.3 (a) and Article 22. In principle. As you saw in Module 1. Concessions are. this is called "suspending concessions or other obligations under the covered agreements" (Article 22. the disagreement can be resolved through another proceeding before a panel. within 20 days after the expiry of the reasonable period of time.5 of the DSU). the sanctions should be imposed in the same sector as that in which the violation or other nullification or impairment was found (Article 22. SUSPENSION OF CONCESSION (RETALIATION)
If.G. rather. it is the WTO Members. whose delegates compose the DSB who must take the initiative to place items on the DSB agenda (and not the WTO Secretariat). the complainant may ask the DSB for permission to impose trade sanctions against the respondent that has failed to implement the DSB recommendation. As in the previous stages of the dispute settlement system. This compensation does not mean monetary payment. These bound concessions are just one form of WTO obligations.7 of the DSU). Members comply with the recommendations in a report as adopted by the DSB.3(g) of the DSU). In the overwhelming majority of cases.The DSB is the WTO body responsible for supervising the implementation of panel and Appellate Body reports (Article 2 of the DSU). COMPENSATION
If the implementing Member does not achieve full compliance by the end of the reasonable period of time. Although retaliation requires prior approval by the DSB. Technically.1 of the DSU). wherever possible this panel will be composed of the same three persons who formed the original panel.2 of the DSU). by publishing another report. However. the parties have not agreed on satisfactory compensation. The parties to the dispute must agree upon the compensation (Article 22. the respondent is supposed to offer a benefit. which can also be appealed to the Appellate Body. for example a tariff reduction. the countermeasures are applied selectively by one Member against another.2 of the DSU). The most typical form practised so far is the suspension of concessions through the imposition of tariff surcharges. Suspending WTO obligations in relation to another Member requires a previous authorization of the DSB. it has to enter into negotiations with the complaining party with a view to agreeing a mutually acceptable compensation (Article 22. which the respondent has nullified or impaired by applying its measure. for example. tariff reduction commitments that Members made in multilateral trade negotiations and which are bound under Article II of GATT 1994. 71
Ecuador got the authorization to cross-retaliate against the European Union in by denying them protection of related rights.3(b) of the DSU). They must also agree to be bound by the arbitration award.6 — EC). for example. sectors are defined. In the EC . In 2000.
.the WTO Agreement has 4 Annexes.Bananas III (Ecuador) (Article 22.3(f) of the DSU).I. In the GATS. the countermeasures can be taken under another agreement (Article 22. the sanctions can be imposed in a different sector under the same agreement (Article 22. (Annex 1A comprises the GATT 1994 and the other multilateral trade agreements on trade in goods. However. This means that. à Good offices consist primarily of providing logistical support to help the parties negotiate in a productive atmosphere. and a violation in the area of distribution services could be countered in the area of health services. 24 March 2000 – EC .6 of the DSU. This option has no relevance in the area of goods. the categories of intellectual property rights and the obligations under Part III and those under Part IV each constitute separate sectors. ARBITRATION
Arbitration is available as an alternative to dispute resolution by panels and the Appellate Body (Article 25). if the complainant considers it impracticable or ineffective to remain within the same sector.3 (c) of the DSU). a WTO-inconsistent tariff on automobiles (a good) can be countered with a tariff surcharge on cheese. European Communities — Regime for the Importation. The general principle is that the complainant should first seek to suspend obligations in the same sector as that in which the violation or other nullification or impairment was found. the parties used arbitration to rule on the allocation of TRQs. furniture or pyjamas (also goods).Recourse to Arbitration by the European Union under Article 22. all goods belong to the same sector (Article 22. If the violation occurred in the area of distribution services. On the other hand.J. a violation with regard to patents could be countered with countermeasures in the area of trademarks. Annex 1 is subdivided into three. and Annex 1C the TRIPS Agreement) Within these agreements. GOOD OFFICES. Sale and Distribution of Bananas .Bananas case. With regard to the TRIPS Agreement. Annex 1B the GATS. but. for example. See the case Decision by the Arbitrators. if the complainant considers it impracticable or ineffective to remain within the same agreement. In turn. then the countermeasure should also be in this area. The Parties to the arbitration define the issues referred to arbitration and agree on the rules to be followed. conciliation or mediation to settle a dispute. The possibility of suspending concessions in other sectors or under another agreement is often referred to as "cross-retaliation".
III. geographical indications and industrial designs. and the circumstances are serious enough. The objective of this hierarchy is to minimize the chances of actions spilling over into unrelated sectors while at the same time allowing the actions to be effective. CONCILIATION AND MEDIATION
The parties to a dispute can agree to use good offices. the response to a violation in the area of patents should also relate to patents. WT/DS27/ARB/ECU.
III. With respect to goods. each principal sector as identified in the current "Services Sectoral Classification List" is a sector.
2 of the DSU).
Good offices. "Non-violation" deals with a government's ability to bring a dispute to the WTO. based on loss of an expected benefit caused by another member's actions — even if no WTO Agreement or commitment has actually been violated. this constructive kind of flexibility and openness must not be detrimental to the parties. a party may offer a compromise solution. these procedures may continue. the complainant must not request a panel before this 60-day period has expired. These are called a non violation complaint or situation complaints. A non-violation case against this country would be allowed to restore the conditions of competition implied in the original deal.K. but not prior to a request for consultations because that request is necessary to trigger the application of the procedures of the DSU. a country may have agreed to reduce its tariff on a product as part of a market access deal. conciliation or mediation process has failed to settle the dispute (Article 5. including Article 5 (Article 1. disputes in the WTO involve allegations that a country has violated an agreement or broken a commitment (violation complaint).
These provisions are elaborated in the DSU. TYPES OF COMPLAINTS
The WTO system provides for three types of complaints: à à à violation (Article XXIII:1(a) of GATT 1994). and do not diminish the position of either party in any following dispute settlement procedure (Article 5. It is allowed if one government can show that it has been deprived of an expected benefit because of another government's action. The parties would not be obliged to accept this proposal.3 of the DSU). If the parties so agree.5 of the DSU).
III. but may also propose a solution to the parties. while the Panel proceeds with an examination of the matter (Article 5. unless the parties jointly consider that the good offices. This is important because. and situation complaints (Article XXIII:1(c) of GATT 1994).à
Conciliation additionally involves the direct participation of an outside person in the discussions and negotiations between the parties. these procedures can be terminated at any time (Article 5. the mediator does not only participate in and contribute to the discussions and negotiations. but later subsidized domestic production so that the effect on the conditions of competition are the same as the original tariff. conciliation and mediation are strictly confidential. For example. non-violation (Article XXIII:1(b) of GATT 1994). admit certain facts or divulge to the mediator the outer limit of the terms on which it would be prepared to settle.4 of the DSU). However.1 of the DSU). in some situations a government can go to the DSB even when an agreement has not been violated. However.
. during such negotiations. the parties can enter into these procedures during their consultations. The proceedings of good offices. If no mutually agreed solution emerges from the negotiations and the dispute goes to adjudication. In general. If this happens within 60 days after the date of the request for consultations. The aim of non-violation complaints is to help preserve the balance of benefits struck during multilateral negotiations.
In a mediation process. A "situation" complaint is understood to cover any situation that results in nullification or impairment.3 of the DSU). For example. conciliation and mediation may begin at any time (Article 5.
a non-violation complaint.
Important: Dispute Settlement and the Agreement on Agriculture The Agreement on Agriculture is covered by the DSU. Article 64. Korea on domestic support and so on. however.2 of the TRIPS Agreement prevents the application of non-violation complaints within the first five years of the entry into force of the TRIPS Agreement. There have been a number or dispute settlement cases involving the Agreement on Agriculture although there have also been a number of cases which involved agricultural goods but did not concern the Agreement. If an Agreement on Agriculture dispute is decided by adjudication in the WTO.
EXERCISES 10. the EC – Bananas case on Article 4. what are the four steps? What are the types of complaints that Members can bring when they allege breach of obligations under the Agreement on Agriculture? 12. 11. in EC – Bananas the GATT.3 of the TRIPS Agreement instructed the Council to examine the extent and way ("scope and modalities") for non-violation and situation complaints and make recommendations to the General Council by the end of 1999.Non-violation complaints are possible in the areas of goods and services. In particular. Disputes normally cover more than one of the WTO Agreements. and a situation complaint?
. What is the difference between a violation complaint. Article 64. Each case also contributed to the understanding of particular provisions of the Agreement on Agriculture. You may find a list of the disputes invoking the provisions of the Agreement on Agriculture in the Support Documents Section. For example. the General Agreement on Trade in Services and the Agreement on the Import Licensing Procedures were also involved. EC – Poultry on the interpretation of Schedules and the use of the special agricultural safeguard.
In effect. In both situations. and application of countervailing duties. Subsidies are governed by the SCM Agreement. the importing Member can impose a duty to compensate for the unfair advantage (upon importation and in addition to its import tariffs).IV. The SCM Agreement allows Members to challenge – through the WTO dispute settlement mechanism – the consistency of any subsidy programme with the WTO rules. Investigations have to be conducted to determine the margin of dumping and to define the level of the anti-dumping duty.
. The agreement defines two categories of subsidies: prohibited and actionable. However.
IV. dumping – a private practice of firms – is not prohibited by the WTO provisions.non-actionable subsidies.A. The WTO Agreement on Subsidies and Countervailing Measures regulates the actions countries can take to counter the effects of subsidies. On the other hand. The provisions prohibit certain types of subsidies. Anti-dumping measures are disciplined by GATT Art. RULES ON UNFAIR TRADE
ANTI-DUMPING MEASURES. that the subsidized imports are causing injury to a domestic industry and there is a causal link between the subsidies and the injury to the domestic industry. This category existed for five years and ended on 31 December 1999. Anti-dumping measures are the conditional right to take measures to correct price distorting practices of firms. Dumping takes place when a product of one firm is introduced into the commerce of another country at less than the normal value of the product. SUBSIDIES & COUNTERVAILING MEASURES There are similarities between the provisions designed to correct the imbalances created by dumping and certain subsidies. It originally contained a third category . VI and the Anti-dumping Agreement. Subsidies on Agricultural products are governed by the Agreement on Agriculture. the provisions regulate the right of the importing Member to protect its domestic market against "unfairly priced imports". The disciplines set out in the SCM Agreement governs only specific subsidies. The SCM Agreement further elaborated the basic principles in Article VI governing the investigation. determination. A Member can also use a countervailing measure if it determines that its imports are subsidized.
such measures must not lead to arbitrary or unjustifiable discrimination or constitute a disguised restriction to trade. it departs from the guiding principle of non-discrimination defined in Article I of GATT.e.
. numerous exceptions allow Members to derogate from these market access disciplines. either because: à à Specific provisions within these disciplines permit them to do so. Reciprocity and Fuller Participation of Developing Countries) refers to preferential trade arrangements in trade in goods between developing country Members. EXCEPTIONS TO THE BASIC PRINCIPLES
The WTO obligations not to discriminate. Article XIV of the GATS Agreement allows Members to take measures necessary for overriding policy concerns. For example. GATS rules on safeguards are in Article X (general safeguards) and XII (BOP provisions) of the GATS. to ensure the integrity and stability of their financial system (Annex on Financial Services.. including the protection of public morals or the protection of human. WTO Members are however permitted to enter into such arrangements under specific conditions which are spelled out in three sets of rules: à Paragraphs 4 to 10 of Article XXIV of GATT (as clarified in the Understanding on the Interpretation of Article XXIV of the GATT 1994) provide for the formation and operation of customs unions and free trade areas covering trade in goods.
There are general as well as security exceptions relating to goods. However. Article II of GATS. the 1979 Decision on Differential and More Favourable Treatment. GATT Contracting Parties and likewise Members have kept the possibility for Members to take measures to safeguard their economic interest. Safeguard measures are taken to confront unforeseen circumstances. animal or plant life or health. If essential security interests are at stake. the disciplines are not as developed as in the GATT. When a WTO member enters into a regional integration arrangement through which it grants more favourable conditions to its trade with other parties to that arrangement than to other WTO members' trade.IV. and elsewhere.B. and à Article V of GATS governs the conclusion of RTAs in the area of trade in services. However. and a so-called "prudential carve-out" in financial services permits Members to take measures in order. Article XIVbis of the GATS Agreement provides cover. for both developed and developing countries. services and intellectual property. However. Article XII of the GATS Agreement allows for the introduction of temporary restrictions to safeguard the balance-ofpayments. paragraph 2. inter alia. à the Enabling Clause (i. not to withdraw liberalization commitments/concessions etc may appear to restrict the sovereign rights of Members to exercise full autonomy in trade and economic matters. or The horizontal exception enables them to do so. Members are currently negotiating to define rules on safeguards for trade in services.
(iii) arbitration. Rulings are first made by a panel and appeals based on points of law are possible. (ii) adjudication by panels and the Appellate Body (in cases where there is an appeal). conciliation and mediation. with timetables for completing a case. Rulings made by a panel can be appealed to the Appellate Body.IV.C. and (iv) good offices. DISPUTE SETTLEMENT
WTO Members can settle their disputes in four ways: (i) consultation or negotiations.
. The dispute settlement system is based on clearly defined rules.
must be consistent or in compliance.
Pursuant to the WTO rules. such increased imports are either causing or threatening to cause serious injury to domestic industries producing like products.
4. Safeguard measures can take the form of quantitative restrictions (otherwise contrary to GATT Article XI) or imposition of tariffs above bound level (otherwise contrary to GATT Article II). In addition to the general safeguard measures. However.
6. Additionally in some circumstances.
5. injury to a like domestic industry is occurring. When Members utilize the exception they are not required to furnish any information. Alba must first conduct an investigation.
3. with the rules of the international trading system. the disclosure of which would be contrary to their essential security interests. if the measure does not violate GATT Article I and/or XIII (MFN for quotas). that the measure is applied in such a way that it does not violate the requirements of the opening paragraph/chapeau to Article XX.
Vanin can. Namely. and that because of unforeseen developments.
A security exception allows a WTO Member to take any action which it considers necessary for the protection of its essential security interests or in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security. XVIII:B and the "Understanding of the Balance-of-Payments Provisions". in addition. a Member may apply import restrictions for reasons of balance-of-payments problems. Pursuant to Article XII. any trade restrictive measure that a Member take.PROPOSED ANSWERS: 1. and pursuant to Article XX a Member is able to maintain measures that otherwise violates provisions of the GATT.
The SCM Agreement provides for two types of remedies: (a) (b) imposition of countervailing measures. Provided the measure fulfils the criteria in sub-paragraphs (a)-(j) the Member would need to show. The government of Tristat must determine that: (1) (2) (3) 2. The investigation must show that imports from Vanin have increased in absolute or relative terms compared to domestic like or directly competing products. or recourse to WTO dispute settlement procedures to remove/modify the subsidy programme. the Member would first need to show that the goal of the measure is recognized by one of the exceptions listed in sub-paragraphs (a)-(j) of Article XX.
No. that the measure is not applied to cause arbitrary or unjustified discrimination between Members where the same conditions exist and is not applied to constitute a disguised restriction on trade. there are subsidized imports. and there is a causal link between the subsidized imports and the injury. the WTO rules provide for provisions to safeguard Member's balance of payment.
10. In a GATT compatible RTA. The WTO Members recognized as least-developed countries (LDCs). Members "self-elect" their status. but only in "exceptional circumstances". Panel Proceedings. Yes. However. 9. or to stop. to achieve a reasonable rate of increase in its reserves". Article XVIII:B mentions the need to "safeguard a Member's external financial position and ensure a level of reserves adequate for the implementation of its programme of economic development". and whether the conditions warranting its grant still exist. However. Theoretically. During the transition 10 years period (the interim agreement phase). Appellate Review Proceedings. This review requires the Ministerial Conference (or the General Council) to examine the terms and conditions of the waiver and to determine whether they have been met by the Member invoking it. Article XVIII:B contains less stringent criteria than Article XII: Article XII (paragraph 2) states that import restrictions "shall not exceed those necessary (i) to forestall the imminent threat of. duties should be phased out and brought to zero.. the Enabling Clause allows developing countries to enter into RTAs among themselves with less stringent rules.Article XII is invoked to "safeguard a Member's external financial position and its balance-of-payments". pursuant to Article IX. 7.
. Both Articles refer to the need to "restore equilibrium on a sound and lasting basis". and Implementation and enforcement of the recommendations and rulings of the panel/and or Appellate Body. duties (and other regulations restricting trade) must be eliminated on substantially all the trade between members of the RTA. 8. Consultations. Article XVIII:B (paragraph 9) omits the word "imminent" from the first condition and refers to an "inadequate" level rather than a "very low" level of reserves.in the case of a Contracting Party with very low monetary reserves. While Article XII mentions the objective of "avoiding the uneconomic employment of resources". it must be reviewed annually until its termination by the Ministerial Conference. Article XVIII:B refers to "assuring an economic employment of production resources". "adequate" is defined as adequate for the implementation of its programme of economic development.4 of the WTO Agreement. a serious decline in its monetary reserves" or (ii) ". where a waiver is granted for more than one year. other Members can challenge the application of the provisions on special and differential treatment to other Members.. as adopted by the DSB. Yes. Both Articles require Members to progressively relax the restrictions as conditions improve and eliminate them when conditions no longer justify their retention. There are no WTO definitions of "developing" or "developed countries". those countries that have been designated as such by the United Nations.
Violation Complaints; Non-violation; and Situation Complaints.
"Violation" complaints involve allegations that a country has violated an agreement or broken a commitment. "Non-violation" alleges that, loss of an expected benefit caused by another member's actions (even if no WTO Agreement or commitment has actually been violated). It is allowed if one government can show that it has been deprived of an expected benefit because of another government's action, or because of any other situation that exists. "Situation" complaints cover any situation that results in nullification or impairment. The aim is to help preserve the balance of benefits struck during multilateral negotiations. For example, a country may have agreed to reduce its tariff on a product as part of a market access deal, but later subsidized domestic production so that the effect on the conditions of competition are the same as the original tariff. A non-violation case against this country would be allowed to restore the conditions of competition implied in the original deal. While non-violation complaints are possible in the areas of goods and services, the TRIPS Agreement set a temporary moratorium on non-violation and situation complaints. Article 64 prevents the application of non-violation complaints within the first five years of the entry into force of the TRIPS Agreement. During that time, the TRIPS Council started looking at the extent and way ("scope and modalities") non-violation complaints could be applied.
Introduction to the Agreement on Agriculture
ESTIMATED TIME: 5 hours
OBJECTIVES OF MODULE 3
Introduce the Agreement on Agriculture and explain what is agricultural trade; Outline agricultural trade policies under the GATT (prior to the WTO); and Explain the Uruguay Round agriculture negotiations.
Explain the structure of the Agreement on Agriculture; Describe the product coverage under the Agreement on Agriculture; Explain the disciplines and commitments in the Agreement on Agriculture; Outline Implementation under the Agreement on Agriculture; and Describe the role of the Committee on Agriculture.
Explain the relationship of the Agreement on Agriculture to other WTO Agreements.
In Module 1, we reviewed the WTO, its structure and organization as well as the multilateral trading system. Rules were explained generally with a special emphasis in goods in order to prepare for studying the Agreement on Agriculture. This module and the others that follow look at the specific rules governing trade in agricultural products, a subset of goods. At the end of this Module you should be able to explain: à agricultural trade and multilateral trade policies prior to the WTO and the Uruguay Round agriculture negotiations; à the Agreement on Agriculture that came out of the Uruguay Round – its structure, product coverage, disciplines and commitments, implementation; à à the relationship of the Agreement on Agriculture to other WTO Agreements; and the role of the Committee on Agriculture.
The importance of agriculture and agricultural trade cannot be overemphasized. Trade in agricultural products, for example, aids global food security by ensuring that temporary or protracted food deficits arising from adverse climatic and other conditions can be met from world markets. In addition, in many countries, agricultural trade is an important part of overall economic activity. It generates income and wealth, creates jobs, plays a major role in domestic agricultural production and export activities, and generates revenue and foreign exchange for governments.
AGRICULTURE TRADE RULES UNDER THE GATT
International trade in agriculture products had been subject to the rules of the multilateral trading system since the entry into force of the GATT back in 1947. However, there were several important differences with respect to the rules that applied to agricultural primary products as opposed to industrial products. Furthermore, there were exemptions and exceptions for agriculture trade and for subsidies to producers of agriculture products. For example, the GATT 1947 allowed Contracting Parties to use some non-tariff measures such as subsidies and import quotas. In addition, many of the Contracting Parties operated so-called "grey area" measures that were not clearly covered by the rules or commitments but were of dubious legality nonetheless. GATT 1947 also permitted, at least to some extent, the use of (1) non-tariff barriers to imports, such as quantitative restrictions, (2) subsidies to agricultural producers, and (3) export subsidies for primary products. However, there were conditions attached to these flexibilities that often turned out to be quite strict.
Article XI.2(c) of the GATT 1947 permitted the use of quantitative import restrictions on imports of agricultural products. But there were a lot of conditions attached as the import restriction had to be part of a national supply management scheme which imports could undermine. In addition, the exception in Article XI.2(c) was conditional on Contracting Parties maintaining a minimum proportion of imports relative to domestic production. Thus, quantitative import restrictions on imports of agriculture goods were permitted but subject to a list of conditions. Article XI.2(c) was the subject of a lot of litigation in the GATT. For agriculture, the most important of the cases was Japan – Restrictions on Certain Agriculture Products . The Panel effectively showed that the requirements under Article XI.2(c) were quite strict and confirmed the view of some other Members that had sought waivers for sensitive products. The US obtained such a waiver in 1955 for some cotton products, some dairy products, peanuts, syrup and sugar . This waiver remained in place until the Uruguay Round was completed and the provisions of the WTO Agreement on Agriculture applied to agricultural products. Switzerland, on the other hand, negotiated an exemption for the agriculture sector in its protocol of accession to the GATT.
3 2 1
TIP What is a protocol of accession? States and Customs territories, which became Contracting Parties of the GATT between 1948 and 31 December 1994 had to negotiate the conditions of their accession to the GATT 1994. These conditions and commitments are in protocols of accession, which form an integral part of the GATT 1994. Similarly, WTO Members that joined the organization after its establishment have protocols of accession (see Article XII of the WTO Agreement).
In addition, across the GATT only about one-third of agriculture products had bound tariff rates. Furthermore, many Members used various measures to support exports of agricultural products, to subsidise domestic production and to restrict imports using high tariffs or non-tariff measures. Notwithstanding the conditions attached to import restrictions under Article XI of GATT, many non-tariff barriers were applied to imports without any effective limits on domestic production and without maintaining minimum import access. In some cases, this was achieved by the use of measures not specifically provided for under Article XI (the General Elimination of Quantitative Restrictions).
1 2 3
L/6253 adopted on 2 February 1988, BISD/35S/163 BISD/3S/32; March 1955; United States – Import restrictions on agricultural products In the WTO, the India – Quantitative Restrictions on Imports of Agricultural, Textile and Industrial Products
("India – Quantitative Restrictions"), was litigated based on Article XI of the GATT 1994. See the Panel Report, WT/DS90/R, adopted 22 September 1999, as upheld by the Appellate Body Report, WT/DS90/AB/R, paragraph 5.128
In other cases, restrictions were kept pursuant to exceptions and country-specific derogations (such as, grandfather clauses, waivers and protocols of accession). In yet other cases, non-tariff import restrictions were maintained without any apparent justification. Major agricultural products such as cereals, meat, dairy products, sugar and a range of fruits and vegetables faced barriers to trade on a scale uncommon in other merchandise sectors.
TIP You have seen waivers in Module 1 and protocol of accession before- what is this reference to "grandfather clause"? Under a grandfather clause, a rule needs to be applied only to the extent that it is not inconsistent with legislation in effect before the accession to the GATT (for grandfather clause applying to the GATT) or the creation of the WTO for post-Uruguay Round Agreements.
The rules on subsidies to farmers were not clear under the GATT, where Article III.8(b) stated that subsidies to producers were not prohibited by the national treatment obligation. In addition, it was not even clear whether or not price support measures were subsidies. However, the value of tariff concessions affected by these subsidies was protected by Article XXIII which states that concessions cannot be nullified or impaired, even by measures that comply with the GATT (that is, by non-violation nullification or impairment). The use of Article XXIII in the case EC – Payments and Subsidies Paid to Processors and Producers of Oilseeds and Related Animal Feed , brought by the US against the EU, highlighted the importance of non-violation nullification or impairment. The EU had bound tariffs on oilseeds at zero and subsequently introduced a subsidy that was paid to processors on condition that they bought EU produced oilseeds. The subsidy was later changed to payments to producers based on the area of oilseeds planted and harvested. The US claimed, and the Panel agreed, that the subsidy scheme nullified or impaired the benefits it had expected from the zero tariff binding. The case was taken during the Uruguay Round and the results of the dispute were incorporated into the EU's Schedule as limitations on the area of oilseeds planted and some market access concessions to the US and some other countries. However, disputes under Article XXIII would only be possible in cases where a bound tariff existed at a level that would normally permit trade. If there was no bound tariff, or if it was bound at a level that would effectively prevent any meaningful trade, then a domestic subsidy would be unlikely to nullify or impair the value of a benefit under the GATT.
L/6627 Adopted on 25 Jan 1990, BISD/37S/86; July 1991 and BISD/39S/91; September 1993;
EC - Payments and subsidies paid to processors and producers of oilseeds and related animal feed
The result was a cycle of ever more restrictive measures. March 1980. In the aftermath of the Second World War many governments were concerned with getting agriculture production and productivity back to pre-war levels with stable food prices for consumers and producers and national food security. This provision was adjudicated upon in the case EC – Refunds on Exports of Sugar
brought by Australia
in 1980 against the EU.
On export subsidies.B. many countries adopted land reform measures and supported agriculture through market price support systems. if the domestic price rose above these target prices imports were allowed in. The Panel found that it could not rule on whether the export refund system used by the EU had led to it having more than an equitable share of world trade. European Communities – Refunds on Exports of Sugar
. At the same time productivity increased rapidly. World trade fell sharply and the recovery was interrupted by Second World War. However. However.and between . That is.3. Therefore.1. governments set target prices.
URUGUAY ROUND AGRICULTURE NEGOTIATIONS
I. if the domestic price fell below the target price export subsidies were used to reduce domestic supply or the state bought and stored the product.I. This provision referred to primary products and was taken to include primary agricultural products.subsidised exporters and producers. the Panel ruled that the system had depressed world prices and had caused serious prejudice to Australia and that the uncertainty the system brought to the market had led to a threat of injury. domestic pressures often meant that the target prices were always high which encouraged increased production.C. The results were almost permanent surpluses. the insulation of domestic markets by GATT Contracting Parties was the result of measures that were originally introduced during the collapse of commodity prices that led to the 1930's Depression. the Panel was not able to quantify the value of the prejudice. However. which in turn led to huge government stocks and increasing use of export subsidies to dispose of these surpluses on world markets. provided they were not used to gain more than "an equitable share of world trade". The impact on the world market and on those countries that did grant support and protection was depressed prices and competition from . High tariffs in some countries led to retaliation by others that also increased tariffs or reduced the value of their currencies in order to increase the cost of imports and reduce the cost of exports.C. Article XVI:3 allowed Members to use them on primary products. The lack of legal precision meant some Members used export subsidies to dispose of excess production on the world market. This had the effect of depressing world market prices and inducing other countries to do the same.
BISD/26S/290-319. while the GATT 1947 prohibited export subsidies on industrial products.
There were studies on the level of support and effects on other countries. Brazil. New Zealand. Gale. This group was determined to bring agriculture effectively into the GATT framework of multilateral trading rules and they were prepared to prevent any consensus on general liberalisation of trade unless they achieved this aim. added to the pressure for reform. Brazil. production would fall and prices would rise. the EU and the US. Second Edition. the US started to use export subsidies for wheat flour to enter markets in North Africa and in 1985 the Export Enhancement Program expanded export subsidies to other products. Chile. Pakistan. With overvalued exchange rates and low food-price policies that were meant to favour urban consumers. Malaysia. formed in 1986. New Zealand. the report showed support levels in each country. the OECD presented the results of its research into agriculture policies in Australia. the Philippines. It was then made up of 14 countries: Argentina. Australia. the EU. Guatemala. commodity prices were high and the main subsidisers. Canada. Market access barriers reduced export opportunities. demand fell in the early eighties due to recession and high interest rates. In a report on "National Policies and Agricultural Trade" (1987). It also showed that the policies of individual countries did affect the world market.
Macmillan. farmers in developing countries had little incentive to increase production. Australia. The report also showed that. Simultaneously. Canada. In the early 1970s. Thailand and Uruguay. if supports for agricultural products were reduced. D. South Africa. for the Trade Policy Research Centre. Indonesia. 1991
. Some commentators criticised agriculture policies for their inefficiency and failure to achieve objectives. prices declined and government stocks increased. Canada. numerous commentators from independent economists to inter-governmental organisations began to take a more active interest in agricultural policies . Indonesia. Chile. They showed that subsidies did relatively little to support smaller agricultural producers with most of the money going to a few large farmers or to the processing industries. Using a methodology that all OECD member countries had accepted. However. Peru. New Zealand. For those that did not provide support. or even reduce. market-price supports reduced domestic demand while increasing supply and export subsidies were needed to dispose of the high priced surplus production. this meant fewer export opportunities and more competition and lower prices in the world market. were able to increase production and to limit. One of the most influential organisations was the Organisation for Economic Co-operation and Development (OECD). Colombia. Malaysia. The growing competition for world market share resulted in worsening trade relations between the EU and the US. Austria. World Agriculture in Disarray. Meanwhile increasing domestic production and increasing stockpiles had to be disposed of using export subsidies.While high-income countries were encouraging high-cost over-production of agriculture products many less-well-off countries were doing the opposite. The Group is now made up of Argentina. Colombia. the Philippines.
The Cairns Group was formed in 1986 in the town of Cairns in Australia. Costa Rica. Other countries also increased supports to their producers and sought to protect their export markets through subsidies. Fiji. Hungary. As a result. Bolivia. Japan and the United States. subsidies as international demand and fear of food shortages pushed up prices. Paraguay. In 1983. The Cairns Group of exporters of agricultural products. Thailand and Uruguay.
C. companies'.3. the legal position was not as lax as some Contracting Parties believed. low food-price policies and over-valued exchange rates made the impact on low-income countries even worse. In the context of agricultural trade this would mean that producers'. At the same time academic work had begun to show the impact of subsidies and protection on economic growth and welfare.2. Politically. a new system for settling disputes was agreed.C.
The Uruguay Round produced numerous changes in the trade rules for trade in agricultural products. including domestic agricultural policies and the subsidization of agricultural exports.I. as well as rules on sanitary and phytosanitary measures. such as the EC .
. on 20 September 1986 and committed the Contracting Parties of the GATT to negotiations on agriculture. Disciplines were needed on all policies that were causing trade-distortion. Measures causing distortions include subsidies. The combination of these policies meant agricultural trade was highly distorted.Oilseeds case and the Japan – Import Restrictions case. Uruguay. The Uruguay Round was successfully concluded in Marrakesh in 1994. Many old rules were clarified.
I. import restrictions and restrictive business practices". The Ministerial Declaration launched the negotiations in Punta del Este. new areas brought within the rules. importers' and exporters' decisions are influenced by factors other than competitive market conditions. the climate was changing as well and the Cairns Group was formed to make sure agriculture was put on the agenda of trade negotiations and that it stayed on the agenda until a satisfactory result was achieved. showed that the exceptions in the rules had conditions attached. The Contracting Parties of the GATT decided to launch a new multilateral round of negotiations with a view to agree on further liberalization of international trade and that agriculture would be part of these negotiations.
In the lead-up to the Uruguay Round.
TIP What is "distortion"? The WTO Dictionary of Trade Policy Terms defines distortion as "a measure. At the same time. However. Not only did they have to compete with subsidised production and exports in wealthier countries but their own governments often applied export taxes or enforced low procurement prices. it became increasingly evident that the causes of disarray in world agriculture went beyond import access problems which had been the traditional focus of GATT negotiations. on all measures affecting agriculture trade. GATT panels. and the first multilateral Agreements on Agriculture and on Sanitary and Phytosanitary Measures were concluded. giving a clear direction for those negotiations. policy or practice that shifts the market price of a product above or below what it would be if the product were traded in a competitive market.
AGRICULTURE IN THE GATT
The exceptions and exemptions for agriculture within the GATT contributed to the widespread use of high levels of support and protection for agriculture in most wealthy countries.
domestic support and export subsidies. It has: à à A framework for future long-term reform of agricultural trade and domestic policies. as you will see below. Members that acceded to the WTO after the conclusion of the Uruguay Round may have specific rules applicable to them which can be found either in their protocols of accession or their Schedules of Commitments. the strengthened dispute settlement system. such as. Tangermann and Warley.
However. including non-trade concerns. There are also many other non-agriculture specific achievements in the WTO that have influenced the multilateral rules governing agriculture. The outcome of the agriculture negotiations in the Uruguay round can be divided in four main parts: (1) (2) the WTO's Agreement on Agriculture . The reform programme seeks to strike a balance between agricultural trade liberalization and governments' rights to pursue legitimate agricultural policy goals. "Agriculture in the GATT". MacMillan Press Ltd (UK) or St Martin's Press Inc (USA)
.The WTO Agreement on Agriculture. encourage the use of less trade-distorting domestic support policies to maintain the rural economy. the Schedules which list each Members commitments on market access. the Agreement on Agriculture is a result of numerous compromises and like any product of negotiations the basic principles have a number of exceptions and.
For a more detailed description of the history of agriculture in the GATT see Josling. the Agreement on Agriculture required WTO Members to limit the amount of agricultural export subsidies and trade-distorting domestic support they provide and to bind tariffs on practically all agricultural products.
1996. Strengthened rules governing agricultural trade for increased market orientation in agricultural trade and will lead to improved predictability and stability for importing and exporting countries. the wording is subject to different interpretations. in some cases. For the first time. domestic support and import duties on agricultural products were a significant first step towards reforming agricultural trade. The Agreement on Agriculture came into force on 1 January 1995. and allow actions to be taken to ease adjustment burden. à Provisions that allow some flexibility in the implementation of commitments. (3) (4) the Agreement on Sanitary and Phytosanitary Measures. together with individual countries' commitments to reduce export subsidies.itself. and the Ministerial Decision On Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries. à Provisions that.
What are some of the import restrictions that GATT Contracting Parties faced on their agriculture exports?
.EXERCISES: 1. What are some of the measures that GATT 1947 allowed countries to use in agricultural exports that they could not use on industrial products? 2. What are some of the exceptions and country-specific derogations that allowed Contracting Parties to apply non-tariff border restrictions to agriculture imports under the GATT 1947? 3.
which also formed part of the overall outcome of the agriculture negotiations. However.
Structure of the Agreement on Agriculture
. the "peace clause" and the "built-in agenda". INTRODUCTION
The Agreement on Agriculture establishes a number of generally applicable rules. as well as institutional provisions.
AGREEMENT ON AGRICULTUREʹS STRUCTURE
This section of the Module looks at the Agreement on Agriculture. Many other WTO Agreements complement the Agreement on Agriculture. According to Article 21. primarily in the areas of market access. its three pillars. domestic support and export competition (normally referred to as the "three pillars"). There is also a Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-developed and Net Food-importing Developing Countries.A. which are contained in the Schedules and constitute an integral part of the GATT 1994. such as. its objectives.1). The Agreement on Agriculture is divided in thirteen parts (composed of 21 articles) and it has 5 annexes. in cases of conflict.B. the rules in the Agreement on Agriculture prevail (Article 21.
THE AGREEMENT ON AGRICULTURE
II. These rules are backed up by each Members' specific commitments on tariffs.II. domestic support and export subsidies. the GATT 1994 and all WTO agreements on trade in goods in Annex 1 apply to agriculture.
..B. including food security and the need to protect the environment.II.
. including an improvement in the opportunities and terms of access for agricultural products of particular export interest to these Members. and for products of particular importance to the diversification of production from the growing of illicit narcotic crops.1.
The Preamble also refers to non-trade concerns.. THE PREAMBLE
The objective that led to the Agreement on Agriculture is contained in the second paragraph of the Preamble:
Recalling that their long-term objective as agreed at the Mid-Term Review of the Uruguay Round "is to establish a fair and market-oriented agricultural trading system and that a 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".. and taking into account the possible negative effects of the implementation of the reform programme on least-developed and net food-importing developing countries... See paragraphs 5 and 6:
Having agreed that in implementing their commitments on market access... having regard to the agreement that special and differential treatment for developing countries is an integral element of the negotiations. developed country Members would take fully into account the particular needs and conditions of developing country Members by providing for a greater improvement of opportunities and terms of access for agricultural products of particular interest to these Members. having regard to non-trade concerns. and provides special and differential treatment for developing countries.. including the fullest liberalization of trade in tropical agricultural products as agreed at the Mid-Term Review.
Noting that commitments under the reform programme should be made in an equitable way among all Members. including food security and the need to protect the environment.
cotton. but does not provide an exemption from any other obligation in the GATT 1994.II. such as. agricultural fibres and skins including. Reductions were undertaken over a period six years in the case of developed countries and over ten years in the case of
. wool and silk.B. for example. with a minimum reduction of 15% for developed and 10% for developing countries. Hence. Annex 1 defines agricultural products as those within Chapters 1 to 24 of the Harmonized System (excluding fish and fish products). fish products. for example: à basic agricultural products such as wheat. nor does it apply to forestry products. WTO Members can only use ordinary customs duties to restrict imports of agriculture goods with very few exemptions.B. Tariffs (both those resulting from the "tariffication" process and existing tariffs on agricultural products) were reduced by an average 36% in the case of developed countries and 24% in the case of developing countries. This definition of agricultural products is based on the 1992 Harmonised System (HS92).
MARKET ACCESS – ARTICLE 4
Article 4 of the Agreement on Agriculture is the legal basis for market access. Further. there were many country specific exemptions for agriculture. export competition and market access. and raw animal skins destined for leather production. bread. As a result of the Uruguay Round.2. fibres. PRODUCT COVERAGE
The Agreement on Agriculture applies to agricultural products as defined in Article 2 and Annex 1 of the Agreement on Agriculture. Article 4 makes these Schedules legally binding. as well as products derived there from. market access for many agricultural products was restricted by variable import duties and non-tariff measures. chocolate and sausages. waivers. acquired through accession negotiations.3. the definition does not apply to fish.
II. such as. butter and meat. spirits. DISCIPLINES AND COMMITMENTS
The Agreement on Agriculture includes binding commitments to reduce support and protection in the areas of domestic support. or renegotiations. as established and regulated under the World Customs Organization. all the details are found in Members' Schedules. and tobacco products. However. trade in wines. Prior to the Uruguay Round. WTO Members agreed to use the process called "tariffication" to convert all non-tariff measures as they existed during the 1986-88 base period (whether they were in compliance with the GATT or country-specific exemptions) into tariff equivalents. à à à à processed agricultural products. milk and live animals. such as quantitative restrictions or import prohibitions. It covers all agricultural food and beverage products.
minimum/current access commitments (TRQs). In what document can one find the tariff binding. as well as the creation of tariff quotas there were fears that tariff-only protection could lead to import surges or low priced imports.
b. in many cases. special safeguard. WTO Members also committed to maintain current market access opportunities and/or to create new minimum market access opportunities. tariffs were so high or the import restrictions so severe that very little. In such situations the tariff that resulted from tariffication would have been too high to permit trade. tariff bindings and reductions. if any. At present. These access opportunities took the form of low tariffs at limited quantities.
EXERCISES: 4. of at least 3% of domestic consumption by 1995 rising to 5% in 2000 (the implementation period). 5.
SAFEGUARD PROVISIONS – ARTICLE 5
Due to tariffication. Therefore. The provisions of Article 5 permit Members to impose a special safeguard duty on products that had been subject to tariffication and that have the symbol "SSG" in the Schedule. or the quantity of imports exceeds a certain volume (volume trigger). the applied tariff rates are lower than the bound tariff. Outline the current market access rules for agriculture. However. In other cases. As part of the tariffication process Article 5 was created. imports actually got into the applying country. the quantitative restriction applied allowed only limited amounts. In many cases. The "special safeguard" provision permits the imposition of a temporary additional duty on imports of these products when: (a) (b) the price of the product falls below a threshold level (price trigger).
The rules are explained in detail in Module 4.developing countries. called tariff rate quota (TRQ). many countries have bound their tariffs at relatively high rates but . These commitments are also set out in the Schedule of Commitments. many developing countries were not required to undertake tariffication or reductions in tariffs and all least-developed countries were exempted from tariff reductions. and special treatment exemptions of WTO Members? What type of commitments are they?
. The provisions on market access as well as the safeguard provisions (explained directly below) are explained further in Module 4 entitled "Market Access in the Agreement on Agriculture".
Some guarantee a minimum level of income. many provide veterinary and plant health services. and programmes such as direct payments to farmers that are decoupled from production as well as direct payments under environmental and regional assistance programmes. and (3) other trade-distorting support maintained within the "de minimis" levels. is that they encourage over-production and distort the market either by increasing exports or reducing imports. etc. In addition to the Green Box policies. à à developing country Members agreed to make 13. reductions and implementation periods are mentioned the actual periods and reductions may differ and you may have to verify the exact details by referring to the Schedule of Commitments or. through market price support to farmers or similar methods.
DOMESTIC SUPPORT COMMITMENTS & DISCIPLINES – ARTICLE 3. Members can freely use domestic support measures with no more than minimal impact on trade or productionSuch measure are placed in a "Green Box" and include subsidies for government services. (2) certain government assistance programmes to encourage agriculture and rural development in developing country Members (as listed in Article 6. In recognition of the different impacts different policies have on production and trade there are different boxes for the different types of export subsidies: "Green Box". Members do not have to reduce: (1) their subsidies on direct payments to farmers under production limiting programmes ("Blue Box" measures). some provide input subsidies. WTO Members agreed to make the following reductions in the Base Total AMS (an average during the base period of 1986-88): à developed country Members agreed to reduce the Base Total AMS by 20% over 6 years starting in 1995.c.3% cuts over 10 years.
Domestic support measures that cannot be included in the above-mentioned exempt categories must be accommodated within the ceilings set by the "Total Aggregate Measurement of Support" (AMS) or "Current Total Aggregate Measurement of Support" which are expressed in terms of Annual and Final Bound Commitment Levels. there are many forms of support that do not directly influence production. in the case of recently acceded Members to the protocol of accession. The Agreement on Agriculture distinguishes between support programmes that stimulate production directly.
In all cases where base periods.
. On the other hand. In the Uruguay Round. The main complaint about policies which support domestic prices or directly subsidize production. 6 AND 7
Many countries support farming in different ways. and least-developed countries were not required to make any cuts. for example. and those that are considered to have at most a minimal direct effect on production or trade.2 of the Agreement on Agriculture). the "Amber Box" and a "Blue Box".
6 and 7 as well as Annexes 2. which also applies to agricultural products. the reductions were two-thirds those of developed countries over a ten-year period. WTO Members agreed on a "peace clause" (which has already expired) to reduce the likelihood of challenge to these and some other forms of agricultural subsidies. GATT Article XVI:3 permitted the use of export subsidies for agriculture primary products. The Uruguay Round also introduced a clearer and more comprehensive regime governing domestic subsidies in general in the Agreement of Subsidies and Countervailing measures ("SCM Agreement"). Developed-country Members were required to reduce the value of export subsidies by 36% compared to the 1986-90 base period. as set out in their Schedules. which permits certain transport and marketing subsidies in developing countries. The rules on export competition are explained in detail in Module 5. 3.4 of the Agreement on Agriculture. there is no distinction between agricultural and non-agricultural products and therefore. and 11 as well as in Member's Schedule. 10.
d. The Agreement on Agriculture also sets out criteria for food aid donations and refers to export credits. export subsidies are prohibited in both cases. The Agreement on Agriculture does not prohibit the use of export subsidies. provided that Members remain within their commitments. and subject to a c set of rules. where relevant.
. and 4 of the Agreement on Agriculture and. 8‐11)
As you saw previously. The rules on domestic support are explained in details in Module 4. 8. 9. For other WTO Members. only 25 Members have the right to subsidise exports. as you will see below. in Section I of Part IV of a Member's Schedule. For developing countries. over the six-year implementation period. The only exception is Article 9. Members that grant export subsidies also agreed to reduce the amount spenditure and the quantities exported with subsidies.The disciplines and commitments on domestic support are found in Articles 3. and the quantity of subsidised exports by 21%. their reduction commitments are based on exports subsidies granted during the 1986-90 base period.
EXPORT COMPETITION (ARTICLES 3. Currently. The table below summarizes the numerical targets for cutting subsidies and protection. The disciplines and commitments on export subsidies are found in Articles 3. However.
several developing countries chose to set fixed bound tariff ceilings that do not decline over the years. for unbound tariffs.Developed countries 6 years: 1995–2000 Tariffs average cut for all agricultural products minimum cut per product Domestic support cuts in total ("AMS") support for the sector Exports value of subsidies (outlays) subsidized quantities Table 1: –36% –21% –36% –15%
Developing countries 10 years: 1995–2004
The reductions in agricultural subsidies and protection agreed in the Uruguay Round
Notes: Least-developed countries do not have to reduce tariffs or subsidies. Each country's specific commitments vary according to the outcome of negotiations. Only the figures for cutting export subsidies appear in the Agreement on Agriculture. As a result of those negotiations. What are the two forms of measures included in the reduction of export subsidies in the Agreement on Agriculture?
. The base level for tariff cuts was the bound rate before 1 January 1995. the actual rate charged in September 1986 (when the Uruguay Round began). The other figures were targets used to calculate countries' legally binding "schedules" of commitments. or.
to notify the measure and. the Panel held that as long as countries do not respect their obligations with regard to the Agreement on Agriculture.II.
DISCIPLINES ON EXPORT PROHIBITIONS & RESTRICTIONS – ARTICLE 12
Article 12 of the Agreement on Agriculture requires WTO Members that introduce new export prohibition or restrictions on foodstuffs to do so in accordance with Article XI:2(a) of the GATT 1994. The Peace Clause expired at the end of 2003.
DUE RESTRAINT – ARTICLE 13
To protect agricultural subsidies from challenge under GATT 1994 and the SCM Agreement. is the Decision on the Possible Negative Effects of the Reform Programme on Least-Developed and Net-Food Importing Developing Countries. if asked. It also requires the Member introducing the restriction or prohibition to take account of the effect such a restriction will have on other Members' food security. These include the provisions relating to special and differential treatment for developing countries. to consult with any Member that has a substantial interest as an importer. Hence the SCM Agreement now applies to subsidies for agricultural products.
a. subject to Article 21 of the Agreement on Agriculture.Subsidies on Upland Cotton (DS267) case. the Peace Clause affords them no protection. Where is the peace clause found and what was its purpose?
. Also related to the Agreement on Agriculture. The Peace Clause was the subject of dispute in the United States .4. In that case. the Peace Clause and the commitment to enter negotiations on continuing reform. OTHER COMMITMENTS
Although market access. Article 13 provided limited protection for agricultural subsidies granted in accordance with the Agreement on Agriculture from being challenged under specific provisions of the GATT or the SCM Agreement for a period of 9 years. Article 13 of the Agreement on Agriculture introduced a "Peace Clause". other provisions are equally important and form an integral part of it. What are some of the requirements of the Agreement on Agriculture on WTO Members instituting new export prohibition or restrictions on foodstuffs? 8. domestic support and export competition are often called the "three pillars" of the Agreement on Agriculture.
Provisions that contain additional benefits for least-developed countries. 9. Annex 5
Examples: Agreement on Agriculture: Article 15. Lower reduction rates to be applied to trade-distorting domestic support (covered by Total Aggregate Measurement of Support).2.
Developing countries were granted a longer period (10 years.2(b)(iv).1. Annex 2.2. and
footnotes 5 and 6. 15. 9.2
. domestic support commitments. equivalent to two-thirds of the levels required for developed countries in each of these three areas.
Agreement on Agriculture: Articles 6.c. compared to six years for the developed countries. paragraph 3. 2.
SPECIAL AND DIFFERENTIAL TREATMENT – ARTICLE 15
Article 15 of the Agreement on Agriculture recognizes the importance of differential and more favourable treatment for developing country Members. Special and Differential Treatment measures in the Agreement on Agriculture took the form of: 1.
The specific rules on market access. 1995-2004) to implement various reduction provisions.2 Agreement on Agriculture: Articles 16. such as lower levels of tariff reductions. tariffs and export subsidies.1 and 16.
d. No reductions were required for least developed countries. In particular. 6. it provides a legal basis for many special and differential treatment provisions that are found in Schedules but are not expressed in the Agreement on Agriculture itself.
LEAST‐DEVELOPED AND NET FOOD‐IMPORTING DEVELOPING COUNTRIES – ARTICLE 16
Article 16 provides a legal basis for the Marrakesh Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries and the follow-up work of the Committee on Agriculture.
3. It also expressly states that developing countries can have 10 years for implementation and that the least-developed countries do not need to undertake reductions.4.4. 12. export subsidy commitments and the fewer notification obligations as well as the technical assistance are explained in further modules.
raising questions in the Committee does not prevent any WTO Member from seeking formal dispute settlement at any time.
REVIEW OF IMPLEMENTATION ‐ ARTICLES 17 AND 18
Article 17 of the Agreement on Agriculture established a Committee on Agriculture.
CONSULTATION AND DISPUTE SETTLEMENT – ARTICLE 19
While the Agreement on Agriculture has its own institutional mechanism to review and follow-up its implementation. This review work by the Committee is based on notification Members make on their commitments. 2. as well as.
CONTINUATION OF THE REFORM PROCESS – ARTICLE 20
The Agreement on Agriculture set up a framework of rules and started reductions in protection and trade-distorting support. the general WTO dispute settlement procedures apply. take place in "Special Sessions" of the Agriculture Committee.
. In the case of disputes involving provisions of the Agreement on Agriculture. Monitors 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.e.
g. it is subject to the integrated dispute settlement system of the WTO. There is also a provision in Article 18. Of course. The Committee: 1. and 3. Oversees and monitors the implementation of the Agreement on Agriculture and Members' commitments. But this was only the first phase of the reform of trade in agricultural products. developments in the trade of agricultural products. Provides a forum for Members to discuss matters related to agriculture trade and to consult on matters relating to the implementation of commitments.
f.6 that allows Members to raise any matter relevant to the implementation of the commitments under the Agreement on Agriculture. The negotiations actually started in March 2000 and are still continuing as part of the Doha Development Agenda. The Committee meets about four times a year in Geneva and regular reports are made to the Council for Trade in Goods on its work. Article 20 of the Agreement on Agriculture committed Members to start negotiations on continuing the reform in 2000. including rules-based commitments. The negotiations pursuant to Article 20 of the Agreement on Agriculture (discussed below) and the Doha Ministerial Declaration of November 2001. Members can raise questions about the implementation of the Agreement on Agriculture by other Members in the Committee.
Subsidies on Upland Cotton (DS267) discussed above.org/english/tratop_e/agric_e/negoti_e. the Secretariat is also responsible for maintaining the WTO website which includes a comprehensive section on the negotiations.
FINAL PROVISIONS ‐ ARTICLE 21
Article 21 stipulates that "the provisions of GATT 1994 and other Multilateral Trade Agreements in Annex 1A to the WTO Agreement shall apply subject to the provisions" of this agreement. What is the role of the Committee on Agriculture? What are some of the special and differential treatment provisions for developing countries found the Agreement on Agriculture?
EXERCISES: 9. Most of these can be found in the G/AG/NG/S and TN/AG/S series of official documents.
h. This provision was reaffirmed in the United States .To assist the negotiations. in the event of conflict between the Agreement on Agriculture and another WTO Agreement.htm
. 10. the Agreement on Agriculture takes precedence. In other words.wto. the WTO Secretariat has produced a number of background papers at the request of Members. In addition.
Appellate Body Report WT/DS8/AB/R.
. 17 September 1998. 11 July 1996.
Korea – Taxes on Alcoholic Beverages.
RELATIONSHIP OF THE AGREEMENT ON AGRICULTURE TO OTHER WTO AGREEMENTS
III. the Agreement on Agriculture does not have specific rules. either the GATT 1994 or one of the other WTO Agreements apply (see Article 21 above). 15 June 1999. For example. etc.A. 14 December 1999. of the many disputes involving agricultural products. WT/DS110/R. MEX. Panel Report WT/DS8/R. 22 May 1997.1 22 July 1999. à the EC – Bananas
case involved Article XIII of GATT. USA. WT/DS10/AB/R. which have come before the WTO the majority. and à the safeguards on milk powder case against Korea and Countervailing Measures. Korea13 and Chile14 have all involved the principle of national treatment. 18 January 1999. WT/DS98/R 21 June 1999 and
Corr. WT/DS10/R. the Agreement on Agriculture prevails. WT/DS98/AB/R. Although other Agreements may apply to trade in agricultural products. for example: à the cases taken on alcohol against Japan12.
was a complaint under the Agreement on Subsidies
Japan – Taxes on Alcoholic Beverages. have involved other WTO agreements. under Article 21 of the Agreement on Agriculture. WT/DS84/AB/R. WT/DS/11R. Sale and Distribution of Bananas. European Communities – Regime for the Importation. Panel Report WT/DS87/R. WT/DS27/R/ECU. the Import Licensing Agreement and the General
Agreement on Trade in Services.III. In these cases. the administration of tariff quotas is governed by Article XIII of the GATT 1994 and the Agreement on Import Licensing Procedures.
Korea – Definitive Safeguard Measure on Imports of Certain Dairy Products. WT/DS27/AB/R 9 September 1997. 4 October 1996. INTRODUCTION
In some areas. WT/DS/84/R. if conflict arises between the rules of the Agreement on Agriculture and any other WTO provision.
Appellate Body Report WT/DS75/AB/R. In fact.
Chile – Taxes on Alcoholic Beverages. Panel Report WT/DS75/R.
among other things. the principles of the GATT 1994 of: Most-Favoured-Nation Treatment of Article I and National Treatment. As the EU was bound by its tariff schedule which provided for MFN non-discriminatory treatment. The EC – Poultry and EC .2 and 3. ("EC – Poultry"). The WTO Appellate Body found that the bilateral agreement was not part of WTO law and therefore could not be applied directly as law in WTO dispute resolution. Administration of Quantitative Restrictions of Article XIII and General Exceptions of Article XX. Some of the most relevant provisions to agriculture are: the country schedules established within the GATT 1994 Article II. adopted 13 July 1999. adopted 12 March 1998 and WT/DS69/AB/R. these requirements must be observed. Agricultural products are "goods" for the purposes of the GATT 1994. The dispute involved the interpretation of the EU's tariff schedule and its relationship with a separate bilateral agreement between the EU and Brazil.A.A.
. the tariff-rate quota should be allocated exclusively to Brazil and not shared on an MFN basis with other WTO Members. Brazil argued that. (2) Articles 1.III. THE AGREEMENT ON IMPORT LICENSING PROCEDURES
Agricultural trade is sometimes administered through licences.1. WT/DS69/R.Bananas cases included the Agreement on Import Licensing Procedures.
In that case of EC – Poultry Brazil complained about the allocation of an EU tariff-rate quota for frozen poultry meat and the use by the EU of a special safeguard measure under the Agreement on Agriculture.2 make it clear that the Licensing Agreement is also concerned with. the Non-discriminatory.2. both for import and export purposes. as a result of the agreement.
WT/DS69/R and WT/DS69/AB/R. the Appellate Body interpreted the relevant EU tariff schedule. preventing trade distortions that may be caused by licensing procedures. The Appellate Body further found that the EU's administration of this tariff quota did not violate the WTO Import Licensing Agreement. the General Elimination of Quantitative Restrictions of Article XI. It follows that wherever an import licensing regime is applied. the Appellate Body made several findings and reiterated that: (1) The preamble to the Licensing Agreement stresses that the Agreement aims at ensuring that import licensing procedures "are not utilized in a manner contrary to the principles and obligations of GATT 1994" and are "implemented in a transparent and predictable manner". On the Agreement on Import Licensing Procedures.
III. The key provisions regulating import licensing are to be found in the Agreement on Import Licensing Procedures. The
European Communities – Measures Affecting the Importation of Certain Poultry Products. which provided for a global annual duty-free tariff-rate quota for frozen poultry meat. Brazil could not seek preferential treatment on the basis of tariff concessions negotiated bilaterally. THE GATT 1994
Article 21 of the Agreement on Agriculture states explicitly that the GATT 1994 applies to agriculture. Instead.
. adopted 25 September 1997. paragraph 121 GATT Panel Report. Sale and Distribution of Bananas ("Recourse to Article 21. as modified by the Appellate Body Report.Regime for the Importation. adopted 9 April 1999. adopted on 11 February 1994. adopted 12 April 1999. Ecuador. have restrictive or distortive effects on that part of trade that is not strictly subject to those procedures.org/english/res_e/booksp_e/dispu_summary06_e. In April 1996. WT/DS27/ARB. pp. Decision by the Arbitrators ("Recourse to Arbitration by the EU under Article 22. adopted 24 March 2000. EEC – Import Regime for Bananas ("EC – Bananas II").Bananas (21. WT/DS27/RW/EEC. In relation to the Agreement on Import Licensing Procedures the Panel in EC – Bananas III found that this Agreement applies to licensing procedures for tariff quotas. involving both GATT and WTO dispute settlement.wto. adopted 12 April 1999. in fact. DS38/R. European Communities . DS32/R.wto.wto. Sale and Distribution of Bananas ("Recourse to Article 21. Honduras. see: http://www. Guatemala.
bananas. There may be situations where the operation of licensing procedures. Panel Report. the GATS and the Agreement on Import Licensing Procedures. European Communities .Members States Import Regimes for Bananas ("EC – Bananas I"). 1-11.pdf See also the WTO Analytical Index at: http://www.
20 19 18
dispute . The Agreement on Import Licensing Procedures also featured in the EC – Bananas long and complex history. WT/DS27/ARB/ECU. Sale and Distribution of Bananas ("EC – Bananas III"). WT/DS27/R/ECU.5)"). EEC .
OJ L 47. ("EC .htm
Appellate Body Report.requirement to prevent trade distortion found in Articles 1. EC – Poultry. GATT Panel Report. WT/DS27/RW/ECU.
25 February 1993.org/english/res_e/booksp_e/analytic_index_e/agriculture_e.org/english/tratop_e/dispu_e/find_dispu_cases_e.
TIP If you want to know more about the above cases or to read the cases in full. Decision by the Arbitrators ("Recourse to Arbitration by the EU under Article 22.6").
adopted on 19 May 1993.a case with a
The WTO Panel ruled that the EU bananas import regime violated WTO obligations under the GATT.5 by European Union").5)"). European Communities . The Appellate Body upheld this finding as well as the Panel's finding that both Article 1.htm http://www.3 of the Licensing Agreement and Article X:3(a) of the GATT 1994 apply to the EU import licensing procedures.5 by Ecuador"). WT/DS27/AB/R. Mexico and the United States requested the establishment of a panel to examine the EU regime for the importation.Regime for the Importation.2 and 3.2 of the Licensing Agreement refers to any trade distortion that may be caused by the introduction or operation of licensing procedures. and is not necessarily limited to that part of trade to which the licensing procedures themselves apply.Regime for the Importation. ("EC . sale and distribution of bananas established by Council Regulation 404/93.6").Bananas (21.
while the Agreement on Agriculture governs trade in the fruit itself (tariffs and other measures). In 1995. Article 14 of the Agreement on Agriculture provides that "Members agree to give effect to the Agreement on the Application of Sanitary and Phytosanitary Measures". protectionist use of food safety as well as animal and plant health measures. WT/DS18/AB/R. Countries may require that both domestically produced and imported goods should satisfy certain minimum levels of quality. AGREEMENT ON SANITARY & PHYTOSANITARY MEASURES AND THE AGREEMENT ON TECHNICAL BARRIERS TO TRADE
The SPS Agreement applies to measures that affect agriculture products. adopted
12 June 1998. SPS and the Agreement on Agriculture are closely related.5 of the SPS Agreement. the Panel then the Appellate found Australia to be in violation of Article 5.A. Three of the major WTO disputes are described below: (1) The Australia . First.III.5 of the Agreement. Clearer rules for sanitary and phytosanitary measures were also considered to be required. the TBT Agreement governs the packaging as well as the minimum size of a fruit.
. But they can also act as trade barriers when different standards exist in different countries. the SPS Agreement the use of anti-pest spray. as well as to products coming from other countries. The TBT. this agreement was negotiated in conjunction with the Agreement on Agriculture in the Uruguay Round. Australia imposed an import restriction which provided that fresh chilled and frozen salmon could only be imported to Australia if it had first been heat-treated. Sanitary (human and animal health) and phytosanitary (plant health) measures apply to domestically produced food or local animal and plant diseases. food and health products. Hence. It covers all products. including industrial and agricultural products. Food standards may facilitate trade by alleviating consumer fears about imported products. In 1975. The Appellate Body concluded that the Australian import restriction was. The TBT Agreement is also relevant to agricultural trade.
Australia – Measures Affecting Importation of Salmon ("Australian – Salmon"). WT/DS18/R. in reality. For example. These standards are particularly important with respect to agricultural. adopted 20 October 1998. Numerous disputes concerning agricultural products and the SPS and TBT Agreement have been referred to the WTO.Salmon
dispute concerned an import prohibition on uncooked salmon from certain parts
of the northern Pacific Ocean.3. health and safety standards. Canada requested consultations over the matter and argued that the import restriction was a violation of Australia's obligations under both the GATT 1994 and the SPS Agreement and that the measure nullified or impaired benefits that Canada had bargained for in the Uruguay Round. both in their own right and to prevent circumvention of stricter rules on import access through unjustified. a disguised restriction on trade and therefore a violation of Article 5.
arguing that it violated the SPS Agreement. The Japanese Government had simply "made available" the testing guidelines. is a pest of "quarantine-level" significance for Japan. was in violation of Article 5. The Panel first found that Japan had violated Article 7 of the SPS Agreement by failing to publish its testing requirements. plums. In February 1999. WT/DS76/AB/R. These tests could take up to two years. The US and Canada contested the ban. and live ornamental finfish. although common in the US.2 and 5. apples and walnuts originating from the continental US because they were potential hosts for the coddling moth. The Japanese import restriction contained an exemption from the import ban on a variety-by-variety basis.7 of the SPS Agreement. WT/DS48/AB/R. (3) The EC – Hormones dispute
concerned certain EU measures that banned the sale of beef derived from
cattle that had been given growth hormones. The
US argued that a Japanese import restriction on certain types of fresh fruit was in violation of the SPS Agreement.
Japan – Measures Affecting Agricultural Products ("Japan – Agricultural Products II").They found that: 1. while Article 7 and Annex B oblige WTO Members to "publish promptly" all SPS measures. pears. did not override any stated obligations. adopted 22 February 1999. It was therefore found to be in violation of the SPS Agreement. adopted 16 January 1998.
EC – Measures Concerning Meat and Meat Products ("EC – Hormones"). This exemption provided that the efficiency of quarantine treatment for each variety of these agricultural products had to be tested before these products could be imported into Japan. quince. WT/DS26/R/USA. peaches. cherries.1 of the SPS Agreement. especially Articles 2. adopted
27 October 1998. therefore. plums and quince the Appellate Body found that Japan had failed to conduct a proper risk assessment and. both of which posed an equal or greater risk of spreading disease to the very domestic stocks that the salmon ban ostensibly protected. These Panel's findings were upheld by the Appellate Body.2.6. This moth. the WTO Appellate Body essentially upheld the Panel's findings. The Panel found and the Appellate Body upheld the determination that the EU had failed to conduct a risk assessment that satisfied its obligations under Article 5 of the SPS Agreement. Australia limited its import ban to salmon. adopted
18 August 1997. WT/DS76/R. because these measures were not based on a risk assessment as required by Article 5. For apricots. the absence of any controls on the internal movement of the salmon products when compared with the import prohibition on ocean-caught Pacific salmon. The EU measures banning hormone treated beef were found to be in violation of the SPS Agreement. The Appellate Body concluded that the Japanese requirement of testing for some of the products was not based on science. The measures in dispute generally prohibited any imports of fresh apricots.1 of the SPS Agreement. and 2. especially not Articles 5. although represented in Article 5. while at the same time tolerating imports of herring used as bait. pears. (2) The Japan – Agricultural Products II
case concerned the standards for different varieties of fruits. It was also found that the precautionary principle.1 and 5.
provided that such imports are causing. However. or threatening to cause injury to a domestic industry. subject to the Agreement on Agriculture.
. Special procedures must be followed by national authorities in deciding whether to impose such measures. the SCM Agreement applies to subsidies for agricultural products.pdf See also the WTO Analytical Index at: http://www.org/english/tratop_e/dispu_e/find_dispu_cases_e. except when the subsidies conform to the Agreement on Agriculture. DUMPING & ANTI‐DUMPING MEASURES IN AGRICULTURE
GATT 1994 allows WTO Members to impose anti-dumping duties.5. Article 13 of the Agreement on Agriculture (the "Peace Clause") established that. Furthermore. There is nothing in the Agreement on Agriculture which exempts agricultural products from the application of the Article VI of the GATT 1994 and the Anti-dumping Agreement.A.wto. SPS measures which were not based on existing international standards. there should be some protection from challenge and action under the SCM Agreement for agricultural subsidies that complied with a Member's commitments. until the end of 2003.htm http://www.htm
III. without justification under Article 3. which strives to avoid arbitrary or unjustifiable distinctions in the levels of sanitary protection set by Members.3 of the SPS Agreement. as set forth in its Article 21. see: http://www. See the peace clause above. Article 21 of the Agreement on Agriculture explicitly states that the provisions of GATT 1994 and of other agreements in Annex 1A to the WTO Agreement apply to agriculture. for more details.wto.The Appellate Body further stated that the EU by maintaining.org/english/res_e/booksp_e/dispu_summary06_e.1 of the SPS Agreement.wto. as explained above. The provisions of the SCM Agreement firmly state that its provisions apply. since the end of 2003. when such distinctions can inhibit international trade. therefore including the Anti-dumping Agreement. both the Panel and the Appellate Body found that the EU measures were inconsistent with Article 5. AGREEMENT ON SUBSIDIES AND COUNTERVAILING MEASURES (SCM AGREEMENT)
The SCM Agreement applies to agricultural goods as well as industrial products.A.org/english/res_e/booksp_e/analytic_index_e/agriculture_e.
III. Finally. acted inconsistently with Article 3.
TIP If you want to know more about the above cases or to read the cases in full.5. under the heading "Due Restraint".4.
The Korea – Dairy case (WT/DS98)
arose out of the imposition by the Republic of Korea of definitive
safeguard measures in the form of a quantitative restriction on imports of dairy products. The provisions on safeguard measures under Article XIX of the GATT 1994.
adopted 21 June 1999. WT/DS166/AB/R. The GATT 1994 Article XIX:2 allows provisional measures to be imposed in critical circumstances where delay would cause damage that would be difficult to repair.1. The Appellate Body also upheld the Panel's finding that the first sentence of Article 5. 4.2(a) of the Agreement on Safeguards. and Articles 2. that quota comes in effect subject to the provisions of the GATT 1994 Article XIII On the administration and allocation of quotas. 8 and 12 of the Agreement on Safeguards. The US – Wheat Gluten case
arose from of the imposition by the United States of definitive safeguard
measures on imports of wheat gluten.2(b). "Safeguard measures" may result in the imposition of quantitative import restrictions or in a tariff increase above bound rates. The safeguard measure excluded imports from Canada due to its partnership status under NAFTA. Such measures may take the form of tariff increases only. 4. adopted 22 December 2000. WT/DS98/AB/R.
Korea – Definitive Safeguard Measure on Imports of Certain Dairy Products ("Korea – Dairy"). adopted 14 December 1999. The EU challenged the safeguard measures before the WTO under the GATT 1994 Article XIX:1(a) and Articles 2. The EU challenged the safeguard measures before the WTO under the GATT 1994 Article XIX. In addition.1 of the Agreement on Safeguards imposes an obligation on a Member applying a safeguard measure to ensure that the measure applied is not more restrictive than necessary to prevent or remedy serious injury and to facilitate adjustment. WT/DS98/R. which established specific rules for the application of safeguard measures.III.6.2(a). THE AGREEMENT ON SAFEGUARDS
WTO Members may restrict imports of a product temporarily if its domestic industry is injured or threatened with injury caused by a surge in imports. 5. WT/DS166/R.2. entitled "Emergency Action on Imports of Particular Products" is now complement by the WTO Agreement on Safeguards. In fact. there have been numerous cases concerning agriculture that has been referred to the WTO dispute settlement regarding safeguards measures.1 and 12(1) to (3) of the Agreement on Safeguards. GATT 1994 Article XIX safeguard measures apply to all products subject to the GATT 1994 including all agricultural and food products. If the safeguard measure is the introduction of a quantitative restriction. adopted 31 July 2000. in the form of a quantitative restriction.A.
United States – Definitive Safeguard Measures on Imports of Wheat Gluten from the EC ("US – Wheat
Gluten"). the period of application of any provisional measure must be included in the total period of application of a safeguard measure. The Panel found and the Appellate Body upheld that the definitive safeguard measure was imposed inconsistently with the provisions of Article 4. 4. and may be kept in place for a maximum of 200 days.
9). having included Canada in its safeguard investigation. for a finding of causation by "unforeseen developments".1. Australia and New Zealand challenged the
United States safeguard measure. plant variety protection (Article 27. The Panel found and the Appellate Body upheld the finding that the United States had acted inconsistently with Article 2.wto. requiring correspondence between the investigation and the measures applied.3(b)). WT/DS177/AB/R and WT/DS178/AB/R. In the US – Lamb
(WT/DS177 and WT/DS178) dispute.htm http://www. patent protection of agricultural chemical products (Articles 70. 4.org/english/res_e/booksp_e/dispu_summary06_e.org/english/res_e/booksp_e/analytic_index_e/agriculture_e.wto. chilled and frozen lamb meat under the GATT 1994 Article XIX.7.
TIP If you want to know more about the above cases or to read the cases in full.
.wto. see: http://www.org/english/tratop_e/dispu_e/find_dispu_cases_e.2(c) of the Agreement on Safeguards and with Article XIX:1(a) of the GATT 1994 by failing to demonstrate as a matter of fact the existence of "unforeseen developments". The Appellate Body specified that national authorities conducting safeguard investigations were obliged to consider all relevant factors.htm
III. or Frozen Lamb Meat from New Zealand and
Australia ("US – Lamb"). in the form of a tariff rate quota.2(a) and 4.
US – Safeguard Measures on Imports of Fresh. WT/DS177/R and WT/DS178/R.8 and 70.The United States was found to be in violation of Article 4. adopted 21 December 2000. under Article XIX:1(a) of the GATT 1994.A.2 of the Agreement on Safeguards. could not exclude Canada from its safeguard measure. The Panel and the Appellate Body confirmed the requirement. on imports of fresh.pdf See also the WTO Analytical Index at: http://www. and Article 4 of the Agreement on Safeguards. adopted 1 May 2001. regardless of whether they had been clearly raised by the parties to the dispute. because its authorities failed to take into account certain "relevant factors" in their investigation. TRIPS & AGRICULTURE
Some elements of the TRIPs Agreement relating to agriculture include: à à à geographical indications "GIs" (Articles 22-24). The Appellate Body also found that the United States. Chilled.
public disclosure of certain details of a device.
PATENT PROTECTION OF AGRICULTURAL CHEMICAL PRODUCTS (ARTICLES 70. reputation or other characteristic of the good is essentially attributable to its geographical origin.e. even where the true origin of the wine or spirit is indicated or the geographical indication is used in a translation or accompanied by expressions such as "kind". where a given quality.
Article 22. or a region or locality in that territory.
. The TRIPS Agreement requires that all WTO Members protect GIs." Geographical indications for wines and spirits have additional protection compared to that provided in Article 22 for all products.a.
b. except when an exception applies (Article 27. However. whether a product (such as a medicine) or a process (such as a method of producing the chemical ingredients for a medicine). the use of a geographical indication identifying a wine or spirit not originating in the place indicated by the geographical indication is prohibited. b) any use which constitute an act of unfair competition within the meaning of Article 10bis of the Paris Convention (1967).
For wines and spirits.1. A patent is a set of exclusive rights granted by a state to a patentee (the inventor or assignee) for a fixed period of time in exchange for the regulated.8 AND 70. method. WTO Members must provide the legal means for interested parties to prevent: a) "the use of any means in the designation or presentation of a good. GIs also protect non-agricultural products such as the production process or manufacturing skills associated with an area.1 of the TRIPs Agreement defines geographical indications (GIs) as:
"… indications which identify a good as originating in the territory of a Member."
GIs may be used for a wide variety of agricultural products. "type". i.1).
Under Article 23. that indicates or suggests that the good in question originates in a geographical area. WTO Members have to provide higher levels of protection. "style". other than the true place of origin in a manner which misleads the public as to the geographical origin of the good. "imitation" or the like.9)
WTO Members must provide patent protection for any invention. involves an inventive step and is capable of industrial application. process or composition of the invention. which is new. even where there is no danger of the public being misled and the GI is accompanied by expressions such as "imitation" of the GI (Article 23).
c. However. such as Macao and Hong Kong and the EU (as they are not states).
Union had a licensing system for the allocation of the right to import bananas within a TRQ. However. using. adopted 9 September 1997.8.
WT/DS27/R/MEX. and essentially biological processes for the production of plants or animals other than non-biological and microbiological processes.3(b)) Article 27.
III. Article 2.1 of the TRIPS Agreement incorporates the provision of the Paris Convention.The exclusive right granted to a patentee in most countries is the right to prevent or exclude others from making. What about those on services? This was the issue in a case concerning agricultural products .A. This also applies to WTO Members that are not parties to the Paris Union. Such protection is not new. Members can exclude plants and animals and essentially biological processes for the production of plants or animals. (Article 27. selling. WT/DS27/AB/R. WT/DS27/R/USA. and Distribution of Bananas ("EC – Bananas III") WT/DS27/R/ECU. The provisions of this subparagraph shall be reviewed four years after the date of entry into force of the WTO Agreement. This system was
EC – Regime for the Importation. challenged in the WTO. Members shall provide for the protection of plant varieties either by patents or by an effective sui generis system or by any combination thereof. adopted 22 May 1997. since patents were already protected by the Paris Convention of 1883. or by an effective sui generis system. GATS AND AGRICULTURE
As you have seen before. Sale.
PLANT VARIETY PROTECTION (ARTICLE 27. offering to sell or importing the claimed invention.3(b):
3. It obliges WTO Members to comply with Articles 1 through 12 and 19 of the latest act of the Paris Convention (1967).3(B))
WTO Members must protect new varieties of plants developed by plant breeders though patents.Bananas III case. or by any combination thereof. both the rules on goods (in GATT 1994) and those on intellectual property (in the TRIPS Agreement) apply to agriculture. Members may also exclude from patentability: (b) plants and animals other than microorganisms.
.the EC .
Under the GATS. However. Certain measures could be found to fall exclusively within the scope of the GATT 1994. and Distribution of Bananas –
Complaint by Ecuador ("EC – Bananas III (Ecuador)").
Appellate Body Report. the Appellate Body noted: ".
This was confirmed by the Appellate body. These are measures that involve a service relating to a particular good or a service supplied in conjunction with a particular good. the measure in question could be scrutinized under both the GATT 1994 and the GATS. European Communities – Regime for the Importation. This interpretation is further reinforced by the conclusions of previous panels that the term "affecting" in the context of Article III of the GATT is wider in scope than such terms as "regulating" or "governing". Sale. paragraph 7. European Communities – Regime for the Importation.
The Appellate Body. and Distribution of
Bananas ("EC – Bananas III"). when they affect trade in goods as goods. In our view. Sale. the specific aspects of that measure examined under each agreement could be different. Under the GATT 1994. EC – Bananas III. noted that: "(…) Article I:1 of the GATS provides that "[t]his Agreement applies to measures by Members affecting trade in services". paragraph 218. and that the GATT 1994 and the GATS may overlap in application to a particular measure.. adopted 25 September 1997. We also agree that Article XXVIII(c) of the GATS does not narrow "the meaning of the term 'affecting' to 'in respect of' ". as modified by the Appellate Body Report. There is nothing at all in these provisions to suggest a limited scope of application for the GATS. when they affect the supply of services as services. In all such cases in this third category. which indicates a broad scope of application. while the same measure could be scrutinized under both agreements.
Panel Report. the focus is on how the measure affects the supply of the service or the service suppliers involved. WT/DS27/R/ECU. The EU argued that the GATS did not apply to the EU import licensing procedures because they were "not measures 'affecting trade in services' within the meaning of Article I:1 of the GATS". sale and delivery of a service". Certain measures could be found to fall exclusively within the scope of the GATS. the focus is on how the measure affects the goods involved. WT/DS27/AB/R.
Appellate Body Report. The ordinary meaning of the word "affecting" implies a measure that has "an effect on". In particular. adopted 25 September 1997. paragraph 220. marketing.286.. the use of the term "affecting" reflects the intent of the drafters to give a broad reach to the GATS. (…) Article I:3(b) of the GATS provides that "'services' includes any service in any sector except services supplied in the exercise of governmental authority" (emphasis added). They held that the EU banana import licensing procedures were subject to both the GATT 1994 and the GATS. distribution.
The Appellate Body also agreed with the Panel and confirmed that that the GATS and the GATT 1994 are not mutually exclusive agreements. There is yet a third category of measures that could be found to fall within the scope of both the GATT 1994 and the GATS. however.The Panel found that there is no legal basis for an a priori exclusion of measures within the EU banana import licensing regime from the scope of the GATS. and that Article XXVIII(b) of the GATS provides that the "'supply of a service' includes the production.
.org/english/res_e/booksp_e/dispu_summary06_e.pdf See also the WTO Analytical Index at: http://www. see: http://www. Besides the Agreement on Agriculture what are some of the WTO Agreements that related to Agriculture as listed in Annex 1A?
Appellate Body Report. paragraph 221. or both.wto.org/english/tratop_e/dispu_e/find_dispu_cases_e.htm http://www.org/english/res_e/booksp_e/analytic_index_e/agriculture_e. EC – Bananas III.Whether a certain measure affecting the supply of a service related to a particular good is scrutinized under the GATT 1994 or the GATS. is a matter that can only be determined on a case-by-case basis.wto.wto."
TIP If you want to know more about the above cases or to read the cases in full.htm
Least-developed countries do not have any reduction commitments. Developing countries do not have to cut their subsidies or lower their tariffs as much as developed countries. but preferably through policies that cause a minimal or none distortion to trade. The new Agreement. The new rules and commitments apply to market access. created a definition of agricultural products. The Agreement on Agriculture reflects the compromises made to satisfy the multiple negotiating interests in the Uruguay Round. It includes provisions that limit the use of distorting domestic support policies. export subsidies and subjected these limits to reductions.
The results of the Uruguay Round provide a framework for the long-term reform of agricultural trade and domestic policies. The Agreement on Agriculture also includes a "Peace Clause" which was designed to reduce the likelihood of disputes or challenges on agricultural subsidies over a period of nine years. The Agreement on Agriculture does allow governments to support their rural economies.
. and they are given extra time to complete their obligations. Special provisions deal with the interests of countries that rely on imports for their food supplies. It also allows some flexibility in the way commitments are implemented. These were launched in 2000 and continue as part of the Doha Development Agenda.IV. and the concerns of least-developed economies. domestic support and export competition. and converted all non-tariff barriers into ordinary customs duties. This provision expired at the end of 2003. The Agreement on Agriculture includes a commitment to continue the reform through new negotiations.
They are to: (1) (2) (3) do so in accordance with Article XI:2(a) of the GATT 1994. These minimum access tariff quotas were to be expanded to 5% over the implementation period.
7. (i) (ii) Waivers. A special safeguard was introduced which can be used on products that were tariffied and which have the letters SSG in the Schedule.2(c). They are not to be increased in the future. quotas setting the maximum level of imports.
5. 2. Tariffs are bound and subject to reduction.
(iii) variable import levies. to consult with any other Member having a substantial interest as an importer
This rule applies to developing countries only in so far as they are net exporters of the foodstuff in questions. Export subsidies on agricultural primary products provided that agricultural export subsidies were not used to capture more than an "equitable share" of world exports of the product concerned (Article XVI:3 of GATT). non-tariff measures imposed by state trading enterprises. give due consideration to the effects of such restrictions on importing Members' food security. 6. and reduction of the quantity of export benefiting from such subsidies. (i) (ii) import bans. Protocol of accession.
These are market access commitments found in the Schedule of Tariff Concession. and (v) 4.
.PROPOSED ANSWERS: 1. and
(iii) Article XI. if requested.
All agricultural NTBs have been abolished and replaced by tariffs. (iv) minimum import prices. There are avenues for the maintenance of current access opportunities and the establishment of minimum access tariff quotas (at reduced-tariff rates) where current access is less than 3% of domestic consumption. (1) (2) reduction of the amount of money spent on export subsidies. 3.
which was two-thirds for the developing countries of the levels required for the developed countries in each of these three areas.
General Agreement on Tariffs and Trade (GATT 1994). Differential and more favourable treatment for developing country Members is an integral part of the negotiation. Agreement on Sanitary and Phytosanitary Measures. Waiver of tariffication . Agreement on Technical Barriers to Trade.
. Agreement on Import Licensing. 4. Agreement on Anti-dumping.
The peace clause is found in Article 13 of the Agreement on Agriculture. developments in the trade of agricultural products. 3. 1995-2004) to implement various reduction provisions. including rule-based commitments. tariffs and export subsidies .
11. Provides a forum for Members to discuss matters related to agriculture trade and to consult on matters relating to the implementation of commitments. and under Article 18. compared to six years for the developed countries. Agreement on Textiles and Clothing (terminated on 1/1 2005). Agreement on Subsidies and Countervailing Measures. Least developed countries were not required to make reductions. It gave some protection to agricultural subsidies provided in accordance with the Agreement on Agriculture from being challenged under specific provisions of the GATT or the SCM Agreement for a period of 9 years.
1. and Monitors 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.
Oversees the implementation of the Agreement on Agriculture. At the Committee meetings. Agreement on Preshipment Inspection. by converting quotas and other quantitative import restrictions to tariffs. 2.7 counter-notifications can be made when one Member has information which suggests that another Member should have notified a particular measure or action to the Committee. Agreement on Rules of Origin. Reviews notifications. and Agreement on Safeguards.developing countries are given a longer period (10 years. Longer implementation period .the elimination of non-tariff barriers. Members pose questions to Members who make notifications.
10. Lower reduction rates to be applied to fixed base period values of trade-distorting domestic supports (covered by Total Aggregate Measurement of Support). Agreement on Customs Valuation.
9.8. Agreement on Trade Related Investment Measures. Under Article 18.6 of the Agreement on Agriculture other matters related to the reform programme can be raised. as well as. It expired on 31 December 2003.
Outline the prohibition of non-tariff border measures. Explain the Special Treatment provisions relating to Market Access. and Outline the notification obligations of WTO Members concerning market access for agricultural products.
. Describe the Schedule of Tariff Concessions and explain the Tariff Quota Commitments.MODULE
Market Access in the Agreement on Agriculture
ESTIMATED TIME: 6 hours
OBJECTIVES OF MODULE 4
Present the first pillar of the Agreement on Agriculture: Market Access Outline the Conceptual Framework of the rules on market access in the Agreement on Agriculture. Describe the special safeguard provisions. Explain "Tariffication" and the tariff reductions commitments that Members undertook during the Uruguay Round.
Recall that a tariff can take different forms: It can be expressed as an ad valorem tariff (percentage of value). as seasonal tariffs. in the case of goods. created a definition of agricultural products. and à describe the two ways the special agriculture safeguard can work and the conditions that must be satisfied for WTO Members to invoke the safeguard measures.I. tariff rate quotas and the Special Safeguard. bound tariffs. lower. 12% plus $7 per 100kg). Article VI anti-dumping. as either/or tariffs (e. imports into the customs territory). which is different (lower) than the general out-of-quota tariff. Article 5 of the Agreement on Agriculture also provides for additional duties in cases where the import price falls or imports surge for certain products through the agriculture Special Safeguard. explain a tariff quota and describes the principle methods of TRQ administration. describe the measures that WTO Members can use to protect against the import of particular products under the specific safeguard provisions and differentiate it from the general safeguard provision. Recall also that a tariff rate quota is a specific quantity (quota) of a product. multilateral trade policy has sought to make market access predictable and more liberal. particularly in agriculture. $7 per 100kg). The term "market access" refers to entry into the market of another country (that is. Therefore. At the end of this Module. Article XIX safeguards. such as. Traditionally. made provisions for all non-tariff barriers (NTBs) to be converted into customs duties and established new rules and commitments for market access.g. as incorporated in the Agreement on Agriculture. as a specific duty (e.2 of the Agreement on Agriculture.g. Market access commitments can also relate to tariff quotas.g. i.e. This Module looks at the rules on market access in more detail. Market access is regulated by government-imposed conditions under which a product may enter a country. This is done through the binding of maximum permissible tariffs in Members' Schedules of commitments and applying reductions to arrive at new.
In Module 2. 12% or $7 per 100kg whichever is the greater). Tariff quotas are fixed quantities that can be imported at lower tariffs than the general bound rate. which can enter a market at a tariff rate. tariff peaks and tariff escalation. as you also saw in Module 2. the SPS and TBT Agreements. explain the concept of country schedules and what is include therein. domestic support and export subsidies. general and specific border measures may also be adopted under the other WTO Agreements. you should be able to. etc. we saw that the new rules on agriculture. the specific border measures of interest to us for agricultural trade under the Agreement on Agriculture are tariffs. explain the prohibition on non-tariff measures in Article 4. Market access in the WTO is expressed through border measures.
. explain the terms: tariffication. tariffs and non-tariff measures. as a compound duty (e. among other things: à à à à à à explain the rules governing market access for agricultural goods in the WTO. However.
Tariff Reductions Start From Situation prior to 1986 Bound tariff Applied tariff Quantitative restriction Applied tariffs + Quantitative restriction Table 1:
Developed Countries Bound rate Applied rate 1 September 1986 Tariffication
Developing Countries Bound rate Ceiling Bindings or Tariffication Ceiling Bindings or Tariffication
Tariffication The Starting-point for Tariff Reductions
Ceiling Bindings or Tariffication
No tariff reductions for least-developed countries or for developing countries taking ceiling bindings (with
some exceptions). The methodology used depended on the form of the existing protection and the status of the country (that is. even where bound tariffs existed. such as quantitative restrictions under Article XI.
CEILING BINDINGS AND TARIFFICATION
Prior to the Agreement on Agriculture. bound tariffs remained bound and other forms of import restrictions were bound using the "tariffication" process or. For example. applied tariffs were bound at the rate that applied on 1 September 1986. As a result of the Uruguay Round."Modalities for the Establishment of Specific Binding Commitments under the Reform Programme" ("Modalities Agreement").
TARIFFICATION The methodology of the tariffication process is set out in Annex 3 of the Document . which are defined as specific duties and/or ad valorem charges on imports. market access for many agricultural products was restricted through so-called "grey area" measures whose legality was contestable. if it was developed or developing country). border protection was not always in the form of ordinary customs duties. for developing country Members by "ceiling bindings". Many agricultural products in several GATT Contracting Parties had no bound tariffs and agricultural trade was controlled through applied tariffs and/or a variety of non-tariff measures that impeded agricultural trade flows.2(c) of GATT. all WTO Members converted their various forms of non-tariff measures that they used to control trade into bound tariffs that provided substantially the same level of protection.
unit value for 1986-1988 = $50/tonne or 25% = $50/tonne. CEILING BINDINGS
Many developing countries did not have the resources for comprehensive tariffication of all unbound tariffs. Schedule XLIII – Nigeria with an 150% ceiling binding on all agriculture products. Instead. which often took the form of a maximum tariff applied to groups of agricultural products or to all agricultural products.A.
The tariffs resulting from the tariffication process account for nearly one fifth of the total number of agricultural tariff lines on average for developed-country Members.GNG/MA/W/24) can be found on the WTO website and on this site in the
eTraining online library. Some developing applied a single ceiling binding for all agricultural products. Schedule CXXVI – Uganda with a ceiling binding of 80% on most agriculture products. shall be made using the actual difference between internal and external prices in a transparent manner using data. whether expressed as ad valorem or specific rates. or = 25%. Examples of ceiling bindings: à à à à Schedule LXX – Bangladesh with a 200% ceiling binding on nearly all agriculture products. Schedule CXIII – Kenya with a 100% ceiling binding on all agriculture products.
. they were given the option of offering "ceiling bindings". Many Members made their own calculations of the tariffs resulting from tariffication and inscribed them in their Schedules of Commitments.
II. or etc. data sources and definitions as specified in Annex 2. or = $25/tonne + 12.5%. For example: Bound tariff is the price-gap between the internal price and external price.i.
The Modalities Agreement (MTN.Paragraph 2 of Annex 3 states that "the calculation of the tariff equivalents. this share is considerably smaller because many took the option of applying ceiling bindings. In the case of developing-country Members.f. which were subject to verification by other Members. and = $200/tonne = average c. Data used shall be for the years 1986 to 1988". others opted for different bindings on different groups of agricultural products. that is: Internal Price External Price --> Price Gap --> Tariff = $250/tonne = representative wholesale price.
BINDINGS AND REDUCTIONS
Once tariffs were fixed. What are the border measures to protect markets allowed under the Agreement on Agriculture? What were the reduction commitments made on market access during the Uruguay Round?
. 2. Developing countries that adopted ceiling bindings did not have to reduce their tariffs. except on an ad-hoc basis. Members undertook to apply reductions.II. Least-developed countries did not have to reduce tariffs whether or not they adopted ceiling-bindings. These reductions are based on a simple average of 36% and a minimum of 15% over six years (1995-2000) for developed countries and a simple average of 24% and a minimum of 10% over ten years (1995-2004) for developing countries.
The Schedule sets out for each individual agricultural product.htm
III. but in Article II "Country Schedules" of the GATT 1994. agricultural products defined generally. in some cases.org/english/tratop_e/schedules_e/goods_schedules_table_e.
The Schedules of Concessions comprise the results of the calculations for tariffication. They are legally enforceable through Article 4 of the Agreement on Agriculture and Article II of the GATT 1994.A.htm Schedules are available in zipped format and can be downloaded. The bound level of tariffs can be changed in accordance with the procedures set out in Article XXVIII of the GATT 1994.B.org/english/tratop_e/schedules_e/goods_schedules_e. or. each WTO Member has a Schedule of Tariff Concessions covering all agricultural products. More details can be found at the following link: http://www. The agricultural commitments made by WTO Members on market access are not found in the Agreement on Agriculture.
These concessions are annexed to the Marrakesh Protocol and are an integral part of the GATT 1994.
SCHEDULE OF TARIFF CONCESSIONS & TARIFF QUOTA COMMITMENTS
III. as WTO Members are allowed to apply a lower tariff than the bound level. Article XXVIII is only invoked when a WTO Member wants to raise the tariff above the bound rate so as to increase market protection. INTRODUCTION
As we have seen. MODIFICATION OF SCHEDULES
The fact that WTO Members agreed to "bind" the tariffs they negotiated in the Uruguay Round means that they cannot normally impose import duties in excess of the "bound" tariffs inscribed in their Schedule of Concessions.III.wto. ceiling bindings and tariff reductions.wto. However.
TIP The Schedules of WTO Members can be found at the following link: http://www. the maximum tariff that may be applied on imports into the territory of the Member concerned.
. Note that these do not include changes that result from renegotiation of commitments or technical rectifications of Schedules. Both the Agreement on Agriculture and the Country Schedules must be examined together to understand a WTO's Member's Commitment.
the Member seeking to change its Schedule can still go ahead and make the change but those with INRs. principle supplier interests or substantial supplier interests can then enter negotiations with the Member concerned. the change is certified.
. This means that if a tariff is raised.e. the WTO Member changing the tariff must endeavour to maintain a general level of reciprocal and mutually advantageous concessions not less favourable to trade than that previously applicable. principle supplier interests or substantial interest can withdraw equivalent concessions. by lowering another tariff) so as to allow a rebalancing of the levels of trade concessions. some compensation must be given in another sector (i. a Member must notify the WTO that it intends to modify and Members with Initial Negotiating Rights. If agreement is reached with all the parties. If no agreement is reached.. Before any change can be made.According to Article XXVIII:2.
However. including the applicable tariff rates and any other conditions related to them. if necessary. A lower tariff (in-quota) rate is charged on the imports within the quota volume and a higher tariff (over-quota) rate is charged on the imports outside the quota. MTN:GNG/MA/W/24.
TRQs. in many cases some imports were allowed in and these "current access" opportunities had to be maintained and. increased to 3% of corresponding domestic consumption rising to 5% of domestic consumption by the end of the implementation period. as it was intended to result in a level of protection equivalent to the non-tariff measure previously in force.
It was foreseen that the conversion of non-tariff measures into tariffs using the 1986 to 1988 reference period could result in high tariff levels. The current and minimum access commitments were implemented by tariff-rate quotas (TRQs).IV.
A TRQ is a two level tariff. Least developed countries and developing countries with ceiling bindings did not have to create market access opportunities. are specified in the Schedules of the WTO Members concerned.
20 December 1993.
In cases where no significant quantities were imported a "minimum access commitment" had to be created starting at 3% of domestic consumption and increasing to 5% over the implementation period.
Modalities for the Establishment of Specific Binding Commitments under the Reform Programme. which allow imports at low tariff rates up to a certain volume.
see WTO Secretariat back ground paper "Tariff and other Quotas" TN/AG/S/5.
. see the Schedules of Morocco and the
Bolivarian Republic of Venezuela. The numbers in brackets show how many quotas each country has. For more details.ILLUSTRATION
Alba maintains the following TRQ on turnip for a year Y: à à à In-quota rate for imports up to 10MT = 5% Out-of-quota rate for imports above 10MT = 15% Imports of turnip in year Y = 17MT
There are currently (10 December 2006) 43 Members with a total of 1.425 individual TRQs specified in their Schedules (excluding 4 TRQs where the initial and final quantity levels are specified as zero).wto.
WHO HAS TARIFF QUOTAS?
à à à à à à à à à à à à à à à
Australia (2) Barbados (36) Brazil (2) Bulgaria (73) Canada (21) Chile (1) China (10) Chinese Taipei (22) Colombia (67) Costa Rica (27) Croatia (9) Czech Rep (24) Dominican Rep (8) Ecuador (14) El Salvador (11)
à à à à à à à à à à à à à à à
EU (87) Guatemala (22) Hungary (70) Iceland (90) Indonesia (2) Israel (12) Japan (20) Korea (67) Latvia (4) Lithuania (4) Malaysia (19) Mexico (11) Morocco (16) New Zealand (3) Nicaragua (9)
à à à à à à à à à à à à à
Norway (232) Panama (19) Philippines (14) Poland (109) Romania (12) Slovak Rep (24) Slovenia (20) South Africa (53) Switzerland (28) Thailand (23) Tunisia (13) United States (54) Venezuela (61)
43 WTO members currently have a combined total of 1.org/English/tratop_e/agric_e/negoti_e.htm#secretariat_papers
For the TRQs with zero initial and final tariff quota quantities. downloadable from: http://www.425 tariff quotas in their commitments.
Quota rent is a profit which results from the difference between the domestic price and the world price plus the in-quota tariff. In cases where the import price plus the in-quota tariff are much less than the domestic price. The necessity to administer the TRQs is a consequence of the fact that the demand to trade within the quota is often greater than the supply. This includes methods involving licences issued on a first-come. the TRQ should generate a "quota rent". then the higher out-of-quota tariff automatically applies. First-Served": No shares are allocated to importers. The physical importation of the good determines the order and hence the applicable tariff. The allocation of the TRQs among supply countries and the distribution of licences to traders determine who gets the benefit of this "quota rent" or profit. but it is of vital importance since it may affect trade by exporting countries. Imports are permitted entry at the in-quota tariff rates until such a time as the tariff quota is filled. Imports of the product are allowed into the territory of the Member in unlimited quantities at the in-quota tariff rate or below. Some methods of quota administration are explained below. TRQ administration determines whether a product exported from one country can gain access to the market of another country at the lower in-quota tariff. "Licences On Demand": Importers' shares are generally allocated or licences issued. 2. the right to import within the quota results in a profit over and above the profit available in normal trade. The implementation of commitments on TRQs has not been without difficulties and notifications are often the subject of questions in the Committee on Agriculture.
See the reports of the Committee on Agriculture in the document series G/AG/R/…
. in relation to quantities demanded and often prior to the commencement of the period during which the physical importation is to take place. This "extra" profit results from the fact that the protected market price is usually higher than the world market price. That is. Many Members feel that there is not enough clarity or detail in the rules covering the distribution of TRQs to countries and companies.
METHODS OF TRQ ADMINISTRATION 1. "Applied Tariffs": No shares are allocated to importers.The vast majority of TRQs in agriculture originate in the Uruguay Round negotiations and there are some TRQs that were negotiated during accessions to the WTO. "First-Come. TRQ ADMINISTRATION
TRQ administration is a technical subject.
1.first-served basis and those systems where licence requests are reduced pro rata where they exceed available quantities. "Producer Groups Or Associations": Import shares are allocated entirely or mainly to a producer group or association which imports (or has direct control of imports undertaken by the relevant Member) the product concerned.429
Tariff Quotas by Principal Administration Method and Number of Quotas.367
Number of Tariff Quotas
1995 1996 642 101 304 39 82 1997 676 146 307 57 87 1998 664 146 303 59 97 1999 657 143 315 59 97 2000 650 144 312 52 119 2001 643 141 351 53 100 2002 613 165 347 82 104 2003 614 165 355 81 104 2004 614 165 348 81 104
Applied Tariffs First-Come. 5. "Auctioning": Importers' shares are allocated. 10. "Non-Specified": Tariff quotas for which no administration method has been notified.394
1. TN/AG/S/22 27 April 2006
. largely based on an auctioning or competitive bid system. First-Served Licences on Demand Auctioning Historical Importers Imports Undertaken by State Trading Enterprises Producer Groups or Associations Other Mixed Allocation Methods Non-Specified Total Number of Applicable Tariff Quotas Table 2:
654 99 295 41 68
8 10 53 9
8 11 54 10
7 5 56 6
7 5 58 6
7 5 59 14
9 5 59 10
8 5 57 15
8 5 69 11
7 5 61 13
6 5 68 13
1. 6. "Imports Undertaken By State Trading Entities": Import shares are allocated entirely or mainly to a state trading entity which imports (or has direct control of imports undertaken by intermediaries) the product concerned. 7. or licences issued.259
Exporters are sometimes concerned that their ability to take advantage of TRQs can be impaired because of the quota administration. "Historical Importers": Importers' shares are allocated. 1995-2004
Source: WTO. principally in relation to past imports of the product concerned. they might complain that the licensing timetables put them at a disadvantage when production is seasonal and the products have to be transported over long distances. 9.376
1. "Other": Administration methods that do not clearly fall within any of the above categories. for example. Tariff Quota Administration Methods and Tariff Quota Fill. 8. "Mixed Allocation Methods": Administration methods involving a combination of the methods as set out above with no one method being dominant. or licences issued.429
2(d) states that quotas allocated among supplying countries can be allocated after consultations and agreement with those countries. country A should expect to continue to have 10% of the total import quota. The Agreement on Import Licensing Procedures has the rules governing the import licensing procedures used to administer the TRQs and to allocate them to traders (internal administration of TRQs). Sale and Distribution of Bananas.
GATT Article XIII provides for the administration of Quantitative Restrictions and governs the distribution of TRQs between supplying countries. if country A supplies 10% of the import demand for a product in the absence of import quotas then.Regime for the Importation. if quotas are introduced. most notably Article XIII of GATT 1994 and the Agreement on Import Licensing Procedures . The allocation of quotas to supplying countries is set out in the Schedules of Concessions and must comply with the rest of the Uruguay Round Agreements. GATT ARTICLE XIII
Let us go through GATT Article XIII First.
EC . which have a substantial interest. In other words.
Article XIII of the GATT 1994 has the rules governing the administration of import restrictions and the possible country allocation of the TRQ (external administration of TRQs).
EC . If this is not practical then allocations should be based on a representative period.B.Each method of TRQ administration has advantages and disadvantages. This provision requires that import restrictions should be applied in a non-discriminatory manner so that each supplying country should have the same share of the import market. Some importers also want rules because they want to be sure which methods are legal or illegal under WTO rules.Regime for the Importation. as they would achieve in the absence of an import restriction. and many WTO members acknowledge that it can be difficult to say conclusively whether one method is better than another.
. Sale and Distribution of Bananas. Several Members want the ongoing Doha negotiations to come up with some rules on TRQ administration because they want to be sure that the administration method does not impede market access.
Article XIII. WT/DS27/AB/R 9 adopted
September 1997 paragraph 193. WT/DS27/AB/R 9 adopted
September 1997 paragraphs 156–158.
Sale and Distribution of Bananas . in allocating quotas among supplying countries. 29 November 2006. In other words. The Agreement offers guidance on how governments should assess applications for licences. but Ecuador has initiated dispute settlement proceedings under Article 21. AGREEMENT ON IMPORT LICENSING PROCEDURES
The Agreement on Import Licensing Procedures says import licensing should be simple.5 of the DSU by Ecuador. Sale and Distribution of Bananas ("EC – Bananas III").The Appellate Body clarified this to some extent in the case "EC . paragraph 161). Distribution and Supply of Bananas" (the EC — Bananas III case). the Appellate Body stated that.
The EU then asked for. However. the EU tried to negotiate with supplying countries and when this failed they allocated to the principal suppliers based on a historical period.
European Communities – Regime for the Importation. To find a longer term solution the EU entered consultations with interested Members. there may not be a representative period. the importing Member should allocate first to substantial suppliers and then to smaller suppliers (WT/DS27/AB/R. transparent and predictable. the administration system should not distort or restrict trade any further than the TRQ itself.Recourse to by the European Union under Article 22. Sale and Distribution of Bananas: Recourse to
Article 21.C. perhaps because imports were disallowed or because certain exporting countries were deliberately favoured in the past. and was
granted. These consultations continue. if a Member imports a particular product from many different countries and they wish to distribute a TRQ among all these countries they must allocate to the largest before the smaller suppliers.Regime for the Importation.26.
European Communities . after the Appellate Body decision. WT/DS27/65/Rev.
paragraphs 5. Article 3 of the Agreement on Import Licensing Procedures on non-automatic licensing requires that.
European Communities . the arbitration report pointed out that to satisfy Article XIII the historical period must be representative.Regime for the Importation. in operating TRQs. and that information should be provided to Members on the administration system.6 of the DSU.1.
In that case. It also describes how countries should notify the WTO when they introduce new import licensing procedures or change existing procedures. For some countries.25 – 5. 9 April 1999. In the EC – Banana III case.Regime for the Importation.
IV. the agreement requires Members to publish sufficient information for traders to know how and why the licences are granted. a waiver from Article XIII which lasted until end 2005 (WT/MIN(01)/16 of 14 November 2001).5 of the DSU.
. For example. Non-automatic procedures are used to administer the TRQs. WT/DS27/ARB.
There are two basic licensing procedures: automatic and non-automatic.
Simple Average Fill Rate Principal Administration Method Applied Tariffs First-Come. Thus. the Appellate Body found that. Tariff Quota Administration Methods And Tariff Quota Fill. but they must be applied in a non-discriminatory manner and should not increase any trade distortions arising from the quotas. however. There is a perception that different products and different countries require different administration methods. FirstServed Licences on Demand Auctioning Historical Importers Imports Undertaken by State Trading Enterprises Producer Groups or Associations Other Mixed Allocation Methods Non-Specified Overall Table 3:
81 56 62 64 65 58 60 53 59 69 49 55 70 . the Agreement does not apply to the systems of licensing but only to the application of the system (WT/DS27/AB/R paragraph 192). auctioning.. The data in the table below shows the different fill rates according to the principal method of administration. The data should be interpreted with care. The systems themselves may not be considered fair and neutral. For this reason it is hard to draw conclusions from the average fill rates for each of the different administration methods. 60 43 6 1. it shows surprising results. In addition. 2000-2004
Source: WTO. For example.134 44 6 841 54 6 777 41 8 626 20 0 312 75 100 60 99 80 100 75 100 53 100 9 3 5 3 5 3 4 2 3 1 81 68 63 51 47 20 10 9 11 11 52 53 40 65 52 52 39 68 49 56 50 72 38 49 50 59 26 58 33 75 141 282 40 114 138 294 38 63 158 258 55 44 94 194 54 33 24 64 50 21 2000 67
2001 67 2002 71 2003 69 2004 76
Number of Tariff Quotas Included
2000 476 2001 240 2002 185 2003 185 2004 118
Tariff Quotas – Simple Average Fill Rates by Principal Administration Method. the sale of import licenses to the highest bidders. some Members have more than one administration method for the same tariff quota.Bananas case. although the Agreement on Import Licensing Procedures applies to import licenses made under TRQs. TN/AG/S/22 27 April 2006
. but it satisfies the Agreement on Import Licensing Procedures if no individual country is discriminated against in the administration of the license allocation system.IN DETAIL
In the EC .. a system of allocating licenses between different countries may be considered unfair by the supplying countries. which would be expected to ensure the use of the licence has surprisingly low fill rates while imports by state trading enterprises are quite high.
Mexico and the United States requested the establishment of a panel to examine the EU regime for the importation. 1-11.
25 February 1993.
OJ L 47.
The WTO Panel ruled that the EU bananas import regime violated WTO obligations under the GATT. such as that on 17 November 1997. the GATS and the Agreement on Import Licensing Procedures. sale and distribution of bananas established by Council Regulation 404/93. In relation to the Agreement on Import Licensing Procedures the Panel in EC – Bananas III found that this Agreement applies to licensing procedures for tariff quotas. to determine the "reasonable period of time" for implementation of the recommendations and rulings of the DSB. pursuant to Article 21. pp. This case was also adjudicated under Compliance Reports by the original panel (Article 21.
bananas. The Appellate Body upheld this finding as well as the Panel's finding that both Article 1. It was also subject to various arbitrations. You must read the case in its entirety to appreciate the intricacies.
The case has a long and complex history. Ecuador.3 of the Licensing Agreement and Article X:3(a) of the GATT 1994 apply to the EU import licensing procedures. In April 1996. involving both GATT and WTO dispute settlement. Guatemala. Honduras.
. However before we do so – please read the disclaimer!
While the case study below is based on prior WTO Panel and/or Appellate Body rulings its main purpose is not to describe and review all the arguments and conclusions in the case in detail but rather to focus on the issues and principles addressed in the course and provide you with an outline of elements that you may wish to consider when reflecting on these issues and principles.CASE STUDY 1
Let us look at the aspects of the EC — Bananas III case that deals with GATT Article XIII on the non-discriminatory administration of quantitative restriction.5 of the DSU ) to determine that the conformity of the implementing measures of the EU to WTO rules.3(c) of the DSU and the arbitrator's report on the Ecuadorian request for suspension of concessions.
I. reversing the Panel's finding. Honduras. Mexico. I:1 and that waivers must be narrowly interpreted and be subject to "strict disciplines". III. XVII Licensing Ag Art. I: The Appellate Body upheld the Panel's finding that the activity function rules. XIII given that the Waiver refers only to Art. 1. In an
Third countries are those countries other than (i) 12 African. were inconsistent with Art. XIII: The Appellate Body upheld the Panel's finding that the allocation of country-tariff quota shares to some Members not having a substantial interest in supplying bananas. I:1. i.
. XIII:1.e. distribution and sale of bananas. found that the Lomé Waiver does not apply to (i. introduced on 1 July 1993 and established by EEC Council Reg. XIII:1 and XIII:2. The Appellate Body also agreed with the Panel that the EU export certificate requirement accorded an advantage to some Members only. in violation of Art. Measure and Product at Issue
à Measures at issue: The European Union's regime for the importation. II. XIII GATS Arts. United Complainants States
Agreements GATT Arts. Summary of Key Panel / AB Findings
à GATT Art. 404/93. chapeau.3
Timeline of the dispute Establishment of Panel 8 May 1996
Circulation of Panel Report Circulation of AB Report Adoption 10 January 2001
22 May 1997 9 September 1997 25 September 1997
1.e. à Products at issue: Bananas imported from third countries. Guatemala. Sale and Distribution of Bananas (DS27)
Parties Ecuador. are inconsistent with Art. à Lomé Waiver: The Appellate Body.
2. à GATT Art. exempt) violations of GATT Art. The Appellate Body also agreed with the Panel that the BFA tariff quota reallocation rules (The Framework Agreement on Bananas ("BFA")). X. was inconsistent with Art.EC – BANANAS III European Communities – Regime for the Importation. but not to others. the BFA countries. which applied only to licence allocation rules for imports from other than traditional ACP countries. under which a portion of a tariff quota share not used by one BFA country could be reallocated exclusively to other BFA countries. I:1. Caribbean and Pacific ("ACP") countries who
have traditionally exported bananas to the EU and (ii) ACP countries that were not traditional suppliers of the EU market.
à Private counsel: The Appellate Body ruled that private lawyers may appear on behalf of a government during an Appellate Body oral hearing. Describe the rules on market access opportunities that were negotiated? Describe the rules on minimum market access? Tariff Rate Quotas are used to administer the current and minimum market access opportunities. 1. II and XVI: The Appellate Body upheld the Panel's finding that the EU measures are all inconsistent with GATS Art. 1. II and XVII.
3. the Panel did not allow them)
EXERCISES: 3. but that they were justified by the Lomé Waiver. à GATT Art.f. III:4: The Appellate Body agreed with the Panel that the EU procedures and requirements for the distribution of licences for importing bananas from non-traditional ACP suppliers were inconsistent with Art. not the rules themselves. X:3(a) and Licensing Agreement Art. What are the rules on TRQ administration?
. which are 5% of domestic demand and the low tariff for limited volumes of imports. I:1. à GATT Art. on the ground that these provisions apply only to the administrative procedures for rules. 4. and clarified that the "aim and effect" of a measure is irrelevant under GATS Art. III:4.3: The Appellate Body reversed the Panel's findings of violations of GATT Art.issue not appealed to the Appellate Body.3. à GATS Art. II and XVII because they are discriminatory. X:3(a) and Licensing Agreement Art. 5. (c. the Panel had found that tariff preferences for ACP countries were inconsistent with Art.
Article XI:2(c) of the GATT is now inoperative as regards agricultural products because it is superseded by Article 4.
. non-tariff measures maintained through state-trading enterprises. Article 4.A. except as otherwise provided for in Article 5 and Annex 5. This list is not exhaustive and other non-tariff measures come under the general prohibition as well.V. ARTICLE 4 OF THE AGREEMENT ON AGRICULTURE
Let's recall that Article XI."
What are these measures referred to in Article 4.2 there is a list of measures that had to be converted into tariffs and may no longer be used. whether or not the measures are maintained under country-specific derogations from the provisions of GATT 1947. non-agriculture-specific provisions of GATT 1994 or of the other Multilateral Trade Agreements in Annex 1A to the WTO Agreement. but not measures maintained under balance-of-payments provisions or under other general. discretionary import licensing. These measures include: à à à à à à à quantitative import restrictions.2 effectively means that tariffs are normally the only border protection measure allowed. or revert to any measures of the kind which have been required to be converted into ordinary customs duties.2(c) was conditional on Contracting Parties maintaining a minimum proportion of imports relative to domestic production.2 of the Agreement on Agriculture prohibits the use of non-tariff measures for agriculture products. variable import levies. and All similar border measures other than "ordinary customs duties". It provides that: "Members shall not maintain.2 of the Agreement on Agriculture.2(c) of the GATT 1947 allowed quantitative import restrictions in cases where GATT Contracting Parties had national supply management schemes and where allowing the unrestricted importation of competing products would undermine the national schemes. voluntary export restraints. resort to.2? In the footnote to Article 4. Article 4. Article XI.
THE PROHIBITION OF NON‐TARIFF BORDER MEASURES
V. minimum import prices.
however. anti-dumping and countervailing duties provided. in general.
Chile – Price Bands. Members can also use safeguards. which is examined below.The footnote to Article 4 does. tariffs must not be applied in a way that effectively amounts to an import charge like those included in the footnote to Article 4. Thus. Therefore. such as a variable levies or minimum import prices. they comply with the relevant rules. state that Members can resort to measures under the balance-ofpayments provisions and other non-agriculture-specific provisions of GATT 1994 and other multilateral trade agreements that resulted from the Uruguay Round.
It is now time to have a look at a dispute settlement case related to the prohibition of non-tariff border measures and Article 4 of the Agreement on Agriculture. WT/DS207/R 3 May 2002 and WT/DS207/AB/R 23 Sept 2002
. of course. This issue was the subject of the dispute case "Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products"
second sentence. Measure and Product at Issue
à Measure at issue: Chile's Price Band System. à Product at issue: Wheat. as it was assessed on the basis of exogenous price factors.
CHILE – PRICE BAND SYSTEM (DS207) Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products
Timeline of the dispute Establishment of Panel 12 March 2001 3 May 2002 23 September2002 23 October 2002
Argentina AA Art.
2. The Appellate Body however upheld the Panel's finding that Chile's price band system was designed and operated as a border measure sufficiently
.CASE STUDY 2
While the case study below is based on prior WTO Panel and/or Appellate Body rulings its main purpose is not to describe and review all the arguments and conclusions in the case in detail but rather to focus on the issues and principles addressed in the course and provide you with an outline of elements that you may wish to consider when reflecting on these issues and principles. 11: The Appellate Body reversed the Panels findings under GATT Art. governed by Rules on the Importation of Goods. 4. on the grounds that it was a claim that had not been raised by Argentina in its panel request or any subsequent submissions. The Appellate Body also stated that consideration by a Panel of claims not raised by the complainant deprived Chile of its due process rights under the DSU. by assessing a provision that was not part of the matter before it. Summary of Key Panel / AB Findings
à DSU Art. sugar and edible vegetable oils from Argentina. 11. II:1(b)
1. à AA Art. and the Panel. II:1(b). acted ultra petita and in violation of DSU Art. footnote 1 (market access): The Appellate Body reversed the Panel's findings that the term "ordinary customs duty" was to be understood as referring to "a customs duty which is not applied to factors of an exogenous nature" and Chile's price brand system was not an "ordinary customs duty".2
Circulation of Panel Report Circulation of AB Report Adoption 10 January 2001
GATT Art.2. wheat flour. through which the tariff rate for products at issue could be adjusted to international price developments if the price fell below a lower price band or rose beyond an upper price band. 4.
practice" (VCLT. the Appellate Body concluded that Chile's price band system was inconsistent with Art.similar to "variable import levies" and "minimum import prices" within the meaning of footnote 1 and therefore prohibited by Art. passive observers. However.2.7 to secure a positive solution of the dispute at hand.B.2 of the Agreement on Agriculture permits the use of non-tariff import restrictions consistent with the provisions of the GATT 1994 or other WTO Agreements which are applicable to general trade in goods (industrial or agricultural). 31.
EXCEPTIONS TO THE PROHIBITION OF NTBS
Normally. there are exceptions in Annex 5 of the Agreement on Agriculture.4 and 3. 4. Art. Other Issues 13
à Panel's terms of reference: The Appellate Body stated that it was appropriate to rule on the Chile Price Band System as it currently stood.
Other issues addressed: Working Procedure Appellate Review Rule 20(2)(d).
V. 4. on the grounds that the Panel request was broad enough to cover future amendments and that the amendment did not change the essence of the measure under challenge.3(b)). tariffs are the only form of protection allowed for agricultural products and Members cannot exceed the bound tariff rate in their Schedule of Concessions. In addition. 3.
. The Appellate Body also added that ruling on the Chile Price Band System currently in place would be in line with its obligations under DSU Art. Article 4.2. taking into account the amendments enacted after the establishment of the Panel. Thus.
Article 4. Israel and Chinese Taipei have since tariffied the products concerned (G/MA/TAR/RS/57. 78. Chinese Taipei also opted not to undergo tariffication for rice. as specified in Section I-B of Part I of the Schedule of the Member concerned. For the developed-country Members these tariff quota started at 4% of domestic demand which had to be increased by 0. and (e) minimum access opportunities in respect of the designated products correspond. 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.8% on a yearly basis. are increased by 0. to 4% of base period domestic consumption of the designated products from the beginning of the first year of the implementation period and. as being subject to special treatment reflecting factors of non-trade concerns.8% of corresponding domestic consumption in the base period per year for the remainder of the implementation period. They created tariff quotas.
The "special treatment" clause is part of Annex 5 to the Agreement on Agriculture and provides a major exception with respect to the general tariffication requirement. such as food security and environmental protection.1). (c) (d) effective production-restricting measures are applied to the primary agricultural product.
The products and countries concerned are: rice in the case of Japan. these Members undertook minimum import commitments. For the developing-country Members the tariff quota started at 2% of domestic demand and increased gradually to 4% by 2004.VI.2 does not apply to any primary agricultural product and its worked and/or prepared products ("designated products") in respect of which: (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"). Annex 5 permitted four countries to maintain non-tariff border measures on certain products during the period of tariff reductions (with the possibility of extending the special treatment. and cheese and sheep meat in the case of Israel. (b) no export subsidies have been provided since the beginning of the base period for the designated products. Under this provision. Korea and the Philippines are currently in negotiations on extending the special treatment (G/AG/W/62 and G/AG/W/63). During its accession process. 88 and 88/Corr. subject to further negotiations). The details of renegotiation and the increase in the tariff quotas after renegotiation are set out in Annex 5 of the Agreement on Agriculture. the obligation to convert protective measures into customs duties was deferred by six years for certain products. In return for the special treatment. Japan. Korea and the Philippines.
2 of the Agreement on Agriculture and what are the exceptions to this prohibition?
. Members can use non-tariff restrictions in cases of balance-of-payments difficulties under Article XII. the Agreement on Subsidies and Countervailing Measures and the Agreement on the Implementation of Article VI.
Article 4. Members can also take general safeguard action under Article XIX and the Agreement on
Safeguards.2 does not prevent the use of non-tariff import restrictions consistent with the provisions of the GATT or other WTO agreements. which are applicable to traded goods generally (industrial or agricultural). which restricts retaliation rights in cases where the Agreement is being complied with). Do you recall that in Module 2. in what circumstances can additional charges and/or import restrictions be imposed on market access for agricultural products? 7.2 of the Agreement on Agriculture. animal and plant health and to protect the environment.VII. HORIZONTAL EXCEPTIONS
In addition to the exception in Annex 5. in certain circumstances. Members can impose additional charges and/or import restrictions on market access for agricultural products. action under these provisions were restricted by the due Restraint clause of the Agreement on Agriculture. What is the prohibition in Article 4.
The GATT exceptions to the general rule of tariff-only border measures apply to agricultural products in the same way as they apply to industrial products. à The Agreement on Sanitary and Phytosanitary Measures permits import restrictions to protect human. (However. Some of these are explained below: à Article XX of GATT 1994 allows import restrictions for numerous reasons. including for reasons of public morals and protection of exhaustible natural resources. you studied the general horizontal exceptions that allow WTO Members to derogate from all WTO rules? This is not affected by Article 4. In addition to the exceptions in Annex 5. à à à Article XXI of GATT 1994 allows exceptions in cases of national security measures. and à Anti-dumping and countervailing action under Article VI of GATT 1994.
Simple Average Bound Tariff % Australia Bangladesh China Egypt India Indonesia Jamaica Kenya Nigeria Pakistan Philippines South Africa Sri Lanka Turkey Uruguay Venezuela Zambia Table 4: 3.5 15.8 18.5 47. specific duties.9 38.A. The following two tables (tables 4 and 5) present some data on the difference between bound and applied rates.0 150.VII.7 60.3 Average Applied vs Bound Tariffs
Simple Average Applied Tariff % 1.8 36.0 97.9 20.0 97.8 123.1 21.1 53.9 20.
APPLIED VS BOUND TARIFFS Many countries apply tariffs at levels below the rates set out in their Schedules of Concessions.0 13.6 39.8 95. IMPLEMENTATION
You have now studied rules and exceptions related to market access and agricultural products.
.3 114. Let us now see how these rules are implemented.6 14. For the Members in the table this does not cause any significant change in the data because they all have no.2 15. or very few. Table 4 shows the simple average bound and applied tariffs for certain Members.2 188.9 8.1 34.4 8.4 100.8 49. These averages do not include ad valorem equivalents of specific duties.0 9.5 11. WTO Note: Comparable figures for many countries are not presented because of the large number of non-ad valorem tariffs in their Schedules.2 33.8
Year for Average Applied Tariff 2003 2003 2002 2002 2002 2002 2003 2001 2002 2003 2003 2002 2001 2003 2002 2002 2003
Source: World Trade Report 2003.2 22.7 19.
9 5.2 5. and presents the comparison of bound and applied tariffs as both the simple average and the average weighted by the value of trade.7 56.0 54.3 13.1 19. 2004
VII.0 100.4 22.0 16.0 17.5
24.0 Average Applied vs Bound Rates
60.4 22.3 51.7 18. which meant that the difference between import and domestic price was considerable.6
East Asia & Pacific Europe & Central Asia Latin America & Caribbean Middle East & North Africa South Asia Sub-Saharan Africa
19.4 20.1 17.8 24.0 132.4 73.5 51. If other countries did not object by the conclusion of the Round on 15 April 1994.0 17.1
Weighted Average Applied 14.1 18.6
Developing countries Upper middle income Lower middle income Low income
Simple Average Applied Industrial countries EU Japan United States 24. SOME PROBLEMS WITH TARIFFS
During the Uruguay Round.1 14.4 15.3 16.7 50.9 74.4 75.0 Bound 47. countries made their own calculations of the tariffs resulting from tariffication and inscribed them in their draft schedules.5 48.4 6. Therefore. The reference period (1986-1988) used to calculate the difference between the world market price corresponded to a period of low world prices. tariffication resulted in high tariffs in many cases.5
18.9 21.0 23.7 22. the drafts were incorporated as the Final Schedule.6 6.Table 6 includes the ad valorem equivalents of specific duties.4 31. In both cases the data shows that there is a considerable difference between applied and bound rates.4 23.2
Source: Martin and Zhi.1 11.8 50.B.8 95.8 59.5
World Table 5:
17. World Bank.0 27.2 61.1 41.6
.0 Bound 24.
Recall that tariffs can be levied either as ad valorem.50 0805.B.8% + 71 ECU/tonne 3.10. Table 6 with some complex tariff forms:
Product Meat of bovine animals.10.00
12.05¢/kg or> 14.10.4% + 71 ECU/tonne 0805.9¢/kg of total sugars 50% or 12yen/kg whichever is the Japan Table 6: 1005.38 chapter: other 6% + 19.21.66 Oranges: Sweet oranges.2% + 71 ECU/tonne 3.10.16 0805.30.92
access commitment Meat of bovine animals: carcases
chilled: beef steaks and fillets Poultry not cut in pieces.8% + 1768 ECU/tonne
10. compound tariffs.10. COMPLEX TARIFFS
Although non-tariff measures are no longer permitted this does not prevent some countries from having relatively complicated tariff structures.36 0805.2% 16% 16% + 71 ECU/tonne
1 1 1 1
The specific duty shall be reduced to
zero if the entry price per tonne is not less than 372 ECU/tonne
Maple sugar and maple syrup: Blended with other sugars of this United States 1702.10. fresh à à à à à à from 1 to 30 Apr from 1 to 15 May from 16 to 31 May from 1 June to 15 Oct from 16 Oct to 30 Nov from 1 Dec to 31 March 4. fresh or
Base Rate 344 NOK per kg or NOK 119.90 Maize: other: other greater
Complex Tariff Forms
283% but not <7.VII. specific duties.10.
While ad valorem tariffs may be the simplest to establish. seasonal tariffs and other complex forms.01 whichever is greater
Canada European Union
0207. frozen: Fowls of the species Gallus.40 0805. for example. See. some Members prefer to use specific duties or a combination of both specific and ad valorem tariffs or more complicated tariff structures.26 0805.
As can be seen in Table 7. it did not directly result in liberalising trade. in South Africa. Average rates are around 20% for developing countries and below 5% for OECD countries. World Bank.4 6.6 6. as some products may have low tariffs while other products have high tariffs.1 176.4 75.5 51.6 203.1
Coefficient of variation (%) 246. Norway has an average bound tariff of 167% on agricultural products (World Bank estimate) and Bangladesh 188%.7 146.1
Source: Martin and Zhi. Furthermore.2%.6 281. tariffs vary from 0% for some products to a maximum of 597%.3
Weighted Average (%) 24.1 41. For example.VII.2. HIGH TARIFFS AND TARIFF PEAKS
While the tariffication exercise managed to restrict the ways in which a Member can apply border protection measures.2
60 54.9 21.5 48. the average tariff for agricultural products is about 60% higher when compared to average rates for non-agricultural products. tariff rates in different countries vary considerably.6
Maximum tariff (%) 3424 479 1646 100
Developing countries Upper middle income Lower middle income Low income
61.3 167.B.3 51. One measure of the variability of tariffs is the coefficient of variation.7
Simple Average (%) Industrial countries EU Japan United States 47. while Australia has an average of 3.5 Agriculture Tariffs 2000-2002
145. In addition.1 22.7 56. tariffs on agricultural products remain high when compared to industrial products
According to the World Bank.6
8334 7696 3000 550
World Table 7:
60. this coefficient is particularly large in developed countries as they have tariffs varying from zero to very high and everywhere in between.8 95. there are also wide differences within Members. in Korea from 0% to 887% and in Chinese Taipei from 0% to 500%.6 64. for example. Even after the reductions agreed to in the Uruguay Round.
.6%. 7.B. and still higher duties on finished products. TARIFF ESCALATION
Tariff escalation is where there are higher import duties on semi-processed products than on raw materials. This practice protects domestic processing industries and discourages the development of processing activity in the countries where raw materials originate.VII. This practice can be used to protect domestic processing industries but it can also discourage the development of processing industries in the countries where the raw materials originate. and higher still on finished products.7% 1%
Market Access: Tariff Escalation
TARIFF ESCALATION: Higher import duties on semi-processed products than on raw materials.7% on cocoa butter. (Note some of these are ad valorem equivalents and estimates may vary depending on the methodology used). but concentrated grape juice is charged 183. 8% on cocoa powder. between 8% and 66. the EU has bound tariffs of zero on cocoa beans.3.
Tariff escalation is quite common in agriculture.5%.4% on chocolate.
18. The escalation is even more steep from grapes to concentrated grape juice: Fresh grapes can enter the EU with tariffs between 8% and 17. for example.4% on cocoa powder containing sugar and between 22% and 58.
which apply to some agricultural products and the tendency. regional trade agreements and customs unions are covered by GATT Art. juice Groundnuts. for some products. Some Members have very complex networks of bilateral trade agreements and preferential arrangements. frozen (boneless) Milk Butter Rice. Agriculture
Source: UNCTAD (TD/B/COM-1/14). AMAD Database (http://www.org) and Schedule XII as amended in G/SECRET/8/Add.
PhilipJapan 50 Korea 40 Brazil 55 pines 40
India (b) 100 China 12
Product Bovine Meat. XXIV and its updates. As you saw in Module 1. including the 1994 "Understanding" and the Enabling Clause. fresh Pineapples. Schedules. to charge higher tariffs for higher value derivatives of basic commodities. or their ad valorem equivalents. chilled Bovine Meat. These show some of the very high rates of tariffs.1
VII. as well as GATS Article V with regard to services. for example. shelled Groundnuts. in some areas. roasted Table 8:
215 113 68 71 65 44
26 66 70 11 2 2
50 280 105 550 39 40
30 36 89 Annex 5 2 4
55 55 55 55 55 55
35 18 40 Annex 5 30 40
100 60 40 70 40 150
12 15 10 65 65 65
25 46 0 11
1 12 132 132
36 24 550 21
45 54 230
40 50 40 40
150 85 100 150
15 20 30 30
Tariffs. Thus they do not always trade on an MFN basis. as part of a regional trade agreement or under a Generalised System of Preferences which allows Members to apply lower tariff rates to imports from developing and least-developed countries.
.B. groats and meal Pineapples.Table 8 shows tariff rates. prepared or preserved Pineapples.4.amad. milled Wheat Wheat flour Wheat. The extent and depth of these arrangements also varies considerably from one Member to another. PREFERENCES
In many cases different tariffs can be charged on imports from different Members.
and thus. Note that these rules are now being renegotiated as part of the Doha Development Agenda.The Enabling Clause also sets out a number of conditions that must be met. establishing or strengthening the link between national and international agricultural markets. WHAT THEN WERE THE BENEFITS OF THE URUGUAY ROUND?
The Uruguay Round was seen as the first step towards the reform of trade in agricultural products. and (iii) relying more prominently on the market for guiding scarce resources into their most productive uses both within the agricultural sector and economy-wide. The most important conditions are that preferences must not discriminate between developing countries (paragraph 2(a) footnote 3) and that preferences must not hinder MFN tariff reductions (paragraph 3(b)). production and trade in agriculture by: (i) (ii) making agricultural market access conditions more transparent. Explain the following terms: à à tariff peak tariff escalation
. which will be explained in Module 7.C.
EXERCISES: 8. predictable and competitive.
VII. The key aspects of the changes in the Uruguay Round have been to stimulate investment. Tariffication increased the transparency of border protection.
VIII. any additional duty can only be imposed on the shipment concerned. In case of the volume trigger. In case of the price trigger. as set out in Article 5. the SSG provisions allow to raise the bound tariff where either: à import quantities exceed a trigger level relating to the existing market access opportunities. INTRODUCTION
As part of the tariffication package. SPECIAL SAFEGUARD PROVISIONS
VIII. If the tariff line in the Schedule is marked "SSG". Members have the right to invoke the SSG for tariffied products. the higher duties only apply until the end of the year in question. à The SSG was part of the tariffication process. for the relevant product).
The rules on the special safeguard (SSG) are contained in Article 5 of the Agreement on Agriculture.e. For example.
There are two important points to note: à The SSG cannot be used on imports under TRQs. Therefore. products that were not tariffied were not eligible for the SSG.A. an additional duty can be imposed on imports of that product if import prices fall or volumes rise.
. normally referred to as "price trigger". Provided that the product has been tariffied and that it has "SSG" beside it in the Member's Schedule of Concessions relating to agricultural products. or à there has been a fall of the import price below a specified reference price (determined on the basis of the CIF import price of the shipment below a trigger price equal to the average 1986-1988 reference price.4 (volume trigger). i. Members with ceiling bindings on some products did not have the right to use the SSG on these products. additional duties cannot be applied to imports taking place within TRQs. provided that a reservation to this effect appears beside the products concerned in the relevant Member's Schedule. some Members negotiated during the Uruguay Round the right to use a special agriculture safeguard (SSG) for certain tariffied products.
> 10%. the trigger price is the average 1986 to 1988 CIF price and the additional rate of import duty depends on the difference between the trigger price and the price of the imported product. but 60%.1. The price safeguard provisions are set out in Articles 5. If the market entry price (expressed in terms of domestic currency) falls below a trigger price.. For the Price Based SSG. 40% to 60% of difference extra duty is 50% d. e.
Article 5 says: If import price falls below the trigger price. the additional duty is 0 b. over 5% of difference extra duty is 90% that is 0% that is 30% that is 50% that is 70% that is 90% *(TP*10%) *(TP*(40%-10%)) *(TP*(60%-40%)) *(TP*(75%-60%)) *(TP*(85%-75%)) =0%*(20) =30%*(200*30%) =50%*(200*20%) =70%*(200*15%) =90%*(200*10%) =0 = 18 = 20 = 21 = 18
Total additional duty = 77
.B. where Trigger Price = average 1986 . > 60%. the additional duty is 30% on the amount by which the difference exceeds 10% c. y c. the additional duty is 90% of the amount by which the difference exceeds 75% plus b. > 75%. 10% of difference extra duty is 0% b.i. but 75%. but 40%.5 of the Agreement on Agriculture. y d.1(b) and 5. d.f. the additional duty is 50% of the amount by which the difference exceeds 40% plus b. 10% to 40% of difference extra duty is 30% c.1988 c. the additional duty is 70% of the amount by which the difference exceeds 60% plus b. For example: If Trigger Price = 200 and Import Price = 30 then the difference is 200 . PRICE‐BASED SSG
The method of calculating the price-based SSG is set out in Article 5 of the Agreement on Agriculture.30 = 170 or 85% of the Trigger Price therefore the Price Based SSG is: a. price then if the difference between Import Price and Trigger price is: a. Article 5. ≤ 10%.5 come into play and an additional duty may be applicable to the shipment in question.VIII. 60% to 75% of difference extra duty is 70% e. in addition to the two general conditions of Article 5. > 40%. c. the provisions of Article 5.1(b) provides specific conditions for special safeguard provisions related to price.
1(b). However. For the first 10% of the fall in price below the trigger price no extra duty is charged. price plus ordinary customs duties". import price" in the Agreement on Agriculture or in any of the other covered agreements.i.f.i. In the example the trigger price is taken to be $120 with a specific duty of $20. or other charges that may be imposed on a product by a Member upon entry into its customs territory.
Effect of the SSG as it partially compensates for the decline in the import price
In the EC – Poultry case the Appellate Body clarified the interpretation of the terms of Article 5. in customary usage in international trade. We think it significant also that ordinary customs duties are not mentioned as a component of the relevant import price in the text of Article 5. paragraph 146.The graph shows the effect of the SSG as it partially compensates for the decline in the import price. Accordingly.
Panel Report on EC . but as the price falls further below the trigger the additional duty increases.1(b) does not state that the relevant import price is "the c.i.i. customs duties.1(b): In the light of our construction of the preceding phrase "the price at which imports of the product may enter the customs territory of the Member granting the concession".f. There is no definition of the term "c. import price does not include any taxes.i.f.f.Poultry. the c.i. we conclude that the phrase "as determined on the basis of the c. import price in Article 5.1(b) refers simply to the c.1(b) would require us to read words into the text of that provision that simply are not there.f. to read the inclusion of customs duties into the definition of the c.77 and paragraphs 147-150
. Article 5.f. price without customs duties and taxes. import price of the shipment concerned" in Article 5.
The volume-based SSG has its legal basis in Article 5 of the Agreement on Agriculture. It should also be noted that in cases where the level of consumption has been falling the trigger cannot fall below 105% of the average level of imports for the previous three years.Year 2 consumption = 590. This figure gives a base trigger level. if market access opportunities > 30% The y element: Change in domestic consumption The change in domestic consumption between the most recent year for statistics and the previous year. Year 2 is 1000 tonnes. which depends on the level of market access opportunities and the change in domestic consumption.1(a) provides that an additional duty may be imposed if the annual volume of imports of the product exceeds a trigger level. Article 5.1(b) defines the price of the product on which price safeguards are triggered as "equal to the average 1986 to 1988 reference price for the product concerned". It can be either 125% of the average imports over the past three years. the calculation of the trigger volume is more complex.5 tonnes)
. Article 5.To satisfy the specific conditions. Article 5. if market access opportunities 10% of market b.
VIII. For example: Average imports for the three previous years are 562 tonnes/year and consumption for the three previous years as follows: Year 1 is 990 tonnes.1 tonnes or 125% of 562 tonnes (702. The volume-based SSG can be just as hard to calculate as the price-based SSG. it is necessary to determine the price at which the product enters the customs territory. if market access opportunities > 10% but 30% c.
Article 5 says: The element x: Market Access Opportunities: a. or it can be calculated by a complex formula set out in Article 5.1(b) provides that it is to be "determined on the basis of the CIF import price".1 tonnes = 10 tonnes x element is 125% * average imports over the past 3 years x element is 110% * average imports over the past 3 years x element is 105% * average imports over the past 3 years
Trigger Level Above Which Volume Based SSG can be applied is 600. a figure referred to as "market access opportunities".C.4 provides that the "volume trigger level" is to be calculated on the basis of imports as a percentage of domestic consumption (last three years of available data). Although the rate of additional duty is simply one third of the applied tariff. The text of Article 5. and in Year 3 = 1010 tonnes -> average consumption: 1000 tonnes -> import penetration: 56% -> base trigger is: 105% x element is y element is 105%*562 Year 3 consumption .
there is no reform process and the SSG can no longer be applied. However.
WHO HAS THE RIGHT TO USE THE SSG?
Thirty-eight Members have reserved the right to use the SSG on a combined total of 6. Others claim.
SPECIAL AGRICULTURAL SAFEGUARD ACTION BY MEMBER AND NUMBER OF TARIFF ITEMS.
VIII. some Members argue that because Article 20 refers to the continuation of the reform programme this programme could remain in force for some time. made operational. in the case of the EU. 1995-2000
Member Barbados Costa Rica Chinese Taipei EU Hungary Japan Korea Nicaragua Philippines Poland Switzerland United States Total Table 9:
3 21 5
13 7 4 8
17 7 4 7 8 7 13
1 5 5
4 6 2 3 5 105 7 24 42 49 71 74 96 74 98 35 185 37 76 44 81 51 260 39 7 9 138 14
Price-based Special Agricultural Safeguard Action
. that is. As of 17 December 2004. the right to use the SSG depends on the reform process actually taking place. If this view is correct. This is indicated in their Schedules.D.VIII. if there are no negotiations or the negotiations are not making clear progress. WHEN CAN THE SSG BE USED?
Article 5. there is no clear definition of the "reform period" (the "reform period" is not to be confused with the "implementation period").9 states that the SSG can be used for the duration of the reform period "as defined by Article 20". 5 Members had notified that they had used.E.072 agricultural products. In fact. or. that in the absence of implementation of reductions in domestic support and protection the reform programme is not being implemented. the SSG. it would imply that after the implementation period is over and.
unlike with normal safeguards: à higher safeguard duties can be triggered automatically when import volumes rise above a certain level.Member Chinese Taipei Czech Republic EU Japan Korea Philippines Poland Slovak Republic United States Total Table 10:
2003 62 8
5 47 5 61 46 5 2 27 3 2 27 3 2 27 7 13 27 11 1
1 1 1 6 5 108 55 39 33 51 44 2 39 81 61 1 1 4 4
Volume-based Special Agricultural Safeguard Action
Source: WTO Secretariat. to the provisions of paragraphs 1(a) and 3 of Article XIX of the GATT 1994 or paragraph 2 of Article 8 of the Agreement on Safeguards. it cannot have recourse to general safeguard measures. and the Agreement on Safeguards are not met. if a WTO Member chooses to introduce SSG." Therefore. 10. However. WTO Members can raise their duties on agricultural products even when the more stringent requirements of Article XIX on the "Emergency Action on Imports of Particular Products" of the GATT 1994. TN/AG/S/12 Note: Cut-off date: 17 December 2004. What are the pre-conditions to using the SSG? Can all WTO Members use the safeguard mechanism in Article 5 of the Agreement on Agriculture? Why or why not?
. Members undertake not to have recourse.8 of the Agreement on Agriculture provides that "Where measures are taken in conformity with paragraphs 1 through 7 above. a WTO Member may choose between the SSG under Article 5 of the Agreement on Agriculture or the general safeguards under the GATT 1994 Article XIX in accordance with the requirements of the Agreement on Safeguards. or if prices fall below a certain level. Under the SSG. and à it is not necessary to demonstrate that serious injury is being caused to the domestic industry. The SSG provisions for agriculture differ from the general safeguards.
Article 5. in respect of such measures.
Table MA:2 Imports under Tariff Quotas: Shows the volume of imports made under TRQs relative to the market access opportunities. There is no requirement for Members to notify their tariffs to the Committee on Agriculture. This notification is required annually. Members have to make a notification to the WTO of: à the method by which they are administering a TRQ.IX. NOTIFICATIONS FOR THE SPECIAL SAFEGUARD
Members with the right to use the SSG must notify its first use in order to allow its trading partners to establish the parameters.
IX. that is if they are allocating it to countries and how they are giving out import licences. TARIFFS AND TARIFF QUOTA NOTIFICATION OBLIGATIONS
With a view to ensure Members comply with their obligations.
For market-access commitments. Applied tariffs are notified to other bodies of the WTO. As a result of the discussions on implementation in the preparation for the Doha Ministerial Conference. an upfront notification of the relevant reference prices is also possible. Table MA:1 Administration of Tariff Quotas: Lists the different TRQs and the methods of allocation.A.
These commitments are notified in tables MA:1 and MA:2. Members agreed to provide more information on TRQ administration methods and submitted more detailed MA:1 notifications in 2001.B. The notification requirements and formats are set out in document G/AG/2. issued on 30 June 1995. an annual summary notification of the use of the special safeguard is required. A single notification is required with ad-hoc notifications made subsequently if there are changes to the methods of allocation. including the Committee on Market Access and the Trade Policy Review mechanism. In addition. they are required to make notifications on their commitments (the bound agricultural tariffs and the TRQ commitments in their Schedules).
IX. such as the volume or price used to trigger the SSG. and à how much was actually imported under each TRQ. In the case of the price trigger.
Members with TRQs and the right to use the SSG are required to make both ad hoc and annual notifications to the Committee on Agriculture. Table MA:5 indicates the use of the SSG provisions in any year. Table MA:4 can be used either to provide an up front notification of trigger prices or. the MA:3 notification should be made before taking such action for the first time in any year for each product. Where the SSG provisions have not been invoked in any year. What are some of the notification obligations regarding market access?
. MA:5 Annual Notification. a statement to this effect should be made. an indication of who is able to obtain a licence and how they are allocated. setting out how each TRQ is to be administered. for the first use of the price-based SSG for any particular product (to be notified to the extent possible in advance. for example. on a case by case basis.IN DETAIL
Table MA:3 Volume-Based SSG. At the end of each year. At the beginning of the implementation period. Table MA:4 Price-Based SSG. and in any event within 10 days of the implementation of such action. An ad hoc notification is required if the method of allocation under any TRQ changes. As far as practicable. a notification of the quantity of imports entering under each tariff quota is required (tariff quota fill). Such notifications disclose. but in any event within 10 days of the taking of such action). The notification should be submitted no later than 30 days following the year in question. an "up-front" notification was due. if imports are permitted on a "first-come-firstserved" basis or if import licences are used — and in the latter case.
As a result of the Uruguay Round. limited volumes of imports were permitted.e. Transparency in the implementation of commitments is ensured through notifications. The rules on market access and the resulting commitments are found in Articles 4. the import surge required to trigger the special safeguard action is lower. Due to the resulting high tariffs. practically all non-tariff measures were converted into ordinary customs through the tariffication process. the SSG additional duties to be applied in case shipments at prices in domestic currencies below a certain reference level or in case of a surge of imports. current and minimum access opportunities combined represented at least 3% of base-period consumption and are progressively expanded to reach 5% of that consumption in the year 2000 (developed country Members) or 2004 (developing country Members). many GATT Contracting Parties had unbound tariffs for many agricultural products and restricted imports using a variety of non-tariff measures. Developed countries converted the non-tariff measures by the process of "tariffication". Where this "current" access was less than 5% of domestic consumption of the product in question in the base period. This additional market access is provided through TRQs. Developing countries reduced their tariffs by a simple average of 24% with a minimum cut of 10% over a ten-year implementation period. In the case of "tariffied" products. Developing and least-developed countries had the option of using ceiling bindings. This was to ensure that in 1995. respectively. where imports currently make up a large proportion of consumption.
. an (additional) "minimum" access opportunity had to be created so that by the end of the implementation period it was equal to 5% of domestic consumption. The trigger in the safeguard for import surges depends on the "import penetration" currently existing in the market.X. The fears that tariff-only protection could lead to import surges or an avalanche of low-priced imports were addressed by allowing a SSG in certain situations for products that had undergone the tariffication exercise. with a minimum cut of 15% for any product. WTO Members list the current and minimum market-access commitments in their Schedules. i. 5 and the Schedules of Commitments.
Before the Uruguay Round. Contingency protection is provided through SSG. Ceiling bindings were only reduced on an ad hoc basis and least-developed country Members did not have to undertake tariff reductions. Developed country Members reduced their tariffs by a simple average of 36% over a six-year implementation period beginning in 1995.
Product coverage of the Agreement on Agriculture Special Treatment with Respect to Paragraph 2 of Article 4 Tariffs resulting from conversion of non-tariff border measures under
negotiating modalities ("tariffication") plus pre-existing tariffs on all other Schedules agricultural products to be reduced.
Developing Countries Average tariff reductions of 24% (minimum 10%) over 10 years. Where "ceiling bindings" commitments undertaken reductions not required except on ad hoc basis.1 & Schedules
Subject matter Prohibition on the use of restrictions on imports other than tariffs. Implementation of current and minimum access opportunity commitments in Schedules respect of tariffied products.
Developed Countries Modalities/Schedules Average tariff reductions of 36% (minimum 15%) over 6 years.
Instrument Article 4.2 Article 4. Special agriculture safeguard mechanism against import volume surges or import price declines below a trigger level (limited to "tariffied" products and not
Article 5 Annex 1 Annex 5
applicable to imports under related tariff quota commitments). Least developed not required to undertake reduction commitments. All tariffs bound.
which governs the internal allocation of licenses to traders. such as.e. Members that already allowed imports of more than 5% of domestic demand agreed to maintain these opportunities. Methods used for giving exporters access to quotas include first-come. minimum access commitments were created to allow new import opportunities for products previously covered by a non-tariff barrier. Members may also adopt general and specific border measures under the other WTO Agreements. or where import quotas had previously been in place. In addition. The terms can also specify periods for using the quotas. administering through state trading enterprise. and current and minimum market access opportunities in cases where tariffs were very high. the Agreement on the Application of Sanitary and Phytosanitary Measures. 2. developed country Members agreed to reduce. Developing countries Members agreed to reduce. Members tariffied their agricultural products. with a minimum cut of 15% for any product. their tariffs on agricultural products by 36% on average. Tariffs and the Special Agricultural Safeguard. over a ten-year period beginning in 1995. their tariffs on agricultural products by 24% on average. In the Uruguay Round. agreed to reductions. the Agreement on Technical Barriers to Trade or other general. for example times for applying for licences. These commitments are administered through the establishment of "tariff-rate quotas" (TRQs). and for 5% by 2000. 3. import licensing according to historical shares and other criteria. over a six-year period beginning in 1995. general safeguard provisions (Article XIX of GATT and the related WTO agreements). 4. but not to undertake tariff reductions. Article XIX safeguards. and The Agreement on Import Licensing Procedures. and auctioning. and under the SPS Agreement and the TBT Agreement. Members can maintain non-tariff import restrictions consistent with the balance-of-payments provisions (Articles XII and XVIII of GATT). first-served allocations. WTO Members agreed they would agree to reduce these tariffs over time. general exceptions (Article XX of GATT). The rules on TRQ Administration are found in: (1) (2) Article XIII which governs external administration and the allocation to supplying countries. or for delivering the products to the importing countries.
. and other non-agriculture-specific WTO provisions. Article VI anti-dumping. All WTO Members agreed to open up their markets to imports for at least 3% of the domestic consumption in 1995. 6. i. with a minimum cut of 10% for any product. After fixing tariffs. With only a few exceptions developing countries with ceiling bindings did not have to reduce tariffs. Least-developed country Members were required to bind all agricultural tariffs.PROPOSED ANSWERS: 1. bilateral agreements. 5.
These countries had to create market access in the form of progressively increasing import quotas for the products concerned. The exceptions given were special treatment in Article 5 under which option of not adopting tariffs for certain products was taken by Japan. an annual summary notification of the use of the special safeguard is required. usually on so-called sensitive products.
NO. the Philippines and Chinese Taipei. Tariff escalation refers to the charge of higher import duties on semi-processed products than on raw materials.
Tariff peaks are relatively high tariffs. VI) and the SPS Agreement. and still higher import duties on finished products.
The product must have undergone tariffication (the non-tariff border measures applying to the product must have been converted into tariffs). In addition.
The product must have the symbol "SSG" in the WTO Member's Article II Country Schedules in the GATT 1994. and (2) how much was actually imported under each TRQ.7. amidst generally low tariff levels. XXI. Members can still adopt non-tariff import restrictions pursuant to GATT 1994 (Articles XX. use of the safeguard mechanism is only for the Members who applied the tariffication formula during the Uruguay Round negotiations and who made a reservation to use it in the Schedule of Commitments. The right to make use of the special safeguard provisions has been reserved by 38 Members.
8. the Philippines for rice and by Israel for certain sheep and dairy products. In addition. for a limited number of products in each case.
10. Today. In its accession Chinese Taipei also opted not to undergo tariffication for rice. Members with the right to use the special safeguard provisions must notify its first use.2 of the Agreement on Agriculture prohibits the use of agriculture-specific non-tariff measures. an upfront notification of the relevant reference prices is also possible. the exception only applies to Korea. Korea.
Article 4. that is if they are allocating it to countries and how they are giving out import licenses.
. XII. XIX. In the case of the price trigger. Members have to make a notification to the WTO of: (1) the method by which they are administering a TRQ.
For market-access commitments.
Explain the Green Box. De minimis.
Describe the Domestic Support Subject to Reduction Commitments (Amber Box).MODULE
ESTIMATED TIME: 5 hours
OBJECTIVES OF MODULE 5
Present the second pillar of the Agreement on Agriculture: Domestic Support Outline the Conceptual Framework of the rules on domestic support in the Agreement on Agriculture. and Outline the Notification Obligations of WTO Members concerning Domestic Support for Agricultural Products.
. Explain other exempt support: Blue Box. Development Programmes.
the widespread use of production-related subsidies. you should be able to explain: à à à à à the rules governing domestic support in the Agreement on Agriculture. the combination of the protection and subsidies increased production above demand (particularly because demand was often suppressed due to high prices) and the excess had to be stockpiled or exported. needed to be restricted. however. As a result of the Uruguay Round. many argued that subsidies that guarantee high prices. This Module looks at domestic support and Module 5 at export subsidies.8(b) stated that subsidies to producers were not prohibited by the national treatment obligation. For example. led to increasing production in some countries. However.
. that benefit the producers and are not contingent on exports. and the domestic support subject to reduction commitments. the provision was subject to varying interpretation. Of course. and "Amber Box". other than tariffs. However. directly encourage high levels of production. Even in cases where the country remained a net importer. GATT 1947 Article III. Thus. this categorisation arose from the different effect that various types of support have on production and trade. in agriculture. and (2) export subsidies. However.
As you saw in Module 2. Domestic support commitments and rules apply to government measures. At the end of this Module. with world market prices usually lower than domestic prices. the exports required export subsidies. In some cases. "Blue Box". the exemptions for certain development programmes in developing country Members. the rules governing price support measures were unclear. while others argued that if these subsidies nullified or impaired the value of a tariff concession they were in breach of Article XXIII of GATT. the rules concerning de minimis levels of support. Not all subsidies distort trade to the same extent. the GATT 1947 allowed Contracting Parties to grant subsidies. domestic supports can affect trade by reducing demand for imports.
In the WTO. one subsidy (domestic support) led to another (export subsidies). agricultural support measures are classified as belonging to two major groups: (1) domestic support. price support measures. The Agreement on Agriculture covers several categories of support. Likewise. the terms "Green Box". and. therefore. nor do they include payments from the State that depend on the volume produced. Hence. for example. research and training are generally considered as non-trade-distorting because they do not directly encourage or support production or trade in specific products. subsidies were grouped into different categories.I. some Contracting Parties concluded that they could freely provide subsidies to encourage agricultural production. To some extent. the disciplines in the Agreement on Agriculture have fundamentally changed the way domestic support in favour of agricultural producers was treated under the GATT 1947. education and training programmes may lead to increased productivity but they do not require students to grow certain crops.
has to be accommodated within the ceilings set by the Total Aggregate Measurement of Support (Total AMS) and/or the de minimis provisions of the Agreement set out in paragraph 4 of Article 6.2. be reduced). Green Box programmes tend to be those that are not targeted at particular products. these were meant to have the colours of traffic lights: green (permitted).
. amber (slow down – i. fall into the Amber Box and are subject to limits. with the exception of some measures set out in Article 6. such measures have to be government-funded and must not involve price support.2 of the Agreement on Agriculture. red (forbidden). although domestic support exceeding the reduction commitment levels in the Amber Box is prohibited. such as research. a subsidy programme must not have more than a minimal trade-distorting effect or effect on production (paragraph 1 of Annex 2). They also include structural adjustment assistance. such as income supports for farmers that are not related to (are "decoupled" from) current production levels or prices.5 or Annex 2 of the Agreement). payments under environmental programmes and regional assistance programmes. as well as certain direct payments to producers. In the case of Members with no scheduled reduction commitments. Originally.e. These include measures to support prices. and there is a Blue Box for subsidies that are tied to programmes that limit production.
GREEN BOX The Green Box is defined in Annex 2 of the Agreement on Agriculture. Green Box subsidies are therefore allowed without limits. any domestic support not covered by the exempt categories must be maintained within the relevant product-specific and non-product-specific de minimis levels. The Total AMS includes all support provided on either a product-specific or non-product-specific basis and is to be reduced during the implementation period. any domestic support that cannot be included in the categories exempt from reduction (i. And there is a Green Box for subsidies that cause no more than minimal trade distortion. domestic subsidies are classified in "boxes". In addition. pest and disease control or marketing and promotion services.e. There are also exemptions for developing-country Members (normally called "S&D Box").
AMBER BOX All domestic support measures considered to distort production and trade. In fact. In order to qualify for the Green Box.THE BOXES
In WTO terminology. The AMS is defined in Article 1 and Annexes 3 and 4. Article 6. input subsidies or subsidies directly related to production quantities. Article 6. The Agreement on Agriculture has no Red Box. provided they comply with the policy-specific criteria set out in Annex 2. which covers the provisions in Article 6. and include general services.
5 Article 6. Input.
Exemption from Reduction Commitments (1) Green Box (2) Blue Box (3) Development Programmes Annex 2 Article 6. to what provisions of the Agreement on Agriculture would you refer? 2.2 No more than minimally trade or production distorting Production-limiting Programmes Investment. Diversification
Reduction Commitments & de minimis allowance Amber Box Articles 3 & 6 Article 7 Annex 3 Annex 4 Table 1: Domestic Support Structure Reduction Commitments. de minimis General Disciplines Aggregate Measurement of Support Equivalent Measurement of Support
EXERCISES: 1. What are Amber Box subsidies and can you give some examples?
.BLUE BOX This is the "amber box with conditions" — for certain supports that are part of production limiting programmes (details set out in paragraph 5 of Article 6 of the Agreement on Agriculture). If you wanted to find out the type of domestic support that can be included in the exempt categories. At present. there are no limits on spending on Blue Box subsidies.
3 and 4).A. The Green Box applies to both developed and developing country Members but in the case of developing countries special treatment is provided in respect of (1) governmental stockholding programmes for food security purposes and (2) subsidized food prices for urban and rural poor.
To qualify as a Green Box measure a programme must satisfy some general and specific criteria.as long as the general criteria and some other policy-specific conditions are met by each measure (paragraphs 2. and expenditures in relation to the provision of domestic food aid to sections of the population in need . trade-distorting effects or effects on production. be provided through a publicly-funded government programme (including government revenue foregone) not involving transfers from consumers. expenditures in relation to the accumulation and holding of public stocks for food security purposes. provided that it complies with the provisions of Annex 2 of the Agreement on Agriculture.
. However. introduce new measures. GENERAL REQUIREMENTS
Domestic support measures with no more than minimal impact on trade or production can be used without financial limitation — they are placed in a Green Box. and à must not have the effect of providing price support to producers. or amend existing measures.
GOVERNMENT SERVICE PROGRAMMES
The Green Box covers many government service programmes including general services provided by governments.II.
Even with these general conditions the scope of the Green Box is quite broad and it covers a fairly wide range of programmes. or at most minimal. The general criteria are that the measures must: à à have no. Green Box measures must also meet the relevant policy-specific criteria listed in paragraphs 2 to 13 of Annex 2. The general criteria are set out in paragraph 1 of Annex 2.
II.B. Therefore. a WTO Member has the right to: à à à increase spending on existing measures.
THE GREEN BOX
Under the General Services category (paragraph 2 of Annex 2).
II. inspection services. training services. à Government financial participation in income insurance and income safety-net programmes (Annex 2. à Payments for relief from natural disasters (Annex 2. According to the general requirements in paragraph 5. income insurance and safety-net programmes. roads and other means of transport. The protection must not exceed 70% of the income loss.
DIRECT PAYMENTS TO PRODUCERS
The Green Box also provides for the use of direct payments to producers. water supply facilities. paragraph 7): Income protection schemes are allowed for situations where income loss is greater than 30% compared to the average for the previous three years. which are not linked to production decisions. a range of structural adjustment assistance programmes. In addition. These are elaborated. market and port facilities. The conditions preclude any linkage between the amount of such payments and production. no production can be required in order to receive Green Box payments. paragraph 6): Although current production should not be necessary to receive income support the payments can be based on production at some fixed time in the past. although the farmer receives a payment from the government. below: à Decoupled income support (Annex 2. in a summary form. current production or other factors of production. prices or factors of production in any year after a fixed base period. the Green Box exempts from reduction commitments many types of government programmes associated with agriculture such as: à à à à à à à research. or linked to. current prices. marketing and promotion services. that is. this payment does not influence the type or volume of agricultural production ("decoupling"). Additional criteria to be met depend on the type of measure concerned. natural disaster relief. and certain payments under environmental programmes and under regional assistance programmes. and infrastructural services. extension and advisory services. However. paragraph 8): Payment for disaster relief is possible in situations where production has declined by at least 30% compared to the average for the
. spending on capital works such as electricity reticulation. to qualify under the Green Box. it cannot be based on. Paragraphs 5 to 13 of Annex 2 govern direct payments to farmers. which may include: decoupled income support measures.C. for example. pest and disease control. a direct payment must comply with the general requirements of paragraph 1 as well as the specific criteria in paragraphs 6 to 13. dams and drainage schemes as well as infrastructural works associated with environmental programmes.
In addition. Members in transition from centrally planned economies to market-orientated economies have made use of this provision for land re-privatisation. other countries with structural problems in agriculture have also made use of this provision. where made along with income insurance payments. factors of production and no production can be required to receive the payment. have no link to current production. à Payments under regional assistance programmes (Annex 2. à Structural adjustment assistance provided through investment aids (Annex 2. Although the payments should be based on some historic reference period they cannot be related to current production or current prices and are limited to the extra costs or lower income associated with farming in such areas. paragraph 12): Direct payments to farmers may be made to encourage them to comply with environmental rules or to join a government environmental or conservation programme. for resource retirement based on land withdrawal. The value of payments should be limited to the extra costs or reduced income involved in complying with the environmental programme. must not exceed 100% of the producer's total loss. paragraphs 9 and 10): Assistance under structural adjustment is possible for producer (paragraph 9) and resource retirement (paragraph 10) programmes. paragraph 13): Payments may be made to overcome the difficulties faced by producers in disadvantaged areas.previous three years and the payments must be applied only in respect of losses of income or factors of production such as land or livestock. The value of the payments should cover only the loss suffered and. paragraph 11): Structural adjustment payments can also be made through investment aids aimed at overcoming structural disadvantages or for land re-privatisation. à Payments under environmental programmes (Annex 2. à Structural adjustment assistance provided through producer or resource retirement
programmes (Annex 2. the land must not be used for marketable agricultural production for at least three years.
. à Other (Annex 2. For producer retirement programmes the producer must retire from agriculture permanently and. paragraph 5): If a Member has or introduces a new type of direct payment that does not fit under the categories above but the Member claims it is exempt from reduction commitments it must comply with the basic criteria of paragraph 1. prices.
487 25.469 293 393 1.191 1995 4.467 0 23.828 187 451 2.834 0 25. Please note that China became a WTO Member on 11 December 2001.057 50.093 515 544 2.252 49.825 51.128 21. Figures have been rounded to the nearest million.820 49.443 282 525 2.177 2001 1.174 136 762 2.489 2 20.568 22.272 0 32.
EXERCISES: 3.Green Box (US$ million) Selected Members Brazil China* European Union (15) Honduras Japan Korea.590 236 423 2.113 19.672 24.971 2 24.883 1996 2.420 1999 1.165 2000 1.458 1998 2. The domestic support notification (G/AG/N/CHN/8) concerning the years 1999-2001 was provided by China for transparency purposes.464 0 23. using exchange rates from the "International Financial Statistics" of the IMF.449 3. Republic of Philippines South Africa Switzerland Liechtenstein United States Table 2: Green Box 46. Conversion to US$ prepared for training purposes only.041 51.355
Source: WTO Members' notifications. Can you list the measure types which could be included in the Green Box?
.749 50.404 19.600 1997 3.482 4.859 5.298 26. For actual figures and currencies.278 18.462 29.983 0 21. please consult the notifications.997 254 351 2.614 6.267 21.082 4. What are the general criteria set out in paragraph 1 of Annex 2 for a measure to qualify as a Green Box subsidy? 4.019 6.
Article 6. they do affect trade. Blue Box payments are said to be less trade-distorting than market supports or other types of production related subsidies because of the restrictions on production needed to comply with the criteria of Article 6. or made on 85% or less of the base level of production. Because farmers are paid directly rather than supported through higher prices there is less scope for other people to get part of this support.III. or
(iii) based on a fixed number of animals.direct payments under production-limiting programmes. area planted or crop yields. Direct payments to producers are considered more efficient than market supports in maintaining incomes and ensuring minimum areas are planted or livestock numbers maintained. which are paid out directly from the government's budget to producers (Blue Box measures) provided such payments are: (i) (ii) based on fixed area and yields.
OTHER EXEMPT SUPPORT
In addition to measures covered by the Green Box. Blue Box payments are used in countries that have found that the traditional market support payments caused problems of over-production. if agriculture prices are increased through market support schemes much of the transfer of resources is captured by retailers. because they are based on animal numbers. Development programmes in developing country Members. or are too inefficient compared to the objective of maintaining farm incomes or rural employment.A. in the case of the Blue Box measures. provided that current production is limited. wholesalers and processors. However.5 exempts from reduction commitments payments made under production-limiting programmes.
III. Note that although the Green Box covers payments that are decoupled from both prices and production. For example.5. have become too expensive to maintain.
. they can be directly related to current production. and De minimis levels of support. other categories of domestic support do not have to be reduced (see Article 6 of the Agreement on Agriculture): à à à Blue Box subsidies .
using exchange rates from the "International Financial Statistics" of the IMF.842 0 831 984 0 2000 19. Conversion to US$ prepared for training purposes only.963 0 392 1.943 23 0 1.2 of the Agreement on Agriculture. It should be noted that these are not the only programmes developing countries can implement and that the Green Box.Blue Box (US$ million) Selected Members European Union (15) Iceland Japan Norway United States Table 3: Blue Box 1995 26. For actual figures and currencies.
. Figures have been rounded to the nearest million. DEVELOPMENT PROGRAMMES
Measures of assistance (direct and/or indirect) designed to encourage agricultural and rural development and integral to the development programmes of developing countries are exempt from reduction commitments under Article 6.030 1996 26. please consult the notifications.B.798 0 839 871 0 2001 21.044 0 1999 19.231 0 728 813 0
Source: WTO Members' notifications.487 0 0 1.043 0 1998 22. They include: à à investment subsidies which are generally available to agriculture in developing country Members. and à domestic support to producers in developing country Members to encourage diversification from growing illicit narcotic crops.095 0 0 1.124 0 1997 22. agricultural input subsidies generally available to low-income or resource-poor producers in developing country Members. the Blue Box and the Amber Box are also available to these Members.124 7.
As you saw above. using exchange rates from the "International Financial Statistics" of the IMF. For actual figures and currencies please consult the notifications. The related provisions of the Agreement on Agriculture will be taken up in conjunction with the Total AMS. as showed in the table below:
Development Programmes . What kind of measures are covered by the Blue Box? What kind of measures in developing country Members are exempt from reduction commitment under provisions of Article 6. Figures have been rounded to the nearest million.
EXERCISES: 5. support within de minimis levels is also exempt from reduction commitments.2 (US$ million) Selected Members Brazil Chile Honduras Korea.C.
III. Republic of Mexico Morocco Philippines Thailand Table 4: 1995 359 4 2 26 644 148 244 215 1996 269 5 7 38 265 145 53 482 1997 281 3 3 40 152 155 72 220 1998 373 3 0 30 160 150 47 124 1999 156 4 0 52 148 148 41 83 2000 310 3 1 45 39 153 74 67 261 134 77 84 2001 332 9 2
Source: WTO Members' notifications. Conversion to US$ prepared for training purposes only.Article 6.2 of the Agreement on Agriculture?
. 6.Some developing-country Members have used the provisions of Article 6.2 to notify programmes they provide to support agriculture.
IV.3% over the 10-year period (1995-2004).
Modalities for the Establishment of Specific Binding Commitments under the Reform Programme. Hence.1 of the Agreement on Agriculture). Members were required to establish a Base Total AMS which was then subject to reductions. Developed-country Members committed to reduce Total AMS by 20% over the six-year implementation period (1995-2000) and developing country Members by 13.2 of the Agreement on Agriculture) and must be counted in the calculation of the Member's Current Total AMS. Section I of Part IV of a Member's Schedule contains the domestic support reduction commitments which are expressed in terms of the Total AMS and Annual and Final Bound Commitment Levels (Article 6. (1) Base Total AMS is the sum of all domestic support provided in favour of agricultural producers during the average 1986-88 base period. When subsidies exceeded the de minimis levels. the GATT Contracting Parties set out the support they had provided to agriculture during the base period of 1986 to 1988. and Annexes 3 and 4 to the Agreement on Agriculture. A similar approach applies to Members that joined after the Uruguay Round or are in the process of accession. During the Uruguay Round. In these cases the base periods more recent and vary from one Member to another. Least-developed countries were not required to make any reductions. Blue Box or Development Programmes has to be accommodated within the ceilings set by the Total Aggregate Measurement of Support (Total AMS) and/or the de minimis provisions of the Agreement on Agriculture. 20 December 1993. a Member can redistribute support between different products provided it complies with the Total AMS commitment set out in its Schedule.GNG/MA/W/24. (2) Annual Bound Total AMS is the maximum level of support a Member can provide during any year of the implementation period. in order to establish a basis for reductions.
DOMESTIC SUPPORT SUBJECT TO REDUCTION COMMITMENTS
Any domestic support programme that cannot be included in the Green Box. In other words. The calculation of the Total AMS is set out in Article 6.
Different implementation periods apply for some of the recently acceded Members. The Total AMS commitment relates to the global amount of Amber Box (excluding de minimis support) and not to the particular mix of products. paragraph 8.
. support that is not specifically excluded from reduction commitments is presumed to be included (see Article 7. Total AMS includes all product-specific support and non-product-specific support in one single figure. (3) Final Bound Total AMS is the maximum level of support a Member can provide in the last year of the implementation period and thereafter.
Current Total AMS (US$ million) Selected Members Brazil Canada Colombia European Union (15) Japan Korea. In other words.987 1.413 1995 0 570 58 64.374 1998 83 522 10 52.In any year of the implementation period and thereafter.890 6.036 477 2.898 534 6.495 63 1. Republic of South Africa SwitzerlandLichtenstein Thailand United States Table 5: 633 6.791 37 35. the maximum levels of such support are bound in the WTO.392 457 16.876 2000 0 557 5 38.446 451 2.151 5. Figures have been rounded to the nearest million.862 493 16.691 452 3.328
Source: WTO Members' notifications.115 148 2. the Current Total AMS value of non-exempt measures must not exceed the scheduled Total AMS limit as specified in a Member's Schedule. In the case of Members with no scheduled reduction commitments.214 Current Total AMS 510 5.852 29.238 397 10.305 129 1.
.624 1996 0 453 4 61.803 411 14.411 1.283 5.842 2.006 6.636 2001 0 1.658 36.835 0 1. any domestic support not covered by the exempt categories must be maintained within the relevant product-specific and non-product-specific de minimis levels. using exchange rates from the "International Financial Statistics" of the IMF.562 2. Conversion to US$ prepared for training purposes only.257 1999 0 637 7 48.704 1. For actual figures and currencies please consult the notifications.964 1997 0 366 14 55.369 2.213 25.
WHAT IS DE MINIMIS?
De minimis is a concept in the Agreement on Agriculture that exempts relatively small amounts of Amber Box support from the Total AMS commitment. The following types of support are to be included in the AMS calculation: à Market price support is calculated on the basis of 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. Members were not required to include in their Total AMS the value of support during the base period 1986-88 that was within the following de minimis levels: à product-specific support that did not exceed 5% of the total value of production of the basic agricultural product in question.B. the de minimis threshold is 10%. which depend on a price gap are calculated by using either the gap between a fixed external reference price and the applied administered price multiplied by the quantity of
. AGGREGATE MEASUREMENT OF SUPPORT (AMS)
The details for AMS calculations are specified in Annex 3 of the Agreement on Agriculture.
Amber Box and de minimis: Current Total Aggregate Measurement of Support
In the case of developing country Members. à Non-exempt direct payments. and à non-product-specific support that did not exceed 5% of the value of total agricultural production. When commitments were established in the Uruguay Round. non-product-specific subsidies are to be listed and totalled into one non-product-specific AMS. Also. In any year of the implementation period and thereafter.A.IV. a product-specific AMS is to be calculated for each basic agricultural product receiving non-exempt domestic support.
Hence. and. the value of support for each product has to be calculated. and is included in the Current Total AMS only if it exceeds the relevant de minimis level. are to be included in the AMS calculation.production eligible to receive the administered price.. The example in the box below illustrates the calculation of the Current Total AMS for a developed country Member (5% de minimis threshold) in year Y. for each basic agricultural product: à the implicit subsidy of price support measures is added to other product-specific subsidies . the Current Total AMS value of non-exempt measures provided in any given year must not exceed the scheduled Total AMS limit as specified in a Member's Schedule for that year. Even though Total AMS commitments apply to the total value of non-exempt support in favour of agricultural producers. and. The two basic criteria for valuing support are: (1) its effect on prices. As has been mentioned earlier. input subsidies or interest rate subsidies) are calculated using budgetary outlays or 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. Non-product-specific AMS is calculated separately. Both budgetary outlays (the money spent by governments to support a product) and revenue foregone by governments or their agents. the Current Total AMS has to be calculated in accordance ". with the constituent data and methodology used in the tables of supporting material incorporated by reference in Part IV of the Member's Schedule".
. or by using budgetary outlays. (2) its cost to the government. to arrive at the total level of support in terms of the Current Total AMS. à if the value of support to an individual product does not exceed the de minimis level.. it is treated as zero for the purpose of the Current Total AMS calculation.a product-specific fertiliser subsidy. for example — to arrive at a product-specific AMS which is then evaluated against the applicable de minimis threshold. à Other subsidies not exempted from reduction commitments (for example. Also. whether at national or sub-national level. non-exempt direct payments based on factors others than price are calculated using budgetary outlays.
000.000 (de minimis level = $12.000.000) Oilseeds: > Deficiency payments for oilseeds = $13.000 > Oilseeds AMS (AMS 3) = $14.500.000.000 > Barley AMS (AMS 2) = $3.000 tonnes = $290.Example: Calculation of the Current Total AMS
Member X (developed country).000.000.000 > Non-product-specific AMS (AMS 4) = $4. year Y Wheat: > Intervention price for wheat = $255 per tonne > Fixed external reference price (world market price) = $110 per tonne > Domestic production of wheat = 2.000.500.000.000 > Value of barley production = $100.000) Non-product-specific support: > Generally available interest rate subsidy = $4.000 (de minimis level = $25.000 tonnes > Value of wheat production = $510.000.000.000
.000 > Wheat AMS (AMS 1) ($255–$110) x 2.000 (de minimis level = $5.000.000 > Fertilizer subsidy = $1.000.000.000) Current Total AMS (AMS 1 + AMS 3) = $304.000.000 > Value of total agricultural production = $860.000.000.000.000.000 > Value of oilseeds production = $250.000 (de minimis level = $43.000) Barley: > Deficiency payments for barley = $3.
Once the market price support component is determined. 8. any non-exempt direct payments and other non-exempt support need to be calculated as per corresponding AMS components specified in relevant paragraphs of Annex 3.
EXERCISES: 7. The rules for calculating the EMS are set out in Annex 4 of the Agreement on Agriculture. Like the AMS. What reduction commitments in Total AMS were undertaken by Members in the Uruguay Round? What is the Equivalent Measurement of Support (EMS) and where are the rules for its calculation found?
. provisions are made for an "Equivalent Measurement of Support" (EMS).IV. rather than market price support calculated with respect to a fixed external reference price. included in the Current Total AMS. EQUIVALENT MEASUREMENT OF SUPPORT
Where it is not feasible to calculate the market price support component of the AMS by using the methodology set out in Annex 3. This may be the case for market price support measures which cannot be calculated by applying the AMS method because no external reference price can be determined. for example.C. the EMS is compared to the de minimis level and. if above that level. The EMS is generally calculated on the basis of actual budgetary outlays — the money spent by governments to support a product.
2 and footnote 1 to Art.
.2).please read the disclaimer!
While the case study below is based on prior WTO Panel and/or Appellate Body rulings its main purpose is not to describe and review all the arguments and conclusions in the case in detail but rather to focus on the issues and principles addressed in the course and provide you with an outline of elements that you may wish to consider when reflecting on these issues and principles. grain fed beef distinction). Summary of key panel/AB findings 3
à AA Art. Chilled and Frozen Beef
Parties Complainants Australia. United States Respondent Korea
Agreements GATT Arts. (ii) Korea's "dual retail system" for sale of domestic imported beef).
2. AA Art. certain aspects of distribution and sales system for imported beef (GATT Art. 4. Art. However before we do so . XI and the Ad Note. III:4. state-trading entities (GATT Art.2). XI:I and XVII:I AA Arts.4. XX. 7. the Appellate Body reversed the Panel's ultimate finding that Korea
Other issues addressed in this case: AA Art. current AMS for beef and current
total AMS). 6. 3. GATT Art. distribution and sale of beef. III:4). 6.Let us look at case concerning domestic support for agriculture products. 6 and 7
Timeline of the dispute Establishment of Panel Circulation of Panel Report Circulation of AB Report Adoption of AB Report 26 May-26 July 1999 31 July 2000 11 December 2000 10 January 2001
1. and (iii) Korea's agricultural domestic support programmes. II and XI (grass-fed. 4. 4. à Products at issue: Beef imports from Australia and the United States. and panel's terms of reference (panel request) (DSU.
CASE STUDY 1
KOREA –BEEF (WT/DS161/AB/R and WT/DS169/AB/R) Korea – Measures Affecting Imports of Fresh. Measure and product at issue
à Measure at issue: (i) Korea's measures affecting the importation. 3.2 (domestic support): While upholding the Panel's conclusion that Korea miscalculated its domestic support (AMS) for beef.2(a) (de minimis levels.
the Appellate Body said that formally different treatment of imported and domestic products is not necessarily "less favourable" for imports within the meaning of Art. the relative importance of the common interests or values protected and the impact of the law on trade. In this connection. XX) Further. the LPMO's increase in its stocks of foreign beef.2 by exceeding its commitment levels for total support for 1997 and 1998 since the Panel had also relied on an improper methodology for its own calculations.e.wto. According to the Appellate Body.)
TIP If you want to know more about the Korea beef case or to read the full case. as well as its discharge practices (i.htm
.wto.wto. 3. III:4. The Appellate Body agreed with the Panel that Korea failed to demonstrate that it could not achieve its desired level of enforcement using alternative measures. which prohibits Members from maintaining. which modified the conditions of competition for imported beef. (Korea did not appeal this finding. or reverting to any quantitative import restrictions.2 (tender-related practices by a state-trading enterprise (LPMO) for beef imports): The Panel concluded that the LPMO's failure to call. à GATT Art. This also led to the conclusion that the measures were inconsistent with AA Art. the dual retail system virtually cut off imported beef from access to the "normal" distribution outlets for beef. 4.2. III:4 (dual retail system): The Appellate Body agreed with the Panel's ultimate conclusion that Korea's dual retail system (requiring imported beef to be sold in separate stores) accorded "less favourable" treatment to imported beef than to like domestic beef.org/english/res_e/booksp_e/dispu_summary06_e.htm http://www. à GATT Arts. while failing to meet requests for that beef) led to import restrictions on beef contrary to Art. the Appellate Body upheld the Panel's finding that the dual retail system was not justified as a measure necessary to secure compliance with Korea's Unfair Competition Act because the dual retail system was not "necessary" within the meaning of Art. "Necessary" requires the weighing and balancing of factors such as the contribution made by the measure to the enforcement of the law or regulation at issue. XI:1 and XVII:1(a) and AA Art. resorting to. including non-tariff measures maintained through state-trading enterprises. à (GATT Art.pdf See also the WTO Analytical Index at: http://www. XI. the measures violated GATT Art. tenders. XVII:1(a) (a provision governing state-trading enterprises) as well. The Panel also found that should the LPMO be viewed as a state-trading enterprise without full control over the distribution of its import quota share.org/english/tratop_e/dispu_e/cases_e/ds161_e. and delays in calling for. XX(d). because they were inconsistent with the general principles of non-discriminatory treatment. which have been required to be converted into ordinary customs duties. see: http://www.acted inconsistently with AA Art. 4.org/english/res_e/booksp_e/analytic_index_e/agriculture_e.
judicial economy. Rule 20(2)). 9.
Other issues addressed: DSU Articles 11.3. GATT Art. 3. Appellate Body's scope of review (fact vs. 4.Let us look at another case concerning domestic support for agriculture products -the usual disclaimer applies!
While the case study below is based on prior WTO Panel and/or Appellate Body rulings its main purpose is not to describe and review all the arguments and conclusions in the case in detail but rather to focus on the issues and principles addressed in the course and provide you with an outline of elements that you may wish to consider when reflecting on these issues and principles. export credit guarantees and other measures alleged to be export and domestic content subsidies. à Product at issue: Upland cotton and other products covered by export credit guarantees. consultations). 17. 8.
CASE STUDY 2
US – UPLAND COTTON (DS267) United States – Subsidies on Upland Cotton
Parties Complainant Brazil
Timeline of the dispute Establishment of Panel 18 March 2003 8 September 2004 3 March 2005 21 March 2005
AA Arts. sufficiency of notice of appeal (Working Procedures for Appellate Review. Summary of key panel/AB findings 4
à AA Art.7. 5(c) and 6.1(a) and 10 Respondent United States ASCM Arts. Item (j) of the illustrative list of the ASCM.5.
burden of proof. terms of reference (expired measures. XVI. 13 (peace clause): The Appellate Body upheld the Panel's finding that the "Peace Clause" in the AA did not apply to a number of US measures. including domestic support measures for upland cotton. statement of available evidence (ASCM Art. 12. Measure and product at issue
à Measure at issue: US agricultural "domestic support" measures. 3.2).3(c)
Circulation of Panel Report Circulation of AB Report Adoption
1(a) and (b). the United States had acted inconsistently with AA Arts.
The Panel found that other US domestic support programmes (i.1(a) and 3. One member of the Appellate Body.7 and 7.
.1(a) (Step 2 Payments – import substitution subsidies and export subsidies): The Appellate Body upheld the Panel's finding that Step 2 payments to domestic users of US upland cotton were subsidies contingent on the use of domestic over imported goods that are prohibited under Art. 10. Step 2 (user marketing) payments.e.1(a) and 3. 3. In addition. marketing loan programme payments.1(a) of the AA and. and thus.pdf
On 3 February 2006.htm http://www. 10. 4. however.3(c).8): The Panel recommended that (i) as for prohibited subsidies (export credit guarantees and step 2 payments). consequently.e. Art. see the following links on the WTO Website: http://www.à
ASCM Art.2 does not exempt export credit guarantees from the export subsidy disciplines in Art. the Appellate Body found that the Step 2 payments to exporters were prohibited export subsidies that were inconsistent with Art. the United States Congress approved a bill that repeals the Step 2 subsidy programme
for upland cotton. in a majority opinion.
AA Art.1. 3. expressed the contrary view that Art. market loss assistance payments. 3.1(b) and 3. The bill was signed into law on 8 February 2006.wto.2 exempts export credit guarantees from the disciplines of Art. and (ii) as for subsidies found to cause serious prejudice. the United States withdraw them without delay (i.1 of the AA and violated Art.1 until international disciplines are agreed upon. 9.1(a) and 3. 10. circumvented the US export subsidy commitments in violation of Art. within six months of the date of adoption of the Panel/AB Report or 1 July 2005 (whichever was earlier)) . in this case.org/english/tratop_e/dispu_e/cases_e/ds267_e. of the ASCM. 6. 6. causing serious prejudice to Brazil's interests within the meaning of Art. in a separate opinion.e. 9. 5(c).2 of the ASCM. 10.2. 3.
ASCM Art. 10. the United States should take appropriate steps to remove their adverse effects or withdraw the subsidy.
TIP If you want to know more about the US Upland Cotton case or to read the full case. also upheld the Panel's finding that AA Art. AA. The Appellate Body also upheld the Panel's findings that Step 2 payments to exporters of US upland cotton constitute subsidies contingent upon export performance within the meaning of Art. and counter-cyclical payments – is significant price suppression within the meaning of Art. and took effect on 1 August 2006. production flexibility contract payments. 3.2 of the ASCM.org/english/res_e/booksp_e/dispu_summary06_e. 3.
Recommendation (ASCM Arts.1 and ASCM Art. and crop insurance payments) did not cause serious prejudice to Brazil's interests because Brazil failed to prove a necessary causal link between these programmes and significant price suppression. 10.wto. direct payments. The Appellate Body.2 (Export credit guarantees – export subsidies): The Appellate Body upheld the Panel's finding that US export credit guarantee programmes at issue were "export subsidies" within the terms of the ASCM.3 and 8.3(c) (serious prejudice): The Appellate Body upheld the Panel's finding that the effect of subsidy programme at issue – i.
wto. Member A reduced this figure by 20% over six years starting in 1995. points to the fact that it has sufficient room in its Total AMS commitment as it has decreased support to other products (grains) and therefore it can increase support for sugar.htm
A developed country Member A. It should be noted however that only the provisions of the Agreement on Agriculture have been considered here.what do you think? Under the Agreement on Agriculture. Members could thus increase support to a product as long as the Current Total AMS does not exceed the overall ceiling set by the Total AMS commitment level in that Member's Schedule. would like to challenge Member A's use of subsidies. its subsidies on sugar have increased since 1995. not to the value of support given to individual products. They seek your opinion . Member A. According to Member B. especially the Agreement on Subsidies and Countervailing Measures and the GATT 1994.
. Member A is of a different view. a Member's Total AMS commitments apply to the total value of non-exempt support in favour of agricultural producers (expressed as Current Total AMS). has a Total AMS of US$200 million in the base years of 1986-1988. one would also need to bear in mind other WTO Agreements.org/english/res_e/booksp_e/analytic_index_e/agriculture_e. In order to provide a complete answer as to whether Member A's measures could be challenged. Member A argues that it can increase its domestic support on sugar so long as the Current Total AMS in any year of the implementation does not exceed the ceiling set by the Total AMS in its Schedule of Commitments.See also the WTO Analytical Index at: http://www. the Agreement on Agriculture prohibits increases in the use of subsidies for agricultural products. However. Member B.
the development programmes or Blue Box categories. the development programmes. fiscal.) year in question. marketing. à Supporting Table DS:3: Those Members availing themselves of the exemption from reduction commitments under Article 6. the programmes. under each clause of Article 6. except for LDC Members. a notification must be made showing that such support falls within its de minimis levels. Supporting Tables DS:1 to DS:9 contain the details of the calculation.
The levels of domestic support granted by Members vary considerably. Table DS:1 is a summary of the Current Total AMS calculation for the 12 month reporting period.5. The Committee on Agriculture examines these notifications regularly. and à calculations of Total AMS. etc. Developing-country Members can also request the Committee to set aside the annual notification requirement for measures other than those falling into the Green Box. the relevant paragraph of Annex 2. their monetary value and the data source. Where a Member without such scheduled commitments has support measures which are not covered by the exempt categories. In addition to the annual notification obligations. the value of the measure and the data source. their value and the data source. input subsidies and diversification from growing illicit narcotic crops) along with a brief description of the measures. à Supporting Table DS:2: Developing country Members using the exemptions listed in Article 6. Article 18. including the de minimis claims. and direct payments under production-limiting programmes . This requires: à a listing of all measures that fit into the exempt categories (the Green Box.2 (investment subsidies. All Members with base and annual commitment levels in Section I of Part IV of their Schedule have to submit a notification no later than 90 days (or 120 days if the initial notification is provisional) after the end of the calendar (or. WTO Members are required to make annual notifications.
.V. which are required to notify every two years. Special formats have been developed by the Committee on Agriculture in order to facilitate compliance with the notification obligations. à Supporting Table DS:1 lists the Green Box measures exempt from reduction commitments. all Members must notify any modifications of existing or any introduction of new measures in the exempt categories. and a notification of the Current Total AMS for Members that have scheduled domestic support reduction commitments.2 are required to list the measures under each of the three headings of Article 6.2 of the Agreement on Agriculture requires all Members to notify the extent of their domestic support measures to the Committee on Agriculture for its review. the Member is required to provide a brief description of each measure.the Blue Box). Those Members that had high levels of support during the 1986-88 base period and established commitments to reduce the Total AMS have tended to continue giving high levels of support although some Members have shifted the emphasis from the Amber Box to the Blue and Green Boxes. Under each of the headings in Annex 2.5 (Blue Box) for direct payments under production-limiting programmes must list.
2 (development programmes) and the Blue Box. the external reference price. other non-exempt direct payments. the name of the measure.
Supporting Table DS:5 covers data on market price support schemes for each product. the applied administered price. Also included in Supporting Table DS:7 are the results from Supporting Tables DS:6 and DS:5 and the sum is called Total Product-specific AMS. The data must include the description of the basic product. measures under the Green Box. The budgetary outlay associated with the scheme is usually used. Details of the individual elements are in other supporting tables.e. the annual notification requirements are in many cases not burdensome. This could include subsidies per hectare planted or per animal which are not related to price but are aimed at supporting production. However. the applicable year. associated fees and the total value of direct payments for each product. the eligible production. the data must include the basic product. the name of the measure. any associated levies or fees and the total market price support for each product. they are effective in providing a basis for policy discussions within the Committee on Agriculture and serve a useful purpose in enabling governments to maintain an annual overview of support to their agricultural sectors.3 of the Agreement on Agriculture. This Table is required to notify.
Supporting Table DS:9 shows non-product-specific support provided in favour of agricultural producers in general. As most Members do not have domestic support measures other than those falling into the exempt categories. This table covers for example intervention type schemes where the State buys products at certain minimum prices. i.
Supporting Table DS:7: If there are any remaining product-specific subsidies they are included in this Supporting Table. This could include an intervention scheme of limited application or the cost of disposing of surpluses. the external reference price.à
Supporting Table DS:4 contains the summary of the product-specific AMS and non-product-specific AMS with the relevant de minimis claims noted. the size of the agriculture sectors varies between different Members and should be taken into account in any examination of domestic support data as should the structure of that support which is often concentrated in a few sectors.
. Similar to Supporting Table DS:5. In addition. on an ad-hoc basis. the Article 6. Table DS:2 notifications should be submitted for each new or modified measure exempt from reduction as far as practicable before such measures are adopted and in any event within 30 days of adoption. This includes for example credit subsidies or water subsidies. any new or modified domestic support measures exempt from reduction.
Supporting Table DS:6 contains data on non-exempt direct payments. the eligible production. Caution should be exercised when examining the notifications as many Members notify in different currencies. the applied administered price. which have been subject to varying exchange rate and inflation fluctuations. the year.
There is also a Table DS:2 for notifications under Article 18. This normally covers deficiency payments schemes where farmers are paid the difference between the price they get on the market and the target price set by the government as well as other non-exempt direct payments that may not be related to price. the total price related direct payments.
Supporting Table DS:8 For market price support schemes where the price gap method of calculating the AMS is not practicable the EMS is calculated as set out in Annex 4 of the Agreement on Agriculture.
How often are notifications on Domestic Support to be made and in what form?
Members agreed to make the following reductions in the Total AMS as compared to the average during the base period of 1986-1988: à developed country Members agreed to reduce the Total AMS by 20% during the six-year implementation period. such measures are placed in a Green Box. least-developed countries were not required to make any cuts. in Section I of Part IV of a Member's Schedule. where relevant. disaster relief.
. and (3) other support maintained within the de minimis levels.
The disciplines and commitments concerning domestic support are found in Articles 3.3% over 10 years. In the Uruguay Round.
Domestic support measures that cannot be included in the above-mentioned exempt categories must be accommodated within the ceilings set by the Total Aggregate Measurement of Support (Total AMS) which are expressed in terms of Annual and Final Bound Commitment Levels. structural adjustment assistance.VI.2 of the Agreement on Agriculture). which have no more than minimal trade distorting effects or effects on production. and 4 of the Agreement on Agriculture and. Members do not have to reduce: (1) (2) direct payments under production-limiting programmes (Blue Box measures). payments under environmental programmes and regional assistance programmes. In addition to the Green Box policies. 6 and 7 as well as Annexes 2. 3. à à developing country Members agreed to reduce the Total AMS by 13.
Members can use without limits the domestic support measures. They include subsidies for government services and certain direct payments to producers such as decoupled income support. certain government assistance programmes to encourage agricultural and rural development in developing country Members (as listed in Article 6.
4(a) and (b)
De minimis provision allows exclusion of product-specific and non-product-specific support .
Article 6. (ii) other policies included in the Aggregate Measurement of Support (AMS) subject to reduction commitments (Amber Box). Least-developed countries must bind AMS support level if applicable but are not required to reduce it.
De minimis provision allows exclusion of productspecific and non-product-specific support . (i) permitted policies (Green Box).3% over 10 years.
Article 6.DOMESTIC SUPPORT
Instrument Article 6.5
Direct payments under production-limiting programmes (Blue Box) are excluded from the calculation of the Current Total AMS.
Total AMS to be reduced by 20% over 6 years.less than 5% of respective current value of production from the calculation of the Current Total AMS. These development programmes are excluded from the calculation of the Current Total AMS.less than 10% of respective current value of production from the calculation of the Current Total AMS.
Total AMS to be reduced by 13. 7 & Annex 2
What it says or deals with
Policies divided into two groups. Developed country Members Developing country Members Developing country Members are allowed to use investment and input subsidies under certain conditions as well as support to encourage diversification from growing illicit narcotic crops.
and Annex 2 of the Agreement on Agriculture. 3.2. 4. the domestic support measures must meet policy-specific criteria and conditions relating to a particular category of the Green Box. The general criteria are that the domestic support measure: à à must have no.
Direct payments under production-limiting programmes that are made on fixed area and yields or a fixed number of livestock as well as payments made on 85% or less of the base level of production. 2. or at most minimal. General services Public stockholding for food security purposes Domestic food aid Decoupled income support Government financial participation in income insurance and income safety-net programmes Payments for relief from natural disasters Structural adjustment assistance provided through producer retirement programmes Structural adjustment assistance provided through resource retirement programmes Structural adjustment assistance provided through investment aids Payments under environmental programmes Payments under regional assistance programmes Other payments consistent with provisions of Annex 2. and à must not have the effect of providing price support to producers. Examples are: (1) price support (2) input subsidies (3) subsidies directly related to production quantities.PROPOSED ANSWERS: 1. Measure types which could be included in the Green Box: à à à à à à à à à à à à 5.5.
. Amber Box subsidies refer to domestic support measures that distort production and trade. Article 6. trade-distorting effects or effects on production. Article 6. must be provided through a publicly-funded government programme (including government revenue foregone) not involving transfers from consumers.
6. . Members with no scheduled reduction commitments must maintain their non-exempt domestic support within the relevant product-specific and non-product-specific de minimis levels. Least developed countries were not required to make reduction commitments. except for LDC Members which are required to notify every other year. In addition to the annual notification obligations. These programmes include: 1.
Article 6. Investment subsidies generally available to agriculture. whether direct or indirect. 2.
7.". Table DS:1 is a summary of the Current Total AMS calculation for the 12 month reporting period. Supports to encourage diversification from growing illicit narcotic crops.. to encourage agricultural and rural development are an integral part of the development programmes of developing countries. Developing country Members can also request the Committee to set aside the annual notification requirement for measures other than those falling into the Green Box.. Special formats have been developed by the Committee on Agriculture in order to facilitate compliance with the notification obligations.. government measures of assistance.
Developed country Members committed to reduce Total AMS by 20% over six years (1995-2000) and developing country Members by 13. shall be exempt from domestic support reduction commitments that would otherwise be applicable to such measures. The Committee on Agriculture examines these notifications regularly.. Input subsidies generally available to low-income or resource-poor producers. the Development Programmes or Blue Box categories. 3. Table DS:2 notification contains details of any new or modified measure exempt from reduction commitment.2 stipulates that ". The rules for calculating the EMS are set out in Annex 4 of the Agreement on Agriculture.
The EMS is a fall-back concept used when it is not practicable to calculate a market price support component of the AMS by using the methodology set out in Annex 3. all Members must notify any modifications of existing or any introduction of new measures for which an exemption from reduction is claimed..
WTO Members are required to make annual notifications..3% over 10 years (1995-2004). Supporting Tables DS:1 to DS:9 contain the details of the calculation.
Describe the rules and the reduction commitments Members made. Explain the rules for Products with no specific reduction commitments. Explain anti-circumvention.MODULE
ESTIMATED TIME: 5 ½ hours
OBJECTIVES OF MODULE 6
Present the third pillar of the Agreement on Agriculture: Export Competition/Subsidies Outline the Conceptual Framework of the rules on export subsidies in the Agreement on Agriculture. and Outline the notification obligations of WTO Members concerning export subsidies.
. Explain the special and differential treatment provisions relating to export subsidies.
since they can.I. in its natural form or which has undergone such processing as is customarily required to prepare it for marketing in substantial volume in international trade".
In Module 2. In addition to reducing prices and undercutting unsubsidised exporters in other countries. In addition. In most cases the subsidy depends on the difference between the world and domestic prices. Article XVI obliged Contracting Parties who used export subsidies not to do so in a way that gained "more than an equitable share of the world export trade in the product" in question for the subsidizing party. which means the exporter can always match or undercut exporters in other countries. while the GATT 1947 prohibited export subsidies for manufactured products. we saw that. As the level of subsidy usually depends on the difference between domestic and world market prices. but a trade effects test. export subsidies also amplify world market price variations. it could be argued that. Exporters that receive export subsidies enjoy an advantage. Therefore. as well as independent economists and academic institutions. or any mineral. See Interpretative Note 2 to Section B of Article XVI of the GATT.
The negative effects of export subsidies on agriculture have been analyzed by international organizations.
The proliferation of export subsidies in the years leading to the Uruguay Round was one of the key issues addressed in the agriculture negotiations. forest or fishery. sell below the cost of production. supply from the subsidising country is not affected by market prices as the subsidy increases or decreases as prices fall or rise. This in turn increases competition for other exporters or for domestic producers in the importing country.
. many WTO Members. for exports of primary products. or even increase. However. if world market prices fall the subsidy increases and supply from the subsidised exporter can remain the same. The rules on agricultural subsidies are found in both the Agreement on Agriculture and the Agreement on Subsidies and Countervailing measures ("SCM Agreement"). taking into account representative historical trade shares and any special factors. primary products were defined as "any product of farm. Article XVI allowed exports of primary products to be subsidized.
For purposes of GATT Article XVI. for example. there was not an export subsidy prohibition.
Oxford University Press. At the 6th Ministerial Conference held in Hong Kong in 2005. actionable and non-actionable).
The use of export subsidies is prohibited except those provided within the framework of the Agreement on
Agriculture. See also World Trade Report 2006 for thematic essays on Subsidies and the WTO.
. provided a Member's use of export subsidies was within its commitments. Therefore. This date was to be confirmed only upon completion of modalities. 8. classifying subsidies into three categories (prohibited. Members also agreed that the provisions of the SCM Agreement on export subsidies would apply "except as provided in the Agreement on Agriculture" (Article 3. This hurts vulnerable producers in developing countries.1). Article 3 of the SCM Agreement prohibits subsidies contingent in law or fact on export performance. However. The SCM Agreement is also applicable to agricultural products. the "Due Restraint" clause of the Agreement on Agriculture (Article 13) restricted other Members rights to challenge these subsidies until the end of 2003. 2003. concepts and methodologies relating to adverse effects. it defined subsidies for the first time and further elaborated on subsidy disciplines. export subsidies and subsidies contingent upon the use of domestic products over imported goods are prohibited. except as provided for in the Agreement on Agriculture. 9. "Except as provided in the Agreement on Agriculture…". It also developed definitions. Article 3 (Prohibition) of the WTO Agreement on Subsidies and Countervailing Measures stipulates that. most of the export subsidies are granted to temperate products like dairy and cereals. and (2) the amount of money spent subsidizing exports. WTO Members agreed to eliminate agricultural export subsidies by 2013. and established procedural rules for multilateral remedies. transparency provisions.
For a comprehensive examination of the Peace Clause and analysis of the trade impacts of various export
subsidy and domestic support measures see Steinberg and Josling. The SCM Agreement also expanded and developed existing procedural and substantive rules on the use of countervailing measures. it could be argued that consumers in net-food-importing developing countries benefit from the lower food prices although producers in these countries will suffer from the increase in subsidised. but only where they used them during the base period (1986-1988). However. The SCM Agreement added precision to the rules. for example. Journal of International Economic Law 6(2). 10 and 11 of the Agreement. Export subsidies can still be used by WTO Members. The Agreement on Agriculture permits export subsidies on agriculture subject to the limits set out in Members' Schedules of Commitments (which give details of their reduction commitments) and the rules in Articles 3. as part of the single undertaking and subject to the parallel elimination of all forms of such subsidies.
On average export subsidies lead to declining food prices. Part VII of the SCM Agreement sets out enhanced provisions on notification and surveillance – that is. 369-417.This exaggerates the swings in world prices by reducing supply in times of high prices and increasing it in times of low prices. In addition. The Agreement on Agriculture provides that the level of export subsidies cannot be increased and that the existing level of subsidies could continue subject to conditions and the commitments to reduce (1) subsidized export quantities.
WT/DS108/AB/R. In these cases it may be possible to seek some of the remedies set out in the SCM Agreement. adopted 20 March 2000. they can also cover cases where someone gets a benefit as a result of a government programme. a subsidy exists if: à à à there is a financial contribution by a government or any public body within the territory of a Member. and United States – Tax
Treatment for "Foreign Sales Corporations" ("US – FSC"). The Panel said in paragraph 7. Governments can also provide support to exports through export credits which offer the purchasing government or enterprise lower interest rates or easier terms than commercial banks. within the meaning of Article 1. Canada – Dairy. arises where the grantor makes a "financial contribution" which confers a "benefit" on the recipient. the Appellate Body said that a "subsidy". the SCM] Agreement". a benefit is thereby conferred. there is any form of income or price support in the sense of Article XVI of the GATT 1994. It must also be noted that exports can be supported in many different ways and that direct aid by governments is only one of these methods. although a subsidy is legal it may cause or threaten to cause harm to another Member. a subsidy arises when: à "financed" or a "financial contribution" do not necessarily mean a direct payment of monies. A state trading enterprise may also have access to government-guaranteed loans or government investments which enable it to undercut the competition.150 that Article 1 of the SCM Agreement. Panel Report WT/DS108/R. Under the SCM Agreement.However. Appellate Body Report. as it is the only Article in the WTO Agreement that provides a definition of that term. à A subsidy can exist even where the benefit is granted not directly by the government but by virtue of government action. as compared with what would have been otherwise available to the recipient in the marketplace.
In the Canada .1 of the SCM Agreement.e.FSC (DS108) Panel Report. To sum-up. The Agriculture Agreement does not contain any definition of the term "subsidy". Food aid can also be used as a way to dispose of surplus stocks. is directly applicable to the Agriculture Agreement.Dairy report. food aid could displace commercial trade in the receiving country rather than contributing to alleviation of hunger. This is not of course to say that the definition of "subsidy" in the SCM Agreement. represents highly relevant context for the interpretation of the word "subsidy" within the meaning of the Agriculture Agreement.
Appellate Body Report. paragraph 87. which applies "[f]or the purpose of this [i. Canada – Aircraft WT/DS70/AB/R.
The same approach can be found in the Canada – Measures Affecting the Export of Civilian Aircraft ("Canada – Aircraft")(DS70) and the US .. adopted 20 August 1999. as modified by the Appellate Body Report. which defines the term "subsidy" for the purposes of the SCM Agreement. In some cases.
What products were eligible for export subsidies under GATT 1947 and subject to what conditions? In which agreement is the definition of subsidies to be found?
.EXERCISES: 1. 2.
4 of the Agreement on Agriculture).
. the milk incorporated into processed cheese. The right to use export subsidies is now limited to two situations: (i) export subsidies subject to product-specific reduction commitments within the limits specified in the Schedule of the WTO Member concerned. for example.1 in respect of the agricultural products or groups of products in excess of the commitments specified in Section II of Part VI of its Schedule. Since 2000 the annual limits apply and this "roll-over-relief" provision has now expired.
EXPORT SUBSIDIES RULES FOR AGRICULTURE
As a result of the Uruguay Round. The reduction commitments are shown in the Schedules of WTO Members on a product-specific basis. During the period 1996 to 1999 Members that had export subsidy reduction commitments in their Schedules did have the right to exceed the limits set out in their Schedules provided they had not used their full commitment for the previous years. ARTICLE 9 (SUBSIDIES TO BE REDUCED)
The export subsidies that are subject to reduction are listed in Article 9 of the Agreement on Agriculture. and à Article 11 contains the disciplines on the use of subsidies on incorporated agricultural primary products. Those WTO Members that have the right to use export subsidies were required to reduce the amount of money spent on export subsidies and the quantity exported with subsidies: à Articles 3 and 8 of the Agreement on Agriculture prohibit WTO Members from providing export subsidies for products not specified in their respective Schedule. the use of export subsidies for agricultural products is prohibited. The amount by which a Member could exceed the limit in its Schedule was limited and at the end of the implementation period the total quantity exported with subsidies and the amount spent of subsidies had to be within the totals set out in the Schedule.II.A. Article 3.3 of the Agreement on Agriculture states that a WTO Member may not provide export subsidies listed in Article 9.
II. Article 10 states that other measures cannot be used to circumvent export subsidy commitments and sets out some rules for export credits and food aid. In all other cases. and (ii) export subsidies consistent with the special and differential treatment provision for developing country Members (Article 9. These Articles also require that the quantity exported with subsidies and the budgetary outlay on these subsidies do not exceed the limits set out in the Member's Schedule. à à Article 9 lists the types of subsidies to be reduced. the right to use export subsidies is limited by the disciplines in the Agreement on Agriculture.
adopted 20 December 2002. adopted 3 December 2001.5 of the DSU. However. wheat contingent on their incorporation in export products such as biscuits. contingent on export performance. such as.5 of the DSU. from the grantor of the payment to the recipient. Recourse to Article 21. it is worth noting that Article 9. WT/DS103/AB/R and DS133/AB/R. subsidies on agricultural products for example. c) Payments on the export of an agricultural product that are financed by virtue of governmental action. adopted 23 October 1999. if the recipient gives full consideration in return for a "payment-in-kind". e) Internal transport subsidies applying to exports only. b) Sales of non-commercial stocks of agricultural products for export at prices lower than comparable prices for such goods on the domestic market.Dairy dispute
(DS103. WT/DS103/RW and WT/DS113/RW. to a firm. WT/DS103/R and
WT/DS113/R. which is taken to include producer financed subsidies. to producers of an agricultural product. WT/DS103/AB/RW2 and WT/DS113/AB/RW2. paragraphs 87-88. WT/DS103/AB/RW and WT/DS103/AB/RW. DS113).1 is much broader than it might appear at first sight. which can be in a form other than money. government programmes which require a levy on all production which is then used to subsidise the export of a certain portion of that production.
. and f) Subsidies on incorporated products.1 covers: a) The provision by governments or their agencies of direct subsidies.5). Second Recourse to Article 21.5)(II). to an industry. That is. to a cooperative or other association of such producers.
Canada – Measures Affecting the Importation of Dairy Products ("Canada – Dairy"). Although other forms of export subsidies can be provided. i. adopted 11 July 1999. or to a marketing board. there can be no subsidy. including payments-in-kind. such as those designed to bring exportable produce to one central point for shipping.
Canada – Dairy. Canada – Dairy (21.e. For example. WT/DS103/AB/R and WT/DS/113/AB/R. the
Appellate Body held that "'payments-in-kind' are a form of direct subsidy" and a "payment-in-kind" is just one of the forms in which "direct subsidies" may be granted. if the recipient gives less than full consideration for the "payment-in-kind" there is a subsidy. The Appellate Body indicated that "payments" and "payments-in-kind" denote a transfer of economic resources. WT/DS103/RW2 and WT/DS113/RW2.The list in Article 9. Article 9. The Appellate Body also ruled that the mere fact that a "payment-in-kind" has been made does not by itself imply that a "subsidy" has been granted. adopted 17 May 1999.1(a) refers to direct payments. adopted 26 July 2002. In the Canada . including paymentsin-kind that are contingent on export performance. Canada – Dairy (21. d) Cost reduction measures such as subsidies to reduce the cost of marketing goods for export: this can include upgrading and handling costs and the costs of international freight.
These 25 Members have a total of 428 individual reduction commitments. Members without commitments cannot subsidize agricultural exports at all.4 allowed developing countries to use subsidies aimed at reducing the cost of marketing including internal and external transport as well as handling and processing costs (that is the subsidies listed in Article 9. paragraph 108.
WHO CAN SUBSIDIZE EXPORTS?
25 WTO Members (counting the EU as one) can subsidize exports. WT/DS103/AB/R and DS133/AB/R. it has expired but the Hong Kong Ministerial Declaration states that "developing country Members will continue to benefit from the provisions of Article 9..4 for five years after the end-date for elimination of all forms of export subsidies".
II. or transfer existing commitments to other agricultural products.
II.1(d) and (e)).With respect to the requirement of Article 9. Hence. These Members cannot: (1) (2) (3) introduce new subsidies for products not listed in their Schedules. the Appellate Body in the Canada . Canada – Dairy. allowing them to subsidize marketing.4. paragraphs 119-120.4
The Agreement on Agriculture includes certain temporary exemptions for developing countries. cost reduction and transport in Article 9. WT/MIN(05)/DEC. provided that these are not applied in a manner that would circumvent export subsidy reduction commitments. In brackets are the numbers of products involved for each country. In the Canada – Dairy case the benefit arose because one class of milk production was available to producers at low cost provided it was used exclusively for exports.C.1(c) of the Agreement on Agriculture that payments be made on the export of the agricultural product. Strictly speaking.
EXCEPTION IN ARTICLE 9. This exemption is one of the special and differential treatment provisions of the Agreement on Agriculture and was only available during the implementation period. by
virtue of governmental action" are not restricted to direct financial assistance but include benefits given to exporters that arise from government schemes. Article 9.. paragraph 6. but only for products on which they have commitments to reduce these subsidies. Doha Work Programme: Ministerial Declaration.
7 8 9
Canada – Dairy. Article 9. WT/DS103/AB/R and DS133/AB/R.B.
.Dairy ruled that
"payments. exceed the limits in their schedules. Some among them have decided to greatly reduce their subsidies or drop them completely.1(c) covers many measures and policies used by governments to support exports.
1.1 and Add.
. see WTO Secretariat background paper "Export subsidies" TN/AG/S/8/Rev.Export Subsidy Commitments
à à à à à à à à à à à à à à
Australia (5) Brazil (16) Bulgaria (44) Canada (11) Colombia (18) Cyprus (9) Czech Rep (16) EU (20) Hungary (16) Iceland (2) Indonesia (1) Israel (6) Mexico (5) New Zealand (1)
à à à à à à à à à à à à
Norway (11) Panama (1) Poland (17) Romania (13) Slovak Rep (17) S Africa (62) Switzerland Liechtenstein (5) Turkey (44) United States (13) Uruguay (3) Venezuela (72)
All Members 428
For more details.
1 are shown in the Schedules of WTO Members on a product-specific basis. the universe of agricultural products was initially divided into product groups.
Code 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 20 19) 21 22 23 24 25 Table 1: (includes
Products or groups of products Wheat and wheat flour Coarse grains Rice Oilseeds Vegetable oils Oilcakes Sugar Butter and butter oil Skim milk powder Cheese Other milk products Bovine meat Pig meat Poultry meat Sheep meat Live animals Eggs Wine
Fruit and Vegetables Tobacco Cotton Incorporated products Other agricultural products All agricultural products Product groupings
Based on Uruguay Round Modalities document MTN.
. PRODUCT CATEGORIES
The reduction commitments for the export subsidies in Article 9.D. For this purpose.GNG/MA/W/24.II. Annex 8.
each WTO Member must specify in its Schedule of Commitments the maximum level of budgetary outlay (money spent) and the maximum quantity exported (volume) by product on an annual basis. Some Members took commitments on a more disaggregated level. See Article 9. By the last year of the implementation period. have commitments in Section III of Part IV of their Schedule. Now they are restricted to the transport and marketing subsidies permitted under Article 9. Under Article 9.
As was explained on page 1. Members had to be within their final export subsidy ceilings. it is not taken into consideration throughout this course. but must remain within the limits set in their Schedules.2(a) of the Agreement on Agriculture.e. some Members. some
countries such as Costa Rica and Panama.
Product specific reduction commitments in terms of: (Developed) Volume Budgetary outlays Table 2: 21% 36% (Developing) 14% 24%
Product specific reduction commitments
For the product categories.2(b)(iv) for reference to the reduction commitments. but none of them had any export subsidies to begin with. by the year 2000).E. Developed-country Members had to reduce their expenditure on export subsidies by 36% from the levels in the 1986-1990 base period. Developing-country Members are required to reduce their expenditure on export subsidies by 24% over 10 years.4. For "incorporated products" (last item in the Article 9 list) the reduction commitments are expressed in terms of money spent only. requiring them to eliminate or reduce certain incentive schemes applying to non-traditional agricultural products. are allowed to use them.e. The 25 Members which have listed commitments for reducing export subsidies. and to reduce the quantities benefiting from export subsidies by 14% (i.
.II. the commitments regarding the reduction of export subsidies relate to both the amount of money spent (budgetary outlet) and the quantity exported (by volume). LDCs are not required to undertake any reduction commitments. have established maximum annual expenditure and volume levels in the Schedules (Section II of Part VI).
Export subsidy reduction commitments are in Section II of Part IV of the Schedules. Furthermore. But as this Section of Schedules is not covered by the notification requirements. and to reduce the quantities benefiting from export subsidies by 21% over a six year implementation period (i. by the year 2004).
The ceilings specified in the schedules must be respected in each year of the implementation period although limited "over-shooting" in the second to fifth year of implementation is permitted as is explained below under the heading "roll over commitments".
Explain briefly the rules in Articles 9 of the Agreement on Agriculture referred to export subsidy commitments? 4. What are the conditions on permissible export subsidies?
1997. For this period.2(b)(ii) 1995-99 = 7160 + 1 600*1.75% of the exported volume. provided that it did not exceed the overall commitments over the entire implementation period. for the years 1996.2
For example: What is the maximum value and volume of export subsidies in 1999 Commitment Year Base Period average 1995 1996 1997 1998 1999 2000 Total Value 255 240 224 209 194 178 163 1 208 Volume 1 600 1 544 1 488 1 432 1 376 1 320 1 264 8 424 240 200 180 190 ? 1 500 1 400 1 300 1 350 ? Value Actual Volume
In 1999 this country would be allowed to provide export subsidies greater than its commitments as follows: Value Total of Commitments for 1995-99 =240+224+209+194+178 = 1045 = 1053 = 810 = 243
Total Allowed Under Article 9.5550
But by 2000 the total volume getting subsidies from 1995 to 2000 must not exceed 8424
. Although the reduction commitments relate to the 1986-1990 base period. This is known as the "roll-over" principle.810
But by 2000 the total spent from 1995 to 2000 must not exceed 1 208 Volume Total of Commitments for 1995-99 = 1544+1488+1432+1376+1320 = 7160 = 7188 = 5550 = 1638
Total Allowed Under Article 9. Hence.II.2(b)(i) 1995-99 =1045 + 255*3% Actual Value of Export Subsidies 1995-98 Total Permitted in 1999 =240+200+180+190 =1053 . Article 9.75% Actual Volume of Export Subsidies 1995 -98 Total Permitted in 1999 = 1500+1400+1300+1350 = 7188 . 1998 and 1999 exporters were able to maintain a higher level of subsidized exports provided that by the end of 2000 the total amount used from 1995 to 2000 was the same as the total set out in their Schedule.
ROLL‐OVER OF COMMITMENTS
For the period 1996-1999.F. However.
ROLL-OVER: ARTICLE 9.2(b) allowed a WTO Member to exceed its commitments in any given year by up to 3% of expenditures and 1. they still had to reduce them to a level which represented 64% in value and 79% in volume compared to the 1986-1990 base period (76% and 86% respectively for developing countries). WTO Members had a certain degree of flexibility with regard to their commitments on the reduction of export subsidies. Members were given the flexibility of starting their reduction from the 1992 levels where they used more export subsidies in 1992 than in the base period.
where the government of the recipient country has declared an emergency and people would starve if aid were not delivered. export credits and state trading enterprises and their relation to export subsidies. giving them cheaper access to capital. In many cases it is vital for delivering food in urgent situations. such as after the crisis and during the recovery period. In other cases. let's clarify that the WTO is not a food aid agency. as well as numerous non-governmental organisations. and the other that that increases consumption by providing food that would not have been consumed if the aid had not been granted.
The reduction commitments in the Agreement on Agriculture relate to scheduled export subsidies. there are also cases where food aid is used to dispose of surpluses in the donor country. given without any government involvement. However. before we look at Article 10 in detail. food aid may be needed to address chronic shortages. displaces other exports or domestic production and is used to dispose of surpluses in the supplying country. as many private financial institutions provide loans for purchases of imports. Export credits can. Article 10 of the Agreement on Agriculture prevents Members from using export support subsidies that are not specifically listed in Article 9 of the Agreement on Agriculture in ways that result in or even threaten to lead to circumvention of export subsidy commitments. However. From the perspective of commercial trade there are two types of food aid: à à one that displaces commercial exports. food aid may be used as a surplus disposal instrument and disrupt or displace commercial transactions. EXPORT CREDIT GUARANTEES AND INSURANCE PROGRAMMES Export credits are loans given to importers or importing governments to buy exports from another country. Exporting state trading enterprises or single-desk traders may cross-subsidise. or have access to government guaranteed borrowing. Where governments are involved in giving loans. when the credit conditions are more favourable than those that private financial institutions would provide. Food aid is a very sensitive and complex issue. which would also distort trade. Finally.
FOOD AID First of all. and usually are. Studies have shown that a small proportion of the food aid that is currently provided is supply-driven rather than needsbased and is used as a disposal tool for domestic surpluses. to ensure that an adequate level of food aid is provided and that trade rules do not cause any unintended impediment to dealing with emergency situations. let us look at food aid. the Food and Agriculture Organization (FAO) and other international agencies. Export credits may also distort export competition. If the food aid does not result in extra consumption. there is often the question of whether these loans are subsidised or not in some way. and second to ensure that food aid results in additional consumption and does not cause commercial displacement. However. The concern of WTO Members is twofold: Firstly. That role belongs to other institutions such as the World Food Programme of the United Nations. it is essentially the same as an export subsidy. however. other forms of subsidising exports do exist.III.
In some cases STEs have monopoly or near-monopoly power over the purchases and sales of a country's agricultural products.Government involvement may be via credits provided directly by the government of the exporting country or through the government guaranteeing some of the risk of default.4% of world trade between 1995 and 1998. There may be cases. It has been argued that private companies can also have commercial power.6% the highest subsidy content. With the government guaranteeing some of the risk. In these cases. Of this. or organisations that have some special rights or privileges given to them by a government. OECD. However. For example: à à governments may provide operating capital or underwrite losses.
STATE TRADING ENTERPRISES (STE) State Trading Enterprises (STE) are state owned organisations. the only way food could be purchased would be through official export credit guarantees or insurance schemes provided by the exporting country. others argue that it is a very efficient way of supporting exports as a small
reduction in loan costs or improvement in repayment terms can have a big impact on trade decisions. however. commercial banks may deem the risk of default to be too great. the STE may have a monopoly when buying commodities for exports. Canada 5% and Australia 2% (see Figure 10).
. The total subsidy element amount is estimated to have been $300 million in 1998. à à à the STE may benefit from government guarantees. use the commercial practice of differential pricing and may receive government help when struggling for existence. the EU 7% (excluding intra-EU credits). It has been discussed whether a monopoly given by a government to an exporting enterprise is itself suspect or whether it is the actions of the enterprise that would determine whether it is subsidizing exports or not. if a government is involved in an export insurance scheme it may be able to offer better risk coverage than would be available on purely commercial terms. the overall trade distorting effect of export credits in total trade of agriculture products is very small although certain export credit programmes bias targeted importers' purchasing decisions and distort markets. the STE may be in a position to use price pooling between domestic and export sales which may lead to consumer financed subsidies. this study uses data from 1998 and may no longer be representative. Following a financial crisis. for example. Cereals account for almost one half of the subsidy element of all used export subsidies. where the private sector would not be prepared to offer credits to the purchasing government or enterprises in the importing country. only a
portion are estimated to have distortionary effects.
Total export credits facilitated on average 4. but of these. Similarly. both in total as well as relative to total trade. the borrowers can avail of better repayment terms and interest rates than without the guarantee. Governments could support exports through exporting STEs in a number of ways.
However. OECD (2000). The use of export subsidies was increasing during this period. the US provides 86%. Paris. According to the OECD. The US is the strongest user of export credits and their export credits have at 6. "An Analysis of Officially Supported Export Credits in Agriculture". and the STE may not have purely commercial objectives for its activities as it may be required to maximise returns to producers.
it does require that the value of such support and the quantity exported with support must be within a Member's Scheduled commitment levels. including inter alia disciples on the use of export credits and credit guarantees as well as food aid as is explained below. Article 10. that it is not "applied in a manner which results in.
Article 10 of the Agreement on Agriculture seeks to prevent Members from trying to circumvent their commitments in numerous ways: (i) by requiring that any export subsidy not listed in Article 9. However.
Part V: Article 10 Prevention of Circumvention of Export Subsidy Commitments 1.1). or which threatens to lead to.1 is not used in a way that even threatens to lead to circumvention of commitments.1 prohibits WTO Members from applying subsidies of a type not listed in Article 9. circumvention of export subsidy commitments. export credit guarantees or insurance programmes in recognition that such measures could also be used to circumvent commitments.The Agreement on Agriculture does not oblige WTO Members to make reduction commitments on the subsidy components in export credits.
(iii) by putting the burden of proof on Members to show that exports in excess of commitments are not subsidised. Export subsidies not listed in paragraph 1 of Article 9 shall not be applied in a manner which results in. That is. and (iv) by establishing rules for food aid. "Non-commercial transactions" could also be used to circumvent these commitments. According to Article 10.
Article 10. circumvention of export subsidy commitments" (Article 10. However. Article 10 refers in particular to food aid or export credits. not only export subsidies can "threaten to lead to circumvention" of WTO Member commitments.2 calls for WTO Members to develop internationally-agreed disciplines to govern the provision of export credits. or which threatens to lead to. state trading enterprises and food aid.
.1. (ii) by requiring Members to work towards developing disciplines on export credits. nor shall non-commercial transactions be used to circumvent such commitments. the Agreement on Agriculture has some provisions for the prevention of circumvention of export subsidies commitments.
This prohibition applies to both scheduled and unscheduled products.
In other words.
Despite the lack of clear rules.
The issue of disciplines on export credit and related programmes has been a standing agenda item of the regular meetings of the Committee on Agriculture as an implementation-related issue. Any Member which claims that any quantity exported in excess of a reduction commitment level is not subsidized must establish that no export subsidy. paragraph 6 of the Hong Kong Ministerial Declaration. the Hong Kong Declaration reaffirmed Members' commitment to the development of internationally-agreed disciplines for export credits. has been granted in respect of the quantity of exports in question. can it be used in a way that threatens to lead circumvention of commitments.
. no subsidy can be used to export products not listed in a Member's Schedule nor. Article 10. guarantee and insurance programmes is subject to the commitments in Members' Schedules and the rules in the Agreement on Agriculture. any subsidy element that might exist in government-supported export credit.2 in the agriculture negotiations rather than pursuing discussions in the regular Committee on Agriculture. export credit guarantees or insurance programmes and. if there are commitments for a particular product. In December 2005.2. it was acknowledged that Members were prioritizing the discussion of issues under Article 10.
During the informal consultations on implementation-related issues held in February 2006.
WT/MIN(05)/DEC. after agreement on such disciplines.3 requires that exporting countries with export subsidy commitments must show that any exports above commitment levels do not receive any export subsidies. Members undertake to work toward the development of internationally agreed disciplines to govern the provision of export credits.
3. export credit guarantees or insurance programmes only in conformity therewith. whether listed in Article 9 or not. to provide export credits. and again in the May 2006 meetings of Committee on Agriculture.
As an additional measure against circumvention. The development of disciplines in this area has also been addressed in the agriculture negotiations (Special Session).
Appellate Body Report. However. adopted 20 December 2002.e. if a Member has no export subsidy commitments. and (c) that such aid shall be provided to the extent possible in fully grant form or on terms no less concessional than those provided for in Article IV of the Food Aid Convention 1986. the system of Usual Marketing Requirements (UMRs).
Article 10." This means that in relation to the anti-circumvention provisions of Article 10. therefore.4. under the usual rules. The Appellate Body said:
"With respect to the export subsidization part of the claim. the complaining Member.This provision was litigated in the Canada – Dairy
.WT/DS103/AB/RW2 and WT/DS113/AB/RW2. it could be argued that the Member making the accusation needs to prove that subsidies were involved. … However.
4. the complaining Member is not required to lead in the presentation of evidence to panels. including bilateral food aid which is monetized. and à it is up to the defending Member to establish that they are not subsidized. Members donors of international food aid shall ensure: (a) that the provision of international food aid is not tied directly or indirectly to commercial exports of agricultural products to recipient countries. to establish a prima facie case of export subsidization of the excess quantity. shall be carried out in accordance with the FAO "Principles of Surplus Disposal and Consultative Obligations". provided that this Member has established the quantitative part of the claim [i.5 of the DSU by New Zealand and United States ("Canada – Dairy (21. paragraph 75. where appropriate. can show that the exporting Member has exported more than the quantity commitments in its country schedule]. including. covering food aid.
. (b) that international food aid transactions. Recourse
to Article 21. A country with export subsidy commitments must prove that any exports in excess of its commitments do not benefit from subsidies.3 of the Agreement on Agriculture: à the complaining Member must merely show that the exports of a particular agricultural product exceed the quantity commitments in the country schedule and claim that these excess quantities are subsidized. specifies that WTO Members must ensure that: à the provision of international food aid is not tied directly or indirectly to commercial exports of agricultural products to recipient countries. is relieved of its burden. Canada – Measures Affecting the Importation of Dairy Products – Second. and it might well succeed in its claim even if it presents no evidence – should the responding Member fail to meet its legal burden to establish that no export subsidy has been granted with respect to the excess quantity.
Part V: Article 11 Incorporated Products 1.
The activities of STEs were not specifically disciplined in the Agreement on Agriculture. Article 11 restricts the export subsidy on a processed product to the amount that would be payable on the basic product.à
that international food aid transactions are carried out in accordance with the FAO "Principles of Surplus Disposal and Consultative Obligations". and
such aid be provided. 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. to the extent possible. in fully grant form or on terms no less concessional than those provided for in Article IV of the Food Aid Convention 1986.
EXERCISES: 5. As a further means of avoiding circumvention of the export subsidy commitments. Article XVII of the GATT states that STEs must operate in accordance with commercial considerations and in a non-discriminatory way. What are the four ways in which Article 10 tries to prevent Members from circumventing their export subsidy commitments?
Members must notify the use of food aid on an annual basis if such aid is granted. the export subsidy notifications form part of the basis for reviewing the progress in the implementation of the commitments by the Committee on Agriculture.
EXPORT SUBSIDY NOTIFICATION OBLIGATIONS
Article 18 of the Agreement on Agriculture provides for the review of the implementation of commitments by the WTO Committee on Agriculture. as specified in their Schedules. All Members must notify their export subsidies to the Committee on Agriculture on an annual basis. à ES:3 Food Aid: Food aid donors are required to make an annual notification showing the total volume of food aid given in the previous year.IV. à ES:1 Supporting Table ES:1: Along with Table ES:1. do not need to make and ES:3 notification. they are required to notify the WTO Committee on Agriculture concerning their volume of subsidized exports.e. over 5% of world exports) have to make a annual notification showing the total value of exports of the product group concerned. WTO Members are required to report "at such intervals as shall be determined" on how they have complied with the Agreement on Agriculture. As in other areas. total exports of agricultural products must be notified by Members with reduction commitments as well as by a number of other "significant exporters" as defined by the Committee. Likewise. For the vast majority of Members — those without reduction commitments — this involves only a statement to the effect that export subsidies on agricultural products have not been used (or a listing of those measures that may be used by developing country Members under Article 9. Significant exporters of agricultural products are also required to notify the total level of exports. For Members with reduction commitments in their schedules.4 of the Agreement if this has been the case). Supporting Table ES:1 is also required showing the details of the export subsidies provided. as part of the anti-circumvention provisions. and the volume of un-subsidized exports. the volume and value of subsidised exports along with the volume of food aid and the relevant annual commitment levels. Donors with export subsidy commitments will have already provided this information in ES:1 notification and.
. by commodity. à ES:2 Notification of Total Exports: All Members with export subsidy commitments along with those Members that are significant exporters of the different product groups (i.4 for marketing and internal transport are required to make list these subsidies in Supporting Table ES:2 along with the volume of goods benefiting. à Statement of Non-Use of Export Subsidies: Members with no export subsidy commitments must make an annual statement stating that no such subsidies have been used in the past year. therefore. their expenditures on export subsidies. In addition. Table ES:1 shows the product group. à Statement of Non-Use: Supporting Table ES:2: Developing country Members that have availed of the exemption in Article 9. These are notified in tables as explained below: à ES:1 Budgetary Outlay and Quantity Reduction Commitments: Members with base and annual commitments in Section II of Part IV of their Schedule must make an annual notification along with Supporting Table ES:1.
Canada – Measures Affecting the Importation of Dairy Products ("Canada – Dairy").5). Canada – Dairy (21.
. WT/DS103/AB/RW and WT/DS103/AB/RW. WT/DS103/R and
WT/DS/113/R. their main purpose is not to describe and review all the arguments and conclusions in the case in detail but to highlight issues and principles addressed in the course and provide you with an outline of elements that you may wish to consider when reflecting on these cases. WT/DS103/RW2 andWT/DS113/RW2.V.Dairy Agreement on Agriculture on export subsidies.
DISPUTE SETTLEMENT CASES
Let us look at the US "Foreign Sales Corporation" Scheme. Recourse to Article 21. adopted 3 December 2001. adopted 20 December 2002. WT/DS103/AB/RW2 and T/DS113/AB/RW2. WT/DS103/AB/R and WT/DS/113/AB/R. three of the most important cases concerning the interpretation of the provisions of the
While the case studies below are based on prior WTO Panel and Appellate Body rulings. adopted 11 July 1999. adopted 17 May 1999. adopted 26 July 2002. Second Recourse to Article 21. However before we do so – please read the disclaimer!
and the EC – Subsidies on
Sugar cases. WT/DS103/RW and WT/DS113/RW. the Canada . adopted 23 October 1999.5 of the DSU.5)(II).5 of the DSU. Canada – Dairy (21.
1(a) (export subsidy): The Appellate Body upheld the Panel's finding that the FSC measure constituted prohibited export subsidies under ASCM Art.1(d). of direct taxes . The Appellate Body (and the Panel) rejected the US argument that footnote 59 to item (e) exempted the FSC measure from constituting export subsidies. à ASCM Art. In practice. The Appellate Body considered that "income tax liability" that was exempted or reduced under the FSC tax regime could not be considered as "the costs of marketing exports" of agricultural products that were subject to reduction commitment within the meaning of Art. 1.e. à AA Arts. through the FSC exemptions. Measure and Product at Issue
à Measure at issue: US tax exemptions for Foreign Sales Corporations ("FSC") export-related foreign-source trade income. 10.3 and 9.
. 10. 9. including agricultural products.3.1 (revenue foregone): The Appellate Body upheld the Panel's finding that the FSC measure constituted government revenue foregone that was "otherwise due" and. no limitation on the amount of the exemption and no
FSCs are foreign corporations in charge of specific activities with respect to the sale or lease of goods
produced in the US for export outside the US..1 and subsequently Art..1 (export subsidy): The Appellate Body reversed the Panel's finding that the FSC tax exemptions were an export subsidy under AA Art.1): The Appellate Body found that the United States violated AA Art. 3. 3.1(a) because the FSC exemptions (i) were based upon foreign trade income derived from "export property" and (ii) fell within the language of item (e) (full or partial exemption remission . 3. affected by the US measure.. 9.
in respect of their
2. 3. thus a "financial contribution" within the meaning of Art. 8
1.1 and 8 (export subsidies not listed in Art. à Product at issue: All foreign goods. à AA Arts. 8 because the United States.1(d) and thus violated Art..1. many FSCs are controlled foreign subsidiaries of US corporations. 1.US – FSC (DS108)
United States – Tax Treatment for "Foreign Sales Corporation"
Parties European Complainants Union
Timeline of the Dispute Establishment of Panel Circulation of Panel Report Circulation of AB Report Adoption of AB Report 22 September 1998 8 October1998 24 February 2000 20 March 2000
ASCM Articles 1 and 3 Respondent United States AA Articles 10. ) of Annex I (illustrative list of export subsidies). as FSCs affiliated with its US supplier receive greater benefits under the programme. which were unlimited in nature (i. Summary of Key Panel / AB Findings
à ASCM Art. 9.
7 (recommendation): Pursuant to Art. not to provide export subsidies for scheduled products (Art. Measure and Industry at Issue
à Measure at issue: Canadian government's support system (Special Milk Classes Scheme) for domestic milk production and export. 4. 4. The Panel found that this rule only applies to Members' "scheduled" products.1 and 8. first. then the respondent must prove that such an excessive amount of exports is not subsidized. the Panel recommended that the United States "withdraw the FSC subsidies without delay. Complainants New Zealand
Timeline of the Dispute Establishment of Panel Circulation of Panel Report Circulation of AB Report Adoption of AB Report 25 March 1998 17 May 1999 13 October 1999 27 October 1999
AA Articles 9. not to provide any Art. second.
3. as well as Canada's tariff rate quota ("TRQ") regime for imports of fluid milk. 10. 6. 10. Other Issues 18
à Special burden of proof (AA Art.3): The Panel concluded that an AA Art. panel's jurisdiction (appropriate tax forum). à ASCM Art.2 (statement of available evidence). 4. Respondent Canada GATT Art.3.2 (identification of products (agricultural) at issue). à Industry at issue: Milk and dairy product industry. order of consideration of ASCM issues.
. 9. II:1(b)
1. 10. 9. DSU Art.1) in excess of the scheduled commitments. new arguments before
the AB.1 export subsidies for unscheduled products.1. interpretation of footnote 59 to item (e) of Annex I.7. 3.3 claim contains a special burden of proof whereby once the complainant has proved that the respondent is exporting a certain commodity in quantities exceeding its commitment levels. acted inconsistently with its export subsidy commitments under the AA. The parties agreed that the date for withdrawal would be 1 November 2000. and. DS113)
Canada – Measures Affecting the Importation of Milk and the Exportation of Dairy Products
Parties United States.
Other issues addressed in this case: ASCM Art.discretionary element to its grant).
CANADA – DAIRY (DS103.
by exceeding the support reduction commitment levels scheduled by Canada. the Appellate Body also reversed the Panel's finding that Canada had acted inconsistently with Arts. which exceeded the reduction commitment. 9. Canada had acted inconsistently with Arts. It is then for the respondent to prove that export quantities in excess of reduction commitment levels are not subsidized. (This resulted in a partial reversal of the Panel's interpretations and conclusions. 3. Canada's measures still constituted an "other" export subsidy in the sense of Art.1(a) (direct subsidy): Having reversed the Panel's conclusion that Canada's measure involved export subsidies within the meaning of Art 9. 3.1(c) and that the relevant payments under Canada's scheme were financed by virtue of governmental action. 10.3 shifts the burden of proof from the complainant to the respondent in cases dealing with export subsidies once the complainant has shown exports in excess of scheduled quantities. 9. it found that Canada's value limitation set at Can$20 for each importation was inconsistent with Art. 9.1 and exceed its reduction commitment levels in violation of Art.3 and 8 by providing export subsidies under Art. à AA Art.1. II:1(b). 9. 9.e.1(c) (export subsidy): The Appellate Body upheld the Panel's finding that the provision of milk at discounted prices to processors for export constituted "payments" within the meaning of Art. it upheld the Panel's ultimate conclusion that Canada's scheme constituted an export subsidy within the meaning of Art. 9.2. 9.1(a)).1(c). Art. 9.
TRQ REGIME (FLUID MILK IMPORTS) à GATT Art.1(a) – i. and thus. 10.)
Other issues addressed in this case: submission of evidence (preliminary panel decision). à AA Art. the Appellate Body concluded that Canada's limitation of cross-border purchases of fluid milk to "Canadian consumers" by specifying it as a condition in Canada's Tariff Schedule justifies Canada's effective limitation of access to the TRQ to imports for "personal use". 10. Other Issues 19
à Burden of proof (AA Art.1 (other export subsidy): The Panel found alternatively that in the event Canada's measures did not involve export subsidies under Art.1(a) or (c). as there was no mention of such value limitation in Canada's Schedule.3): The Panel noted that AA Art.1(a) – "governments or their agents"). Summary of Key Panel / AB Findings
EXPORT SUBSIDY à AA Art.1(a) (based on the Panel's erroneous interpretation of the terms "direct subsidies" and "payments-in-kind" under Art. II:1(b): Recalling its earlier finding (EC – Computer Equipment) that Members' Schedules should be interpreted under the general rules of interpretation set out in the VCLT. But. 10. Thus. 10.3 and 8. export subsidies
under both the Agriculture Agreement and the SCM Agreement (Agriculture Agreement.
Canada – Measures Affecting the Importation of Milk and the Exportation of Dairy Products
Parties United States.1(c) (which was made in excess of its export subsidy and quantity commitments in violation of Arts. 9. Complainants New Zealand
Timeline of the Dispute Referred to Original Panel Circulation of Panel Report Circulation of AB Report 1 March 2001 11 July 2001 12 November 2001 18 December 2001
AA Art. 3. Measures Taken to comply with the DSBʹs Recommendations
à The revised version of the system of government support for domestic milk production and export.1(c)
Adoption of AB Report
As a result of the Appellate Body's findings. 9. Canada revised the supply system for sales of domestic milk and a separate scheme governing milk to be sold for export. 9.
.5 I) (DS103. 9. did not suggest a specific method for calculating the average total cost of production.1. did not complete the analyses based on the correct legal standard. which were the measures at issue in the original dispute. while holding that the "average total cost of production" was the appropriate standard for determining whether export sales involve "payments".1 and 10.3 and 8 thereof). however. Summary of Key Panel / AB Findings
Other issues addressed: AA Arts.1(c): On the question of whether the Canadian measures were "payments on the export of an agricultural product that are financed by virtue of governmental action" and thus constituted a subsidy under Art. New Zealand and the United States once again referred this matter to the original panel on the date of the adoption of the first compliance Panel/Appellate Body reports. as well as Canada's tariff rate quota regime for imports of fluid milk.CANADA – DAIRY (ARTICLE 21. The Appellate Body. See Canada – Dairy (Article 21.
2. à AA Art. 3.
The Appellate Body.1 (c). the Appellate Body reversed the Panel's legal findings as follows. à
("payments") The Appellate Body held first that neither prices for milk destined for the domestic market nor world market prices could serve as the appropriate basis for determining whether prices charged for export sales constituted a "payment" within the meaning of Art.5 – New Zealand and US II).
Canada – Measures Affecting the Importation of Milk and the Exportation of Dairy Products Second Recourse to Article 21.1: The Appellate Body upheld the Panel's finding that the supply of commercial export milk by Canadian milk producers. or as a consequence of" the governmental action. (i) having found. Canada revised the supply system for sales of domestic milk and a separate scheme governing milk to be sold for export. The Appellate Body found that although the governmental action established a regulatory regime whereby some milk producers could make additional profits only if they chose to sell commercial export milk. 9. 9. the Appellate Body reversed the Panel's finding that the Canadian governmental action in this case "obliged" producers to sell commercial export milk and that there was a demonstrable link between the governmental action and the financing of the payments. Complainants New Zealand
Timeline of the Dispute Referred to Original Panel Circulation of Panel Report 18 December 2001 11 July 2002 5 December 2002 17 January 2003
AA Articles 3 Respondent Canada and 9
Circulation of AB Report Adoption of AB Report
1. 9. that Canada's regulation of supply and price of milk in the domestic market was a "governmental action" and that the term "by virtue of" in Art.
CANADA – DAIRY (ARTICLE 21. and (ii) having noted that "payments" within the meaning of Art.1(c). Measures Taken to comply with the DSBʹs Recommendations
à The system of government support for domestic milk production and export. there was no demonstrable link between the governmental action and the financing of the payments.
. based on a textual approach.1(c) and were accordingly "payments" within the meaning of Article 9.5 II) (DS103. which were the measures at issue in the original dispute. 9.1(c) cover both the financing of monetary payments and payments-in-kind. as well as Canada's tariff rate quota regime for imports of fluid milk. at a price below the "average total cost of production".1(c) implies that the payments must be financed "as a result of. Summary of Key Panel / AB Findings
à AA Art. to Canadian dairy processors involved export subsidies under Art.à
("financed by virtue of governmental action") Second.5 of the DSU by New Zealand and the United States
Parties United States." and the effect of these different governmental actions is to secure a highly remunerative price for sales of domestic milk by producers.
2. à The Appellate Body then considered the "role" of the Canadian government and noted that "governmental action" controls "virtually every aspect of domestic milk supply and management.
the Appellate Body said that Art.
.1 and 8.3 (burden of proof): Reversing the Panel's finding that it is for the complaining Member to make a prima facie case that the exports in excess of the schedule commitments are subsidized. Despite the Panel's misapplication of the burden of proof on the issue. 9. which are necessary to ultimately determine the existence of "payments".10. 9. the traditional burden of proof principles (i.3.3. the burden is on the complainant Member) apply only to the question of whether exports have been made in quantities above export quantity commitment levels. 10. 10. 10.3: On the basis of its findings on the export subsidies within the meaning of Art. Regarding the method by which to establish the production costs.1(c) and 10.
Other issues addressed: AA Arts. In this connection. Other Issues 22
à AA Art. which were provided in excess of the quantity reduction commitment set forth in Canada's Schedule. 3.3 "is clearly intended to alter the generally accepted rules on burden on proof" in respect of the question of whether an export subsidy has been granted to the excess quantities. 9. the Appellate Body found that the Panel ultimately arrived properly at the burden of proof situation envisaged by Art.1. 3.1(c). the Appellate Body confirmed that Canada had acted inconsistently with its obligations under Art. 3.à
The Appellate Body concluded that these factors were sufficient to demonstrate the "nexus" between the governmental actions and the financing and hence were covered by Art.1(c). the Appellate Body found that the standard is "an industry-wide average figure that aggregates the costs of production of all producers of milk" and that the industry-wide cost of production could be based on a statistically valid sample of all producers. 8.3 and that its error did not vitiate any of the Panel's substantive findings under Arts.
e. private counsel (AB).1(c).10. which is not eligible for domestic price support or direct export subsidies and must be exported.2 (enhanced third party
rights). notification of third parties' interest in participating. (i) sales of C beet sugar below the total costs of production to C sugar producers. Art. à AA Arts. good faith (DSU. 1260/2001): two categories of production quotas – "A sugar" and "B sugar" – were established under the Regulation.
.3 and 8 (export subsidies – exports of C sugar): The Appellate Body upheld the Panel's finding that the European Union violated Arts. amicus curiae (confidentiality). consideration of new arguments (AB).1(c) for C sugar producers.EC – EXPORT SUBSIDIES ON SUGAR (DS265. 10.
2. namely. 3. sugar produced in excess of A and B quota levels is called C sugar. 3. 11). 3. 3. 9. 6. sufficiency of notice of appeal (Working Procedures for Appellate Review. terms of reference (DSU Art.3 and 8 of the AA by exporting C sugar because export subsidies in the form of payments on the export financed by virtue of government action within the meaning of Art. 9.5). Further.2. 17. Measure and Industry at Issue
à Measure at issue: EU measures relating to subsidization of the sugar industry. a Common Organization for Sugar (CMO) (set out in Council Regulation (EU) No. Rule (20(2)(d)). Summary of Key Panel / AB Findings 23
à EU export subsidy commitment levels for sugar: The Appellate Body upheld the Panel's finding that footnote 1 in the EU Schedule relating to preferential imports from certain ACP countries and India did not have the legal effect of enlarging or otherwise modifying the European Union's quantity commitment level contained in Section II.1(c) were provided in excess of the European Union's commitment level. through cross-subsidization resulting from the
Other issues addressed in this case: DSU Art. 9. DS266. 9. DS283)
European Communities – Export Subsidies on Sugar
Parties Australia. à Industry at Issue: Sugar industry. timing of objection to the panel's jurisdiction. estoppel from pursuing the dispute. the European Union provided two types of "payments" within the meaning of Art.2). Art. extension of time for appeal and circulation of report (AB.4. 16.1
Circulation of AB Report Adoption of AB Report
1. confidential information. 8 Respondent European Union and 9. and (ii) transfers of financial resources. In this regard. Brazil Complainants and Thailand
Timeline of the Dispute Establishment of Panel Circulation of Panel Report 29 August 2003 15 October 2004 29 April 2005 19 May 2005
AA Arts.2 (separate panel reports). DSU Art. Part IV of its Schedule. 7. i.
3.3): The Panel explained that AA Art. then the respondent must prove that such an excessive amount of exports is not subsidized. 10. 19. Other Issues
à Judicial economy (export subsidies under ASCM and AA): The Appellate Body found that the Panel's exercise of judicial economy in respect of the complainant's claims under ASCM Art. 10.1(a).
.1(a) and the European Union had not proved otherwise.3 reverses the usual rule of burden of proof such that once the complainant has proved that the respondent is exporting a certain commodity in quantities exceeding its commitment levels. 3. à Reversal of burden of proof (AA Art. 3 (after having found a violation by the European Union of AA Arts. 9. 3 and 8 since the evidence indicated that European Union's exports of ACP/India equivalent sugar received export subsidies within the meaning of Art. that exports of C sugar that exceeded the European Union's commitment levels since 1995 had not been subsidized.3. 10.1). as different and more rapid remedies were available to the complainant respectively under ASCM (Art. 9. Further.operation of the EU sugar regime. à AA Arts. the Panel concluded that the European Union had not demonstrated.7) and AA (through DSU Art. pursuant to AA Art. 4. 3 and 8 (export subsidies – export of ACP/India equivalent sugar): The Panel found that the European Union acted inconsistently with AA Arts.3 and 8) was false.
. LDCs do not need to make any cuts. Exception during the implementation period in respect of certain marketing and internal
Article 9. Definition of export subsidies subject to reduction. Other export subsidies subject to anti-circumvention provisions which include disciplines
relating to food aid.
WTO Members cannot maintain export subsidies on agricultural products. Developed Countries Distinct reduction commitments on both volume (21%) and budgetary outlays Two-thirds of the reduction required for developed countries over ten years.3
Disciplines Undertaking not provide export subsidies otherwise that inconformity with the Agreement on
Article 8 Article 9
Agriculture and the Schedules.VI. Members start at the averages for 1986-90 as the base level: Expenditures: Developed countries agreed to cut the value of export subsidies by 36% over the six years starting in 1995 (24% over 10 years for developing countries). Article 10 of the Agreement on Agriculture has some provisions for the prevention of circumvention of export subsidies commitments. LDCs do not need to make any cuts. Volume of exports: Developed countries also agreed to reduce the quantities of subsidized exports by 21% over the six years (14% over 10 years for developing countries). developing countries are allowed under certain conditions to use subsidies to reduce the costs of marketing and transporting exports.4
transportation subsidies. For incorporated/processed products
budgetary outlays only (36%). unless they declare these subsidies in a list in the Schedules of commitments. Where they are listed. Developing Countries
(36%) over six years. To calculate the reduction commitment. During the six-year implementation period. Prohibition on the use of export subsidies on products not subject to reduction
Article 3. WTO Members must reduce both the amount of money they spend on export subsidies and the quantities of exports that receive subsidies.
(iii) by putting the burden of proof on Members to show that exports in excess of commitments are not subsidised. except when the subsidies conform to the Agreement on Agriculture. 2.1 is not used in a way that even threatens to lead to circumvention of commitments. Article XVI of GATT 1947 prohibited export subsidies except for exports of primary products subject to the condition that such a subsidy did not result in the exporter getting more than an equitable share of world trade in that product. and à must comply with Articles 3. 9. Articles 3 and 8 commit Members to abiding by the commitments in their Schedules and acting in conformity with the Agreement on Agriculture. Article 11 disciplines the use of subsidies on an incorporated agricultural primary products. The volume of export subsidies must be reduced by at least 14% and the expenditure on export subsidies by at least 24% over 10 years for developing countries. Article 1(e) of the Agreement on Agriculture defines export subsidies but Article 1. 5. 4.1 of the Agreement on Subsidies and Countervailing Measures defines subsidies generally. (ii) by requiring Members to work towards developing disciplines on export credits. Article 10 states that other measures cannot be used as a way to circumvent export subsidy commitments and provides some rules on export credits and food aid. and (iv) by establishing rules for food aid. Article 9 lists the types of subsidies which are subject to reduction commitments and provides an exception for developing countries for certain marketing and transport subsidies. provided a Member's use of export subsidies was within its commitments.PROPOSED ANSWERS: 1. 8.
The volume of export subsidies must be reduced by at least 21% and the expenditure on export subsidies by at least 36% over 6 years for developed countries. (i) by requiring that any export subsidy not listed in Article 9. The SCM Agreement applies to agricultural goods as well as industrial products. 3. However. 10 & 11 of the Agreement.
. Export Subsidies: à are allowed only if they are listed in a Member's Schedules and subject to reductions in the quantity exported with the subsidies and the budgetary outlay on those subsidies. the Due Restraint" clause of the Agreement on Agriculture (Article 13) restricted other Members rights to challenge export subsidies until the end of 2003.
. and Explain the Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries and the obligations therein.
Explain Article 16 of the Agreement on Agriculture.MODULE
Export Restrictions and Prohibitions and Net Food‐Importing Developing Countries
ESTIMATED TIME: 3 hours
OBJECTIVES OF MODULE 7
Explain the rules on export restrictions and prohibitions in relation to agricultural products.
and (j).. GATT Article XI:2(b) governing the application of standards. (i). etc. and safety reasons. WTO Members can still do so based on exceptions or justifications for security. import or export licences or other measures. which you have seen in the previous modules.I. shall be instituted or maintained by any contracting party on the importation of any product destined for the territory of any other contracting party. taxes or other charges. GATT Article XX governing the general exceptions. and GATT Article XXI. and explain the Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries and the obligations therein (NFIDCs) a separate Decision adopted by the Ministerial Conference at Marrakesh as part of the outcome of the Uruguay Round negotiations on agriculture to address the concerns of the least-developed and net food-importing developing countries Members.
.A. the Agreement on Agriculture contains other provisions such as those on export prohibitions and restrictions."
Although Article XI obliges WTO Members not to maintain prohibitions or restrictions over export. Among the exceptions to this general prohibition are those in: à à à à GATT Article XI:2(a) in cases of critical shortage of foodstuffs. in particular. (g). public health.B.
In addition to the commitments in market access. domestic support and export subsidies. At the end of the Module you should be able to: à explain the conditions that Members are required to follow when they restrict or prohibit export of agricultural products. whether made effective through quotas. as well as net food importing developing countries (NFIDCs).
EXPORT RESTRICTIONS AND PROHIBITIONS
I. à à understand the obligation in Article 16.
DISCIPLINES ON EXPORT RESTRICTIONS AND PROHIBITIONS
Let's recall that Article XI of the GATT 1994 which stipulates a general prohibition of quantitative restrictions states that:
"no prohibitions or restrictions other than duties. which governs the security exceptions.
with any other Member having a substantial interest as an importer with respect to any matter related to the measure in question. the rules governing the prohibitions and restrictions on the export of agricultural products are further restricted by Article 12 of the Agreement on Agriculture entitled "disciplines on export prohibition and restrictions".2
For goods. Developed Countries Developing Countries Exception for developing countries that are net-exporters of the
Instrument Article 12
Discipline Requirement for advance notice and obligation to consult on request and supply information in case of new export restrictions on foodstuffs.
. upon request. they must be
applied on a non-discriminatory basis. The requirements and formats for notifications are set out in WTO document G/AG/2. Article 12 stipulates the conditions Members must respect if they wish to implement export prohibitions or restrictions on agricultural products in cases of critical shortages of foodstuff as allowed under Article XI:2(a) of the GATT 1994.2 contains an exception for developing countries. Article XIII of the GATT 1994 stipulates that when export restrictions are used. WTO Members are required to make a notification pursuant to Article 12 of the Agreement on Agriculture.B. à Before instituting the an export prohibition or restriction. Article XII of the GATT 1994 (Article XVIII in the case of developing countries) allows members to apply restrictions to safeguard the balance of payments.The rules and disciplines on export restrictions of the GATT 1994 apply to both non-agricultural and agricultural products. for which an export prohibition or restriction has been instituted. According to Article 12 of the Agreement on Agriculture: à Any Member implementing an export prohibition or restriction shall give due consideration to the effects of such prohibition or restriction on importing Members' food security. Article 12. The requirement in Article 12 does not apply to developing countries unless they are net exporters of the foodstuff.
Before instituting an export prohibition or restriction.2 Table 1: Articles 12 and 12.
For agricultural products. the Member shall give notice in writing to the Committee on Agriculture and shall consult.
EXERCISES: 1. and Duration of application of measure. Members must notify: (1) (2) (3) (4) Description of product.Export prohibitions and restrictions are notified in the form of Table ER:1. What are the two conditions that WTO Members must follow when they institute new export prohibition on foodstuff restrictions according to Article 12? 2. Nature of. Tariff item number(s). Which WTO Members are required to make notifications under Article 12?
. measure to be introduced. and justification for.
Article 16 of the Agreement on Agriculture makes reference to this Decision. and although their farming sectors might receive a boost from higher prices caused by reduced export subsidies. it was also recognized that there could be possible negative effects for least-developed and net food-importing developing countries. during the reform programme 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.
NET FOOD‐IMPORTING DEVELOPING COUNTRIES
Article 16: Least-Developed and Net Food-Importing Developing Countries 1. 2.II. They include some of the poorest countries. However. including short-term difficulties in financing normal levels of commercial imports of basic foodstuffs. These difficulties might arise from a rise in world market prices resulting from the reduction of domestic support and export subsidies in some exporting countries. under the Agreement on Agriculture.1. WTO members have to reduce their subsidized exports and the domestic support granted to farmers.
II. It recognizes that while the progressive implementation of the results of the Uruguay Round will generate increasing opportunities for trade expansion and economic growth to the benefit of all WTO Members. the follow-up to this Decision. 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. THE MINISTERIAL DECISION ON NFIDCS
The Decision has 6 paragraphs. Ministers agreed 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
. as appropriate. they might need temporary assistance to make the necessary adjustments to deal with higher priced commercial imports.A.A. INTRODUCTION
Although it is generally considered that trade liberalization improves global prosperity and food security. some developing countries may depend on supplies of cheap imported foodstuffs. The Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on LeastDeveloped and Net Food-Importing Developing Countries (NFIDCs) was agreed during the Ministerial Conference in Marrakesh (1994) and sets out certain mechanisms to deal with the possible negative effects arising from the reform programme in agriculture. The Committee on Agriculture shall monitor. As you saw in previous Modules.
(ii) 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. The Decision is also subject to regular review by the Ministerial Conference. Ministers also 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.
. To this end Ministers agreed to: (i) Review the level of food aid established periodically by the Committee on Food Aid. The Decision recognizes 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. especially least-developed and net food-importing developing countries.sufficient to continue to provide assistance in meeting the food needs of developing countries. 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. under the Food Aid Convention of 1986. The Committee on Agriculture monitors the follow-up to the Decision. paragraph 18. or such facilities as may be established. Paragraph 18 of the Working Procedures 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
Least-Developed and Net Food-Importing Developing Countries. in order to address such financing difficulties. in the context of adjustment programmes. (iii) 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."
In 1996. the FAO. Côte d'Ivoire. inter alia. paragraph 17). Members supplying food aid are required to submit notifications as explained below under the sub-heading "notifications".2. Sri Lanka. Tunisia and Venezuela.B. This list currently contains: à the 50 least-developed countries (LDCs) as defined by the Economic and Social Council of the United Nations . Saint Vincent and the Grenadines. inter alia. See G/AG/11. the Committee established a WTO list of net food-importing developing countries. In addition. Kenya. the General Council instructed the Committee on Agriculture to examine possible means of improving the effectiveness of the implementation of the NFIDC Decision. Botswana. Gabon. Saint Lucia. BENEFICIARIES
The Decision describes but does not list the developing countries that are to be beneficiaries. This list was revised on 22 March 2005 (document G/AG/5/Rev.8). Mongolia (Mongolia was added as a beneficiary in the revision in 2005). Jordan. See WT/L/384. Dominica. Jamaica. which was approved by the Doha Ministerial Conference.
7 6 5
The Committee's report on this question . Honduras.A. Cuba. Peru. that is Barbados.
II. Morocco. of the Table NF:1 notifications as submitted by Members (details below). The annual monitoring of the NFIDC Decision. Egypt. a recommendation for the establishment of an Inter-agency panel of financial and commodity experts to examine the issue of short-term difficulties by NFIDCs and LDCs in financing normal levels of
See G/AG/3. is undertaken on the basis.
IMPLEMENTATION OF THE NFIDC DECISION
The implementation of the Decision is open for discussion at each regular meeting of the Committee on Agriculture. Senegal. Namibia. included.
. Saint Kitts and Nevis. and à 26 developing country Members (NFIDCs). In December 2000 . The decision to establish this list was taken on the understanding that "being listed would not as
such confer automatic benefits since. donors and the institutions concerned would have a role to play" (G/AG/R/4. Dominican Republic. under the mechanisms covered by the Marrakesh Ministerial Decision. the International Monetary Fund as well as other Observers present annual reports at each November meeting of the Committee outlining the situation in LDCs and NFIDCs.II. See progress reports to the General Council on such consultations in G/AG/7 and G/AG/10. the World Bank.
4 5 6 7
See G/AG/5/Rev.8. in accordance with Article 16 of the Agreement on Agriculture and paragraph 18 of the Working Procedures of the Committee on Agriculture. Mauritius. Trinidad and Tobago. Pakistan.
It was referred
to the Committee on Agriculture in 2003 by the Chairman of the General Council in the context of the WTO's Work Programme on Special and Differential Treatment under the Doha Development Agenda (Decision adopted by the General Council on 1 August 2004. the Committee on Agriculture has also considered.8 million tonnes and €130 million (as of June 2005).commercial imports of basic foodstuffs. The Food Aid Convention (FAC) provides a safety net in terms of food aid availability. Table 1 below summarizes the annual food aid commitments under the 1999 Food Aid Convention.
. The panel report. a proposal by the African Group calling for developed-country Members to. respectively. paragraphs 11-12 of the Committee's follow-up report on Implementation-Related Issues and Concerns to the General Council (dated 13 June 2006). FAC members' combined minimum annual commitments.
Since July 2003. included an examination of specific proposals submitted by a group of seventeen WTO NFIDCs.
See G/AG/W/42/Rev. Progress reports relating to the African Group proposal are contained in
G/AG/17 and Corr. the Committee on Agriculture decided to revert to this recommendation contained in its report to the General Council on
Implementation-Related Issues. at each of its regular meetings.
The exception was 1994/95 when shipments fell short of the aggregate commitment (G/AG/W/42/Rev.d of WT/L/579 refers).5 million tonnes (under the Food Aid Convention 1986) to 5.
At its meeting in January 2006. According to Table 1.
paragraph 12 refers). expressed in wheat equivalent. See also G/AG/16/Add.
II.1. Table 1 also shows that annual shipments exceeded.1) and Inter-agency panel report (WT/GC/62 . matter on the basis of
In September 2004.2 (dated 17 July 2002).B.1 and Corr.
Under the Food Aid Convention 1999. the combined minimum annual volume and value
commitments of FAC members are established at 4. as well as the food aid shipments by FAC members. the aggregate annual commitments.1. the Food Aid Committee of the International Grains
See proposals (G/AG/W/49 and 49/Add.". inter alia. G/AG/20.G/AG/13). The proposal itself is contained in paragraph 52 of TN/CTD/W/3/Rev. as part of the discussions on implementation-related issues. which was submitted in June 2002.8 for data relating to donor commitments and shipments under the 1986 and 1995
Food Aid Conventions. paragraph 1. contribute to a revolving fund for normal levels of food imports. during the period 1999/00-2005/06. The international food aid commitments under the FAC are specified in terms of minimum annual contributions by its members. REVIEW OF FOOD AID
In paragraph 3(i) of the NFIDC Decision Ministers agreed "… 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..
See G/AG/16. decreased from a total of 7.4 million tonnes (under the Food Aid Convention 1995). and G/AG/22.8..
Informal consultations specifically dedicated to that proposal were also held
in May 2005 and again in February 2006.1. often significantly. paragraph 19(c).
54.8 j) k) 310.3
9.6 €130 million
10.801.8 €130 million
61.570.0 Norway a) b) Switzerland 40.0
1.1 l) 396. International Grains Council. These figures refer to the wheat equivalent of actual shipments completed during the years shown.692. Uganda and Kenya.9
6. They are not adjusted for product limits under Article IV of the Food Aid Convention 1999 and do not necessarily represent the performance of members in relation to their annual commitments.324.760.0
Minimum Annual Contributions and Shipments under the Food Aid Convention (thousand tonnes.1
76. with the largest recipients being respectively Ethiopia.0 o) m) n) o) 2.
NOTES FOR TABLE 2: * Unless otherwise specified.2
10.124. wheat equivalent)
Source: attachment 2 of document (G/AG/W42/Rev.
See G/AG/GEN/71. Sudan.6 e) 293.0 470.0
.9) based on Source: Food Aid Committee.4
74. a) Wheat equivalent of cash contributions as calculated on the basis of the "prevailing international market price".907.0 and 1.357.9
2.0 320.7 h) i) 451.6
203.2 1. These figures therefore do not correspond to quantities actually shipped.7
4.5 2.0 and 8.7
67.8 f) g) 408.0
Australia Canada EU
150.Council observed that more than half of the food aid in 2004/05 was sent to Africa.1
9.7 296.0 d) 420.5
5. all shipments were in respect of the Food Aid Convention.479. page 6.0 250.500.000.2
2.279.5 1.836.4 2.0
705 (actual) tonnes (Value Commitment) as reported by the EU.
Includes FAC "value" contributions totalling 181.120 (actual) tonnes (Value Commitment) as reported by the EU. with a record of 17.140 tonnes.350 (actual) tonnes (Tonnage Commitment).049.659 tonnes. h) Includes FAC "value" contributions totalling 137. Excludes incomplete records of 148. as at July 2006.625 Euro reported as notional wheat equivalent of 984. but actual shipments.3 million tonnes reached in 1993. reported as notional wheat equivalent of 849.462 tonnes. Data from these sources are not directly comparable with the data of the Food Aid Committee of the International Grains Council (IGC) mainly due to differences in country and product coverage. IGC Secretariat estimates.193 tonnes (tonnage commitment) as reported by the EU.
c) d) e)
Includes contributions under IEFR . o) p) Provisional.Immediate Response Account (IRA).
Includes total estimated
wheat equivalents of
incomplete records of 14. reported as notional wheat equivalent of 628. 10-11. WFP data show that global food aid deliveries present a cyclical pattern. reporting period. as reported by WFP.943 Euro.
. pp. and 10. i) Includes total estimated wheat equivalents of incomplete records of 212.384 Euro. k) Includes total estimated wheat equivalents of incomplete records of 22.151 Euro. as reported by WFP. Includes FAC "value" contributions totalling 199.749 tonnes. another peak was reached in 1999 when food aid totalled
See also G/AG/GEN/49.541 tonnes. j) Includes FAC "value" contributions totalling 205.561 tonnes (Value Commitment) as reported by the EU. As revised with effect from 1 July 2003.338.885 tonnes (value commitment) as reported by the EU. Includes FAC "value" contributions totalling 156.267 Euro.134.296. Excludes incomplete records of 71.504. reported as notional wheat equivalent of 531. may not have been completed in the corresponding period.
As shown in Chart 1 below.385 tonnes (tonnage
commitment) and 5.533 tonnes (Tonnage Commitment) as reported by the EU. l) m) Reported contributions do not distinguish between tonnage and value commitments. particularly the Food and Agriculture Organization (FAO) and the World Food Programme (WFP).
There are a number of other sources of food aid data.b)
Norway made its entire FAC commitment available to WFP in the form of cash during each of the years shown. n) Excludes incomplete records of 5. and the use of delivery rather than shipment data. reported as notional wheat equivalent of 599.
Food aid deliveries to LDCs and NFIDCs. Notes: Includes cereals in grain equivalent and non-cereals in product weight. "NFIDC" refers to the
26 Members listed in G/AG/5/Rev. within the framework of their food aid policies.
See G/AG/11. other countries. 1995-2005
Source: Food Aid Monitor: 2005 Food Aid Flows. 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.
In this context.
Food aid deliveries as monitored by the WFP include deliveries by FAC members.
. Part B paragraph 3 I(b) refers.15.1 million tonnes. statutes.8. and
non-governmental organizations. Data for 2005 are provisional. programmes and commitments. June 2006. the Doha Ministerial Conference approved the following recommendation
made by the Committee on Agriculture:
"WTO Members which are donors of food aid shall.
It is channelled multilaterally. sometimes. and is usually provided on a grant basis. (Lesotho. Mali.5 8. Unlike most of the food aid provided for project or emergency purposes. and Liberia)
2005 as per cent of 1995-2004 average 118 79 55 84
(million tonnes) Ldc Nfidc Other TOTAL Table 3: 4. but increased by 18% with respect to LDCs..5 9. Table 3 shows that. or.8 2. 1995-2005
Source: Food Aid Monitor: 2005 Food Aid Flows. or bilaterally. Djibouti. Eritrea. Chad. through NGOs. all NFIDCs on the WTO list were. Democratic Republic of Congo.2
Evolution of food aid deliveries. Tanzania. is freely distributed to targeted beneficiary groups. preliminary WFP data indicate that food aid deliveries to Sudan. Guinea Bissau. occasionally or regularly. It is usually freely distributed to targeted beneficiary groups. Zambia and Maldives more than doubled in 2005 compared to their 1995-2004 average. June 2006. total food aid deliveries to NFIDCs were 21% lower than average deliveries recorded during the previous 10-year period (i.Except for Barbados and Trinidad and Tobago.2 1. Malawi. Senegal. and increased between 17 and 80% for another 12 LDCs. As far as LDCs are concerned.
Notes: Includes cereals in grain equivalent and non-cereals in product weight. WFP. à Project food aid aims at supporting specific poverty-alleviation and disaster-prevention activities.1 4. The Gambia.
. Ethiopia. recipients of food aid during 1995-2005. à Programme food aid is usually supplied as a resource transfer for balance of payments or budgetary support activities. 1995-2004). and provided either as a grant. Sao Tome and Principe. in 2005.8. but may also be sold on the open market and is then referred to as "monetized" food aid. Malawi. "NFIDC" refers to the
26 Members listed in G/AG/5/Rev. it is not targeted to specific beneficiary groups. Burundi. Niger. Myanmar. Data for 2005 are provisional. It is sold on the open market.e. Mauritania.8 4. bilaterally.9 0. through NGOs. It is provided on a grant basis and is channelled multilaterally. or as a loan. Uganda.
WFP statistics are compiled based on the following three food aid categories: à Emergency food aid is defined by WFP as being destined to victims of natural or man-made disasters. Guinea.
to develop recommendations with a view towards establishing a level of food aid commitments.
. INITIATION OF FOOD AID NEGOTIATIONS
In 1996. the Food Aid
Committee confirmed its intention to bring a new Food Aid Convention into effect on 1 July 1999 and requested the Working Group which was undertaking the re-negotiation of the FAC to aim to conclude the substantive negotiations by the end of 1998.
See G/L/125. June 2006. action be initiated in 1997 within the framework of the Convention.B. in anticipation of the expiry of the Food Aid Convention 1995. IGC statement in G/AG/GEN/20.
In December 1997.WFP statistics compiled in Table 4 below indicates that a rising share of global food aid deliveries (excluding Eastern Europe and the CIS) is provided in the form of emergency relief in response to man-made or natural disasters while the share of programme food aid has been declining since 1995. under arrangements for participation by all interested countries and by relevant organizations.
FOOD AID CATEGORY
2000 per cent
TOTAL Emergency Project Programme Table 4:
100 41 32 27
100 51 25 24
100 65 24 12
Composition of global food aid deliveries
Source: Food Aid Monitor: 2005 Food Aid Flows. the Food Aid Committee decided to extend the FAC for one year (until June 1999) and to open the Convention for renegotiation taking into account. WFP. covering as wide a range of donors and eligible products as possible. the Singapore Ministerial Conference adopted the recommendation by the Committee on Agriculture that.2. In early 1998. data exclude food aid
deliveries to Eastern Europe and the CIS. "the food security and trade liberalization objectives under the WTO and the World Food Summit Action Plan"
. which is sufficient to meet the legitimate needs of developing countries during the reform programme. paragraph 18(i). amongst other things. The negotiations on the Food Aid Convention 1999 were completed on 24 March 1999 and the new Convention provisionally entered into force on 1 July 1999 for an initial duration of three years. data for 2005 are provisional. and in preparation for the re-negotiation of the Food Aid Convention.
Notes: Includes cereals in grain equivalent and non-cereals in product weight.
FAC members undertake to give priority to the LDCs and Low-Income Countries. the Committee decided that the 1999 Food Aid Convention. At its December 2004 session.
II. 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.
. Ministers also agreed:
"… 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 …" (). as agreed by the Food Aid Committee.The Food Aid Convention 1999 contains a number of new features à à à
The list of eligible products which may be supplied has been broadened significantly beyond cereals.
Other eligible food aid recipients include Lower Middle-Income Countries and all other countries included in the WTO list of net food-importing developing countries at the time of negotiation of the new Convention. The Committee agreed that the FAC renegotiations would be more effectively carried out in the light of developments in the WTO.
At the Doha Ministerial Conference in 2001. until 30 June 2007. Ministers approved the recommendation of the Committee:
"that early action be taken within the framework of the Food Aid Convention 1999 (which unless extended.B."
The Food Aid Convention 1999. the Food Aid Committee concluded that the relationship between the review process in the Food Aid Committee and negotiations underway in the WTO was so important that conclusive recommendations should await the outcome of the Doha Development Agenda. Part B paragraph 3 I(a) refers. In June 2004. which had been due to expire on 30 June 2005. In these circumstances. See G/AG/11. the Food Aid Committee decided to undertake a renegotiation of the FAC 1999 with the aim of bringing into effect a Convention which is a "more effective instrument to provide food to those identified needs when food aid is the most appropriate response". should be extended for a further two years. There are also new provisions designed to improve the effectiveness and the impact of food aid. was not renegotiated at that stage but.3. with or without a decision regarding its renegotiation. it was initially extended by one year and subsequently further extended until 30 June 2005. When allocating their food aid. which was to expire on 30 June 2002. CONCESSIONALITY OF FOOD AID
Under paragraph 3(ii) of the NFIDC Decision. FAC Working Group meetings were held in October and November 2004.
See G/AG/GEN/35 for a description of major changes introduced in the Convention. many of which are on the present WTO list of net food-importing developing countries.
As provided by the Food Aid Convention 1999, all food aid provided to LDCs will be in the form of grants. Overall, food aid in the form of grants is to represent, at a minimum, 80% of FAC members' contributions and donors are to seek to progressively exceed this share. At the Doha Ministerial Conference, Ministers approved the recommendation that:
"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: … (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."
Table 5 below shows the proportion of food aid provided to LDCs and NFIDCs in the form of donations, as notified by WTO Members. All notifying Members, except the United States, provided 100% of food aid to the beneficiary countries in grant form. In the case of the United States, in the implementation years 1995/96 to 2001/02, between 83 and 95% of food aid was donated, with the remainder being provided in accordance with the relevant FAC guidelines. According to the Food Aid Committee of the International Grains Council, nearly all food aid (97%) was provided in grant form during 2004/2005, while approximately US$800 million were also provided by FAC donors to cover transportation and other costs.
Member FAC DONORS Australia Canada EU Japan Norway Switzerland United States
Concessionality of food aid 100% grant terms 100% grant terms 100% grant terms 100% grant terms 100% grant terms 100% grant terms Proportion of food aid to LDCs and NFIDCs on 100% grant terms: 1995/96 1996/97 1997/98 1998/99 and 1999/00 2000/01 2001/02 2002/03 84% 93% 83% 93% 95% 91% 100%
The remainder is provided in accordance with Food Aid Convention guidelines. OTHER DONORS Cuba New Zealand South Africa Table 5: 100% grant terms 100% grants of cash 100% grant terms Proportion of food aid provided in fully grant form to LDCs and NFIDCs Source: Members' Table NF:1 notifications.
See G/AG/11, Part B paragraph 3 I(b) refers. See G/AG/GEN/71, page 6.
II.B.4. TECHNICAL AND FINANCIAL ASSISTANCE
Paragraph 3(iii) of the NFIDC Decision required Members "… 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". The Doha Ministerial Conference called on developed-country Members to continue to give full 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. This recommendation reflects the fact that technical and financial assistance is essentially a bilateral matter between donors and recipients based on requests made by recipient countries. Furthermore, the Doha Ministerial Conference approved the recommendation:
"... 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."
The responses from the African Development Bank, the European Investment Bank, FAO and the World Bank were circulated.
The International Monetary Fund renewed its commitment to providing assistance to
developing countries in capacity building and in coping with balance-of-payment shortfalls resulting from multilateral trade liberalization.
II.B.5. DIFFERENTIAL TREATMENT IN THE FRAMEWORK OF AN AGREEMENT ON EXPORT CREDITS
In light of paragraphs 1 and 2 of the NFIDC Decision, Ministers agreed "… to ensure that any agreement relating to agricultural export credits makes appropriate provision for differential treatment in favour of leastdeveloped and net food-importing developing countries". Paragraph 4 of the NFIDC Decision.
26 27 28
See G/AG/11, Part B paragraph 3 II(b) refers. See G/AG/W/57 and Add.1. See G/AG/GEN/71, page 9.
At the Doha Ministerial Conference, Ministers reaffirmed the commitment above and approved a general understanding regarding procedures for the development of disciplines pursuant to Article 10.2 of the Agreement on Agriculture and the related provisions of the NFIDC Decision.
Accordingly, work within the WTO on the question of agricultural export credits has been undertaken in both the regular meetings of the Committee on Agriculture and in the negotiations in the Special Session on the basis, inter alia, of the proposals that have been tabled and other inputs, including with respect to special and differential treatment in favour of developing countries.
Moreover, the Agreed Framework for establishing modalities in agriculture provides that:
"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."
The above objective was reaffirmed during the Hong Kong Ministerial Conference.
II.B.6. ACCESS TO THE RESOURCES OF THE INTERNATIONAL FINANCIAL INSTITUTIONS
In the NFIDC Decision, Ministers furthermore recognized 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
29 30 31 32 33 34
See G/AG/11, Part A paragraph 4. See also G/AG/16 and Add.1. See paragraph 24 of Annex A of WT/L/579 refers. See paragraph 6 of WT/MIN(05)/DEC. See MTN.GNG/NG14/W/35. See paragraph 5 of the NFIDC Decision.
ABILITY TO FINANCE COMMERCIAL IMPORTS
As noted above, the NFIDC Decision recognizes that as a result of the Uruguay Round certain developing countries may experience short-term difficulties in financing normal levels of commercial imports of basic foodstuffs. In this context, at various stages of the Committee's annual monitoring exercise, several of the international observer organizations have commented on the development of international food prices.
Wheat is the most important food commodity in the import basket of the NFIDCs and LDCs. Figure 2 below shows world market prices for wheat between January 1987 and September 2006.
The International Grains Council Wheat Price Index (1987-2006)
Average wheat prices of seven widely traded varieties of bread wheat: July/Dec 1986=1000
As you can see in this chart, international wheat prices have dropped from their 1996 peak. Price spikes can still be observed between 2002 and 2003. The graph also shows prices strengthening again in the course of 2006, partly due to expected tightened supplies as a result of reduced harvests in major wheat producing countries (adverse weather conditions), lower grain stocks, as well as rising input prices and freight costs. The Inter-agency panel report provides a detailed examination of the question of financing food imports by NFIDCs and LDCs.
The food security situation in LDCs and NFIDCs is being monitored by FAO on a regular
The statements and contributions by international observer organizations can be found in the G/AG/GEN/--
document series, the latest of which is G/AG/GEN/71 (dated 23 February 2006). See, for example, the observations by the IMF on the recent evolution of food prices, including with respect to specific items such as sugar and cereals (pp. 7-8).
See WT/GC/62 – G/AG/13, in particular, Chapter II, Section A and the Conclusions in Chapter III. See also
the contribution by UNCTAD to the 2004 monitoring exercise of the NFIDC Decision (G/AG/GEN/68, pp. 16-18).
basis, notably with regard to overall trends in cereal imports and cereal import bills.
In January 2006, the
FAO also reported on its collaboration with UNCTAD in elaborating a proposal for the creation of a multilateral Food Import Financing Facility (FIFF) designed to assist LDCs and NFIDCs to finance commercial imports in times of excessive food import bills.
The World Bank has also explored ways to strengthen the food security
of developing countries and strategies to deal with food price instability and negative impacts on food security. Among the solutions proposed, the World Bank, in cooperation with development partners, focuses on using commodity price insurance mechanisms as a tool to anticipate food crises, both at farm and at government level.
ACCESS TO THE FACILITIES OF THE IMF AND THE WORLD BANK
The question of access to the resources of the international financial institutions has also been the subject of examination by the Inter-agency panel of financial and commodity experts. The relevant short-term lending facilities of the IMF and the World Bank are set out in the report, with the focus on the operation of the Compensatory Financing Facility (CFF) of the IMF.
In the context of the Committee's annual monitoring exercise of the NFIDC Decision in December 2001, the IMF representative reiterated the position of the IMF regarding the question of access to its resources by stating
"With existing facilities and resources, the Fund is in a position to meet any balance of payments needs of our members that may arise from higher world food prices."
An overview of concrete initiatives in favour of LDCs and NFIDCs is regularly presented by the IMF at the meetings of the Committee on Agriculture. The Poverty Reduction and Growth Facility (PRGF) remains, since 1999, the main instrument for assisting low-income countries. The IMF noted that, by the end of 2005, 21 NFIDCs and 18 LDCs were drawing on the PRGF. A non-financial mechanism, the Policy Support Instrument (PSI) has been recently made available to those low-income countries without a PRGF arrangement which are facing exogenous shocks. In supporting the trade-related adjustment needs of developing countries in the context of the Doha Development Agenda, the IMF also developed a Trade Integration Mechanism (TIM)
37 38 39
See G/AG/GEN/64. See G/AG/GEN/71, page 3. See, for example, G/AG/GEN/71 (pp. 15-17) for a detailed description of ex ante risk management systems
(price- and weather-related) and recently-launched joint WFP-World Bank pilot projects.
See WT/GC/62 – G/AG/13. A review of the CFF concluded that the facility should be retained, see
G/AG/GEN/68, page 11.
See G/AG/GEN/49, page 8.
specifically addressing vulnerabilities stemming from, inter alia, food terms-of-trade shocks. The IMF reported that, by the end of 2004, the TIM had been used by one LDC and one NFIDC.
The position of the World Bank regarding the issue of access to short-term multilateral financing was outlined in November 1997 as follows:
"The World Bank continues to monitor the progress of liberalization resulting from the implementation of commitments made under the Uruguay Round Agreement. A number of recent studies using different methodologies and assumptions confirm that the long run impacts of the Uruguay Round agreement on agricultural prices will be relatively small - certainly far smaller than the price increases that have been experienced in recent years. Given the small size of the shocks resulting from the Round and the Bank's substantial headroom above current IBRD loans outstanding, it seems clear that the Bank will be in a position to meet any additional demands generated by the Round for loans on IBRD terms." "In response to the Ministerial Decision, a Working Group involving the World Bank, the Food and Agriculture Organization, the World Food Programme and the IMF met in 1995 to address the special needs of least-developed and net food-importing countries. The Working Group reviewed the range of facilities available for additional financing needs for developing countries in the event of world price shocks and production shortfalls and provided a report to the WTO in late 1995. Given the wide range of facilities and the small price impacts expected to arise as a consequence of the Round, and the difficulty involved in distinguishing Uruguay Round impacts from other shocks, it did not seem appropriate to establish a special Uruguay Round adjustment facility."
See, for example, G/AG/GEN/68, pp. 10-11; and G/AG/GEN/71, pp. 8-10. See G/AG/GEN/15, page 3.
Philippines. Fiji. Members must indicate the: (1) (2) (3) (4) Quantity of food aid provided to least-developed and net food-importing developing countries. Morocco.2 are carried-out using table NF:1. Notification under Article 16.org/interfais/.wfp. See WFP data on http://www.
44 45 46
Counting the EC and its member States as one.
. Technical and financial assistance under paragraph 3(iii) of the Decision. and Other relevant information with respect to actions taken within the framework of the Decision. A number of other Members have also submitted Table NF:1 notifications
stating that no food aid or technical/financial assistance was provided or that the Table NF:1 notification requirement was not applicable. "compliance" refers to any Table NF:1 notification received by the seven Members
that are donors under the Food Aid Convention and other Members that have
in the past identified themselves as food aid donors in their notifications or provided food aid to least-developed and net food-importing developing countries in the period 1995-2005 according to data of the World Food Programme (WFP)
. This is the case for Brazil. Indonesia. pages 33-34.
Table 6 below summarizes compliance with Table NF:1 notification requirement during the 1995-2005 implementation period.III. For the purposes of this table.
As mentioned above. WTO Members make notifications concerning the Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries. United Arab Emirates
and Uruguay. Burkina Faso. Malta. The notifications are done pursuant to the requirements and format set out in G/AG/2. Indication of the proportion in fully grant form or appropriate concessional term.
. n. 21 & Add. 32/Rev. 22. n.1. 50. 21
China n.a. "n.1.9 Notes: "X" means that a notification was received.a. 14.a. 45 KOR/9. 31.1. 52. 39." denotes not applicable. 19 & Corr. 25. 13. 27. 17. 68. 57. Rep. 37. 33.. 46. 39. 42 CHE/23. 21. 40.a. 34 & Corr.1. n.a. 9. 32. of South Africa Compliance calculated as number of notifications received by FAC donors (%) Table 6: X X X X 86 X X X X X X X X X X X 71 14 0 X X X X X X X X X X X X X X CUB/4. 60 CAN/11.1. 35. 25. 15. 78. 30. 33.1995
Food Aid Convention donor Australia Canada EU Japan Norway Switzerland United States Other donors Argentina
Notification circulated in G/AG/N-series
X X X X X X
X X X X X X X
X X X X X X X
X X X X X X X
X X X X X X X
X X X X X X X
X X X X X X X
X X X X X X X
X X X
AUS/5. 20 and Corr. A blank means that no notification was received. 48. 25. 46.
Annual reporting periods differ among Members. 56
100 100 100 100 100 100 100
Compliance with notification requirements (Table NF:1)
Source: WTO document G/AG/W/42/Rev. 24. 25.a. 21. 17. 39. 57 EEC/9. 46 & Add. 42. 52. 20. (11/12/2001) Cuba New Zealand Korea. 17 ZAF/7. 18. 87. 26.a. 34. 13. n. 56
USA/7. 18. 24 NZL/6. 42. 50 JPN/15. n. 107
NOR/6. 5. Argentina informed the WTO Secretariat on 30 July 2003 that it no longer is a food aid donor under the Food
Aid Convention. n. 26. 51 & Corr.
Ministers agreed to take certain measures.
. List them. To establish appropriate mechanisms to ensure the implementation of the Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on LDCs and NFIDC.EXERCISES: 3. To which Members do the Marrakesh Decision on Least-Developed and Net Food-Importing Developing countries apply? 4.
as well as (2) the Committee on Agriculture to monitor the follow-up to this Decision. The Decision sets out certain mechanisms to deal with the possible negative effects arising from the reform programme in agriculture on Least-Developed and Net Food-Importing Developing Countries (as per the list established by the Committee on Agriculture). the Member shall give notice in writing to the Committee on Agriculture and shall consult. WTO Members are required to make notifications on export prohibitions and restrictions on the basis of the requirements and formats set out in WTO document G/AG/2. with any other Member having a substantial interest as an importer with respect to any matter related to the measure in question.
LEAST-DEVELOPED AND NET FOOD-IMPORTING DEVELOPING COUNTRIES Article 16 of the Agreement on Agriculture requires (1) developed country Members to 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. and justification for. WTO Members make notifications concerning the Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries pursuant to the requirements and format set out in G/AG/2. inter alia.
. à Before instituting the an export prohibition or restriction. measure to be introduced. and (4) Duration of application of measure. (2) Tariff item number(s).IV. The annual monitoring of the follow-up to the NFIDC Decision is carried-out by the Committee on Agriculture in accordance with Article 16 of the Agreement on Agriculture and under paragraph 18 of the Working Procedures of the Committee on Agriculture is undertaken on the basis. upon request. of these Table NF:1 notifications. à give due consideration to the effects of such prohibition or restriction on importing Members' food security. Developing countries are only required to follow the conditions above where they are net exporters of the foodstuff. (3) Nature of.
EXPORT PROHIBITIONS OR RESTRICTIONS ON AGRICULTURAL PRODUCTS According to Article 12 of the Agreement on Agriculture. the export of which is being restrained or prohibited. Members must notify: (1) Description of product. Members that implement export prohibitions or restrictions on agricultural products in cases of critical shortages of foodstuffs. as allowed under Article XI:2(a) of the GATT 1994 must.
(1) a review of the level of food aid established periodically by the Committee on Food Aid under the Food Aid Convention. Give due consideration to the effects of such restrictions on importing Members' food security. Saint Kitts and Nevis. Honduras. Jordan. Botswana. Tunisia and Venezuela. Côte d'Ivoire. Egypt. Sri Lanka. As of March 2005. Trinidad and Tobago. Dominica. It applies to the least-developed countries and the net food importing countries recognized as such in the list established by the Committee on Agriculture. Morocco. Saint Vincent and the Grenadines. 2. Kenya. and Consult upon request. Saint Lucia. Pakistan. Peru. on request. Any Member instituting an export prohibition or restriction covered by Article 12 of the Agreement on Agriculture (except developing country Members which are not net exporters of the product concerned). Senegal. Mongolia. The Least Developed Countries are those recognized by the Economic and Social Council of the United Nations as such. (2) the initiation of negotiations to establish a level of food aid commitments sufficient to meet the legitimate needs of developing countries during the reform programme. Jamaica. 3. give it necessary information. the net-food importing developing countries are Barbados. with any other Member having a substantial interest as an importer regarding the measure in question and. Give notice as far in advance as practicable to the Committee on Agriculture.
. Gabon. Namibia. Dominican Republic. Mauritius. including the measure's nature and duration.PROPOSED ANSWERS: 1. Cuba. (3) that WTO Members adopt guidelines to ensure that food aid is given in grant form and/or on concessional terms in line with Article IV of the Food Aid Convention 1986. and (4) that Members give full consideration to providing assistance towards improving agriculture productivity and infrastructure to least-developed and net food-importing developing countries. This rule in Article 12 of the Agreement on Agriculture applies to developing countries only in so far as they are net exporters of the foodstuff. 4.
August 2004 Framework.MODULE
Negotiations on Agriculture
ESTIMATED TIME: 3 hours
OBJECTIVES OF MODULE 8
When you finalize studying this Module.
. The Cotton Initiative. The Doha Mandate in the Doha Development Agenda. Hong Kong Ministerial Declaration. you will be familiar with: Original Negotiating Mandate: Article 20 of the Agreement on Agriculture.
the built-in agenda called for assessments or reviews of the situation at specified times.
The negotiations on Agriculture started in March 2000 and were later incorporated into the Doha Development Agenda. In other cases. The regular meetings of the Committee on Agriculture continue to take place and it is still the body responsible for overseeing implementation of Members' commitments. in 2001. We will now examine the mandate for negotiations on agriculture and how it has evolved. In some areas the work started almost immediately and in others it included new or further negotiations. notably in basic telecommunications and financial services. Agriculture negotiations are conducted in "Special Sessions" of the Committee on Agriculture with a different Chairperson. As a matter of fact. This is generally referred to as "built-in agenda".
. Article 20 of the Agreement on Agriculture provides for negotiations on continuing the process of reducing support and protection to start at the beginning of 2000. Qatar.
Do you know what a "built-in agenda" is? Certain WTO Agreements set clear timetables for future work.
The Agreement on Agriculture was only the first step towards a longer-term programme to reform trade in agricultural products.I. Some negotiations were quickly completed. which was launched at the fourth WTO Ministerial Conference held in Doha.
For more information on the Committee on Agriculture report. paragraph 12.
WT/MIN(96)/DEC. see Report of the Committee on Agriculture.
The preparatory work saw high levels of participation by WTO Members. November 1995. In the twelve meetings held between 1997 and 1999. 74 papers from 36 Members were discussed. paragraph 19. ANALYSIS AND INFORMATION EXCHANGE
Although Article 20 of the Agreement on Agriculture mandated that negotiations begin in 2000.II.
. see Secretariat Summary Reports of the Committee on Agriculture's meetings
G/AG/R/11 to G/AG/R/20.
G/L/131. The Secretariat reports of the meetings of the Committee on Agriculture include summaries of the papers and discussions that took place during the AIE process. which included 13 papers from 24 developing countries.
For more information. In 1996. the Singapore Ministerial Conference agreed to start a Process of Analysis and Information Exchange in line with the recommendation made by the Committee on Agriculture in its 1996 report to the Council for Trade in Goods.
The process of Analysis and Information Exchange (normally referred to as the "AIE process") started in early 1997 and continued until negotiations started in 2000. December 1996. A summary of the meetings in the AIE process can be found in the 1999 Chairman's report to the Council for Trade in Goods in document G/L/322. see Singapore Ministerial Declaration.A. many Members wanted to discuss issues that concerned them without having to do so under negotiations.
For more information on the analysis and information exchange.
there was no requirement to finish those negotiations. At the Seattle Ministerial Conference in December 1999 an attempt was made to start a broad round but the attempt did not succeed and the agriculture talks started based on the mandate in Article 20 of the Agreement on Agriculture. non-trade concerns and special and differential treatment for developing countries. non-trade concerns.B. Some Members had hoped that the mandated negotiations on agriculture and services would start at the same time as a general trade round. like Article XIX of the General Agreement on Services. Members agree that negotiations for continuing the process will be initiated one year before the end of the implementation period. the impact of the Agreement. The Article 20 mandate for negotiations. special and differential treatment to developing-country Members.
Article 20 of the Agreement on Agriculture states:
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. Article 20 also requires numerous factors to be taken into account.
. However. Members' experiences of implementing the Agreement on Agriculture. and the other objectives and concerns mentioned in the preamble to this Agreement. Members were legally obliged to respect it and the requirement that negotiations on agriculture restart at the beginning of 2000. which clarifies the general direction that the negotiations should have.II. was part of the Uruguay Round Agreements. taking into account: (a) (b) (c) the experience to that date from implementing the reduction commitments. Between the start of the negotiations (under Article 20) in March 2000 and the Doha Ministerial Conference in November 2001. the effects of the reduction commitments on world trade in agriculture.
The mandate in Article 20 sets the objective of achieving "substantial progressive reductions in support and protection resulting in fundamental reform". and the objective to establish a fair and market-oriented agricultural trading system. 121 governments submitted numerous negotiating proposals. and (d) what further commitments are necessary to achieve the above mentioned long-term objectives. including.
The negotiations. We take note of the non-trade concerns reflected in the negotiating proposals submitted by Members and confirm that nontrade concerns will be taken into account in the negotiations as provided for in the Agreement on Agriculture.
The agriculture mandate is found in Paragraph 13 of the DDA:
13. and substantial reductions in trade-distorting domestic support. The Ministerial Declaration is normally referred to as the "Doha Development Agenda" (DDA).II. the fourth WTO Ministerial Conference was held in Doha.
We recognize the work already undertaken in the negotiations initiated in early 2000 under
Article 20 of the Agreement on Agriculture.
DOHA DEVELOPMENT AGENDA
In November 2001. including provisions for special and differential treatment. including with respect to rules and disciplines and related legal texts. 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. Qatar. 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. with a view to phasing out.
. agriculture became part of the single undertaking in which virtually all the linked negotiations were scheduled to end by 1 January 2005. all forms of export subsidies. reductions of. We reconfirm our commitment to this programme. but now with new mandates. shall be concluded as part and at the date of conclusion of the negotiating agenda as a whole. Modalities for the further commitments. 14. Hence. including the large number of negotiating proposals submitted on behalf of a total of 121 Members. 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 Ministerial Declaration issued on 14 November launched a new round of multilateral trade negotiations on a wide range of subjects with a special focus on development issues.C.
shall be established no later than 31 March 2003. The DDA includes the negotiations that were already underway in agriculture and services. 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 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.
and substantial reductions in trade-distorting domestic support. To a large extent. some rules are also needed along with the formulas. and à 1 January 2005: completion of the negotiations. Thus.
TIP There is probably no single agreed definition of the term "modalities". stock taking. modalities determine the shape of the final outcomes of negotiations. For example. à committed Members to comprehensive negotiations aimed at: à à à à substantial improvements in market access. But.
made special and differential treatment integral throughout the negotiations. in the case of domestic support.
took note of non-trade concerns (such as environmental protection. with a view to phasing out. reductions of.
All the deadlines in the Doha Mandate have been missed so far. rural development) and confirmed that the negotiations would take them into account. and "The modalities phase" (September 2004–onwards).The Doha mandate: à confirmed and elaborated the objectives of the negotiations "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".
. Blue or Amber Box) and the definition of each type. in tariffs modalities set how much will tariffs be reduced and the length of the time period. food security. all forms of export subsidies. 2003 (in Mexico): countries' comprehensive draft commitments. 5th Ministerial Conference. as per Article 20 of the Agreement on Agriculture. "Cancún and the framework phase" (August 2003-August 2004). in particular in food security and rural development. and
set deadlines for the negotiations: à à 31 March 2003: formulas and other "modalities". modalities set which type of domestic support is being reduced (is it Green. At its most simple it could be defined as the formulas to calculate the new commitments of WTO Members.
stated that the outcome should be effective in practice and should enable developing countries to meet their development needs. both in new commitments and in any new or revised rules and disciplines. Therefore. the negotiations under the DDA can therefore be divided in: à à à "Preparations for modalities" (March 2002–July 2003).
Their draft modalities paper was issued on 13 August 2003 and provoked a quick reaction from other WTO Members. Revision. TN/AG/10. February 2003.
Negotiations on Agriculture: Report by the Chairman to the Trade Negotiations Committee. the Chairman distributed his overview of the state-of-play at that point. As required by the Doha Ministerial Declaration. CANCÚN MINISTERIAL CONFERENCE
Work continued with the objective of establishing modalities by the Cancún Ministerial Conference in September 2003. the Chairman distributed his report to the Trade Negotiations Committee on the status of negotiations which set out a series of questions Members would have to answer if they were to achieve full modalities. TN/AG/W/1. the probability of achieving this objective receded as the date for the Conference approached.
March 2003. However. Special Sessions of the Committee on Agriculture at regular intervals throughout the year. let alone full modalities on agriculture. export credits and food aid. the Chairman wrote and distributed a first draft of a compromise document in February 2003 . Mexico. In December 2002. however there were no signs of serious convergence. despite all the work it was not possible for Members to reach agreement before March 2003. Within seven days. continuously encouraged Members to negotiate with each other and to find compromises that would deliver solutions. TN/AG/W/1/Rev. Ambassador Stuart Harbinson (Hong Kong). would be needed if the deadline of end-March 2003 was to be met.1. the Special Session focused on less controversial technical issues such as TRQ administration. this document only caused the refusal to make any concessions from Members and the Chairman could only distribute a limited revision by the end of March that did not get much support either.D. However. The Ministerial Conference was scheduled for September 2003 in Cancún.Soon after the Doha Ministerial Conference. In preparation for that event. Negotiations on Agriculture: First Draft of Modalities for Further Commitments. The Chairman. Although some useful work was done. In the months that followed. it was far short of establishing any agreement.
7 6 5 4
summarised all the proposals made since the Doha Ministerial Conference and concluded that a major effort
July 2003. the "Group of 20" developing countries leaded by Brazil (commonly known as the
4 5 6
Negotiations on Agriculture: Overview. work restarted in Geneva in early 2002 with the new mandate and the objective of establishing modalities by end-March 2003. The EU and the United States tried to negotiate an intermediate goal of creating a framework on which modalities would be based. December 2002. Negotiations on Agriculture: First Draft of Modalities for Further Commitments. Nevertheless.
delegations realised that others were not posturing or taking tactical positions. This had the effect of leading to a more practical approach to the negotiations and to a more open attitude to finding solutions. the fact finally sank in that there are countries that can produce high quality agriculture products at low prices and they would really like to export to those countries that cannot match either their quality or price. G-33 and G-20 were formed. Instead.G-20) was formed and developed a counter-proposal. while the United States also met with the Cotton-4 and negotiated on cotton.E. Therefore. the EU and the G-20 to compromise. indirectly. that export subsidies were going to be eliminated also helped to move the negotiations forward. the negotiations under the Agriculture Facilitator. four least-developed African countries (Benin. the Group of Least-Developed Countries and the Cairns Group also remained active. The converse is also true. but Ministers could not agree on a framework for modalities and the Conference was concluded when it became clear to the Chairman. Progress was made. the African Caribbean Pacific (ACP) Group. Other groups. Minister Derbez of Mexico. After the Ministerial Conferences.
. Minister George Yeo (Singapore) focused on getting the United States.
II. like the African Group. The result was that. This period saw the negotiating landscape change as the G-10. which was submitted on 20 August 2003. Burkina Faso. the different sides in the negotiations realised that (i) it was not the fault of the Chairman that their position was not accepted and reflected in draft papers and (ii) those on the other side had real problems they wanted addressed. took a different approach to conducting the negotiations on agriculture. the positions remained deadlocked for the rest of 2003 and it was only in early 2004 that the negotiations started again under a new Chairman of the Special Session. The open-letter to all WTO Ministers from Commissioners Lamy and Fischler of the European Commission admitted. Ambassador Tim Groser (New Zealand). Chad and Mali) formed the Cotton-4 and tabled a proposal to specifically address domestic support for cotton in the negotiations. In Cancún. that it would not be possible to reach consensus. Additionally.
GENERAL COUNCIL DECISION OF 1ST AUGUST 2004
Ambassador Groser. and increased imports or reduced support would mean lower incomes and reduced production. There are some people that depend on support and protection. for the first time perhaps. He stopped convening consultations under his Chairmanship and left it to delegations to arrange their own meetings.
It also set out clear directions for export credits.
Agriculture 1(a) Agriculture: the General Council adopts the framework set out in Annex A to this document. in December 2005. The Framework described the key features of the modalities. but without going into all the details. China.
Doha Work Programme: Decision Adopted by the General Council on 1 August 2004. In this regard. The text constituted the basis for the negotiations for full modalities .which Members hoped to adopt at the 6th Ministerial Conference in Hong Kong. On export competition. It should be noted that the amount of guidance given by the Framework varies a lot depending on the issue. including the Bretton Woods Institutions. referred to in paragraph 1(a) set out in some detail the shape of the modalities that would be established.
. and all developed countries are urged to participate. à à State trading enterprises: Elimination of trade distorting practices. Annex A of the "Framework". the General Council agreed on a "Framework for Establishing Modalities in Agriculture" and other agreements designed to focus the negotiations and raise them to a new level. and Food aid: Prevent commercial displacement. The Council takes note of the recent Workshop on Cotton in Cotonou on 23-24 March 2004 organized by the WTO Secretariat. continue their bilateral programmes. after many drafts and late nights. WTO Members should work development issues with the international financial institutions. WT/L/579.
Cotton Initiative 1(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 Framework clarified that export subsidies will have to be eliminated. August 2004. on 1st August 2004. food aid and exporting state trading enterprises: à Export credits: Elimination of export credits of 180 days or more and rules on other kinds of export credits.Finally. the Food and Agriculture Organization and the International Trade Centre to direct effectively existing programmes and any additional resources towards development of the economies where cotton has vital importance.
The General Council Decision of 1st August 2004 is generally known as the "Framework" or the "July Package" added a lot of detail to the broader mandate of the Doha Ministerial Declaration and put cotton firmly on the agenda. 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.
With regard to cotton. but did not give a final date. and other bilateral and multilateral efforts to make progress on the development assistance aspects and instructs the Secretariat to continue to work with the development community and to provide the Council with periodic reports on relevant developments. the General Council instructed the Director General to consult with the relevant international organizations.
a tariff of $50 per tonne. for example. à à à Final Bound Total AMS to be reduced by a tiered formula. Many Members still apply non-ad valorem tariffs. and à Green Box criteria to be reviewed to ensure that Green Box measures have no. expeditiously and specifically within the agriculture negotiations. summaries of meetings. the Framework requires that tariff escalation be addressed and that the long-standing commitment to the fullest liberalization of trade in tropical products be realised. it gave some direction to the negotiations. While the Framework is quite clear for export competition and domestic support.htm
AFTER THE FRAMEWORK: MODALITIES
The Framework had settled some political questions. The Framework also provides that cotton will be addressed ambitiously. or at most minimal.wto. but à The Framework also provides for flexibility for all Members to declare some products as "Sensitive Product" which would be subject to lesser tariff cuts with expansion of tariff quotas. it is much less clear for market access and leaves a lot of issues unresolved. That is. However. trade-distortion effects. such as an outline of the approach for cutting tariffs. à The basic formula for tariff reductions would be a tiered formula under which higher tariffs would be subject to greater reductions. In many other issues. and the agreed framework visit: http://www. such as whether to negotiate the end of export subsidies. à Also reinforcing the basic objective. which have to be converted into an ad valorem equivalent in order to put them into their correct band of a tiered formula. In a clear sign of the sensitivity of the agriculture
.org/english/tratop_e/dda_e/dda_package_july04_e. a tiered formula means bigger tariffs get reduced by more but Members need to decide in which tier they should put. One of the first issues that had to be addressed in the post-Framework negotiations was where to put non-ad valorem tariffs in a tiered formula. plus Blue Box limit) to be reduced with the biggest subsidisers reducing by more through a tiered formula. Blue Box to be expanded to cover programmes decoupled from production but all Blue Box capped at 5% of the value of agriculture production. Negotiations between the August 2004 Framework and the 2005 Hong Kong Ministerial were set to address the many remaining questions in all three pillars of the agriculture negotiations. many technical details still needed to be sorted out to allow Members to move to the next set of political decisions and agree on full modalities. plus permitted de minimis. For more details on the August 2004 Framework.The domestic support elements of the Framework are not quite as clear but they too set out the direction and the details reinforce the overall objective of substantial reductions in trade-distorting domestic support: à The total of all trade-distorting domestic support (Final Bound Total AMS. Developing countries would also be able to declare some products as "Special Products" subject to more flexible treatment and to avail of a Special Safeguard Mechanism. De minimis limits to be reduced.
most of the major agriculture trading nations did provide data and then the negotiations were able to address the tariff reduction formula itself. however. setting-up agreed formulas for reduction and accompanying rules with the actual numbers and percentages and key phrases in the rules being left for Ministers to decide in Hong Kong. That is. Therefore. etc. what should be the base periods for domestic support reductions and caps.
Negotiations on Agriculture: Report by the Chairman to the TNC. that Ministers in the Hong Kong Conference would decide the actual levels of cuts in support and protection. The Draft Ministerial Text sent to Hong Kong by the Chair of General Council showed just how far apart Members were. The negotiations continued and. once again. It was clear at this stage that modalities by the Hong Kong Ministerial Conference in December 2005 would not be possible. the focus for the Ministerial Conference was changed to trying to make as much progress as possible on the very few elements on which Members seemed to agree. unable to agree on some basic issues like the number of tiers for tariff reductions.
Compared to the draft text sent to Hong Kong. The Chairman's report to the Ministerial Conference
made it clear that there were many issues that still had to be resolved before
modalities could be established. It was only in May 2005 that Members accepted a provisional methodology for conversion. 28 November 2005 Doha Work Programme: Draft Ministerial Text.
II. WT/MIN(05)/W/3. what should be the focus of rules on export credits. if the reductions in each tier should be linear or progressive. the Ministerial Conference did succeed in making a considerable amount of progress. TN/AG/21. The Hong Kong Ministerial Declaration sets out the progress on agriculture and for cotton. 7 December 2005
.negotiations.F. Pascal Lamy (former Trade Commissioner of the European Union) took office as the new the WTO Director General. a Ministerial Conference was approaching without modalities being agreed. but did not agree on full modalities. The same month. However. food aid and state trading enterprises. In September 2005.
HONG KONG MINISTERIAL DECLARATION
WTO Members had hoped to establish a "first approximation" of agriculture modalities by the end of July 2005. Ambassador Groser was replaced by his compatriot Crawford Falconer as Chair of the agriculture negotiations. the discussions on finding a methodology for calculating ad valorem equivalents took nearly eight months. Members were.
In the Hong Kong Ministerial Declaration (WT/MIN(05)/DEC). Members agreed to conclude overall negotiations successfully in 2006 (paragraph 1).
For Cotton. export credit guarantees or insurance programmes. and à the Director-General is to furnish updates on development assistance aspects. à Eliminate all forms of export subsidies by 2013. The chart below shows the negotiating groups:
The negotiating groups
. together with agreed progressivity and parallelism. to the General Council (paragraph 12). at appropriate intervals. exporting state trading enterprises and food aid by 30 April 2006 as part of modalities (paragraph 6). Ministers agreed that: à All forms of export subsidies for cotton were to be eliminated by developed countries in 2006 (paragraph 11). Complete disciplines on export credits. and à Submit comprehensive draft Schedules based on modalities no later than 31 July 2006 (paragraph 10). to be confirmed only upon completion of modalities (paragraph 6). For agriculture negotiations they decided to: à à Establish modalities no later than 30 April 2006 (paragraph 10).
what are some issues Members have to take into account according to the Agreement on Agriculture under the initial Article 20 mandate? 3. Give examples of non-trade concerns in the context of the agriculture negotiations.EXERCISES: 1. What are the special sessions of the agriculture committee? In the agriculture negotiations.
which was presented on 10 June 2003 to the Trade Negotiations Committee by the President of Burkina Faso.III. INTRODUCTION
The cotton initiative was originally raised both in the General Council and in the agriculture negotiations by Benin.E.1. Chad and Mali". since the WTO does not have development funding except for training officials in WTO affairs. if and how it should be paid. They also differed over the question of compensation. But no conclusion was reached in Cancún. and for compensation to be paid to the four while the subsidies remain. Chad and Mali ("Cotton Four" or C-4).b). and other activities. The C-4 first wrote to the WTO Director-General on 30 April 2003. The proposal was the basis for two Cancún Ministerial Conference documents.A. H.Joint Proposal by Benin. and in its Annex A. In early 2004. for example whether it should be development assistance. the debate continued. Benin. The Special Session of the Committee on Agriculture also discussed the proposal (document TN/AG/GEN/4) on 1 and 18 July 2003. and who should handle it. Burkina Faso. The C-4 sought a decision in the Cancún Ministerial Conference on an agenda item titled "Poverty Reduction: Sectoral Initiative in Favour of Cotton . WT/MIN(03)/W/2 and WT/MIN(03)/W/2/Add. Members stated that they considered the cotton initiative to be important in both its (1) trade and (2) development aspects. the main text of the August 2004 framework instructs the Secretariat and the Director General to continue to work with the development community and international organizations (World Bank.
THE COTTON INITIATIVE
III. Blaise Compaoré. Burkina Faso. domestic support and export subsidies).
. including how the discussion on cotton fits in with the negotiations and the Doha Development Agenda. The sectoral initiative on cotton formed a separate paragraph from agriculture in the Cancún draft declaration. Members' views differed as to whether this should be handled as a specific question or whether it should come under the three pillars of the agriculture negotiations (market access. The proposal: 1) described the damage that the C-4 believe has been caused to them by cotton subsidies in richer countries. They also stressed that the two aspects were complimentary (paragraph 1. introducing a "Sectoral Initiative in Favour of Cotton". 2) 3) called for the subsidies to be eliminated. Mr. to cover economic losses caused by the subsidies. Development: Referring to the WTO Secretariat's 23-24 March 2004 workshop on cotton in Cotonou.
III.B. GENERAL COUNCIL DECISION OF 1ST AUGUST 2004
Cotton was addressed both in the main text of Framework.
As per the mandate of the Framework (paragraph 4). At the first meeting. to meet periodically and report to the Special Session of the Committee on Agriculture to review progress.IMF. The Cotton Sub-Committee held its first meeting on 16 February 2005. (TN/AG/SCC/1)
. It states that cotton will be addressed "ambitiously. The Sub-Committee takes into account the need for "coherence between trade and development aspects of the cotton issue". the framework provided that the work on cotton shall encompass all trade-distorting policies affecting the sector in all three pillars of market access.C. particularly developed countries. Members themselves. expeditiously and specifically" within the agriculture negotiations. Moreover. and export subsidies. and the Framework. and to report regularly to the General Council. and their desire to see speedy and substantial results from the work of the Sub-Committee. discussions focused on procedural issues relating to the Sub-Committee's work programme. The Sub-Committee reports periodically to the Special Session of the Committee on Agriculture. International organizations that are observers in the agriculture negotiations can also be observers in the Sub-Committee. the Sub-Committee is open to all WTO Members and observers. and that both the provisions of the framework and the sectoral initiative should be used a the basis of that approach. and is independent of other sectoral initiatives. The development-related aspects of cotton cover various aspects of helping the cotton sector of the cotton-producing less-developed and developing countries. It instructs the agriculture negotiations to ensure that the cotton issue is given "appropriate" priority. According to its terms of reference (TN/AG/13). Trade: The mandate on trade is found in paragraph 4 of Annex A. through (1) an assessment of progress in the Agriculture Special Session and (2) regular updates on the development-related aspects of cotton. FAO. General Council and Ministerial Conference." in the "three pillars of market access.
III. to focus on cotton as a specific issue in the agriculture negotiations. the Cotton Sub-Committee was set up. The trade-related aspects of cotton are encompassed in the agriculture negotiations on market access. Several Members highlighted the importance of cotton for their economies. and export competition. domestic support. Members agreed that the Sub-Committee should "work in depth on all trade-distorting policies affecting trade in cotton. International Trade Centre). at the 19 November 2004 meeting of the Special Session of the Committee on Agriculture. The Framework also mandated the establishment of a subcommittee on cotton. and export competition" as specified in the 2001 Doha Declaration. domestic support. "should" engage in similar work. The Sub-Committee is tasked to work on "all trade-distorting policies affecting the sector. which in turn reports to the Trade Negotiations Committee. as specified in the Doha text and the framework itself. domestic support.
the development issues. and paragraph 12. Ministers reaffirmed the complementarity of the trade policy and development assistance aspects of cotton. within the agriculture negotiations in relation to all trade-distorting policies affecting the sector in all three pillars of market access. while keeping the Sub-Committee on Cotton fully informed of progress. Ministers urged Members to promote and support South-South cooperation. including transfer of technology. HONG KONG MINISTERIAL DECLARATION
The Hong Kong Ministerial Declaration contains two paragraphs on cotton. Ministers welcomed the Consultative Framework process initiated by the Director-General to implement the decisions on those issues pursuant to paragraph 1. with emphasis on improved coherence. Ministers urged the Director-General to further intensify his consultative efforts with bilateral donors and with multilateral and regional institutions. at appropriate intervals in the meantime. Ministers urged the development community to further scale up its cotton-specific assistance and to support the efforts of the Director-General. Paragraph 11 provides that "all forms of export subsidies for cotton will be eliminated by developed countries in 2006". as specified in the Doha Ministerial Declaration and the 2004 Framework. Ministers welcomed the domestic reform efforts by African cotton producers aimed at enhancing productivity and efficiency. In paragraph 11. Noting the importance of achieving enhanced efficiency and competitiveness in the cotton producing process. Ministers invited the Director-General to furnish a third Periodic Report to third next Session with updates. Finally. and encourage them to deepen this process. coordination and enhanced implementation and to explore the possibility of establishing through such institutions a mechanism to deal with income declines in the cotton sector until the end of subsidies. In that context.III. Paragraph 11 addresses the trade issues. It also states that "developed countries will give duty and quota free access for cotton exports from least-developed countries from the commencement of the implementation period". expeditiously and specifically. that the objective was that 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. without prejudice to Members' WTO rights and obligations. to the General Council.b of the Decision adopted by the General Council on 1 August 2004. including those flowing from actions taken by the Dispute Settlement Body. Ministers recalled the mandate in the August 2004 Framework to address cotton ambitiously. Ministers noted the work already undertaken in the Sub-Committee on Cotton and reaffirmed their commitment to ensure having an explicit decision on cotton within the agriculture negotiations ambitiously.
. Ministers took note of the Director-General's Periodic Reports and the positive evolution of development assistance noted therein.D. domestic support and export competition. which concerns the development issues of cotton. Members also agreed in paragraph 11. expeditiously and specifically. Ministers requested the Director-General to set up an appropriate follow-up and monitoring mechanism. In paragraph 12.
EXERCISES: 4.Important note
The negotiations on agriculture are constantly evolving. What are the aspects of the negotiations on cotton? What is the component of the trade aspect of the negotiations on cotton?
.wto. For more updated information on the negotiations.org/english/tratop_e/agric_e/negoti_e. please visit the Agriculture Negotiations Webpage at: http://www. 5. as well as access to related documents.
domestic support and market access. These negotiations were incorporated in the comprehensive round of negotiations under the Doha Development Agenda in 2001. The C-4 have succeeded in getting political agreement that the results of the Doha Development Agenda will mean greater reductions in cotton subsidies over a shorter period of time compared to subsidies in general. Agreement has already been reached for developed countries to eliminate their cotton export subsidies by 2006.wto. the negotiations are also addressing the sectoral initiative on cotton. Cotton is to be treated ambitiously. expeditiously and specifically in all three pillars of the agriculture negotiations (tariffs. Developed countries would have also extended duty-free quota-free access for all the cotton exports of least-developed countries from the start of the implementation period.IV. First in March 2003 and then at the Cancún Ministerial Conference in September (2003). The initiative began in 2003 in the run-up to the Cancùn Ministerial Conference by the Cotton-4 group (Benin. COTTON In addition to the market access. To assist the negotiations. and export support). Most of these can be found in the G/AG/NG/S and TN/AG/S series of official documents (see http://www. Chad and Mali) and their focus has been to reduce trade-distorting domestic support and export subsidies for cotton.
. In July 2006. negotiations were suspended. Please read them if you would like to have a more comprehensive outlook. the elimination of export subsidies and tariff and quota-free access for imports of cotton from least-developed countries (paragraph 4.
Negotiations on agriculture started in 2000 as mandated by Article 20 of the Agreement on Agriculture. However.org/english/tratop_e/agric_e/negoti_e. the WTO Secretariat produced various background papers at the request of Members. Agriculture negotiations were updated in the General Council Decision of 1st August 2004 (and advances were made in the Hong Kong Ministerial Conference in December 2005 (WT/MIN(05)/DEC).htm). domestic subsidies. they restarted fully in January 2007. Burkina Faso. Annex A of WT/L/579 and paragraph 11 WT/MIN(05)/DEC). Various deadlines for modalities were missed.
It is distinct from regular meetings of the committee on Agriculture. The meetings of the Committee on Agriculture in which agriculture negotiations takes place. 4. 5. and Environmental protection. and (d) the further commitments necessary to achieve the long-term objectives of the Agreement on Agriculture. (Read Module 3 to recall the functions of the Committee on Agriculture). (a) (b) (c) the experience to that date from implementing the reduction commitments. Food security. Rural development. Market access – including duty and quota free access for cotton export for LDCs from the start of the implementation period Domestic support. de minimis and disciplines on Blue Box support Export subsidies – the elimination of all forms of support by 2006 Implementation of the negotiated provisions for cotton
.PROPOSED ANSWERS: 1. and the other objectives and concerns mentioned in the preamble to the Agreement on Agriculture. for example reducing trade distorting support the modalities on cutting support to cotton in terms of overall cut and total AMS. the effects of the reduction commitments on world trade in agriculture. The trade aspect. the objective to establish a fair and market-oriented agricultural trading system. special and differential treatment to developing-country Members. 3. non-trade concerns. The development aspect. 2.
ESTIMATED TIME: 2 hours
OBJECTIVES OF MODULE 9
Review the previous Modules.
. and Provide a conclusion to the course.
the MFN and National Treatment: à The principle of MFN for goods is found in GATT Article I.
. There are various organs and bodies that make up the structure of the WTO: Ministerial Conference.
I. Annex 4 is termed "Plurilateral Trade Agreements". There are two main principles of non-discrimination. The functions of the WTO are to: à Facilitate the implementation. WTO Members have must adhere to the bound rates in their Schedules of Tariff Concessions and there is a prohibition on the introduction or maintenance of quantitative restrictions. General Council (also DSB and TPRB). and trade in. à à à à Serve as a forum for trade negotiations. Sub-Committees. Plurilateral agreements are ONLY binding on Members that join them.
Annex 2 covers the Dispute Settlement Understanding. such as. Services. Annex 1B (Agreement on Trade in services). with the objective of improving the welfare of the peoples of its Member countries by expanding the production of. There are other rules in the WTO legal framework. those governing market access. 2. administration and operation. and Intellectual Property. which contains four Annexes. goods and service. Annex 3 covers the Trade Policy Review Mechanism.A. and Annex 1C (Agreement on Trade-related Aspects of Intellectual Property Rights). and Cooperate with the IMF and the IBRD (World Bank) to achieve coherence in global economic policy making. The umbrella agreement is the WTO Agreement. Working Groups and Working Parties. This principle prohibits discrimination between imports irrespective of their origin or destination. Annex 1 is divided into three sections: à à à Annex 1A (The Multilateral Agreements on Trade in Goods). as well as the Committees. Councils for Goods.
The WTO was established in 1995. and 3 are the "Multilateral Trade Agreements". Administer the Dispute Settlement Understanding (DSU). à GATT Article III governs national treatment for goods and prohibits discrimination between imported and locally-produced products. and furthering of the objectives of the WTO Agreements (including the Plurilateral Agreements). Annexes 1.I. Administer the Trade Policy Review Mechanism (TPRM).
B. Least-developed countries were not required to undertake reduction commitments. Members agreed to improve market access for agricultural products through (a) converting non-tariff measures into tariffs. Members undertook to create TRQs equivalent to 3% of domestic consumption. countries were already allowing imports at low tariffs. Apart from the least-developed countries. and 3) export competition. i. but do not include fish nor forestry products. 2) domestic support. In these cases. which also constitute a derogation to WTO disciplines.
I. which reflected the general level of protection applied during the base period. (b) reducing tariffs and (c) creating and/or expanding tariff quotas.e. even though the bound tariffs were very high or there was no tariff binding at all. The Uruguay Round created the first comprehensive set of multilateral trade rules on agriculture. à In many cases.
. For tariffs that were bound using "ceiling bindings" no reductions were required. except on an ad hoc basis. (A TRQ is a certain volume of imports that can be imported at a low tariff).1. while developing countries reduced tariffs by an average of 24% (minimum 10%) over 10 years. Instead they undertook to replace the various measures applied to unbound tariff lines with "ceiling bindings".
I. Tariffs were then reduced by an average of 36% (minimum 15% per tariff line) over 6 years for developed countries. Agricultural goods are defined in Annex 1 of the Agreement on Agriculture they include processed forms of practically all farm products.
AGRICULTURE IN THE URUGUAY ROUND
The Agreement on Agriculture came into effect in 1995. maximum allowed rate for all or many agricultural products. The Uruguay Round negotiators adopted a three-pillar approach for agriculture reform: 1) market access.B. as well as other exceptions of a horizontal nature.There are specific exceptions. à Members converted all unbound tariffs and non-tariff measures to tariff equivalents ("tariffication" process) and bound the converted tariffs.
In the Uruguay Round. If these current access opportunities were less than 3% of domestic consumption they had to be increased to this amount on the first year of implementation (1995). the importing Member was required to maintain these "current access" opportunities. If they were less than 5% of domestic consumption they had to be increased to this amount by the last year of implementation (2001 for developed countries and 2004 for developing countries). These TRQs were increased to 5% of domestic consumption during the implementation period. à Where a product had been tariffied and no or minimal levels of imports were imported during the base period. many other developing countries were not required to reduce all or some of their tariffs.
general safeguard action. However.Figure 1:
Uruguay Round cuts
Article 4. Article 4. In its accession. The products and countries concerned are: rice in the case of Japan. Korea and the Philippines will be extending special treatment (G/AG/W/62 and G/AG/W/63). The use of the SSM is limited to "tariffied" products and is not applicable to imports under related tariff quota commitments. which have been required to be converted into ordinary tariffs. Chinese Taipei also opted not to undergo tariffication for rice. the ordinary GATT rules on applying anti-dumping or countervailing duties. They can be found in Annex 5 and Article 5 of the Agreement on Agriculture: à Annex 5 allowed four countries to maintain non-tariff border measures on certain products during the period of tariff reductions. etc.2 of the Agreement on Agriculture prohibits the use of measures.1 of the Agreement on Agriculture states that the detailed commitments on market access (i. the maximum tariff rates and TRQ commitments) can be found in Members' Schedules. à Article 5 provides for the SSM against import volume surges or import price declines below a trigger level.
. Korea and the Philippines. can be utilized and in these cases additional duties can be applied in addition to the bound tariff. balance of payments measures. Japan.e. There are a few other exceptions to the bound tariff rule of Article 4. Israel and Chinese Taipei have already tariffied the products concerned. and cheese and sheep meat in the case of Israel.
support under production limiting programmes. the Annual and Final Bound Commitment Levels for the Aggregate Measurement of Support (AMS). in Section I of Part IV of a Member's Schedule.2).
The disciplines and commitments concerning domestic support are found in Articles 3. where relevant. and least-developed countries were not required to make any cuts. if such support is generally available (that is non-product-specific) and less than 5% of the total value of agricultural production. Similarly.e. under Article 6. If domestic support for a specific product is below 5% of the value of production of that product.2 and are greater than the de minimis level must be accommodated within the ceilings set out in Members' Schedules. In the Uruguay Round. structural adjustment assistance. i.
.2.3% over 10 years. 6 and 7 as well as Annexes 2. and regional assistance programmes. In addition to the Green Box policies. disaster relief.B. These measures must have no more than minimal trade-distorting effects and they must meet the conditions set out in Annex 2 of the Agreement on Agriculture. it does not have to be reduced. Blue Box.
Members can use. there is no limit on support provided as: (1) direct payments under production-limiting programmes (Blue Box measures).5). Members agreed to make the following reductions in the Total AMS. income insurance. WTO Members agreed to reduce the aggregate levels of domestic support with exemptions for: à à à à low levels of support. Such payments must (1) be based on fixed areas or yields (2) be made on 85% or less of the base level of production. domestic support measures that fit in the Green Box. which cover: general government service programmes such as research. as compared to the average during the base period of 1986-88: à developed country Members agreed to reduce the Total AMS by 20% during the six-year implementation period. (3) be made on a fixed number of head for livestock payments (Article 6. support with minimal or no distortion to trade. payments under environmental programmes. à à developing country Members agreed to reduce the Total AMS by 13. certain direct payments to producers such as decoupled income support. it does not have to be reduced. without limits. 3. All other types of support are subject to limits or reduction commitments. (These de minimis levels are 10% for developing countries and 5% for developed countries) Domestic support measures that do not fit in the Green Box. disease control and infrastructure. and programmes in developing countries. investment subsidies and subsidies that encourage diversification from planting illegal narcotics (Article 6.
In the Uruguay Round.I. and 4 of the Agreement on Agriculture and. and (2) certain input subsidies.
B. The Agreement in Agriculture contains a "due restraint" or "peace clause" which regulates the application of other WTO agreements to subsidies in respect of agricultural products (Article 13).4 of the Agreement on Agriculture.
I. In particular. it provides a legal basis for special and differential treatment provisions that are found in Schedules. Article 9 contains the definition of export subsidies subject to reduction. Article 10 governs other export subsidies subject to anti-circumvention provisions. Using the base period of 1986-90.
. It also requires the Member introducing the restriction or prohibition to take account of the effect such a restriction could have on other Members' food security. and 21% in terms of the quantities exported with export subsidies. Article 15 of the Agreement on Agriculture recognizes the importance of differential and more favourable treatment for developing-country Members.B. such as lower levels of tariff reductions. This is a separate Agreement in the WTO which reaffirms right to countries to set their own health and safety standards provided they are justified on scientific grounds and do not result in arbitrary or unjustified barriers to trade. Article 16 refers to the decision Marrakesh Ministerial Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries.
The Agreement on Agriculture prohibits the use of export subsidies on products which are not subject to reduction commitments (Article 3. anti-circumvention).4. In Article 14. which can provide certain types of marketing and transport subsidies under Article 9. unless they are net exporters of the foodstuff for which an export prohibition or restriction has been instituted. The requirement in Article 12 does not apply to developing countries.e. WTO Members agreed to reduce their export subsidies by: à à 36% in terms of the amount spent on export subsidies (24% in developing countries).I. and includes certain special and differential treatment provisions.(14% in developing countries). to notify the measure and. The Peace Clause has already expired.3).
In addition to reductions in subsidy levels and the amount exported with subsidies. Members also agreed to a set of rules governing the types of export support that can be granted and to measures to prevent a country avoiding its commitments (i. if asked. It also expressly states that developing countries can have 10 years for implementation and that the least-developed countries do not need to undertake any reductions.3. encourages use of international standards. Members agree to give effect to the Agreement on the Application of Sanitary and Phytosanitary Measures. to consult with any Member that has a substantial interest as an importer. There are some exemptions for developing countries.
Article 12 of the Agreement on Agriculture requires WTO Members to comply with the disciplines in Article XI:2(a) of the GATT 1994 when they introduce new export prohibition restrictions on foodstuffs. which include disciplines relating to food aid. but are not expressed in the Agreement on Agriculture itself.
including the Committee on Market Access and the Trade Policy Review Mechanism.
. disputes between WTO Members about their obligations are subject to the WTO's dispute settlement procedures. Furthermore. Therefore. which allows any Member to raise. The review process of the Committee on Agriculture provides a forum for discussion and consultation. the Working Procedures of the Committee allow Members to request the Chairperson to mediate in concerns that may arise between them. The use of instruments under the auspices of the Committee on Agriculture does not. The notification requirements and formats are set out in document G/AG/2 of 30 June 1995.Article 17 establishes the Committee on Agriculture. The Agreement on Agriculture also provides for certain mechanisms that can be used by Members to address their concerns without recourse to these procedures. prevent any Member from seeking formal dispute settlement at any time. any matter relevant to the implementation of the commitments under the reform programme as set out in the Agreement. This process is mainly based on the notifications and on Article 18. In order to ensure Members actually comply with their obligations they are required to make notifications on their commitments (the bound agricultural tariffs and the tariff quota commitments in their schedules). Pursuant to Article 19. This Committee has the task of overseeing the implementation of the Agreement and related commitments. There is also a counter-notification provision. measures that do not comply with the Agreement on Agriculture can be challenged under the WTO's dispute settlement mechanism. the Agreement on Agriculture is covered by the Dispute Settlement Understanding.e. however. i. Applied tariffs are notified to other bodies of the WTO. at any time. which is capable of authorising trade sanctions against noncompliant states.6.
4(a) De minimis provision allows and (b) exclusion of product-specific and non-product-specific support less than 5% of respective current value of productions from the calculation of the Current Total AMS.
Definition of export subsidies subject to reduction. (ii) other policies included in the Aggregate Measure of Support (AMS) subject to reduction commitments (Amber Box).
De minimis provision allows exclusion of product-specific and non-product specific support less than 10% of respective current output value from the calculation of the Current total AMS.2 Article 4.
Average tariff reductions of 24% (minimum 10%) over 10 years.
Total AMS support to be reduced by 13.
Implementation of current and minimum access opportunity commitments in respect of tariffied products.
. Where "ceiling bindings" commitments undertaken reductions not required except on ad hoc basis.
Average tariff reductions of 36% (minimum 15%) over 6 years.Policy Area
Instrument Article 4. (i) permitted policies (Green Box). Least developed not required to undertake reduction commitments.
Tariffs resulting from conversion of non-tariff border measures under negotiating modalities ("tariffication") plus pre-existing tariffs on all other agricultural products to be reduced. Special agriculture safeguard mechanism against import volume surges or import price declines below a trigger level (limited to "tariffied" products and not applicable to imports under related tariff quota commitments).1 and Schedules Article 5 Schedules
Prohibition on the use of restrictions on imports other than tariffs. 7 and Annex 2
Policies divided into two groups. Schedules Total AMS support to be reduced by 20% over 6 years.
Article 6. All tariffs bound.
Developing countries allowed to use investment and input subsidies under certain conditions.5
Decoupled direct payments under production limiting programmes (Blue Box) are excluded from AMS.3% over 10 years. Least-developed countries must bind AMS support level if applicable but not required to reduce it.
Key Elements of the Agreement on Agriculture
Exception for developing countries that are net-exporters of the foodstuff concerned. Negotiations.
WTO Committee on Agriculture given the task of overseeing the implementation of the Agreement and related commitments. Other WTO Agreements apply subject to the provisions of the Agreement on Agriculture. volume (14%) and budgetary outlay (21%) over 6 years.3
Prohibition on the use of export subsidies on products not subject to reduction commitments.
Export prohibitions and restrictions
Requirement for advance notice and obligation to consult on request and supply information in case of new export restrictions on foodstuffs.
Article 18 Article 19 Article 20 Article 21
Review of the implementation of commitments on agriculture.
Article 3. Consultations and Dispute Settlement.
Article 13 Article 14 Article 16
Peace Clause (now expired) The Agreement on the Application of Sanitary and Phytosanitary Measures.4
For incorporated/processed products budgetary outlays only (36%).
Incorporated products subject to budgetary reductions (36%).
Article 9 and Schedules
Distinct reduction commitments on Distinct reduction commitments on both both volume (21%) and budgetary outlay (36%) over 6 years.subsidies
Other export subsidies subject to anti-circumvention provisions which include disciplines relating to food aid.
Exception during the implementation period in respect of certain marketing and internal transportation subsidies. Marrakesh Ministerial Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries.
Although the supporting tables often set out the starting points from which reductions were made.I.
I. normally referred to as the "Modalities document". Furthermore. Furthermore. Other WTO Agreements also apply to trade in agricultural products. for countries that joined the WTO after the Uruguay Round. there is nothing in the Agreement on Agriculture that reflects Members commitment made during the Uruguay Rounds to open up their markets to imports of at least 3% of domestic consumption by 1995 rising to 5% by 2000. EC —Sugar (WT/DS265. these were sometimes modified because of negotiations. The basis for calculating specific commitments.C. These details are set out in each Member's Schedule of Commitments. For example. such the as the maximum subsidy levels are in Members' Agriculture Supporting Tables and are based on the modalities document drawn up during the Uruguay Round. The effect of the modalities document was the subject of dispute in three cases: EC — Bananas III (WT/DS27). their Protocol of Accession may contain legal commitments and/or set out additional or different requirements that must be met. Information to be Provided on Domestic Support and Export Subsidies in Agriculture).
AGRICULTURE SUPPORTING TABLES
The starting-point for calculating commitments on export subsidies and domestic supports is based on data that can be found in the "Supporting Tables Relating to Commitments on Agriculture Products in Part IV of the Schedules" (G/AG/AGST/ series). SUPPORTING TABLES & THE MODALITIES DOCUMENT
The Agreement on Agriculture does not include all the rules and commitments made by Members. Acceding countries must also prepare supporting tables and for them the base periods can be different to those used for the Uruguay Round negotiators (for more information see WT/ACC/4.C.
The Modalities for the Establishment of Specific Binding Commitments under the Reform Programme (MTN.1.
SCHEDULES. WT/DS266 and WT/DS283) and Korea —Beef (DS161). 18 March 1996.2.C.
. These Tables show the value of supports given by each GATT Member on different products and schemes during the base periods. For many of the commitments the "Modalities Document" sets out the specific percentage reductions and the methods of calculation needed to establish a basis for the reductions. some provisions of the Agreement were negotiated after the supporting tables were completed and these provisions are not reflected in them. nor the maximum subsidy levels each Member can apply. for example the SPS Agreement.GNG/MA/W/24). is part of the preparatory work of the negotiations for the Agreement on Agriculture.
Section II. Section IA. Please note that many Members have renegotiated parts of their Schedules for various reasons. specific commitments in some areas because of the negotiations.C.3. each WTO Member prepared its Schedule. which sets out the specific commitments on tariff: à tariff rates for each product for the start and the end of the implementation period are set out in Part I. Section IB. The details of the current situation of each Member's Schedule can be found by following the link: http://www.org/english/tratop_e/schedules_e/goods_schedules_table_e. Although based on the modalities document.
The Schedules may also contain additional information or commitments.
SCHEDULES OF COMMITMENTS
Based on the Modalities Document and the supporting tables.htm
. Section I. domestic support commitments in Part IV. and export subsidy commitments in Part IV.wto. à à à TRQ commitments are set out in Part I. the distribution of tariff quotas to supplying countries. such as.I.
the Doha Declaration elaborated on this. The second phase started in March 2001. it did succeed in adding some details to the package. After the Doha Ministerial Declaration. reductions. Doha on 9-14 November 2001 successfully launched a new round of trade negotiations. The Fourth Ministerial Conference held in Qatar. such as the agreement to eliminate all forms of export subsidies by the end of 2013. the Declaration makes it clear that special. and substantial reductions in trade-distorting domestic support. Although the Hong Kong Ministerial Conference did not succeed in completing the modalities.
In addition. The Declaration also states that non-trade concerns will be taken into account in the negotiations. the agriculture negotiations became part of the single undertaking.
At the conclusion of the Uruguay Round. The 1 August 2004 decision is sometimes called the "July Package". export subsidies. most of the meetings in the second phase were informal and instead of concentrating on country proposals. they concentrate on specific issues. Members continued from the end of Phase 2 rather than start all over from the beginning. While Article 20 gave a general direction (substantial progressive reductions in support and protection resulting in fundamental reform). As Phase 1 had already seen general negotiating proposals and Phase 2 had dealt with specific issues Members started working on modalities for reform. Unlike the first phase. with a view to phasing out. Members agreed to hold further negotiations on agriculture commencing one year before the end of the six-year implementation period (Article 20). At the Doha Ministerial Conference. differential treatment is an integral part of the negotiations that it will be reflected in the outcome so that developing countries can address their development needs.II. including food security and rural development. The negotiations now had the objective of achieving: à à à substantial improvements in market access. That phase consisted of general proposals being submitted by Members and discussed in the Special Sessions. The first phase of the negotiations lasted one year and ended in March 2001. The framework on which modalities would be based was achieved at the General Council meeting on 1 August and is contained in WT/L/579. These talks began in early 2000 in Special Sessions of the Committee on Agriculture.
. There were also a number of formal meetings which included reports of the work done in other meetings.
.8) Reports by the Chairman to the General Council on Implementation-Related Issues .......................................9) Criteria for inclusion in the list of NFIDCs ...............................................................................................................................................................(TN/AG/SCC/1) Marrakesh NFIDC Decision Paragraphs 11 and 12 of Hong Kong Ministerial Declaration on cotton WTO Agreements Series – Agriculture Booklet
ADDITIONAL REFERENCE MATERIALS CoA Regular Session à à à à à Agricultural Products ..................................... (WT/L/384) List of NFIDCs ........................................................ (G/AG/W/29/Rev.............................................. (G/L/142) Secretariat Note on Members' Participation in the Normal Growth of World Trade in Agricultural Products .................9) Summary report of October 2006 CoA meeting........... (G/AG/5/Rev............................1) à à à Request for observer status ..................................8...............................................................................................................................(G/AG/2/Add..................9) à à à à Secretariat Note on the Implementation of the Marrakesh NFIDC Decision ................................................................... (G/AG/W/32/Rev.............................................. adopted by the General Council on 1.... (G/AG/R/47) Technical Cooperation Notification Handbook......(G/AG/16 and G/AG/16/Add....... (G/L/796) Revised Draft Modalities on Agriculture...(TN/AG/W/4) Sub-Committee on Cotton: Work programme .... (G/AG/W/32/Rev....................................................................................................... (G/AG/3) General Council ... (WT/L/579) Hong Kong Ministerial Declaration .....Support Documents
CORE MATERIALS à à à à à à à à à à à Doha Ministerial Declaration ...................04 ....6) Rules of procedure .................... (WT/MIN(01)/DEC/1) Doha Work Programme... (G/AG/W/42/Rev..........................................1) Notification requirements ............................................... (G/AG/1)
.....................................................................................................................................................Implementation-Related Issues and Concerns ........................................................................................................................................................................ (WT/TC/NOTIF/AG/1) Working procedures ..Decision of 15 December 2000 ............................................................................. (G/AG/2) Report by Chairman to General Council on CoA Activities in 2006 ............................................................................................................. (WT/MIN(05)/DEC) List of significant exporters ..............
.............................................................................. 266 & 283)
........................................ Chilled and Frozen Beef...........................................................................................................(TN/AG/SCC/R/12)
Other à Accession to the World Trade Organization ..................... (WT/ACC/4) à Table – Key Elements of AoA
DISPUTE SETTLEMENT RELATED TO AGRICULTURE (SEE TABLE ATTACHED) à à à à à EC – Regime for the Importation................(WT/DS267) EC – Export Subsidies on Sugar ............ (WT/DS27) EC – Measures Affecting Importation of Certain Poultry Products ......... (TN/AG/13) Latest Sub-Committee Report ....... (WT/DS103 & 113) à à à à Korea – Measures Affecting Imports of Fresh............................................CoA Special Session Ministerial and General Council texts à à Doha Ministerial Decision on Implementation-Related Issues and Concerns .............(WT/DS108) Canada – Measures Affecting the Importation of Milk and the Exportation of Dairy Products.... (WT/DS90) US – Tax Treatment for "Foreign Sales Corporation" .............(WT/DS207) US – Subsidies on Upland Cotton .............. (WT/DS69) India – Quantitative Restrictions on Imports of Agricultural................................................(WT/MIN(01)/17) Singapore Ministerial Declaration ............................................................. (TN/AG/19) Chairman's reference papers (all topics) Negotiating coalitions Report by the Chairman to the TNC............................................................... Textile and Industrial Products .................... Sale and Distribution of Bananas............................................................................................................................................................................. (WT/DS161 & 169) Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products ............(TN/AG/SCC/W/7) Development assistance aspects of cotton ................................ (WT/DS265...............Information to be Provided on Domestic Support and Export Subsidies in Agriculture .................................................(TN/AG/SCC/W/8) Establishment of Sub-Committee on Cotton ......... (TN/AG/10)
Sub-Committee on Cotton à à à à Concluding Remarks from the DG during the High-level Session on Cotton.......................................................................................................................................... (WT/MIN(96)/DEC)
Other documents à à à à à Chairman's "Challenges" Papers Chairman's assessment – August 2005.............................
............. TN/AG/S/17 Past Negotiations and Consultations on Tropical Products.org/gen_search...... TN/AG/S/3 Members' Usage of Domestic Support Categories................................TN/AG/S/2/Rev....1 Special Agricultural Safeguard... TN/AG/S/15/Rev.............................1
.................................. July 2005 ............................................................. February 2005 (Excel) ............... TN/AG/S/20 Total Aggregate Measurement of Support.................. Export Subsidies and Export Credits..................... TN/AG/S/19 Annotated Selective Bibliography of Recent Research on Tariff Escalation. TN/AG/S/4 Export Subsidies............... December 2004 (also in Access) ...................... TN/AG/S/11 Add.........1 Export Subsidies Commitments.............. January 2005 ...asp?searchmode=simple) Calculation of Ad Valorem Equivalents à Calculation of Ad valorem Equivalents (AVEs): Data Requirements and Availability....................... Addendum 1 part 1................... March 2005 ................... TN/AG/S/9 Tariff Quota Fill.... TN/AG/S/17 Past Negotiations and Consultations on Tropical Products............ March 2002............................................................................................................. Part 1............... TN/AG/S/17
Others à à à à à à à à à à à à à à à à à à à Agricultural Trade Performance by Developing Countries 1990-2003..1 Tariff Quota Administration Methods and Tariff Quota Fill................................................. February 2005 ............... TN/AG/S/22 Tariff Quota Administration: Auctioning........................................1 à Calculation of Ad valorem Equivalents (AVEs): Data Requirements and Availability..............WTO SECRETARIAT BACKGROUND PAPERS (available at the following address: http://docsonline..... November 2004 ....... TN/AG/S/17 Past Negotiations and Consultations on Tropical Products............ TN/AG/S/23 Availability of World Indicator Prices.2
Past Negotiations à à à à Past Negotiations and Consultations on Tropical Products...... March 2002.. TN/AG/S/14 De Minimis support............................................. April 2006........ February 2005 (Excel) ........... February 2005 .. December 2004 (also in Access) .................................. TN/AG/S/18 Blue Box Support................. February 2005........................................................ Part 2......... December 2004 ............... February 2005 ...................................................... TN/AG/S/10 IDB and CTS-based Reports for Agricultural Products..... TN/AG/S/12 Tariff and other Information on Agricultural Products.. March 2002 ................... September 2002 ........... TN/AG/S/13 Add......................................................................1 Green Box Measures.................... February 2005.............. TN/AG/S/13 Total Aggregate Measurement of Support... TN/AG/S/16 Domestic Support..................................................................................................... TN/AG/S/11 à Calculation of Ad valorem Equivalents (AVEs): Data Requirements and Availability................ November 2004 ....... Addendum 1........................TN/AG/S/8/Rev.......... Part 4......................... February 2005......... February 2005 ....... Addendum 1.... Part 3............wto.......... May 2006......... February 2005 (Excel) ............. December 2004............................ April 2005...... TN/AG/S/11 Add..... TN/AG/S/1 Product-Specific AMS .................TN/AG/S/8/ Add. Addendum 2 part 1.......
.READ MORE ON. à à à à à à à à à à à à à à à à à à à à à à à à à à à à à à Anti-dumping Barriers to Trade in Services Developments in the Agriculture Negotiations Enabling Clause GATT Part IV GATT General Exceptions in GATT General Exceptions in the GATS General Exceptions in TRIPS Graph Tariff Quota Legal Status of the Schedule List of Dispute Settlement Cases Invoking AoA Market Access Services MFN Goods MFN Principle under GATS MFN Principle under TRIPS MFN TRIPS Ministerial Conferences Negotiations 2000-2002 Negotiations Three Pillars NT in GATS NT in Goods NT under TRIPS Regional Integration S&D Safeguards under GATS Schedule Bangladesh Security Exceptions Subsidies in GATS WTO Meetings