WORLD TRADE
ORGANIZATIONG/L/322
6 October 1999
(99-4278)
COMMITTEE ON AGRICULTURE:  GENERAL COUNCIL OVERVIEW OF
WTO ACTIVITIES (1999)
Report by the Chairman
The present report by the Chairman of the Committee on Agriculture, Ambassador Nestor
Osorio Londoño, is submitted on his own responsibility as agreed by the Committee.
_______________
1. The Committee on Agriculture held regular meetings on 25-26 March, 24-25 June and
29-30 September 1999 (Secretariat summary reports of these meetings G/AG/R/18 to 20 refer).  A
further regular meeting is scheduled for 17-18 November 1999.
2. In accordance with Article 18.1 of the Agreement on Agriculture ("the Agreement"), the
Committee, at each of these three meetings, revi ewed progress in the implementation of commitments
negotiated under the Uruguay Round reform programme.  This review process was undertaken on the
basis of notifications submitted by Members in the areas of market access, domestic support, export
subsidies and the provisions of the Agreement relating to export prohibitions and restrictions.  In total
180 notifications in these areas were subject to review by the Committee, 24 less than in the first three
meetings of 1998 reflecting an decrease in the number of domestic support notifications.  At each of
its meetings the Committee also reviewed the overall position with respect to notification obligations
under Article 18.2 and other relevant provisions of the Agreement.  The current situation concerningcompliance with notification requirements is summarized in Annex I to this report.
3. Furthermore, the Committee addressed a wide range of general and specific matters relevant
to the implementation of commitments that were ra ised under the provisions of Article 18.6 of the
Agreement.  A number of these matters have been subject to informal consultations.
4. Article 16.1 of the Agreement provides that developed country Members of the WTO shall
take such action as is provided for within the framework of the Marrakesh Ministerial Decision on
Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed
and Net Food-Importing Developing Countries.  In accordance with Article 16.2 of the Agreement,
the Committee on Agriculture continued to monitor the follow-up to the Marrakesh Ministerial
Decision at its regular meetings, including the recommendations of Singapore WTO Ministerialmeeting on food aid and other matters related to this Decision.
5. In line with the recommendations of the Singapore WTO Ministerial meeting, the re-
negotiation of the Food Aid Convention 1995 was launched in 1997 under the auspices of the
London-based Food Aid Committee/International Grains Council.  At its March meeting, the
Committee was informed by the Executive Director of the International Grains Council, in a detailedstatement circulated as docume nt G/AG/GEN/35, that the negoti ations had been successfully
concluded.  The new Food Aid Convention entered into force provisionally on 1 July 1999.   At the
meeting of the Committee in June, Cuba was included in the WTO list of net food-importingG/L/322
Page 2
developing countries (G/AG/5/Rev .3).  The list currently comprises the 48 least-developed countries,
as recognized by the United Nations, and the following 19 developing country Members of the WTO:
Barbados, Botswana, Côte d'Ivoire, Cuba, Domini can Republic, Egypt, Honduras, Jamaica, Kenya,
Mauritius, Morocco, Pakistan, Peru, Saint Lucia, Senegal, Sri Lanka, Trinidad and Tobago, Tunisia
and Venezuela.
6. At the request of the Committee the Secretariat prepared a background note on the
implementation of the Marrakesh Ministerial D ecision and related recommendations (G/AG/W/42).
The Committee's discussion on this matter is reflected in the Secretariat's summary reports of the
March, June and September meetings (G/AG/R/ 18, paragraphs 24-32, G/AG/R/19, paragraph 23, and
G/AG/R/20, refer).  An updated version of this Se cretariat note (G/AG/W/42/Rev.2) is attached as
Annex II.
7. Under the arrangements adopted at the March 1997 meeting of the Committee the process of
analysis and information exchange ("the AIE process"), as agreed to by the Singapore MinisterialConference (paragraph 12 of G/L/131 and WT/MIN(96)/DEC, paragraph 19 refer), was continued
through informal open-ended meetings of the Committee.  Three such meetings were held in 1999.
Members discussed topics in a wide range of areas.  The discussions were based on informal papers
submitted by Members.  A number of additional factual Secretariat background papers were also
provided and earlier papers revised in order to facilitate the work of the AIE process.
8. The AIE process was concluded in September 1999 with a report by the Chairman to the
Committee on Agriculture on the process as a whole (AIE/R) which is attached as Annex III to this
report.  In line with the suggestion made in paragraph 6 of AIE/R regarding the Secretariat AIE
background papers, including those in the course of preparation or revision, the Committee agreed
that, for the purposes of Members' on-going and future work on implementation generally, thesepapers should be re-issued as documents of  the Committee from January 2000.
9. The following international intergovernmental organizations have regular observer status in
the Committee:  FAO, the IMF, the International Grains Council, the OECD, UNCTAD, the UN
World Food Programme and the World Bank.  No consensus was reached with regard to applications
for observer status which had been under consideration by the Committee since March 1997, by theACP Secretariat, the Inter-American Development Bank and the Inter-American Institute for
Agriculture Cooperation (G/AG/W/29/Rev.1).  In addition, the Committee received a number of new
requests for observer status from other intergovernmental organizations (G/AG/W/29/Rev.3 refers).
10. The Committee adopted the following schedule for the Committee's regular meetings in 2000:
23-24 March, 29-30 June, 28-29 September and 16-17 November.                                                                    Annex I G/L/322
Page 3Annex I – Regular notifications pertaining to the 1995 to 1998 years made under the Agreement on Agriculture
(as of 6 October 1999)
MA:1 MA:2 MA:5 DS:1 ES:1 ES:2
Imports under tariff quotas Special safeguard Domestic support Export subsidies Total exports
One off 1995 1996 1997 1998 1995 1996 1997 1998 1995 1996 1997 1998 1995 1996 1997 1998 1995 1996 1997 1998
Angola NA NA NA NA NA NA NA NA NA NA NA (NA) NA NA NA NA NA NA
Antigua & Barbuda NA NA NA NA NA NA NA NA NA NA NA NA NA
Argentina NA NA NA NA NA NA NA NA NA X X X X X X X X X
A u s t r a l i a X XXXXXXXXX X X XXXXX XX X
B a h r a i n N A N AN AN AN AN AN AN AN A X * X X * X N A N AN A N A
Bangladesh NA NA NA NA NA NA NA NA NA (NA) (NA) NA NA NA NA
Barbados X X X NA NA NA NA
B e l i z e N A N AN AN AN AN AN AN AN A N A N AN A N A
B e n i n N A N AN AN AN AN AN AN AN AN A( N A ) X ( N A ) N A N A N AN A N A
Bolivia NA NA NA NA NA NA NA NA NA X X X X X X NA NA NA NA
Botswana NA NA NA NA NA X X X X X NA NA NA NA
B r a z i l X XXXX N A N A N A N A X X X XXXXX XX X
Brunei Darussalam NA NA NA NA NA NA NA NA NA NA NA NA NA
Bulgaria NA NA NA NA NA NA NA NA NA NA
Burkina Faso NA NA NA NA NA NA NA NA NA (NA) X* X NA NA NA NA
Burundi NA NA NA NA NA NA NA NA NA (NA) (NA) NA NA NA NA
Cameroon NA NA NA NA NA NA NA NA NA NA NA NA NA
Canada X X X XXXXXXX XXXXX XX
Central African Rep. NA NA NA NA NA NA NA NA NA (NA) (NA) NA NA NA NA
Chad NA NA NA NA NA NA NA NA NA NA (NA) X* (NA) NA X* X* NA NA NA NA
C h i l e N A N A N A N A N A N A N A N A N A XXXXX X X X X X X X
C o l o m b i a X XXXXXXXXX X XXX X XX
Congo NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA
C o s t a  R i c a X XXX XXX X * X * X * XXX X XX
Côte d'Ivoire NA NA NA NA NA NA NA NA NA NA NA NA NA
Cuba NA NA NA NA NA NA NA NA NA X X X X X
Cyprus NA NA NA NA NA NA NA NA NA X X X X X X X X X X X
Czech Republic X X X XXXXXX XXXXX X X X X X X X
Dem. Rep. of the Congo NA NA NA NA NA NA NA NA NA NA NA (NA) NA NA NA NA NA NA
Djibouti NA NA NA NA NA NA NA NA NA (NA) (NA) NA NA NA NA
Dominica NA NA NA NA NA NA NA NA NA X X X NA NA NA NA
Dominican Republic NA NA NA NA NA NA NA NA NA X NA NA NA NA
EC X X X X X X X X X X X X X
Ecuador X NA NA X X X NA X NA X X X NA NA NA NAG/L/322                                                        Annex I
Page 4
Annex I – Regular notifications pertaining to the 1995 to 1998 years made under the Agreement on Agriculture  (cont'd)
(as of 6 October 1999)
MA:1 MA:2 MA:5 DS:1 ES:1 ES:2
Imports under tariff quotas Special safeguard Domestic support Export subsidies Total exports
One off 1995 1996 1997 1998 1995 1996 1997 1998 1995 1996 1997 1998 1995 1996 1997 1998 1995 1996 1997 1998
E g y p t N A N AN AN AN AN AN AN AN A X X X X X X X X N AN AN AN A
El Salvador X X X X X X XXXXX X X N A N A N A N A
Fiji NA NA NA NA NA NA NA NA NA NA X X NA X X NA NA NA NA
Gabon NA NA NA NA NA NA NA NA NA NA NA NA NA
Gambia NA NA NA NA NA NA NA NA NA NA (NA) X (NA) NA X NA NA NA NA
Ghana NA NA NA NA NA NA NA NA NA NA NA NA NA
Grenada NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA
G u a t e m a l a X XXXXXXXXX X XXX N A N A N A N A
Guinea Bissau NA NA NA NA NA NA NA NA NA (NA) (NA) NA NA NA NA
Guinea, Republic of NA NA NA NA NA NA NA NA NA (NA) NA NA NA NA
Guyana NA NA NA NA NA NA NA NA NA X X NA NA NA NA
H a i t i N A N AN AN AN AN AN AN AN AN A ( N A ) ( N A )N A N AN AN AN A
Honduras NA NA NA NA NA NA NA NA NA X X X X X X X X X X
Hong Kong, China NA NA NA NA NA NA NA NA NA X X X X X X X X NA NA NA NA
Hungary X X X XXXXXXX X XX XXX
I c e l a n d X XXX XXX XXXX X XX XXX
I n d i a N A N AN AN AN AN AN AN AN A X N AN AN AN A
Indonesia X X X XXXX X XXXXXXX
I s r a e l X XXXXXXXXXXX X XXXXXXX
J a m a i c a N A N AN AN AN AN AN AN AN A X X X * X X X X * N AN AN AN A
Japan X X X XXXXXXXX X XXX N A N A N A N A
K e n y a N A N AN AN AN AN AN AN AN A X X X X X N AN AN AN A
K o r e a X XXX XXX XXXX X XXX N A N A N A N A
Kuwait NA NA NA NA NA NA NA NA NA X* NA NA NA NA
Kyrgyz Republic NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA
Latvia X NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA
Lesotho NA NA NA NA NA NA NA NA NA (NA) (NA) NA NA NA NA
M a c a u N A N AN AN AN AN AN AN AN A X X X X X X N AN AN AN A
Madagascar NA NA NA NA NA NA NA NA NA (NA) (NA) NA NA NA NA
Malawi NA NA NA NA NA NA NA NA NA (NA) (NA) NA NA NA NA
M a l a y s i a X X XX XX X X XX X
Maldives NA NA NA NA NA NA NA NA NA (NA) X* (NA) X* X* X* X* X* NA NA NA NA
Mali NA NA NA NA NA NA NA NA NA (NA) (NA) NA NA NA NA
M a l t a N A N AN AN AN AN AN AN AN A X X N AN AN AN A
M a u r i t a n i a N A N AN AN AN AN AN AN AN A ( N A ) ( N A ) N AN AN AN A                                                                  Annex I G/L/322
Page 5Annex I – Regular notifications pertaining to the 1995 to 1998 years made under the Agreement on Agriculture  (cont'd)
(as of 6 October 1999)
MA:1 MA:2 MA:5 DS:1 ES:1 ES:2
Imports under tariff quotas Special safeguard Domestic support Export subsidies Total exports
One off 1995 1996 1997 1998 1995 1996 1997 1998 1995 1996 1997 1998 1995 1996 1997 1998 1995 1996 1997 1998
M a u r i t i u s N A N AN AN AN AN AN AN AN A N AN AN AN A
M e x i c o X XXX X
Mongolia NA NA NA NA NA NA NA NA NA NA NA X X NA NA X X NA NA NA NA
M o r o c c o X XXX XXX XXX X X N A N A N A N A
Mozambique NA NA NA NA NA NA NA NA NA (NA) (NA) NA NA NA NA
Myanmar NA NA NA NA NA NA NA NA NA (NA) (NA) NA NA NA NA
N a m i b i a N A N AN AN AN A X X X X X X X X N AN AN AN A
N e w  Z e a l a n d X XXXXXXXXXXXX X XXXXXXX
Nicaragua X X X NA NA NA NA
Niger NA NA NA NA NA NA NA NA NA NA NA (NA) NA NA NA NA NA NA
Nigeria NA NA NA NA NA NA NA NA NA X X X X X X NA NA NA NA
N o r w a y X XXX XXXXXXX X XX XXX
P a k i s t a n N A N A N A N A N A N A N A N A N A XXX X XXXXXXX
P a n a m a X N AN A X N AN A X N AN A N A N A X * N AN A X *
Papua New Guinea NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA
Paraguay NA NA NA NA NA NA NA NA NA X X X* X* X X X* X* NA NA NA NA
Peru NA NA NA NA NA NA NA NA NA X X X NA NA NA NA
P h i l i p p i n e s X XXX XXX XXX X XX XXX
P o l a n d X XXX XXXXXXXX X XXXXXXX
Q a t a r N A N AN AN AN AN AN AN AN AN A N A X X X N AN AN AN A
R o m a n i a X XXX XXX XX X XX XXX
R w a n d a N A N AN AN AN AN AN AN AN AN A ( N A ) ( N A )N A N AN AN AN A
S a i n t  K i t t s  &  N e v i s N A N AN AN AN AN AN AN AN AN A N A N AN AN AN A
Saint Lucia NA NA NA NA NA NA NA NA NA NA NA NA NA
Saint Vincent & Gre. NA NA NA NA NA NA NA NA NA NA NA NA NA
Senegal NA NA NA NA NA NA NA NA NA NA NA NA NA
Sierra Leone NA NA NA NA NA NA NA NA NA (NA) (NA) NA NA NA NA
Singapore NA NA NA NA NA NA NA NA NA X X X X X X X X NA NA NA NA
Slovak Republic X X X XXXXXXXXXX X XXXXXXX
S l o v e n i a X XXXX N A N A N A N A XXXX X XXX N A N A N A N A
Solomon Islands NA NA NA NA NA NA NA NA NA NA (NA) (NA) NA NA NA NA NA
S o u t h  A f r i c a X XXX XXXXXXX X XXXXXX
Sri Lanka NA NA NA NA NA NA NA NA NA X X X X X X NA NA NA NA
Suriname NA NA NA NA NA NA NA NA NA NA NA NA NA
Swaziland NA NA NA NA NA NA NA NA NAG/L/322                                                        Annex I
Page 6
Annex I – Regular notifications pertaining to the 1995 to 1998 years made under the Agreement on Agriculture  (cont'd)
(as of 6 October 1999)
MA:1 MA:2 MA:5 DS:1 ES:1 ES:2
Imports under tariff quotas Special safeguard Domestic support Export subsidies Total exports
One off 1995 1996 1997 1998 1995 1996 1997 1998 1995 1996 1997 1998 1995 1996 1997 1998 1995 1996 1997 1998
Switzerland-Liechtenstein X X X XXXXXXXXXX X XXXXXXX
T a n z a n i a N A N AN AN AN AN AN AN AN A ( N A ) ( N A ) N AN AN AN A
T h a i l a n d X XXXXXXXXXXXX X XX XXX
Togo NA NA NA NA NA NA NA NA NA (NA) (NA) NA NA NA NA
Trinidad and Tobago NA NA NA NA NA NA NA NA NA X X X X NA NA NA NA
T u n i s i a X XX XXX XXX X XX N A N A N A N A
T u r k e y N A N A N A N A N A N A N A N A N A XXXX X XXXXXXX
Uganda NA NA NA NA NA NA NA NA NA (NA) (NA) NA NA NA NA
United Arab Emirates NA NA NA NA NA NA NA NA NA NA NA NA NA NA NA
U n i t e d  S t a t e s X XXXXXXXXXXX X XX XXX
Uruguay NA NA NA NA NA X X XXXXXX X XXXXXXX
Venezuela X X X X X X X X X X* X X X X X X
Zambia NA NA NA NA NA NA NA NA NA (NA) X (NA) X X X X X NA NA NA NA
Zimbabwe NA NA NA NA NA NA NA NA NA X X X
EXPLANATORY NOTES
Notifications may be submitted according to va rious bases (calendar, crop, fiscal years,  etc.) as stipulated in G/AG/W/2/Rev.4.   The symbols used in the tables are as
follows:(a) A blank  indicates that the requirement is applicable to the Member concerned, but that no notification has been received up to the cut -off date.
(b) " NA" indicates that the requirement was not applicable for a given Member during the implementation period considered.
(c) " (NA)" is used in conjunction with the Table DS:1 (Domestic Support) notification requirement in the case of least-developed country  Members.  While all
Members are required to notify on an annual basis, the least-developed country Members may notify every second year.
(d) " X" denotes that a notification has been received and " X*" that the notification has been received but is still under preparation.  Subsequent addenda or
corrections to notifications are not counted as additional notifications.G/L/322
Page 7
Annex II
IMPLEMENTATION OF THE DECISION ON MEASURES CONCERNING THE POSSIBLE
NEGATIVE EFFECTS OF THE REFORM PROGRAMME ON LEAST-DEVELOPED
AND NET FOOD-IMPORTING DEVELOPING COUNTRIES
Note by the Secretariat*
Revision
1. The present note further updates the information provided in the Secretariat note
G/AG/W/42/Rev.1, the original version of which was circulated on 10 February 1999.  G/AG/W/42
was prepared in response to the request made at the November 1998 meeting of the Committee on
Agriculture that the Secretariat provide an overview  on the state of play in implementing the Decision
on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-
Developed and Net Food-Importing Developing Count ries (the "Decision") (G/AG/R/17, page 6).
Following a brief introduction on the follow-up process to the Decision as a whole (Part I), this note
sets out the substantive provisions of the Decision and provides information regarding their
implementation (Part II).  A list of related Committee on Agriculture documents is contained in
Attachment 1.  Further details are presented in Attachments 2 to 5.
I. MONITORING OF THE FOLLOW-UP TO THE DECISION
2. The follow-up to the Decision has represented an important element in the Committee's work.
This subject has been on the agenda at each regular Committee meeting.
3. In 1995, the Committee established notification requirements under which donor Members
are required to submit data on food aid donations (quantity and concessionality) as well as
information on technical and financial assistance and other relevant information on actions takenwithin the framework of the Decision (G/AG/2, page s 33-34).  The annual monitoring of the follow-
up to the Decision 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,
inter alia,  of these Table NF:1 notifications.
4. Attachment 2 summarizes compliance with NF:1 notification requirements in the first three
years of implementation.  For the purposes of Attachment 2, "compliance" refers to any NF:1
notification received by the eight Members (counting the EC as one) that are donors under the Food
Aid Convention and three other Members that have  identified themselves as donors in their
notifications (Cuba, New Zealand and South Africa).   It should be noted that a number of other
Members have submitted NF:1 notifications stating that no food aid or technical/financial assistancewas provided or that Table NF:1 was not applicable.
________________
*(G/AG/W/42/Rev.2, dated 4 October 1999).G/L/322 Annex II
Page 8
5. In 1996, the Committee established a WTO list of net food-importing developing countries.1
This list currently contains the 48 least-developed countries as defined by the United Nations and
19 other developing country Members.2
6. In the same year, the Singapore Ministerial Conference ("SMC") adopted the Committee's
specific recommendations regarding the Decision (G/L/125).
7. At various stages of the Committee's annual monitoring exercise of the Decision, some of the
international observer organizations, including the IMF, have commented on the development of
world food prices.3  International wheat prices increased sharply in 1995/96 (Chart 1).  By 1999,
however, world market prices for wheat had fallen, in nominal terms, to their lowest level since 1990
– the year of the highest world wheat crop ever except for 1997/98.  A variety of supply and demand
factors caused the observed price development, however as a practical matter, it is hardly feasible to
identify and accurately quantify each of them.
8. Attachment 3 shows the development of various IMF commodity price indices since 1987.4
Following peaks in 1995 (agricultural raw materials) and 1996 (food), the respective price indices
have fallen steadily in terms of US dollars and are currently at the same level or lower than in the
early 1990s.  Chart 2 shows the trend of the non-fuel primary commodity price index which covers
more commodities than the food price index (column 3 of Attachment 3).5  The broken line in Chart 2
which tracks the price development in real terms shows that non-fuel primary commodity prices in the
first half of 1999 were as low as in 1992.
                                                     
1 The decision to establish this list was taken on the understanding that "being listed would not as such
confer automatic benefits since, under the mechanisms covered by the Marrakesh Ministerial Decision, donors
and the institutions concerned would have a role to play" (G/AG/R/14, paragraph 17).
2 Barbados, Botswana, Côte d’Ivoire, Cuba, Dominican Republic, Egypt, Honduras, Jamaica, Kenya,
Mauritius, Morocco, Pakistan, Peru, Saint Lucia, Sene gal, Sri Lanka, Trinidad and Tobago, Tunisia and
Venezuela (G/AG/5/Rev.3, dated 28 June 1999, refers).
3 See FAO in G/AG/GEN/31, page 2 and G/AG/GEN/36, page 1; IMF in G/AG/GEN/15, page 2 and
G/AG/GEN/31, page 6; International Grains Council in G/AG/R/4, page 6; UNCTAD in G/AG/GEN/31,page 12; World Bank in G/AG/GEN/15, page 3 and G/AG/W/12, page 4-6; see also the points raised byMembers in G/AG/R/3, page 6.
4 For further details, see the IMF's web site www.imf.org/external/np/res/commod/index.htm.   F o r
UNCTAD's commodity price indices, see G/AG/GEN/31, page 20.
5 It should be noted that in this index metals and fertilizers carry a weight of 26.7 per cent and 1.3 per
cent, respectively.                                                               Annex II G/L/322
Page 9Chart 1 – The International Grains Council wheat price index, January 1987 – July 1999
050010001500200025003000
* Average wheat prices of seven widely traded varieties of bread wheat: July/Dec 1986=1000 87 88 89 90 91 92 93 94 95 96 97 98 99
G/L/322                                                        Annex II
Page 10
Source:  International Monetary Fund.Annex II G/L/322
Page 11
II. PROVISIONS OF THE DECISION AND IMPLEMENTATION
9. The Decision states:
"Ministers recognize  that the progressive implementation of the results of the
Uruguay Round as a whole will generate increasing opportunities for trade expansion
and economic growth to the benefit of all participants" (paragraph 1).
"Ministers recognize  that during the reform programme leading to greater
liberalization of trade in agriculture least-developed and net food-importing
developing countries may experience negative effects in terms of the availability of
adequate supplies of basic foodstuffs from external sources on reasonable terms and
conditions, including short-term difficulties in financing normal levels of commercial
imports of basic foodstuffs" (paragraph 2).
10. The remaining paragraphs of the Decision contain a number of specific agreements in the
areas of food aid, technical and financial assistance, differential treatment within the framework ofany agreement on agricultural export credits, and a recognition regarding access to the resources of
the international financial institutions.  In the foll owing, these paragraphs are taken up one by one and
supplemented by information available to the Secretariat regarding implementation.
Food aid and technical and financial assistance11. In light of paragraphs 1 and 2 of the Decision quoted above,
"Ministers accordingly agree to establish appropriate mechanisms to ensure that the
implementation of the results of the Uruguay Round on trade in agriculture does not
adversely affect the availability of food aid at a level which is sufficient to continue to
provide assistance in meeting the food needs of developing countries, especiallyleast-developed and net food-importing developing countries" (chapeau to
paragraph 3).
(i) Review of Food Aid Levels and Initiation of Food Aid Negotiations
12. To the end enunciated in the chapeau of paragraph 3 of the 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 ..."
(paragraph 3(i) of the Decision).
Review of food aid levels
13. In reviewing developments with regard to food aid levels, the Committee considered
background notes by the Secretariat which indicated that both the international food aid commitments
and the actual deliveries had declined sharply in recent years (G/AG/ W/20 and G/AG/W/36 refer).
6
While the decline in food aid reflected reduced availabilities, and coincided with rising world market
prices for cereals, it appears that reduced demand  for food aid was also an important factor.  As
Table 1 indicates, in 1994 a large share of global food aid deliveries (excluding Europe and the CIS)
                                                     
6 It may be noted that food aid in value terms is small compared to total Official Development
Assistance (3 per cent in 1996).  See OECD Development Assistance Committee Report 1997.G/L/322 Annex II
Page 12
was in the form of emergency relief provided in response to man-made or natural disasters.  More
than 50 per cent of the 1.9 million tonne decline in global food aid between 1994 and 1998 was due to
lower levels of such emergency relief food aid.
Table 1: Composition of global food ai d deliveries, excl. Europe and the CIS
('000 tonnes)
1994 1998 Decline from 1994
to 1998% change
Relief food aid 3,590 2,563 1,027 - 29
Programme food aid 2,824 2,071    753 - 27
Project food aid 2,706 2,553    153 -  6
Total 9,120 7,187 1,933 - 21
Notes: All figures include cereal (in grain equivalent) and non-cereal food aid (in product weight).
Relief food aid: targeted and freely distributed to victims of natural or man-made disasters.
Project food aid: provided to targeted beneficiary groups to support specific development
objectives.  Always supplied on a grant basis.
Programme food aid: Usually supplied as a resource transfer for balance-of-payments and/or
budgetary support objectives.  Provided as a grant or loan on a bilateral basis.Not targeted at specific beneficiary groups but sold on the market of the
recipient country.
Source: WFP Food Aid Monitor: Food Aid Flows 1998, special issue, May 1999 from the Internet
(www.wfp.org).
14. FAO estimates that in the marketing year 1998/99 (July/June) cereal food aid provided to
least-developed and net food-importing developing countries increased by 24 per cent, toapproximately 4.3 million tonnes compared to 3.5 mill ion tonnes in 1997/98 (Table 2).  As indicated
in the following Table, in 1998/99, cereals food aid to least-developed country recipients increased by
1.15 million tonnes, whereas such aid to the net food-importing developing countries decreased by
0.3 million tonnes.  Overall the 1998/99 level still falls short of the corresponding levels in 1993/94
and 1994/95.
Table 2: Cereal food aid provided to least-de veloped and net food-importing developing
countries, 1993/94 – 1998/99 ('00 0 tonnes grain equivalent)
1993/94 1994/95 1995/96 1996/97 1997/98 1998/99
Least-developed countries 3,932     4,326     3,305 2,671 2,852     4,004
Net food-importing
developing countries1,868     1,327 644 509        636 334
Total 5,800     5,654     3,949     3,180     3,489     4,338
Source: FAO.
Initiation of food aid negotiations
15. In anticipation of the expiry of the Food Aid Convention, 1995 ("FAC") the SMC agreed that,
in preparation for the re-negotiation of the Food ai d Convention, action be initiated in 1997 within the
framework of the Convention, under arrangements for participation by all interested countries and byAnnex II G/L/322
Page 13
relevant organizations, to develop recommendations with a view towards establishing a level of food
aid commitments, covering as wide a range of donors and donable products as is possible, which is
sufficient to meet the legitimate needs of developing countries during the reform programme
(G/L/125, paragraph 18(i) refers).
16. Since January 1997 several meetings took place within the framework of the FAC, including
meetings with least-developed and net food-importing developing countries as well as potential newfood aid donors.  In December 1997 the FAC Food Aid Committee decided to extend the FAC for one
year (until June 1999) and to open the Convention for renegotiation taking into account, among other
things, "the food security and trade liberalization objectives under the WTO and the World Food
Summit Action Plan" (IGC statement in G/AG/GEN/20).
17. In early 1998 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.
18. In November 1998, the Food Aid Committee held a further dialogue meeting with
representatives of food aid recipient countries regarding the main elements of the new Convention
(G/AG/GEN/31, page 4 refers).
19. 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.  Its members, includingprovisional members, are the same as the members of the Food Aid Convention, 1995 (Argentina,
Australia, Canada, EC and its member States, Japan, Norway, Switzerland and the United States).
20. Under the new Food Aid Convention, the list of eligible products which may be supplied has
been broadened significantly beyond cereals.  When allocating their food aid, FAC members
undertake to give priority to the least-developed countries and Low-Income Countries, many of whichare on the present WTO list of net food-importing developing countries.  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.
Attachment 4 reproduces a summary by the IGC Executive Director of the outcome of the
negotiations on the new Food Aid Convention.
(ii) Concessionality of Food Aid
21. To the end stated in the chapeau of paragraph 3 of the Decision 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 fullygrant form and/or on appropriate concessional terms in line with Article IV of the
Food Aid Convention 1986 …" (paragraph 3(ii) of the Decision).
22. The SMC agreed that the recommendations to be developed by the FAC referred to in
paragraph 15 above should include guidelines in accordance with paragraph 3(ii) of the Decision, as
well as means to improve the effectiveness and positive impact of food aid.
23. Table 3 shows the proportion of food aid provid ed to least-developed and net food-importing
developing countries in the form of donations as notified by Members. All notifying Members, exceptthe United States, provided the food aid to the countries concerned in fully grant form.  In the case of
the United States, in the first three years of implementation between 83 and 93 per cent of food aid
was donated, with the remainder being provided in  accordance with the relevant FAC guidelines.G/L/322 Annex II
Page 14
Table 3: Proportion of food aid provided in fully grant form
Member Concessionality of food aid
FAC donors
Argentina no notification received
Australia 100 % grant terms
Canada 100 % grant terms
EC 100 % grant terms
Japan 100 % grants of cash
Norway 100 % grant terms
Switzerland 100 % grant terms
USA proportion of food aid to LDCs and NFIDCs on 100 % grant terms:
1995/96 -   84 %
1996/97 -   93 %1997/98 -   83 %
the remainder is provided in accordance with FAC guidelines
Other donors
Cuba 100 % grant terms
New Zealand 100 % grants of cash
South Africa not applicable (no food aid provided)
(iii) Technical and Financial Assistance
24. To the end stated in the chapeau of paragraph 3 of the Decision Ministers agreed
  "… 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" (paragraph 3(iii) of the Decision).
25. The SMC 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.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.
26. The Secretariat has no information whether least-developed and net food-importing
developing countries made requests pursuant to th is paragraph.  However, Attachment 5 provides an
overview of spending on bilateral technical and financial assistance programmes as notified byMembers, including in a number of cases funding given to multilateral organizations and other aid.
Some Members noted in their notifications that it had not always been possible to identify
expenditures that were exclusively targeted to agriculture and to least-developed and net food-
importing developing countries.Annex II G/L/322
Page 15
27. In addition, in their contributions to the Committee's annual monitoring exercise of the
Decision several of the international observer organizations have provided information on their
respective activities in the area of technical assistance.7
Differential treatment within the framework of an agreement on agricultural export credits
28. In light of paragraphs 1 and 2 of the Decision quoted above, Ministers agreed:
"… to ensure that any agreement relating to agricultural export credits makes
appropriate provision for differential treatment in favour of least-developed and net
food-importing developing countries"   (paragraph  4 of the Decision).
29. Ministers reaffirmed this commitment at the SMC.  In the ongoing negotiations on an
understanding regarding agricultural export credit s undertaken within the framework of the OECD,
consideration is being given to this matter (OECD statement in G/AG/GEN/15, page 8 refers).
Access to the resources of the international financial institutions
30. In the 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 financialinstitutions 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 theWorld Bank (MTN.GNG/NG14/W/35)" (paragraph 5 of the Decision).
31. At the SMC it was agreed that WTO Members, in their individual capacity as members of
relevant international financial institutions, take appropriate steps to encourage the institutions
concerned, through their respective governing bodies, to further consider the scope for establishing
new facilities or enhancing existing facilities for developing countries experiencing Uruguay Round-related difficulties in financing normal levels of commercial imports of basic foodstuffs.
(i) Ability to finance commercial imports
32. As noted above, the Decision recognizes that as a result of the Uruguay Round certain
developing countries may experience short-term difficulties in financing normal levels of commercialimports of basic foodstuffs.  Whether or not such difficulties have occurred or to what extent they are
likely to materialize in the future is essentially an empirical question.  In this context, the FAO
presented to the Committee in November 1997 the main findings of a study on the food situation in
the least-developed and net food-importing countrie s (G/AG/GEN/15, pages 5-6).  The study provides
quantitative results on a number of variables affecting the ability to finance commercial imports,
including export earnings, the balance-of-payments situation and the debt service ratio.  FAO
emphasized the fact that as the result of declining levels of food aid and export subsidies "a muchgreater volume of cereals is now imported under commercial terms."  In conclusion FAO noted that
"all the relevant statistics differentiate clearly the LDCs and the NFIDCs from the rest of the
                                                     
7 See World Bank, "A partial listing of projects in LDCs" in G/AG/GEN/31, pages 23-27;  World Bank
in G/AG/GEN/15, pages 3-4; FAO, "Special Programme on Food Production in Support of Food Security in
LIFDCs" in G/AG/R/9, paragraph 33.G/L/322 Annex II
Page 16
developing countries as regards food availability and capacity to import.  The food security situation
in both the LDCs and the NFIDCs remains precarious and FAO will continue to monitor thissituation as it evolves."
8  An update on the food security situation in the countries covered by the
Decision was presented in November 1998 (G/AG/GEN/31, page 2-3 refers) and in March 1999.At the March meeting, FAO concluded that "overall, despite the fall in the [cereal] import bill ofthe LDCs and the NFIDCs during the current season, their food security situation remainsprecarious in a large number of these countries as it is regularly reported by the Global Informationand Early Warning System" (G/AG/GEN/36, page 2).
(ii) Access to the facilities of the IMF and the World Bank
33. At the November 1995 meeting the IMF informed the Committee of the IMF's two principal
facilities to assist net food-importing developing countries, i.e. the Enhanced Structural Adjustment
Facility (ESAF) and the Compensatory and Cont ingency Financing Facility (CCFF).  Under ESAF
arrangements, funds may be provided on concessional terms in the event of  persistently  higher import
prices for food, regardless of whether or not these are caused by the Uruguay Round.  The CCFF,
particularly its cereal element, was established to deal with financing needs in the event oftemporarily  higher food prices (for further details of  the CCFF see page 6 of document G/AG/W/12).
At the September 1996 Committee meeting, the IMF gave a detailed account on how these facilities
had been used by the least-developed and net food-importing developing countries in the wake of
rising world food prices.  The general conclusion of the IMF was that, under existing facilities and
with anticipated resources, the IMF was in a position to meet any additional balance-of-paymentsrelated needs that may arise from higher world food prices.
34. At the November 1998 meeting the IMF advised the Committee that 27 least-developed and
net food-importing developing countries, nine more than 1997, received financial support from the
IMF to support their adjustment programmes or to deal with emergency situations.  Among the
additional countries that received IMF loans in 1998 are seven listed WTO Members (Bangladesh,
Central African Republic, Côte d'Ivoire, the Gambia, Rwanda, Senegal and Uganda).   In conclusion
the IMF reiterated that "the Fund has the resources under existing facilities and has shown itswillingness to use these resources in the last year, to meet the balance of payments needs of net food-
importers."
35. The position of the World Bank on the issue of access to its resources 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.  Anumber 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, itseems 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
                                                     
8 See also "Food Security Assessment: Why Countrie s are at Risk" by the Economic Research Service
of the U.S. Department of Agriculture, August 1999, available via the ERS web site at www.econ.ag.gov.Annex II G/L/322
Page 17
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 Roundadjustment facility" (G/AG/GEN/15, page 3).
36. Furthermore, at the Committee's November 1998 monitoring exercise in respect of the
Decision, the World Bank provided an overview of the World Bank's lending programmes in terms of
agricultural development projects (see above), st ructural adjustment lending and emergency lending
(G/AG/GEN/31, pages 25-27).G/L/322 Annex II
Page 18
Attachment 1
List of documents related to the implementation of the Decision
G/L/125 Report by the Committee on Agriculture on the Marrakesh Ministerial
Decision on Measures Concerning the Possible Negative Effects of the
Reform Programme on Least-Developed and Net Food-ImportingDeveloping Countries (COA report for the SMC)
G/AG/5/Rev.3 WTO list of net food-importing developing countries for the purposes of
the Marrakesh Ministerial Decision on Measures Concerning the
Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries
G/AG/GEN/15 Annual monitoring exercise in re spect of the follow-up to the Ministerial
Decision on Measures Concerning the Possible Negative Effects of the
Reform Programme on Least-Developed and Net Food-ImportingDeveloping Countries (statements by the international observerorganizations)
G/AG/GEN/20 Communicati on from the Executive Director of the International Grains
Council presented to the 19-20 March 1998 meeting of the Committee on
Agriculture
G/AG/GEN/31 Annual monitoring exercise in re spect of the follow-up to the Ministerial
Decision on Measures Concerning the Possible Negative Effects of the
Reform Programme on Least-Developed and Net Food-ImportingDeveloping Countries (statements by the international observerorganizations)
G/AG/GEN/35 Communicati on from the Executive Director of the International Grains
Council presented to the 25-26 March 1999 meeting of the Committee on
Agriculture
G/AG/GEN/36 Statement by the Observer from the FAO presented to the 25-26 March
1999 meeting of the Committee on Agriculture
G/AG/W/12 and Add.1 Decision on Measures Concerning the Possible Negative Effects of the
Reform Programme on Least-Developed and Net Food-ImportingDeveloping Countries:   the Director-General's consultations with the
IMF and the World Bank
G/AG/W/20 Preparatory work programme in respect of paragraph 3(i) and (ii) of the
Marrakesh Ministerial Decision on Measures Concerning the Possible
Negative Effects of the Reform Programme on Least-Developed andNet Food-Importing Developing Countries (note by the Secretariat)
G/AG/W/36 Review of food aid levels (note by the Secretariat)G/AG/R- series Reports of COA meetingsAnnex II G/L/322
Page 19
Attachment 2
Compliance with notification requireme nts in respect of actions taken within
the framework of the Decision, 1995-97 (Table NF:1)
Member 1995 1996 1997 Noti fication received
Food Aid Convention donor
Argentina
Australia X X X AUS/5, 13, 21
Canada X X X CAN/11, 18, 25
EC X EEC/9
Japan X X X JPN/15, 27, 33
Norway X X X NOR/6, 19 and Corr.1, 20 and Corr.1
Switzerland X X X CHE/23
United States X X X USA/7, 20, 21
Other donors
Cuba X X CUB/4, 5
New Zealand X X X NZL/6, 13, 17
South Africa X X X ZAF/7, 9, 17
"Nil" notifications
Brazil X X BRA/2, 7
Burkina Faso X BFA/2
Fiji X X FJI/3, 5
Indonesia X X IDN/6, 7
Korea X X KOR/9, 17
Malta X MLT/3
Morocco X MAR/9
Philippines X PHL/7
United Arab Emirates X ARE/1
Uruguay X URY/6
Compliance calculated as:
… number of notifications  
received by FAC donors (%)88 75 75
… number of notifications
received by FAC & otherdonors (%)91 82 73
Notes: Annual reporting periods differ among Members.
"X" means that a notification was received.  A blank means that no notification was received.
"Nil" notification means that the notification indicated that no food aid or technical/financial assistancewas provided or that Table NF:1 was not applicable.
For some Members, the 1998 implementation year, or the allowable delay for the submission of
Table NF:1 notifications, is still under way, hence notifications for 1998 are net yet required.G/L/322 Annex II
Page 20
Attachment 3
Indices of Primary Commodity Prices, 1987-99
(1990=100) 1
All
Primary
Commodities2Non-Fuel Primary Commodities3Petroleum5
Non-fuel
Primary
CommoditiesFood BeveragesAgricultural
Raw
Materials 4/Metals Fertilizers
(weights) (100.0) (32.9) (6.8) (32.3) (26.7) (1.3)
--------------------------------------------------------------In Terms of US Dollars------------------------------------------- -------------
1987 84.0 87.5 84.3 134.6 87.3 79.4 88.9 79.21988 89.8 108.6 108.6 138.3 94.2 118.8 102.5 64.3
1989 94.6 106.8 110.6 114.6 97.3 112.0 104.7 77.9
1990 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.01991 90.1 94.3 99.1 93.5 96.4 85.7 103.2 84.3
1992 89.5 94.4 101.3 80.5 99.0 83.7 98.0 82.8
1993 86.4 96.1 100.0 85.6 115.0 71.9 83.0 73.01994 92.2 109.0 105.1 149.7 125.9 83.8 89.6 69.4
1995 99.8 118.1 113.7 151.1 131.3 100.2 99.1 74.8
1996 104.9 116.7 127.5 124.9 127.7 88.2 112.7 88.61997 100.6 112.9 113.7 165.5 119.1 90.9 113.9 83.8
1998 79.6 96.2 99.2 140.3 99.6 76.1 117.1 56.9
97Q1 106.1 116.6 120.3 147.0 126.8 92.0 116.3 91.7
97Q2 101.7 117.2 116.6 189.6 123.0 92.8 114.2 80.5
97Q3 98.5 111.2 107.5 167.6 117.8 93.4 111.9 81.297Q4 96.1 106.4 110.4 157.8 108.7 85.4 113.3 82.0
98Q1 85.1 102.2 106.4 165.1 102.8 79.6 117.1 61.6
98Q2 81.1 98.2 101.2 141.8 102.0 77.6 118.0 57.8
98Q3 77.2 92.3 93.3 129.1 96.8 74.9 117.9 56.6
98Q4 75.0 92.2 96.1 125.3 96.8 72.2 115.5 51.6
99Q1 73.3 89.4 89.8 119.3 99.3 68.1 115.4 51.3
99Q2
680.7 87.7 83.8 110.9 98.5 72.2 115.1 71.2
97Oct. 99.0 107.4 109.7 155.6 110.5 88.3 111.5 87.5
97Nov. 97.3 107.5 111.9 152.5 111.1 85.9 114.2 83.497Dec. 92.0 104.4 109.6 165.5 104.4 82.0 114.2 75.0
98Jan. 86.9 102.5 107.7 169.7 100.8 80.2 117.0 65.5
98Feb. 85.6 103.1 106.9 170.6 104.2 79.1 117.0 61.7
98Mar. 82.7 101.1 104.6 154.8 103.3 79.6 117.3 57.6
98Apr. 82.5 100.3 103.2 150.2 102.8 80.1 117.5 58.398May 82.7 98.7 101.8 141.4 103.0 77.7 117.8 60.8
98June 78.1 95.5 98.7 133.9 100.1 74.9 118.6 54.3
98July 77.3 93.4 97.1 128.7 96.1 75.1 118.6 55.398Aug. 75.9 91.7 91.5 132.8 96.5 74.4 118.1 54.3
98Sep. 78.3 91.7 91.2 125.9 97.8 75.1 117.0 60.0
98Oct. 77.5 92.0 95.5 123.3 96.5 72.9 116.6 57.798Nov. 75.5 93.0 97.5 126.4 97.0 73.0 115.3 51.7
98Dec. 72.1 91.7 95.3 126.3 97.0 70.7 114.7 45.3
99Jan. 73.7 91.2 94.0 124.2 99.2 68.3 115.9 49.8
99Feb. 71.0 88.8 88.8 118.1 98.5 68.4 115.2 46.8
99Mar. 75.3 88.5 86.6 115.6 100.2 68.2 115.2 57.3
99Apr. 79.8 87.6 85.0 110.9 97.8 71.4 115.2 69.0
99May
681.6 88.7 83.9 112.1 100.2 73.5 115.2 71.9
99June682.1 89.0 82.6 109.7 104.5 71.7 114.8 72.7
1Weights are based on 1987-89 average world export earnings.
2Petroleum and non-fuel primary commodities index. The weights are 57 per cent for the index of non-fuel primary
commodities prices and 43 per cent for the index of petroleum prices.
3Indices comprise 39 price series for 33 non-fuel primary commodities.
4Includes forestry products.
5Spot crude. Average of UK Brent, Dubai, and West Texas Intermediate, equally weighted.
6Provisional.
Source: International Monetary Fund.Annex II G/L/322
Page 21
Attachment 4
G/AG/GEN/35:  Communication from the Executive Director of the International Grains
Council presented to the 25-26 March 1999 meeting of the Committee on Agriculture
In my letter of 3 December 1997, I informed you that members of the Food Aid Committee
had decided to open the Food Aid Convention, 1995 for re-negotiation, thus following up on the
Recommendations that WTO Ministers adopted at their Singapore Conference in respect of Least-
Developed and Net Food-Impor ting Developing Countries.
These negotiations were completed on 24 March.  Under cover, I have pleasure in conveying
to you the text of a new Food Aid Convention 1999 (FAC) which, subject to the necessary actions bymember Governments, will come into effect on 1 July 1999.
The objectives of the FAC 1999 are "to contribute to world food security and to improve the
ability of the international community to respond to emergency food situations and other food needs
of developing countries".
Under the new Convention, the list of eligible products which may be supplied has been
broadened significantly beyond cereals.  There are also stronger provisions to cover transportation and
other operational costs associated with food aid transactions, especially when food aid is directed to
least-developed countries and in emergencies.
FAC donors may now express their commitments in tonnage, or in value, or in a combination
of tonnage and value.  Accordingly, the mini mum annual tonnage and value commitments of FAC
members amount in total to 4,895,000 tonnes (wheat equivalent) and  €130 million, respectively.
When allocating their food aid, FAC members will give priority to Least-Developed
Countries and Low-Income Countries – many of which are on the WTO list of Net Food-Importing
Developing Countries (NFIDCs).  Eligible food aid recipients will include Lower Middle-Income
Countries and all other countries on the present WTO list of NFIDCs, when experiencing food
emergencies or internationally recognized financial crises leading to food shortage emergencies, orwhen food aid operations are targeted on vulnerable groups.
The new FAC contains stronger provisions to promote local agricultural development in
recipient countries.  This includes possible "triangular transactions" i.e. donor countries using their
cash contributions to purchase food in developing countries for supply to a recipient country, and
"local purchases", i.e. food being purchased by donors in one part of a developing country for supply
to a deficit area in that country.
All FAC food aid to least-developed country recipients covered by members' commitments
will be in the form of grants.  Overall, food aid pr ovided in the form of grants under this Convention
will represent not less than 80 per cent of a member's contributions and, to the extent possible,
members will seek progressively to exceed this percentage.
In determining whether, and the extent to which, food aid provision on long-term
concessional credit terms should continue to be covered under any Food Aid Convention, FAC
members will take account of the results of relevant multilateral negotiations bearing on food aid.
All FAC members agreed that the provisions of the new Convention should neither prejudice
nor constrain future negotiations, including those in the framework of the WTO, on the status of food
aid provisions on concessional credit terms.  The EU and some other members re-affirmed theirG/L/322 Annex II
Page 22
opinion that food aid provided under credit terms shoul d no longer be included in the list of food aid
operations.
The new FAC will seek to improve the effectiveness and the impact of food aid transactions,
inter alia , in terms of the assessment of food aid needs, the monitoring of the aid provided, and co-
operation between food aid donors, recipients and others concerned.  In addition, the provision offood aid under the FAC will not be tied in any wa y to commercial exports of goods or services to
recipient countries.
During the negotiations, a dialogue was maintained with food aid recipient countries.  Efforts
to broaden the list of FAC donors were also made and will continue.  I am also pleased to note that
close co-operation with the WTO was maintained throughout, regular progress reports being made to
the Committee on Agriculture.
FAC members have emphasized that the new Food Aid Convention is evidence of their desire
to maintain international cooperation in support of world food security and to follow up on the WTO
Singapore Ministerial recommendations.  Whether their specific FAC commitments are expressed in
volume or in value, they are all about meeting th e food aid needs of developing countries adequately,
irrespective of fluctuations in world food prices and supplies.Annex II G/L/322
Page 23
Attachment 5
Technical and financial assistance under paragraph 3(iii) of the Decision
Notifying
MemberProgramme Currency 1995 1996 1997
Australia Total A$ mill. 351.8 400.4 263.0
AusAID multilateral core funding 227.0 230.5 161.9
AusAID regional funding 11.4 9.7 8.1
AusAID bilateral 24.2 48.1 44.5
AusAID scholarships 42.0 18.1 30.4
AusAID humanitarian relief 13.4 81.5 7.2
ACIAR multilateral programmes 24.0 9.4 8.9
ACIAR bilateral programmes 9.8 3.2 2.1
Canada Total C$ mill. 299.3 271.3 290.9
CIDA multilateral core funding 253.4 215.8 243.3
CIDA bilateral programmes 25.2 25.3 16.9
CIDA Canadian Partnership Branch 8.3 5.8 5.4
IDRC bilateral programming 4.5 3.6 3.2
DFAIT multilateral core funding 7.9 20.8 22.1
EC Total ECU mill.      1,117.0 NNR NNR
EDF- ACP countries 465.9
Development projects with other countries 651.1
Japan Total US$ mill. 434.3 688.2 395.8
grant aid 268.1 202.1 158.0
technical cooperation 107.1 129.7 114.4
ODA loans 59.1 356.5 123.4
New Zealand Total NZ$ mill. 3.3 4.2 5.9
multilateral core funding/other multilateral 1.5 2.4 3.8
regional 0.7 0.5 0.3
bilateral 1.1 1.4 1.8
Norway Total NOK mill. 648.6 718.9 818.5
WFP contribution 213.0 219.0 208.2
bilateral programmes 285.8 297.7 338.1
emergency relief aid 149.8 202.2 272.2
South Africa Total bilateral aid '000 Rand 705.6 355.0 865.0
Switzerland Global total international cooperation SFr mill. 1,356.9 1,373.3    1,334.9
bilateral ODA – Africa n.a. 280.9 269.6
bilateral ODA – Asia n.a. 249.6 216.5
bilateral ODA – Latin America n.a. 118.4 100.4
USA Total US$ mill. 1,080.1 889.1 1,256.6
USAID global assistance to agriculture 88.0 37.1 33.6
USAID bilateral assistance to agriculture 157.7 -- --
contributions to multilateral organizations 829.5 846.4 1217.5
Cochran Fellowship Program 0.3 0.3 0.3
Peace Corps 4.7 5.2 5.2
Abbreviations:
NNR no notification received
AusAID Australian Agency for International Development Agency
ACIAR Australian Centre for International Agricultural Research
CIDA Canadian International Development AgencyIDRC International Development Research CentreDFAIT Department of Foreign Affairs & International Trade
EDF European Development Fund
ODA Official Development Assistance
Notes: Annual reporting periods differ among Members.
EC aid excludes aid provided by member States.
For further details, see NF:1 notifications.
__________G/L/322
Page 24
Annex III
SUMMARY REPORT BY TH E CHAIRMAN TO THE SEPTEMBER 1999 MEETING OF
THE COMMITTEE ON AGRICULTURE ON THE PROCESS OF ANALYSIS AND
INFORMATION EXCHANGE:   1997-1999  (AIE/R)
The present report by the Chairman of the Committee on Agriculture, Ambassador Nestor
Osorio Londoño, is submitted on his own responsibility as agreed by the Committee.
__________
1. In accordance with the Committee's decision of 25 June 1999 (G/AG/R/19) the following is
my factual summary report of the work undertaken under the process of Analysis and InformationExchange (AIE) during the period March 1997 to September 1999.
2. The AIE process originated from a recommendation of the Committee on Agriculture for the
purposes of the Singapore Ministerial Conference, contained in the report adopted by the Committee
on Agriculture on 6 November 1996 (G/L/131, dated 7 November 1996).  Paragraph 12 of that report
reads:
"The negotiations to continue the reform process referred to in Article 20 of the
Agreement on Agriculture, will be conducted in conformity with the timetable and all other
provisions contained in that Article.  Useful experience will be gained by the Committee on
Agriculture in reviewing the implementation of existing commitments which will enable the
Committee on Agriculture to further pursue in 1997 and thereafter:
(a) the assessment of the compliance with these commitments, taking into
account the need for full and timely compliance;  and
(b) a process of analysis and information exchange, in accordance with all
relevant provisions of the Agreement on Agriculture.
This will allow WTO Members to better understand the issues involved and to
identify their interests in respect of them before undertaking the mandated negotiations laid
down in Article 20.
1"
_____________________
1 Article 20 - Continuation of the Reform Process:
"Recognizing that the long-term objective of substantial progressive reductions in support and
protection resulting in fundamental reform is an ongoing process, Members agree that negotiations forcontinuing the process will be initiated one year before the end of the implementation period, taking into
account:
(a) the experience to that date from implementing the reduction commitments;(b) the effects of the reduction commitments on world trade in agriculture;(c) non-trade concerns, special and differential treat ment to developing country Members, and the
objective to establish a fair and market-oriented agricultural trading system, and the other objectives andconcerns mentioned in the preamble to this Agreement;  and
(d) what further commitments are necessary to achieve the above-mentioned long-term
objectives."Annex III G/L/322
Page 25
3. At the Singapore Ministerial Conference, Ministers agreed "to a process of analysis and
exchange of information, where provided for in th e conclusions and recommendations of the relevant
WTO bodies, on the Built-in-Agenda issues, to allow Members to better understand the issues
involved and identify their interests before undertaking the agreed negotiations and reviews"
(WT/MIN(96)DEC, paragraph 19).
4. At its meeting on 13-14 March 1997, the Committee on Agriculture agreed "that the process
of analysis and information exchange … would be undertaken through open-ended informal meetings
of the Committee on the basis, inter alia , of papers to be submitted by Members.  Such papers,
including any contributions that may be requested from the Secretariat, would remain informal
documents and would be available to all Members.  The detailed arrangements for carrying out the
process of analysis and information exchange, including the frequency of meetings, would be
organized as appropriate by the Chairperson following consultations.  For transparency purposes an
item relating to the process of analysis and inform ation exchange would be included in the agenda of
regular meetings of the Committee to enable the Chairperson to make a factual and summary report to
the Committee on the process" (G/AG/R/10 and Corr.1).
5. In the course of the 12 meetings of the AIE process held between March 1997 and
September 1999, a total of 74 informal papers by 36 Members were discussed, including 13 informal
papers by 24 developing countries.  As can be seen from the list of AIE documents in Attachment 1,these papers covered a wide variety of topics.  Informal papers submitted following the
September 1999 meeting would be circulated and anno tated accordingly in the list of AIE documents.
6. In addition, as requested by Members, the Secretariat contributed background papers to assist
the work of the AIE process (Attachment 1 refers).  A number of these background papers have been
regularly revised in order to provide a more up-to -date overview of the data and other information
notified by Members in the main implementation areas.  It would be useful for the purposes of
Members' on-going and future work on implementation generally if these papers were to be re-issued
as documents of the Committee on Agriculture as from January 2000.
7. The Chairman's summary reports on the individual meetings of the AIE process are
reproduced in Attachment 2.  As had been agreed, no conclusions were drawn from the discussions.The summary reports made by the Chairman on his ow n responsibility to the formal meetings of the
Committee on Agriculture were only designed to provide a brief summary of the subjects discussed
and some of the main points raised by Members in the discussion.
8. On the occasion of the final meeting of the Committee on Agriculture in the framework of the
AIE process, held on 28-29 September 1999, Members agreed that this process had been conducted inan effective manner and that it has been useful in giving them a better understanding of the issues
involved and identifying their interests before starting the forthcoming negotiations on agriculture.G/L/322 Annex III
Page 26
Attachment 1
AIE:  PROCESS OF ANALYSIS AND INFORMATION EXCHANGE
Informal Documents Presented by Members
AIE/1: by Australia on Administration of Tariff Quotas - 13 May 1997
AIE/2: by the United States on Circumvention of Export Subsidy Commitments -
16 May 1997
AIE/3: by the United States on Data Supplied Through Notifications - 16 May 1997
AIE/4: by Australia on "Green Box" Domestic Support - 16 May 1997
AIE/5: by New Zealand on Tariff Quota Administration - 12 August 1997
AIE/6: by Pakistan, Peru and the Dominican Republic on Issues of Interest to Developing
Countries - 19 September 1997
AIE/7: by the United States on Administra tion of Tariff-Rate Quotas - 22 October 1997
AIE/8: by Uruguay on Implementation of Tariff Commitments - 24 October 1997
AIE/9: by Australia on Tariff Quota Administra tion:  First-Come, First-Served (FCFS) -
29 October 1997
AIE/10: by the United States on Article 6.5:  Direct Payments Under Production-Limiting
Programs - 31 October 1997
AIE/11: by the United States on State Trading Enterprises:  Single Desk Buyers and Single
Desk Sellers - 31 October 1997
AIE/12: by Cuba on Special and Differential  Treatment and Food Importing Developing
Countries - 18 December 1997
AIE/13: by the United States on Special Agricultural Safeguard:  Data and Analytical
Issues -19 January 1998
AIE/14: by the European Community on Direct Payments under Production-Limiting
Programmes - 20 January 1998
AIE/15: by Australia on Article 6.5:  Direct  Payments under Production-Limiting Programs
- 27 January 1998
AIE/16: by Australia on State Trading Enterprises (Single Desk Buyers and Single Desk
Sellers) - 27 January 1998
AIE/17: Paper based on NZ's comments (20 January 1998) on the US paper on State
Trading Enterprises (AIE/11) - 5 February 1998
AIE/18: Paper based on NZ's comments (20 January 1998) on the Secretariat background
paper on Export Subsidies (AIE/S3) - 5 February 1998
AIE/19: Paper by the United States on Domestic Support Policy Reform (the Federal
Agriculture Improvement and Reform Act of 1996) - 4 March 1998
AIE/20: Paper by New Zealand on Article 5:  Special Safeguard Provisions - 5 March 1998
AIE/21: Paper by Canada on Sectoral Trade Liberalization - 17 March 1998
AIE/22: Paper by Norway on Non-Trade Concerns in a Multifunctional Agriculture -
Implications for Agricultural Policy and the Multilateral Trading System –
2 June 1998
AIE/23: Paper by Canada on Annex 2:  Do mestic Support Measures Exempt from
Reduction Commitments - 2 June 1998
AIE/24: Paper by Canada on Export Restrictions and Taxes - 2 June 1998
AIE/25: Paper by Japan on Non-Trade Concerns on Agriculture - 2 June 1998
AIE/26: Paper by the United States on Annex 4:  Equivalent Measurement of Support -
2 June 1998
AIE/27: Paper by Australia:  Reforming Domestic Support for Agriculture - 5 June 1998Annex III G/L/322
Page 27
AIE/28: Paper by New Zealand - "Side Effects of  Agricultural Policies and Production" –
9 June 1998
AIE/29: Paper by the EC - Domestic Support Policy Reform:  the Role of Article 6.5 Direct
Payments - 19 June 1998
AIE/30: Paper by India - Issues of Intere st to Developing Countries - 23 June 1998
AIE/31: Paper by Brazil - Trade Liberalization:  Sectoral and "Across the Board"
Initiatives  -  6 July 1998
AIE/32: Paper by Argentina – Non-Trade Concerns in the next Agricultural Negotiations –
27 July 1998
AIE/33: Paper by South Africa – The Effect  of Inflation on Reduction Commitments –
29 July 1998
AIE/34 Paper by the United States – Non-Trade Concerns and Agriculture –
2 September 1998
AIE/35 Paper by Australia – Decoupling Domestic Support – 4 September 1998
AIE/36 Paper by Australia – Non-Trade Concerns – 4 September 1998
AIE/37 Paper by the United States – Article 13 - Due Restraint Provisions  –
15 September 1998
AIE/38 Paper by the United States – Domestic Support – Response to AIE/23 and
AIE/27 -  15 September 1998
AIE/39 Paper by the Republic of Korea – Non-Trade Concerns in Net Food-Importing
Countries – 22 September 1998
AIE/40 Contribution of the European Community on the Multifunctional Character of
Agriculture – 28 September 1998
AIE/41 Paper by South Africa – The Negative Effects of Export Subsidies on Developing
Countries – 26 October 1998
AIE/42 Paper by Iceland – External Refe rence Price Adjustment – 27 October 1998
AIE/43 Paper by Uruguay –  Tariff Peaks and Tariff Escalation - 4 November 1998
AIE/44 Paper by India – Food Security – An Important Non-Trade Concern -
16 November 1998
AIE/45 Paper by Bulgaria, the Czech Republic, Hungary, Poland, the Slovak Republic and
Slovenia – The Future Treatment of Domestic Support Commitments in the Case
of Transition and Post-Transition Economics – 18 November 1998
AIE/46 Paper by the United States – Administ ration of Tariff-Rate Quotas – 2 March 1999
AIE/47 Paper by the United States – Food Security – The Impact of Export Taxes –
2 March 1999
AIE/48 Paper by Norway – Environmental Effects of Trade Liberalization in the
Agricultural Sector – 2 March 1999
AIE/49 Paper by New Zealand – Domestic Support:  Article 6.5 of the Agreement on
Agriculture - Blue Box – 3 March 1999
AIE/50 Paper by New Zealand – Export Credits – 3 March 1999AIE/51 Paper by Mauritius – Multifunctional Role of Agriculture in Small Island
Developing States – 10 March 1999
AIE/52 Paper by the European Communities – Article 5:  Special Safeguard Clause for
Agriculture – 10 March 1999
AIE/53 Paper by the European Communities – The Agreement on Agriculture and the
Need for Legal Security – 10 March 1999
AIE/54 Paper by El Salvador, Honduras, Cuba, Nicaragua, the Dominican Republic and
Pakistan – Issues Related to Market Access – 23 March 1999
AIE/55 Paper by Canada – Data Requirements for Agricultural Negotiations –
16 April 1999
AIE/56 Paper by the United States – High In-Quota Duties – 4 June 1999
AIE/57 Paper by Norway – Food Security and the Role of Domestic Agricultural Food
Production – 7 June 1999G/L/322 Annex III
Page 28
AIE/58 Paper by Uruguay – Agreed Conclu sions of an UNCTAD Expert Meeting on
Trade in Agriculture Held on 26 April 1999 – 7 June 1999
AIE/59 Paper by Malaysia, Myanmar, Philippines and Thailand – Continuation of the
Reform Process after the End of Implementation Period – 7 June 1999
AIE/60 Paper by Japan – Multi-Functionality in Japan – 21 June 1999
AIE/61 Paper by Japan – Food Security – 21 June 1999AIE/62 Paper by Japan – Export Regulations in the Existing Agreement – 21 June 1999
AIE/63 Paper by Cuba, Dominican Republic, El  Salvador, Honduras, Nicaragua, Pakistan,
Sri Lanka and Uganda – Agreement on Agriculture:  Issues Related to Special and
Differential Treatment – 22 June 1999
AIE/64 Paper by US – The "Multifunctional" Character of Agriculture, Food Security and
Other Non-Trade Concerns – 22 June 1999
AIE/65 Paper by Mauritius – Agriculture in Small Island Developing States – 9 July 1999AIE/66 Paper by the European Communities – Product Coverage of the Agreement on
Agriculture – 14 September 1999
AIE/67 Paper by Switzerland – The Multifunctional Dimension of Agriculture –
17 September 1999
AIE/68 Paper by Norway – Appropriate Polic y Measure Combinations to Safeguard Non-
Trade Concerns of a Multifunctional Agriculture – 17 September 1999
AIE/69 Paper by the US – Trade in Agricultural Biotechnology Products –
23 September 1999
AIE/70 Paper by El Salvador, Cuba, Honduras , Dominican Republic, Pakistan, Sri Lanka
and Zimbabwe – Agreement on Agriculture:  Special and Differential Treatment -Non-Paper 2 -  24 September 1999
AIE/71 Paper by EC – Administration of Tariff Rate Quotas – 27 September 1999
AIE/72 Paper by EC – Food Quality, Reputation and Geographical Origin –
27 September 1999
AIE/73 Paper by EC – Safeguarding the Multifunctional Role of EU Agriculture:  Which
Instruments? – 28 September 1999
AIE/74 Paper by Uruguay – The Multifunctio nal Character of Agriculture and Land –
28 September 1999
Secretariat Background Papers
AIE/S1/Rev.1: Tariff and Other Quotas - Revision - 26 May 1998 (to be updated)
AIE/S2/Rev.2: Domestic Support – Revision – 23 September 1999
AIE/S3/Rev.1: Export Subsidies – Revision - 11 August 1999
AIE/S4/Rev.1: Tariff Quota Administration Methods and Tariff Quota Fill - Revision -
10 June 1998 (to be updated)
AIE/S5: Ad valorem, Specific and other Tariffs - 6 February 1998
AIE/S6: Special and Differential Treatment Provisions Relating to the Agreement on
Agriculture - 16 February 1998
AIE/S7: Studies on the Implementation and Impact of the Agreement on Agriculture
on Developing Countries - 24 February 1998
AIE/S8/Rev.1: NFIDC Decision – Actions Taken Within the Framework of the Decision as
Notified by Members - Revision – 24 February 1999
AIE/S9/Rev.1: Green Box Measures – Revision – 27 May 1999
AIE/S10/Rev.1: Agricultural Trade Perfor mance by Developing Countries – Revision
17 February 1999
AIE/S11: Uruguay Round Agricultural Tariff Reductions for Selected WTO Members
According to Stage of Processing - 23 June 1998Annex III G/L/322
Page 29
AIE/S12: Special Agricultural Safeguard  -  9 October 1998
AIE/S12 (Corrigendum):   Special Ag ricultural Safeguard – 18 December 1998
AIE/S13: Tariff Treatment of Products of Special Interest to Developing Country
Members – 28 July 1999
AIE/S14: Agricultural Export Credits (to be circulated)G/L/322 Annex III
Page 30
Attachment 2
PROCESS OF ANALYSIS AND INFORMATION EXCHANGE (AIE PROCESS)
Chairman's Summary Reports on Individual Meetings of the AIE Process:
May 1997 to September 1999
*  *  *  *
First and Second Meetings of the AIE Process:  Held on  27 May and on 25-26 June 1997 –
(G/AG/R/11, paragraph 44, refers)
"(a) The Committee's decision on the follow-up to the Singapore Ministerial Declaration
regarding the process of analysis and information ex change (now referred to as a matter of convenience
as the "AIE Process") provides that "for transparen cy purposes an item relating to the process would be
included on the agenda of regular meetings of th e Committee to enable the Chairperson to make a
factual and summary report to the Committee on the process."
(b) In this light, the first session of the AIE process was held at an informal open-ended
meeting of the Committee on 27 May 1997.  The principal matters discussed related to the detailedarrangements for carrying out the AIE process.  In summary the following arrangements were agreed:
- that in the current year informal meetin gs of the Committee for carrying out the AIE
process would be held back-to-back with  the regular meetings of the Committee on
Agriculture in June, September and Novemb er, with the possibility, if necessary, of
holding additional meetings in the interval between regular meetings;
- that in order for informal papers to be considered at a session of the AIE process they
would have to be circulated by the Secretar iat to all Members of the Committee at least
three weeks prior to the session concerned.  Informal papers would be circulated
initially in their original language and as soon as practicable thereafter in the other
working languages.  Informal papers circulated after the three weeks deadline could be
the subject of a general presentation at the next meeting but would not as such be for
substantive consideration at that meeting, unless otherwise agreed on a case-by-case
basis;
- that informal papers would generally be ta ken up individually in the AIE process in the
order in which they have been circulated (each informal paper would be numbered and
identified by code:  e.g. AIE/1).  Arrang ements would be made by the Chairman, as
appropriate, for joint consideration of info rmal papers dealing with the same or a
related topic.
(c) Finally, as regards the first session of th e AIE process, an informal paper on tariff quota
administration was presented by Australia and was the subject of a preliminary exchange of views.
Equally, two papers of the United States were presen ted but not yet subject of a preliminary exchange of
views.
(d) The second session of the AIE process wa s held at an informal meeting of the
Committee on 25 and 26 June 1997.  Informal papers  on the following topics were considered:Annex III G/L/322
Page 31
AIE/1: by Australia on Admi nistration of Tariff Quotas
AIE/2: by the United States on Circum vention of Export Subsidy Commitments
AIE/3: by the United States on Da ta Supplied Through Notifications
AIE/4: by Australia on "Gr een Box" Domestic Support
(e) The discussion proved fruitful and there was general agreement to follow up the
discussions in all relevant areas.  With regard to  the further discussions on the administration of tariff
quotas, the initial analysis will focus on:  (i)  purpose  of the tariff quota;  (ii)  the methods of allocation
of tariff quotas;  (iii)  access to import licences;  (iv)  validity and timing of licence periods;  (v)  sub-
allocation of broadly-defined tariff quotas to specifi c products and (vi)  administrative barriers.  This
selection of items would be used to focus discussions , but would not limit reference to other items.  The
focus of following meetings would be left for further consideration, but on the understanding that other
items would be covered at future AIE meetings.
(f) In addition, the Secretariat was requested to prepare factual background papers based
on information provided by Members in notifications on the following subjects to assist the further work
in the AIE process:  (i)  tariff quotas and imports with in tariff quotas;  (ii)  a report on the availability of
information concerning ad valorem equivalents of specific duties;  (iii)  summary tables concerning
domestic support and export subsidy commitments and amounts notified in respect of those
commitments;  and (iv) a listing of green box m easures by category as notified by Members."G/L/322 Annex III
Page 32
Third Meeting of the AIE Process:  Held on 23 and 25 September 1997 –
(G/AG/R/12, paragraph 58, refers)
"(i) The Committee's decision on the follow-up to the Singapore Ministerial Declaration
regarding the process of analysis and information exchange (now referred to as the "AIEProcess") provides that "for transparency purposes an item relating to the process would beincluded on the agenda of regular meetings of the Committee to enable the Chairperson tomake a factual and summary report to the Committee on the process."  In this light, followingthe first two sessions of the AIE process  reported on at the last meeting of the Committee(G/AG/R/11, paragraph 44 refers), an info rmal open-ended meeting of the Committee was
held on 23 and 25 September.  The informal papers circulated prior to the previous meetingswere reconsidered, i.e.:
AIE/1: by Australia on Administration of Tariff Quotas
AIE/2: by the United States on Circumvention of Export Subsidy CommitmentsAIE/3: by the United States on Data Supplied Through NotificationsAIE/4: by Australia on "Green Box" Domestic Support
plus two papers submitted were considered for the first time at this meeting:AIE/5: by New Zealand on Tariff Quota Administration
AIE/6: by Pakistan, Peru and the Dominican Republic on Issues of Interest to Developing
Countries.
In addition, a background paper on tariff and other quotas by the Secretariat (AIE/S1) was
made available to the informal meeting.
"(ii) As indicated would be the case in my report to the last meeting, the AIE meeting
focused on certain aspects of issues raised under the topic of tariff quota administration.  Onceagain there were, in my view, very fruitful discussions.  Concerning the purpose of tariffquotas, while Members agreed that the tariff quotas themselves were the basis of Members'commitments in this area, many Members believed it was also necessary to keep in mind theorigins of different tariff quotas and what that may imply in terms of their administration.
"(iii) On the issues of the methods of allocation of tariff quotas and access to import
licences, Members proposed a number of criteria that could be used to examine differentadministration methods (including, for example, equity, predictability , non-restrictiveness,
and economic efficiency).  Some Members noted that in many cases shortcomings of
particular allocation methods could be overcome and this concept should also form part of
future discussions along with the limits imposed by the WTO framework.
"(iv) Detailed discussions were also held on the validity and timing of licence periods, the
sub-allocation of broadly-defined tariff quotas to specific products and administrative barriers.Among many other points, it was underlined that in the administration of tariff quotasMembers must keep in mind implications and effects on the business community, bothdomestically and abroad.  The discussion was not exhaustive and the topics are sure to berevisited in the future.Annex III G/L/322
Page 33
"(v) A paper was introduced into the process by Pakistan, Peru and the Dominican
Republic and welcomed by a large number of Members.  A substantive discussion on thepaper will be held at the next (November) meeting under the AIE process.
"(vi) In concluding the meeting I noted that the next meeting would cover the Pakistan,
Peru and the Dominican Republic paper and other new papers received by the three weekdeadline - a number of Members indicated such papers were likely to be forthcoming.  Thepapers that had already been  submitted on domestic support and export subsidy issues would
also be for further discussion along with more issues in the area of tariff quota administrationwith reference to papers already presented.  The Secretariat confirmed that, as requested byMembers, it would continue its factual work.
"(vii) This being said, in concluding my report on the AIE process I would like to remind
Members that, as agreed, the process "would be undertaken through open-ended informalmeetings of the Committee on the basis, inter alia , of papers to be submitted by Members"
(G/AG/R/10, paragraph 36).  I am reiterating this in order to encourage Members to ensurethat all topics of interest to them can be discussed in the process and to remind you that thepresentation of a paper is not a prerequisite for an issue to be discussed as I am aware of thedifficulties f aced by some Members in preparing papers."G/L/322 Annex III
Page 34
Fourth Meeting of the AIE Process:  Held on 19-20 November 1997 –
(G/AG/R/13, paragraph 45, refers)
"(i) The Committee's decision on the follow-up to the Singapore Ministerial Declaration
regarding the process of analysis and inform ation exchange (now referred to as the "AIE
Process") provides that "for transparency pur poses an item relating to the process would be
included on the agenda of regular meetings of th e Committee to enable the Chairman to make a
factual and summary report to the Committ ee on the process" (G /AG/R/10, paragraph 36,
refers).  In this light, following the first three sessions of the AIE pro cess reported on at previous
meetings of the Committee (G/AG/R/11, paragr aph 44 and G/AG/R/12, paragraph 58 refer), an
open-ended informal meeting of the Committee was held on 19 and 20 November.  Members
had before them 11 informal papers submitted by Members along with four background papersprepared by the Secretariat i.e.:
Informal papers submitted by Members:
AIE/1: by Australia on Admi nistration of Tariff Quotas
AIE/2: by the United States on Circum vention of Export Subsidy Commitments
AIE/3: by the United States on Da ta Supplied Through Notifications
AIE/4: by Australia on "Gr een Box" Domestic Support
AIE/5: by New Zealand on Ta riff Quota Administration
AIE/6: by Pakistan, Peru and the Dominican Re public on Issues of Interest to Developing
Countries
AIE/7: by the United States on Ad ministration of Tariff Quotas
AIE/8: by Uruguay on Implementation of Tariff Commitments
AIE/9: by Australia on Tariff Quota Admi nistration:  First-come, First-served
AIE/10: by the United States on Article 6.5:  Direct Payments under Production-Limiting
Programmes
AIE/11: by the United States on State Trading Enterprises (Single Desk Buyers and Single
Desk Sellers)
Secretariat background papers:
AIE/S1: Tariff and Other Quotas
AIE/S2: Domestic Support
AIE/S3: Export Subsidies
AIE/S4: Tariff Quota Administrati on Methods and Tariff Quota Fill.
"(ii) The meeting focused on those papers that had been submitted since the last meeting
in the AIE process, or that had only been subjec t to preliminary review in the previous meeting.
"(iii) Specifically, the paper by Pakistan, Peru and the Dominican Republic on Issues of
Interest to Developing Countries was warmly  received by a large number of delegations.
Members underlined the importance of examining the situation of developing country Members
in the post-Uruguay Round period and a number of Members indicated that they intended to
submit papers on specific issues and examples from their experiences to the group to enhance
work on this topic in the future.  Many Members referred to the work being carried out by other
international organizations and their role in he lping developing country Members identify issues
of particular interest in order to assist all Memb ers' full integration into the international trading
system.  A number of delegations suggested that  the Secretariat act as a coordinating body for
bringing together the work of other organiza tions and proposed areas of work which could be
undertaken by the Secretariat directly, concerni ng, for example, statistics on trade patterns.Annex III G/L/322
Page 35
Reference was made to action taken under the Mi nisterial Decision on Measures Concerning the
Possible Negative Effects of the Reform Pr ogramme on Least-Developed and Net Food-
Importing Developing Countries as al so being relevant to this topic.
"(iv) In light of suggestions made, the Secretariat undertook to provide to the March
meeting of the AIE process, an overview of relevant information concerning special and
differential treatment provisions relating to the Agreement.  It would also provide a listing of
studies which have been undertaken by the WTO and other international organizations on topics
relevant to the issue.  It was also noted that ta riff line trade data such as that contained in the
IDB would be required to carry out effective analyses in this area.  I will consult with Members
on the best way for developing country Members to submit information on their specific
experiences to the AIE process and solicit views on relevant information which could be sought
from other international organizations.  When othe r international organizations are in a position
to make additional information available they w ould be invited, on an ad hoc basis, to make a
specific presentation on it to the AIE process.
"(v) On the issue of tariff quota administra tion, there was a wide-ranging discussion on
the issues raised by the United States' paper on the subject (AIE/7).  Many Members appearedto consider that the paper provided a good overvi ew of the advantages and disadvantages of the
various tariff quota administration mechanisms in  use.  During the discussion, reference was
also made to papers that had been presented to the process at earlier meetings and to the
Secretariat background papers.  A number of Memb ers commented that, in their view, the paper
showed that there was no one single method of tariff quota administration which could be
considered superior in all cases having regard to the range of products and circumstances
involved.  It was also suggested that there was a certain balancing act that had to be undertaken
to satisfy different objectives such as the great est possible reduction of restrictions to trade, an
orderly management of imports throughout a year, a reduction of bureaucratic intervention,
control of speculation and the promotion of co mpetition.  Discussions concerning the issue of
quota rents also took place with differing views concerning the effects on the shares of quota
rents obtained by importers and exporters of di fferent administration methods and the potential
for quota rents to encourage vested interests wh ich may not support further trade liberalization.
"(vi) Continuing on the topic of tariff quota administration, Members discussed Australia's
informal paper on the first-come, first-served  (FCFS) allocation method and the particular
advantages and disadvantages of that system (AIE /9).  It was noted that a distinction needed to
be made between FCFS allocation methods whic h involved the issuance of licences and those
that relied solely on the physical entry of goods .  A number of Members, while acknowledging
the potential disadvantages of the FCFS method, c onsidered that some of them could be readily
addressed through means such as the use of a number of tranches of the tariff quota throughout
the year and penalties applying to importers if allocations were not fully used.  The reallocation
of shortfalls where a tariff is apparently not going to be filled during a period was also
discussed.  Such re-allocations could be used in cases where an individual importer was unable
to import its allocated quantity or, in cases where a country-specific allocation was involved, a
supplying country would not fill its allocation.  A num ber of other issues were raised such as the
implication such reallocations could have for futu re year's allocations, the eventual participation
of new participants and the possibility of rollin g over unused portions of tariff quotas to the next
year.  A number of Members offered the view that while such mechanisms may enhance tariff
quota fill rates, they went beyond the obligations of Members which were to provide access
opportunities in line with th eir scheduled commitments.G/L/322 Annex III
Page 36
"(vii) As to the paper presented by Uruguay on the implementation of tariff commitments,
it was noted that while the Uruguay Round had involved the replacement of non-tariff barriers
with tariffs, a number of those tariffs remained hi gh and in some cases specific duties or specific
components also required study.  A number of  Members proposed that information should be
collected on trade flows on tariff lines which had tariffs resulting from the Uruguay Round's
tariffication process to further the discussi on, along with an examination of ad valorem
equivalents of non-ad valorem duties.  Other Memb ers did not consider that the scope of such a
discussion lay within the AIE process.  Con cerning measures such as entry prices, non-
automatic licensing systems and similar measures as raised in the paper by Uruguay, some
Members considered that this was not an appr opriate topic for discussion since, if other
Members considered that these measures were in  conflict to the WTO rules, other avenues were
available, including the dispute settlement sy stem.  Other Members considered that it was
appropriate to continue discussions in this ar ea in the context of considering options for the
upcoming negotiations that would tackle the spec ific problems facing some agricultural trade.
The Secretariat undertook to examine the availability of statistics on out-of-quota trade in
agricultural products in the context of the work  under way on examining the availability of ad
valorem equivalents of specific duties.
"(viii) A preliminary discussion was undertaken on the United States' paper on Article 6.5
of the Agreement.  Some Members considered th e issue deserved attention as there were only a
very limited number of Members overall using the provision and it was, in their view, not based
on sound economics and could delay the transition of agricultural policy towards the green box
of measures (Annex 2 of the Agreement).  Othe r Members did not consider there were reasons
to examine the provision as in their view it was not inconsistent with the general reform process,
it was not a transitional measure nor was the AI E process an appropriate forum for discussing
possible changes to the provision's criteria or its  elimination.  As this informal paper of the
United States was for preliminary discussion it is to be revisited.
"(ix) A preliminary discussion was also held on the United States' informal paper on State
trading enterprises (single desk buyers and single desk sellers).  Many Members recognized that
the paper provided a rather complete outline of potential trade distortions which could result
from the use of such entities.  Some Members, however, did not consider that the potential was
always backed up by practical experience and that  some of the potential trade distortions cited
in the paper necessarily contradicted others.  In  their view the entities were, in some cases, the
most appropriate means of carrying out certain objectives such as stock piling for security
reasons and the attainment of economies of scale.   As this informal paper of the United States
was for preliminary discussion it too is to be revisited.
"(x) While the general back-to-back nature of  AIE meetings with those of the Committee
on Agriculture was noted, it was agreed to hold an additional meeting of the AIE process on
20 January 1998.
"(xi) This being said, in concluding my re port on the AIE process I would like to remind
Members that, as agreed, the process "would be undertaken through open-ended informal
meetings of the Committee on the basis, inter alia , of papers to be submitted by Members"
(G/AG/R/10, paragraph 36).  I am reiterating this in order to encourage Members to ensure that
all topics of interest to them can be discu ssed in the process and to remind you that the
presentation of a paper is not a prerequisite for an issue to be discussed as I am aware of the
difficulties faced by some Members in preparing papers."
The European Communities, Switzerland and Japan took the floor to express the concern that
the Chairman's report on the process of analysis and information exchange and thus the discussions
undertaken within the framework of the AIE process we re too detailed and formalized.  According to theAnnex III G/L/322
Page 37
representative of the European Communities, circulation of the Chairman's report on the process of
analysis and information exchange to the Committ ee, would make it a public document and would thus
enable the informal AIE discussions to be traced publicly.  As the AIE process developed, and more
sensitive issues were discussed, such detailed repor ts by the Chairman could, therefore become more
controversial.  The representatives of the United Sates, Mexico, Argentina, Uruguay, the Dominican
Republic, Malaysia, Peru, Brazil, Venezuela, Chile, Ivory Coast and South Africa, respectively, stated
their appreciation of the Chairman's report on the pro cess of analysis and information exchange, a report
which, in their view, was factual and perfectly neutral and balanced, as mandated by the Committee.
The Chairman noted that the report on the process of analysis and information exchange was
made on his responsibility as Chairman, on a factual and informal basis as mandated by the
Committee (G/AG/R/10, paragraph 36 refers).G/L/322 Annex III
Page 38
Fifth and Sixth Meetings of the AIE Process:  Held on 20 January and 18 March 1998 –
(G/AG/R/14, paragraph 30, refers)
"(i) In line with paragraph 36 of G/AG/R/10, the following is my factual and summary
report as Chairman on meetings of the AIE process held on 20 January and 18 March 1998.
"(ii) First of all, at both meetings there was a wide-ranging and very useful discussion
regarding analysis and exchange of information on  issues of interest to developing countries
and on special and differential treatment.  This was on the basis of informal papers presented
by Pakistan, Peru and the Dominican Republic (AIE/6), by Cuba (AIE/12), as well as
Secretariat background notes made available in advance of the March meeting on Special and
Differential Treatment Provisions Relating to the Agreement on Agriculture (AIE/S6) and on
Studies on the Implementation and Impact of the Agreement on Agriculture on Developing
Countries (AIE/S7).  As part of the follow-up to these discussions the Secretariat will prepare
supplementary background material, as appropriate, on trade data and tariff bindings for
selected major products of interest to developing countries in line with the suggestions made
in this regard.  Developing country Members were invited to submit country papers on
specific issues, related to their experience in the implementation and impact of the
Agreement, including on import and exporting trends.  It was also indicated that analysisrelated to food security and net food-importers will be of relevance.
"(iii) In this general regard I undertook to consult with Members in advance of the next
meeting regarding a possible check-list of issues to be developed, on the basis of the various
suggestions made by Members, for focusing further work on special and differential treatment
in the contexts of market access, food security, domestic support, export subsidies,notification requirements and technical assistance.  It would also be my intention to consult
with Members regarding the basis on which ob server international organizations would be
invited to make a specific contribution on an ad hoc basis to a forthcoming meeting of the
AIE process.
"(iv) The special agricultural safeguard mechanism (SSG) and proposals for a Secretariat
background paper on this subject were discussed at the January AIE meeting on the basis of
an informal paper by the United States.  The further discussion on the SSG encompassed the
more recently circulated informal paper by New Zealand (AIE/20) on the operation of the
special safeguard.  Some of the points made in this regard were that:  the use of the SSG
involved no injury test and thus had the potential  to be used in an arbitrary fashion;  that the
volume-based SSG could be implemented on the basis of a zero trigger level or when tariff
quotas were under-filled;  that the price-based safeguard was being applied to minuscule
import quantities;  and that greater transparency regarding the use of the SSG was required.
Reference was also made to the limited use thus far made of the SSG and of the need to
review the justification for its continuation.  Amongst other points made it was stressed that
the SSG was an integral part of the tariffication package;  that the Agreement foresees its
duration throughout the reform process;  that relatively tight market conditions in recent yearsdid not mean that the SSG would not be used  more extensively and would not continue to
have an important general function in the future.  Further AIE discussion on the SSG will be
undertaken on the basis, inter alia,  of an informal background paper which the Secretariat is
to prepare.  In this regard it was suggested that the background paper should, if possible, take
account of the impact of the SSG on imports from developing countries.
"(v) Informal papers presented by the United States (AIE/10), by the European
Community (AIE/14), and by Australia (AIE/15) provided a basis for a discussion on
Article 6.5 Blue Box payments, namely, payments under production-limiting programmes.Annex III G/L/322
Page 39
Some of the main points addressed were:  whether the Blue Box was or should be a
transitional or a more enduring feature of the Agreement;  the relative advantages and
disadvantages of Blue Box payments in the context of domestic agricultural policy reform,
including the role of such payments in relation to non-trade concerns;  and the need to discuss
Blue Box payments in the broader domestic support context, having regard, inter alia , to the
scope for achieving domestic policy objectives and non-trade concerns through minimallytrade-distorting and relatively more efficient Green Box measures.  Several Members
applying Blue Box measures indicated that they intended to submit papers on their experience
in applying such measures as a contribution to the further discussion on this subject.
"(vi) On the subject of State Trading Enterprises (Single Desk Buyers and Single Desk
Sellers) there was a discussion at both the January and March AIE meetings:  the relevant
informal papers were those submitted by the United States (AIE/11), by Australia (AIE/16)
and by New Zealand (AIE/17).  A wide range of points were raised regarding the distortions
to market access and to conditions of competition on world markets which could arise from
the operations of state trading enterprises.  At the same time reflections were made about the
role of such enterprises in the stabilization of domestic prices and in ensuring adequate
supplies for food security purposes.  It was also noted that more practical examples were
needed regarding the scope, activities and potential for trade distortion of state tradingenterprises as a basis for further discussions in this area.
"(vii) The discussion on export subsidies at both AIE meetings was focused on a range of
issues, including the downstream flexibility, breaches of commitments, circumvention, and
the problem of late compliance with the notification requirements.  The background paper by
the Secretariat on export subsidies (AIE/S3) and the informal paper submitted byNew Zealand in advance of the March meeting (A IE/18) both constitute very useful inputs to
the continuing discussion in this area.
"(viii) Recently circulated papers by the United States on Domestic Support Policy Reform
(AIE/19) and by Canada on Sectoral Trade Liberalization (AIE/21) were the subject of
general  presentations and are for substantive consideration at the next AIE meeting.  Finallythe opportunity was taken to have an initial exchange of views on the Secretariat background
paper on Ad Valorem, Specific and other Tariffs (AIE/S5), on the basis that this paper would
also be for substantive discussion at the next AIE meeting, which will take place on
24 June 1998."
The representative of the European Communities noted that during the discussion on issues of
interest to developing countries as well as special and differential treatment, the suggestion was made
that developed countries provide reports on initiatives they had taken, on an autonomous basis,
particularly with regard to least-developed countries.  The Chairman's report also did not make
reference to the fact that on the United States' paper on Domestic Support Policy Reform (AIE/19), a
range of views were expressed, including by the European Communities.  The Chairman responded
that this paper was for preliminary consideration a nd that he intended to reflect the points that were
made following the substantive discussion of the paper in June 1998.G/L/322 Annex III
Page 40
Seventh Meeting of the AIE Process:  Held on 24 June 1998 –
(G/AG/R/15, paragraph 68, refers)
"(i) In line with paragraph 36 of G/AG/R/10, the following is my summary report as
Chairman on the meeting of the AIE process held on 24 June 1998.
"(ii) The first theme considered at this meeting was special and differential treatment.
Members had the benefit of a new informal paper submitted by India on Issues of Interest to
Developing Countries (AIE/30).  In addition, the Secretariat had provided three new
background notes concerning Actions taken Within the Framework of the Net-Food Importer
Decision as Notified by Members (AIE/S8), concerning the Agricultural Trade Performance
of Developing Countries (AIE/S10) and co ncerning Uruguay Round Agricultural Tariff
Reductions for Selected WTO Members According to Stage of Processing (AIE/S11).
Moreover, there was an opportunity to revert to the related informal papers by Pakistan, Peru
and the Dominican Republic (AIE/6) and Cuba (AIE/12) as well as the Secretariat
Background notes AIE/S6 and AIE/S7.
"(iii) The further discussion on issues of interest to developing countries and on special and
differential treatment was useful in helping to bring a clearer focus to bear on the main areas
where detailed analysis and exchange of information needs to be undertaken in a systematic
way.  Thus it will be appropriate to develop a checklist of issues in the five principal areas of:
market access;  food security with particular reference to net food-importing and least-developed developing countries;  domestic support;  export subsidies;  and notification
requirements and technical assistance.
"(iv) In this regard it was stressed that, given the wide range of situations and interests
involved, it was important for the work in this area that developing countries submit countrypapers on their own experience with regard to implementation of the Uruguay Round
Agreement on Agriculture, identifying both positive elements and any problems or obstacles
encountered in taking advantage of the opportunities created by the Uruguay Round.  To this
end short concise papers would suffice since these often attract more attention in capitals than
longer convoluted papers.  The Secretariat woul d of course be willing to assist developing
countries as appropriate so that they can more effectively organize their experiences in the
form of country papers for submission to the AIE Process.  The Secretariat in its further work
on the trade performance of developing countries will also provide additional data on the
trade performance of least developed countries in the context of a revision of the background
note AIE/S10.
"(v) I will of course be continuing my informal consultations on these matters (as I did
between the previous meeting and this one), including on the checklist of issues and on the
arrangements for a proposed ad hoc informal meeting, to which relevant international
organizations could be invited in order to present updated assessments of the impact of the
implementation of the results of the Uruguay Round, with particular focus on the impact of
the implementation of the Agreement on Agriculture for developing countries.
"(vi) The discussion on the informal paper encompassed a number of key issues regarding
the role of this mechanism, including its prev entive role in relation to import surges and
significant price declines and in facilitating adjustment to further reform.  It was pointed out
that the special agricultural safeguard represented a major exception relative to the WTO rulesapplicable to trade in goods generally.   It was also emphasised that the SSG was an integral
element of the Agreement on Agriculture and would remain in force for the duration of the
reform process as determined under Article 20. A specific suggestion for further analysis inAnnex III G/L/322
Page 41
this area concerned the use of the special agricultural safeguard in circumstances where the
volume of imports was insignificant or declining.  Further discussion of the issues relating to
the SSG provisions will be taken up in detail when the Secretariat background note on the
special agricultural safeguard, currently under preparation, becomes available.
"(vii) A wide range of views were expres sed on Canada's paper on Sectoral Trade
Liberalization (AIE/21).  It was noted that any liberalization initiatives for selected sectors
within agriculture should not focus solely on market access but should seek to eliminate a
much wider range of existing trade distortions, including those arising from domestic support,
export subsidies and export taxes.  It was also noted that sectoral liberalization initiatives ran
the risk of leading to unbalanced results between  sectors and that preference should be given
to a comprehensive approach for further liberalization of trade in agriculture.  On the whole it
was my general assessment of the discussion that sectoral initiatives should be regarded as apossible complementary technique and not in any way as a substitute for a comprehensive
approach.
"(viii) With regard to domestic support issues, the United States' informal paper on
Domestic Support Policy Reform (AIE/19) describing its experience under the FAIR Act of1996 was the first subject of discussion.  Several Members expressed the view that the shift
towards Green Box measures constituted a positive step worthy of being extended to other
sectors which had been left out from the reforms.  However, it was also noted that certain
doubts could possibly be raised with the regard to the green status of the direct payments
under the FAIR Act.
"(ix) Canada's informal paper on Annex 2:  Domestic Support Measures Exempt from
Reduction Commitments (AIE/23) and the Secretariat's related background note on Green
Box Measures (AIE/S9) provided the basis for a general discussion of the Green Box.  On the
issue of whether the Green Box criteria were cast too broadly or too narrowly, diverse views
were expressed.  Among many other comments, the point was made that the past positive
experience did not justify a tightening of the criteria and that narrowing the scope of the
Green Box might discourage further policy shifts towards minimally trade-distorting policies.
It was also suggested that any revision or fi ne-tuning of the Green Box criteria should give
consideration to the question of whether the Green Box was sufficiently developed toaccommodate certain domestic policies. The adequacy of the existing review procedures for
the purpose of examining the green status of notified Green Box measures was also
addressed.
"(x) Australia's informal paper on Reforming Domestic Support for Agriculture (AIE/27)
prompted a debate on many of the principal elements of domestic support.   It was observed
that the aggregate nature of the AMS provided a number of advantages, such as addedflexibility.  It was also indicated that this feature of the AMS gave rise to a number of
concerns, such as lack of transparency and the possibility of increased support levels for
particular products or sectors.
"(xi) The recently circulated informal paper by the European Communities, on Domestic
Support Policy Reform:  The Role of Article 6.5 Direct Payments (AIE/29), was subject to a
general presentation and is for substantive discussion of the next AIE meeting.
"(xii) A first discussion of the issue of non-trade concerns was held on the basis of informal
papers by Norway on Non-Trade Concerns in a Multifunctional Agriculture (AIE/22) and by
Japan on Non-Trade Concerns in Agriculture (AIE/ 25).   In this general context reference was
made to the fundamental importance of account being taken in further negotiations of such
concerns as food security and environmental and rural development objectives.  However, itG/L/322 Annex III
Page 42
was also noted that, while acknowledging that non-trade objectives were legitimate policy
objectives, any policies pursuing such objectives needed to take into account societies' other
preferences, trade concerns, as well as the notion of policy failure, and in any event should be
specifically targeted to the various specific non-trade objectives.  In this respect it was
underlined that non-trade concerns could and should be accommodated through recourse to
Green Box policies and measures.  The view was also expressed that account had to be takenof these concerns in the context of the other areas for further negotiation, such as market
access.  It was also noted that the concept of multifunctionality should be developed on the
basis of examples and that useful experience might be gained through concrete illustrations of
Members' approaches to addressing non-trade concerns in a targeted fashion.
"(xiii) The discussion of non-trade concerns is to be continued at the September AIE
meeting, on which occasion there will also be an opportunity to discuss the related NewZealand paper on the Side Effects of Agricultur al Policies and Production (AIE/28).  In my
view this week's discussions on non-trade concerns was a useful start to detailed analysis of a
subject which involves a wide range of sometimes complex and overlapping issues.  Many of
the non-trade concerns that have been highlighted are concerns which many, if not most,
Members share to one degree or another, and what has to be explored in the future analysisand exchange of information, in my view, is how legitimate concerns can be accommodated
without prejudicing further agricultural trade liberalization and the equally shared objective of
achieving fair and market-oriented trade in agriculture.
"(xiv) Subject to confirmation the next AIE meeting will take place on 28 and
29 September 1998."Annex III G/L/322
Page 43
Eighth Meeting of the AIE Process:  Held on 28-29 September 1998 –
(G/AG/R/16, paragraph 43, refers)
"(i) In line with paragraph 36 of G/AG/R/10, the following is my summary report
as Chairman on the meeting of the AIE process held on 28-29 September 1998.
"(ii) The first subject considered at this meeting was non-trade concerns.  As well
as the informal papers by Norway (AIE/22) and by Japan (AIE/25) which were discussed
at the previous session in June, four new informal papers were presented for substantive
consideration:  AIE/28 by New Zealand on "The Side Effects of Agricultural Policies and
Production";  AIE/32 by Argentina on "Non-Trade Concerns in the Next Agricultural
Negotiations";  AIE/34 by the United States on "Non-Trade Concerns and Agriculture";
and AIE/36 by Australia on "Non-Trade Concerns".  In addition two recently submittedpapers by Korea (AIE/39) on "Non-Trade Co ncerns in Net Food-Importing Countries"
and by the European Communities (AIE/40) on "The Multifunctional Character of
Agriculture", were for preliminary consideration and are to be taken up for more
substantive consideration at the November AIE session.
"(iii) First of all it is worth noting that the range of policy objectives and factors
considered relevant in the further analysis and exchange of information on non-trade
concerns is very wide ranging.  In addition to such factors as food security and the need
to protect the environment, which are exp licitly referred to in the Agreement on
Agriculture, reference was made in the contributions to:  the viability of rural areas;  the
maintenance of rural employment generally, as well as in the specific regions;  ensuringbalanced territorial and socio-economic development;  preservation of the landscape;
protection from natural hazards and disasters;  biodiversity and ecological issues;
ensuring safe and high quality food products;  consumer concerns;  and even cultural
factors and concerns.  It was pointed out th at many of these factors and concerns were
inter-related.  A number of suggestions were made regarding the need to define theseconcerns and the concepts involved more precisely, as well as the need to provide
concrete examples in order to facilitate more systematic discussion and analysis.
"(iv) A range of concerns were expressed about the negative impacts on world
market prices and access opportunities arising from protectionist or distortive measures
maintained on the basis of non-trade concerns in the agricultural sector.  A particularconcern was that these non-trade related issues could become an obstacle to achieving
further substantial liberalization of trade in agriculture.  In this regard it was pointed out
that, while many of the non-trade concerns enunciated were legitimate objectives of
domestic policies and that the social, geographical and economic circumstances in which
non-trade concerns arose might vary according to individual countries, methods of
addressing these non-trade concerns should be pursued which minimized their adverse
impacts on trade.  Some of the specific sugges tions made in this regard were to explore
in more detail in the AIE process whether the specific non-trade concerns that had been
mentioned could not be covered by the existing  provisions of the Green Box.  It was also
suggested that any such examination should include related issues of interests to
developing countries, including net food-importing developing countries, and issues
relating to food security.
"(v) These are suggestions that it would be worthwhile to follow up on.
"(vi) The AIE paper by Canada on "Expo rt Restrictions and Taxes" (AIE/24)
provided a useful basis for introducing discussion on a topic which, inter alia , hasG/L/322 Annex III
Page 44
important implications for the increasingly vital role which the WTO trading system will
have to continue to play in helping to ensure global food security.
"(vii) A number of observations were made about the adequacy of the existing
disciplines on export restrictions under the GATT and the Agreement on Agriculture.
The point was made that these disciplines were relatively modest and unbalanced
compared to the stricter obligations relating to import measures.  In this  regard it waspointed out that an important objective of the existing disciplines, and one that needed to
be re-inforced, was to ensure that there was non-discrimination between foreign and
domestic purchasers in relation to available supplies of foodstuffs in periods of high
world prices and short supplies.
"(viii) Amongst other points made it was noted,  in relation to export taxes, that
such taxes were considered to be necessary to offset the adverse effects of tariff
escalation on more processed products.  The possibility of negotiating bindingcommitments on the level of export taxes was also raised.
"(ix) In the area of domestic support, we had the benefit of informal papers on
various topics by the United States, South Africa, the European Communities and
Australia which allowed us to cover new ground in the AIE discussions in this area.
"(x) The United States' informal paper on "Annex 4:  Equivalent Measurement of
Support" (AIE/26) raised the issue of the circumstances under which the Equivalent
Measurement of Support (EMS) methodology as set out in Annex 4 of the Agreement,
should be used in the calculation of Current Total AMS.  The suggestion was made that
there might be a need in the future to develop a more precise methodology.  To improve
the transparency of notifications, it was suggested that EMS calculation details should beprovided. The proposal was also made to further explore the use being made of the EMS
in the framework of informal consultations on domestic support implementation issues
generally.
"(xi) In South Africa's informal paper on "The Effect of Inflation on Reduction
Commitments" (AIE/33), it was noted that c ountries with AMS reduction could be facing
undue constraints in maintaining the real value of price support measures in the event of
high rates of inflation, and that the countries most likely to be affected by this situation
were developing countries. It was noted that this problem was not confined to Members
with domestic support reduction commitments but could also be relevant for the many
developing countries with trade-distorting support within de minimis  levels.  On the other
hand, the point was made that it was an intended outcome of the Uruguay Round
negotiations that countries should not be allowed to maintain the real value of trade-
distorting domestic support.  It was suggested that caution should be exercised in
reopening the complex issues involved. The view was expressed that the Agreement
afforded sufficient flexibility to take account of inflation-related implementation
difficulties, including through the following provisions:  Article 18.4 of the Agreement
on Agriculture; the in-built infl ation adjustment mechanism of de minimis  provisions by
virtue of the fact that support was calculated as a percentage of the current value of
production; a higher de minimis  10 per cent ceiling for developing countries; external
reference prices specified in other than the domestic currency, such as the US dollar;  and
the possibility of shifting domestic support towards the exempt categories, such as the
Green Box.  It was also noted that Article 18.4 of the Agreement had yet to be put intopractice and that there might be a need to develop operational guidelines as to what
constituted "excessive rates of inflation".Annex III G/L/322
Page 45
"(xii) In the course of the discussion of the paper by the European Communities on
"Domestic Support Policy Reform: the Role of Article 6.5 Direct Payments" (AIE/29).  It
was stated that the move from price support towards direct payments was a step in the
right direction and that the Blue Box was a policy instrument necessary to facilitate the
adjustment towards less trade distorting support, and there was no basis in the Agreement
for the suggestion made for eliminating Article 6.5.  Some deficient features of the BlueBox were also noted:  these included, in particular, the lack of a ceiling for Blue Box
expenditures and the trade-distorting effects resulting from such direct payments being
contingent on production.
"(xiii) The informal paper by Australia on "Decoupling Domestic Support"
(AIE/35), presented a case for strengthening the Green Box disciplines and criteria.  One
argument was that Green Box accommodated measures that could cause distortions and
that such exempt policies needed to be revi ewed to ensure that the reform process was
not undermined by policies which were not truly decoupled from current production and
prices.  It was suggested that proposed candidates for such review would be decoupled
income support, resource retirement programmes and investment aids.  There were also
concerns raised regarding the considerable increase in Green Box expenditures on
measures which, according to this view, had distorting effects.  In other views expressedit was considered that the experience with Green Box to date was positive and that there
was no need to tighten the Green Box eligibility requirements, since to do so could
discourage further policy shifts towards less trade distorting measures.  It was also
suggested that any future review should focus on the issue of whether the Green Box was
sufficiently adapted to accommodate policies designed to pursue non-trade objectivesand the multifunctional role of agriculture.
"(xiv) In the preliminary discussion on the United States' paper on "Domestic
Support" (AIE/38) one observation made was that any fine-tuning of the criteria should
impart predictability and stability to the Green Box policy framework and that the
ultimate objective should be to ensure that the Green Box could not be applied so as tocircumvent domestic support reduction commitments.
"(xv) We will have an opportunity to pursue our discussion on the Green Box and
other domestic support issues when this informal paper by the United States is up for
substantive consideration at our November meeting.
"(xvi) We had a brief exchange a views on a recently circulated informal paper by
the United States on "Article 13:  Due Restraint Provisions" (AIE/37) which covers
issues relating to the actionability of both domestic support and export subsidies. The
importance of the expiry date of the Peace Clause at the end of 2003 and its implications
for domestic support and export subsidies was highlighted in a number of the views
expressed.  This informal paper by the United States will likewise be up for further
discussion at our November meeting.
"(xvii) The informal paper by Brazil on "Trade Liberalization:  sectoral and 'across
the Board'" initiatives (AIE/31) was the subject of a further exchange of views on the
relative advantages of sectoral or "zero for zero" negotiating techniques and the
relationship of any such approach with a comprehensive horizontal approach for
achieving further substantial reductions in agricultural support and protection.  Amongst
the points made in this regard it was pointed out that the future reduction modalities assuch would be a matter to be determined exclusively in the further negotiations and could
not be pre-determined in the AIE process.  Nevertheless, what measures "zero for zero"
might or might not cover in addition to tariffs could be explored in general terms, forG/L/322 Annex III
Page 46
example, in the light of previous initiatives , but without attempts to identify specific
products.  The suggestion was also made that sectoral approaches could constitute a
useful technique, as a complement to global reduction modalities, for dealing with tariff
peaks and escalation, including on products of interest to developing countries.
"(xviii) In the discussion on the informal paper by India on "Issues of Interest to
Developing Countries" (AIE/30), a number of issues were raised and elaborated.Specifically it was suggested that the principal areas in which a checklist of issues is to
be developed should be extended to include, in addition to food security, other non-trade
concerns of interest to developing countries.
"(xix) It was noted that food security was a matter which needed to be addressed in
a balanced manner in order to underpin the social and political stability that was
necessary to ensure the fuller participation of developing countries in international trade.
It was also noted that trade distorting subsidies and high levels of border protection insome developed countries had disproportionately negative effects on trade in the many
agricultural products on which developing country exporters were more highly
dependent.  On export subsidies it was pointed out that developing countries were
particularly disadvantaged when it came to competing with exporting countries that
could afford to deploy large financial resources in favour of their exporters.
"(xx) In this general context one of the views expressed was that as export
subsidies should be eliminated completely, export subsidization was not an area in which
continuation of special and differential treatment could be justified.  On the other hand it
was considered that special and differential treatment in the area of market access, both
in terms of commitments and their implementati on, would continue to be essential.  Such
treatment was considered to be particularly important in order to improve the general
participation of developing countries in world agricultural trade and to reverse the
growing tendency for many developing countries to become net importers.  Particular
importance was attached, in a number of the views expressed, to issues relating to net
food-importing developing countries being effectively addressed.  Technical assistanceissues were also raised in this general context.
"(xxi) In the course of this discussion points were also raised concerning the need
for all countries to contribute to the liberalization process, as an integral element of
broader policies that were conducive to promoting economic growth and development,
thus alleviating rural poverty and improving food security generally.  It was suggestedthat some clarification was required regarding the extent to which non-trade concerns
involved specific issues in relation to deve loping countries and that informal papers by
developing countries outlining concrete examples would be a useful contribution to the
further AIE analysis in this area.
"(xxii) There was further discussion on the possibility of relevant international
organizations being invited to participate in an ad hoc meeting to present their updated
assessments of the impact of the implementation of the results of the Uruguay Round,with particular focus on the impact of the implementation of the Agreement on
Agriculture for developing countries.  The suggestion was made that, in a first stage,
consideration might be given to the observer international organizations being invited to
make a contribution along these lines in the context of the annual monitoring exercise on
the Net Food-Importing Decision at the regular November 1998 meeting of the
Committee on Agriculture.Annex III G/L/322
Page 47
"(xxiii) The Secretariat informed the meeting that Secretariat background papers
would continue to be revised and up-dated as appropriate.  It was noted that the informal
Secretariat background paper on the special agricultural safeguard (AIE/S12) would be
distributed to Members in the near future.
"(xxiv) The next AIE meeting will take place on Monday 16 November 1998."G/L/322 Annex III
Page 48
Ninth Meeting of the AIE Proce ss:  Held on 16-17 November 1998 –
(G/AG/R/17, paragraph 36, refers)
"(i) In line with paragraph 36 of G/AG/R/10 the following is my summary report as
Chairman of the meeting of the AIE process held on 16-17 November 1998.
"(ii) The first theme discussed at this meeting was non-trade concerns. Informal papers by
Norway (AIE/22), Japan (AIE/ 25), New Zealand (AIE /28), Argentina (AIE/32), the United
States (AIE/34) and Australia (AIE/36) had be en the subject of substantive discussion at
earlier meetings.  Two additional papers, AIE/39 by Korea "Non-Trade Concerns in Net
Food-Importing Countries" and AIE/40 by the European Communities "The Multifunctional
Character of Agriculture", had been the subject of preliminary discussion at the last meeting
in September and were discussed substantively during this meeting.
"(iii) As I noted in the report on the last AIE meeting there is a broad range of issues
considered relevant in the context of non-trade concerns.  The Korean paper concentrates on
the areas of food security for net food importing-countries and other positive externalities
associated with agricultural production,  particularly flood control arising from riceproduction.  The paper by the European Communities emphasises the multifunctional nature
of agriculture beyond the production of food and fibres.
"(iv) In the discussions, the need to distingu ish between policy objectives related to non-
trade concerns and the measures used to try to achieve these objectives was emphasized.  Itwas observed that targeted measures aimed at specific goals were less likely to distort trade
and were needed to achieve specific objectives.  In contrast, a general measure, like market
price support, was economically inefficient and distorted trade, thus also implying a negative
spill over effect on other countries.
"(v) Another distinction was noted, namely that the ranking of non-trade concerns was not
necessarily the same between developed and developing countries.  For many developing
countries food security was the most urgent issue, including the need to ensure income levels
sufficient for the purchase of basic food stuffs and to develop properly functioning food
distribution systems.
"(vi) A number of observations were made that further liberalization of trade in agriculture
should improve global food security through increased trade volumes and growing
possibilities to diversify sources of supply for food-importers.  It was also recalled that, inter
alia, Annex 2 to the Agreement on Agriculture addressed food security concerns through the
provisions relating to public stockholding and domestic food aid.
"(vii) It was indicated that future discussion in this area should focus on the issue of
appropriate measures to achieve the various objectives that had been identified in the context
of non-trade concerns.  It was also suggested that in order to advance work in this area there
was a need for specific examples of concerns which could not be addressed under Annex 2
provisions.
"(viii) Moving to special safeguards, the Secretariat introduced its paper AIE/S12 "Special
Agricultural Safeguard".  This paper, based on notifications and the Uruguay Round Trade
Negotiation files in the WTO IDB (IDB CD-ROM, Release 2), covers both the potential use
of special safeguards as notified by Members in their Schedules and the actual use as notifiedby Members in their MA:5 notifications.  New Zealand's paper, AIE/20 "Article 5; SpecialAnnex III G/L/322
Page 49
Safeguard Provisions" had already been the subject of substantive discussion at earlier
meetings.  This paper highlights concerns about the use of the SSG.
"(ix) It was noted that the SSG was an important element of the Agreement on Agriculture
as it had been introduced to address concerns arising from the requirement to tariffy non-tariff
measures.  It was also noted that although many Members had reserved the right to usespecial safeguards little use has been made of the provisions.  A number of concerns were
raised relating to the actual use of the  SSG .  They referred mainly to the triggering of
volume-based safeguard action before the tariff quota had been filled;  the possibility to
invoke the volume-based safeguard in cases where there was no tariff quota;  the triggering of
price-based safeguard action at import prices higher than the external reference price used in
the tariffication exercise;  and issues relating to transparency.
"(x) In the continuing discussion on domestic support two informal papers were
examined.  The first by the United States (AIE/38) "Domestic Support; Response to AIE/23
and AIE/27"  had been the subject of prelimin ary discussion at the September meeting of the
AIE process.  This paper further addresses A nnex 2 (Green Box), Article 6.5 (Blue Box) and
AMS disciplines (Amber Box).
"(xi) The observation was made that Article 6.5 and Annex 2 permitted Members to shift
their policies away from more trade-distorting types of domestic support to less distorting
measures. Tightening of these provisions could reduce the flexibility currently available to
Members.  It was also noted that there is nothing in the Agreement on Agriculture to suggestan expiry of Article 6.5.  On the other hand, it was pointed out that Article 6.5 payments were
of a trade-distorting nature.
"(xii) Another point raised in the discussion was the potential for domestic support
measures to distort trade even though they complied with the letter of Annex 2.  The viewwas expressed that it would be more useful to examine the adequacy of the existing criteria
for Green Box payments rather than to  consider limits to these payments.
"(xiii) As for the Amber Box, the observation wa s made that the commitments related to the
reduction of the overall AMS level and therefore they could allow Members to concentratesupports on a smaller, but more subsidised, group of products, or even to introduce new
subsidies.
"(xiv) The paper by Iceland, AIE/42 "External Reference Price Adjustment", addresses the
issue of excessive rates of inflation and their effects on reduction commitments.  This follows
the paper by South Africa, AIE/33 "The Ef fect of Inflation on Reduction Commitments"
which was discussed at the September meeting.  The paper by Iceland explains themethodology by which Iceland has recalculated its domestic support using SDRs to replace
the Icelandic Króna.
"(xv) Some questions were asked about the methodology used in calculating the
adjustment, in particular matters related to the external reference price and to exchange rateconversions.  It was noted that adjustments for inflation are not meant to maintain real levels
of support but to achieve their reduction on a more equitable basis.  On the other hand, the
point was made that the external reference price was fixed, reflecting the fact that the
reduction commitments agreed in the Uruguay Round were in nominal terms.  It was also
noted that exchange rate adjustments on top of external reference price adjustments wouldover compensate for inflation.G/L/322 Annex III
Page 50
"(xvi) It was observed that there is flexibility to address problems of inflation through Green
Box measures.   Also, with respect to trade-distorting measures, the de minimis  provisions had
an implicit inflation adjustment mechanism as support is calculated as a proportion of the
current value of production. The view was also expressed that there was nothing in the
Agreement on Agriculture which prevented adjustments for excessive inflation.
"(xvii) It was observed that Article 18.4 provisions were the appropriate route to address
problems associated with excessive inflation.  Concerns were expressed about the absence of
any implementing guidelines for Article 18.4.  It was suggested that any changes made to
account for excessive inflation should be transp arent and should be notified to the Committee
as an adjustment under Article 18.4.  The Committee could then decide if the adjustment was
appropriate.
"(xviii) The paper by South Africa, AIE/41 "The Negative Effects of Export Subsidies on
Developing Countries" outlines concerns on the effects that such subsidies can have on
developing countries.  It notes that export subsidies can adversely affect both net food-
exporting countries and net food-importing countries, including through their impact on
agricultural investment.  The high proportion of the population of developing countries livingin rural areas and who depend on farming meant there should be a favourable multiplier effect
for the economy as a whole if returns from farming increase.
"(xix) It was suggested that export subsidies distorted trade in favour of those countries
which could afford them.  Net food-exporting developing countries had to compete on worldmarkets against subsidized supply from other sources which meant lower prices for them.  As
regards net food-importing countries it was noted that there may be short term benefits from
importing subsidised agricultural products but that these may reduce their potential to develop
agricultural production.
"(xx) It was stated that the positive effects of eliminating export subsidies for net food-
importing developing countries depended on a number of factors.  These factors could range
from climatic conditions to domestic agricultural policies.  Elimination of export subsidies
would have to be accompanied by transitional food aid measures for some countries.  There
was also the view that there was a need to take into consideration the concerns of small states,particularly least-developed and net food-importing small states, when dealing with the issue
of export subsidies, especially as, in this view, no positive conclusion has been forthcoming
with respect to the relevant Marrakesh Decision.
"(xxi) The point was made that the use of export subsidies could also result in recourse to
trade measures to protect domestic producers from subsidised competition. On the other hand,
reducing export subsidies would provide incentives to improve conditions of market accesswhich, in turn, would benefit trade in agricultural products.
"(xxii) India's paper AIE/30 "Issues of Interest to Developing Countries" had already been
discussed at earlier meetings while India's most recent paper, AIE/44 "Food Security - An
Important Non Trade Concern", was the subject of preliminary discussion.  This new paperexamines the issue of food security and, inter alia , suggests that a purely market-oriented
approach may not be the optimal one for some countries, especially developing countries with
their large rural population.  It suggests government intervention may be necessary in pursuit
of the objective of self sufficiency, considered to be an essential element of food security, and
certain other non-trade concerns.Annex III G/L/322
Page 51
"(xxiii) In terms of future work for the Secretariat it was suggested that developing countries
should submit a list of the agricultural products of greatest interest to them so that the
Secretariat can provide information on the relevant tariff levels.  In this context reference was
also made to the information contained in the AIE/43 paper by Uruguay.
"(xxiv) As the paper AIE/44 was only for preliminary discussion it was agreed to revert to it
at the next meeting which will take place on 17 March, 1999.  Due to time constraints it was
also agreed that discussion of the US paper AIE/37 "Due Restraint Provisions - Article 13"
and the paper by Uruguay AIE/43 "Tariff Peaks and Tariff Escalation for Agricultural and
Agri Food Products and their Effect on Developing and Least Developed Countries" would be
the subject of substantive discussion at the next meeting.  Several Members indicated their
intention to table further papers for this meeting."G/L/322 Annex III
Page 52
Tenth Meeting of the AIE Process:  Held on 24-25 March 1999 –
(G/AG/R/18, paragraph 33, refers)
"(i) In line with paragraph 36 of G/AG/R/10 the following is my summary report as
Chairman of the meeting of the AIE process held on 24-25 March 1999.
"(ii) The discussion of the issue of non-trade concerns continued at this meeting with
papers by India "Food Security - An Importa nt Non-Trade Concern"  (AIE/44) and Norway
"Environmental Effects of Trade Liberalization in the Agricultural Sector" (AIE/48).  The
paper by India, which was the subject of preliminary discussion at the last meeting, was a
follow up to their earlier paper (AIE/30) on general non-trade concerns and focused on the
issue of government support for agricultural production as part of its food security objectives.
"(iii) Members acknowledged that food security was important to all countries, especially
for developing countries, and further trade liberalization was only one of several factors
necessary to ensure reliable access to food supplies.  It was pointed out that the Agreement on
Agriculture already offers flexibility for Members to pursue food security policies.  However,it was also noted that financial constraints reduce the ability of some developing countries to
use direct payments.  While the most effective way of improving food security was
considered to be through general economic development some Members felt that government
intervention may be necessary to maintain production as food security insurance against such
problems as severe exchange rate fluctuations and balance-of-payments difficulties.
"(iv) The discussion on the Norwegian paper focused on the extent to which production
supports are necessary to achieve certain non-trade concerns related to agriculture and the
environmental impact of these supports.
"(v) While, according to the paper there was no significant relationship between levels of
support and environmental degradation, this conclusion was not shared by some Members
who considered that there were shortcomings with the data and the methodology used.  It was
also noted that indicators of the negative environmental effects of agriculture needed to be
considered against the background of the specific conditions of the areas or countries inquestion.  Opinions were expressed that the existing provisions of the Agreement on
Agriculture are already sufficient to allow supports for the environment and that measures
targeted at specific objectives rather than through general support schemes are more likely to
achieve specific environmental objectives.
"(vi) There were two papers on Article 13, the peace clause.  One from the United States
"Article 13 - Due Restraint Provisions" (A IE/37) and the other from the European
Communities "The Agreement on Agriculture and the Need for Legal Security" (AIE/53).
The paper by the United States pointed out that Article 13 is due to expire at the end of 2003
and that the Subsidies Agreement will then apply.  The EC paper suggested that legal security
gives Members time to adapt their policies and is  needed to assure them that in complying
with the Agreement on Agriculture they are protected from litigation.
"(vii) It was pointed out that consensus within  the WTO will be needed for any extension of
the provisions of Article 13 beyond 2003 and this could be seen as an incentive to conclude
negotiations before that date.  It was also noted that the peace clause had been an important
element in agreeing to the Uruguay Round reform programme and should form part of thebasis for further reform.  The role of the peace clause in enabling Members to shift their
supports to the Green Box was stressed.  Some Members noted that the peace clause appliesAnnex III G/L/322
Page 53
more to the question of investigations by national authorities on subsidies rather than to
Dispute Settlement proceedings.
"(viii) The United States argued in their paper "Administration of Tariff-Rate Quotas"
(AIE/46) that additional disciplines are needed to ensure that market access opportunities are
not restricted by administrative methods.  In the discussion, the view was supported that while
Article XIII of GATT 1994 and the Agreement on Import Licensing Procedures include some
provisions on the administration of tariff quotas, these are not considered to be sufficient.
More detailed guidelines were needed both by  exporting countries to ensure that the market
access opportunities were not further restricted and by importing countries to ensure that their
administration systems satisfied the legal requirements of the WTO.   It was also pointed out
that the use of a simple indicator, like tariff quota fill, may be useful but underfill alone was
not sufficient grounds to conclude that a particular administration method is restricting tradefurther than the tariff quota itself.  According to this view an analysis of the administration
method would need to examine other factors incl uding the market structure of the country and
the characteristics of the product concerned.
"(ix) The paper by Bulgaria, the Czech Republic, Hungary, Poland, the Slovak Republic
and Slovenia "The Future Treatment of Do mestic Support Commitments in the Case of
Transition and Post-Transition Economies" (AIE/45) considered the special needs of these
countries. These Members stressed that the situation of the transition and post-transition
countries underlines the vital importance of special flexibility in the area of domestic support
in helping these countries move towards market-oriented economies.
"(x) In the discussion the problems associated with market support-type measures were
pointed out as it was felt these may perpetuate th e types of inefficiencies the shift to a market
economy should remove.  It would be better to use the flexibility of Annex 2 of the
Agreement on Agriculture which permits supports for measures like investment and landrestructuring with no reduction commitments.  Other issues like high inflation may be better
addressed through macro-economic policies which would benefit the country as a whole
rather than trying to shield one sector from its effects.
"(xi) The paper by New Zealand "Domestic Support:  Article 6.5 of the Agreement on
Agriculture - Blue Box" (AIE/ 49) continued the discussion on domestic support.  This paper
suggested that some Members may be maintaining trade-distorting levels of support by
shifting payments away from those that are subject to reduction commitments and into
programmes which qualify for the Article 6.5 exemption for payments under production-
limiting programmes.
"(xii) It was suggested that these types of payments were much less trade distorting than
market support measures.  Some Members considered them necessary to achieve certain
objectives, some of which are in the area of multifunctionality.  It was noted that payments
under Article 6.5 were more transparent and that there is nothing in the Agreement on
Agriculture to suggest the expiry of Article 6.5.  The view was also expressed, however, that
the fact that these types of payments were included in the base period AggregateMeasurement of Support calculation recogniz ed their trade-distorting nature and that
reduction commitments should be considered.
"(xiii) Uruguay introduced a WTO/UNCTAD joint study "Tariff Peaks and Tariff
Escalation" (AIE/43).  The paper indicated that many countries have a number of tariff peaksfor certain agricultural products and that tariff escalation also persists in many cases.  It was
noted that these issues are of considerable importance to developing countries that see in tariff
escalation a serious obstacle to expanding and diversifying their exports and to developingG/L/322 Annex III
Page 54
their food processing industries.  The view was also expressed that the tariff rates agreed
during the Uruguay Round reflected many factors relating to different domestic situations and
particular products.
"(xiv) The paper by the United States "Food Security - The Impact of Export Taxes"
(AIE/47) suggested that disciplines are needed to address the issue of export restrictionsbecause of the impact that they can have on food security in importing countries and the
importance of reliable access to food supplies.  While the suggestion of negotiations on this
issue was noted it was pointed out that export taxes which are part of price controls in the
exporting country should be considered separately.  On the one hand, some developing
countries may need export controls in order to encourage the development of local processing
industries while, on the other hand, some countries use them to stabilize internal prices and
this may exaggerate changes in world market prices.  It was noted that export restrictions mayneed to be considered along with issues like tariff peaks and tariff escalation as all these
issues are relevant to the question of food security.
"(xv) New Zealand's paper "Export Credits" (AIE /50) dealt with the use of export credits
and the need for agreed disciplines on their use.  Members were assured that the paper did notaddress the issue of humanitarian aid.  While it was generally accepted that disciplines were
needed there were different views on the timing and location of the negotiations.  Although
Article 10.2 of the Agreement on Agriculture requires Members to work towards disciplines
on export credits it was noted that no final agreement has been reached in the discussions
taking place in the OECD.  The view was expressed that these negotiations should beconcluded before the negotiations on agriculture commence.  It was also felt that Members as
a whole should be better informed of the issues under discussion.  In this context it was
important to establish the factors that could constitute subsidies in this area.  The Secretariat
was requested to prepare a factual paper on export credits and related facilities.
"(xvi) The paper by El Salvador, Honduras, Cuba, Nicaragua, the Dominican Republic and
Pakistan "Issues Related to Market Access" (AIE/54) was given a preliminary introduction to
the AIE process.  The paper raises some of the problems associated with the Uruguay Round
results on market access for agricultural products, in particular products of interest to
developing countries, and suggests a number of solutions.  Also introduced to the AIE processwas the paper by Mauritius "Multifunctional Role of Agriculture in Small Island Developing
States" (AIE/51) which outlined the concerns facing small developing economies in general
and small islands in particular.  It suggests that flexibility is needed to enable these countries
to address these concerns.  Both of these papers will be the subject of further discussion,
along with the other papers submitted to the AIE process which were not discussed at this
meeting.
"(xvii) The Secretariat briefly introduced the revised background papers "Agriculture Trade
Performance by Developing Countries" (AIE/S 10/Rev.1) and "NFIDC  Decision - Actions
Taken Within the Framework of the Decision as  Notified by Members" (AIE/S8/Rev.1).  In
addition a paper on implementation of the NFID C Decision (G/AG/W/42) had been circulated
to Members and revisions of the Secretariat papers AIE/S2 on domestic support and AIE/S3
on export subsidies along with a new paper on tariff treatment of products of interest to
developing countries are in the course of preparation."Annex III G/L/322
Page 55
Eleventh Meeting of the AIE Process:  Held on 23-24 June 1999 –
(G/AG/R/19, paragraph 26, refers)
"(i) In line with paragraph 36 of G/AG/R/10 the following is my summary report as
Chairman of the eleventh meeting of the AIE process held on 23-24 June 1999.
"(ii) Consideration of non-trade concerns continued at this meeting with substantive
discussion of the paper by Mauritius "Multifunctional Role of Agriculture in Small Island
Developing States" (AIE/51).   This paper addre ssed the characteristics of agriculture in small
developing island states and its role in their social and economic development.  It was
suggested that flexibility in making and im plementing commitments was needed in order to
allow these countries to address their specific concerns.
"(iii) Once again it was noted that different countries focus on different issues which come
under the broad heading of non-trade concerns.  Many less developed countries tend to
concentrate on rural employment, attenuation of the effects of rural out-migration and poverty
alleviation.  On the other hand, some develope d countries place particular emphasis on issues
such as landscape, environment and domestic income equality.  It was noted that food
security was of interest to all Members although particularly for low income countries.
"(iv) Specificities of small island states and the importance of their non-trade concerns
were recognized.  It was also recalled that existing provisions were sufficient to address them
and that protectionism in pursuit of non-trade objectives could reduce development
opportunities for other countries.
"(v) A number of other papers on multifunctionality were introduced at this meeting and
will be the subject of substantive discussion at the next one.  These included papers by
Norway "Food Security and the Role of Dome stic Agricultural Production" (AIE/57), two
papers by Japan "Multi-functionality in Japan" (AIE/60) and "Food Security" (AIE/61) and by
the United States "The 'Multifunctional' Charact er of Agriculture, Food Security and Other
non-Trade Concerns" (AIE/64).
"(vi) The European Communities' paper "Article 5:  Special Safeguard Clause for
Agriculture" put forward the opinion that this provision was introduced to assist tariffication
and that it should remain in force.  In the discussion the concerns expressed at the November
AIE meeting in response to New Zealand's paper (AIE/20) about the application of Article 5
were reiterated although it was noted that special safeguards have not been used extensively.It was pointed out that the provision does cause some uncertainty for exporters although it
was also considered that special safeguards can be a useful mechanism for addressing
concerns about sudden price falls or import surges.
"(vii) Market access issues of concern to developing countries were addressed in the paper
by El Salvador, Honduras, Cuba, Nicaragua,  the Dominican Republic and Pakistan "Issues
Related to Market Access" (AIE/54).  This paper highlighted a number of factors which
reduced market access opportunities for developing countries and suggested a number ofways in which the situation could be improved.
"(viii) In the discussion there was general recognition that special and differential treatment
will remain an integral element of the forthcoming negotiations although the exact nature of
the provisions will be a matter to be taken up in the course of these negotiations.  It was alsoG/L/322 Annex III
Page 56
pointed out that existing special and differential treatment provisions may go some way
towards addressing the concerns expressed in the paper.
"(ix) Also on market access, the United States introduced their paper "High In-Quota
Duties" (AIE/56) which outlined some of the is sues related to in-quota tariff rates and the
need for information on the relationship between quota fill rates and in-quota tariff rates.
Canada's paper "Data Requirements for Agricult ure Negotiations" (AIE/55) also highlighted
the need for information on in-quota tariff rate s.  The paper pointed out the information
currently available from various sources and the deficiencies associated with them.  It stressed
the usefulness for all Members to have complete and accurate data in the forthcoming
negotiations.
"(x) In the discussion of Canada's paper it was stressed that more data would be useful but
that this should not delay the start of negotiations.  It was also pointed out that timely and full
compliance with notification obligations would go some way towards filling the gaps inMembers' data requirements..
"(xi) The European Communities' paper "The Agreement on Agriculture and the Need for
Legal Security" (AIE/53) underlined the importance of legal security for existing
commitments as well as the commitments to be made as a result of the forthcoming
negotiations.  In the discussion it was suggested that this security may need to go beyond theexisting coverage provided by Article 13.  However, different views were expressed about
both any prolongation of the existing peace clau se and about any extension of its scope.  It
was pointed out that before a due restraint clause could be considered some idea of the future
commitments would be needed.  The point was also made that it will be necessary to avoid
undermining other Members' rights to protect th eir trade interests although the view was also
expressed that Members complying with thei r commitments under the agriculture agreement
needed to have assurance that they would not be subjected to undue challenges under other
WTO provisions.
"(xii) It was also pointed out that the implementation period for developing countries runs 
until the end of 2004 while Article 13 expires at the end of 2003.
"(xiii) A number of papers were introduced which were submitted after the deadline of three
weeks before the meeting.  These papers covered the following topics:
-  the continuation of reform (AIE/59 by Malaysia, Myanmar, Philippines and
Thailand);
- the agreed conclusions of the UNCTAD Expert Meeting on Trade in the
Agriculture Sector (AIE/58 by Uruguay);
- export regulations (AIE/62 by Japan); and
- special and differential treatment for developing countries (AIE/63 by Cuba,
Dominican Republic, El Salvador, Honduras, Nicaragua, Pakistan, Sri Lanka
and Uganda).
"(xiv) The Secretariat noted that the background papers on domestic support (AIE/S2) and
Green Box supports (AIE/S9) had been updated.  In addition, the revision of the backgroundpapers on export subsidies and papers on export credits and on products of interest to
developing countries should be available before the next meeting in September."Annex III G/L/322
Page 57
Twelfth and Final Meeting of the AIE Pr ocess:  Held on 28-29 September 1999 –
(G/AG/R/20 refers)
"(i) In line with paragraph 36 of G/AG/R/10 the following is my summary report as
Chairman of the twelfth, and last, meeting of  the AIE process held on 28-29 September 1999.
"(ii) The subject of non-trade concerns was further and extensively discussed on the basis
of papers presented by Norway (AIE/57 and AIE/68), Japan (AIE/60 and AIE/61), the United
States (AIE/64), Switzerland (AIE/67) and the European Communities (AIE/73).
- The first Norwegian paper (AIE/57) stressed the importance of food security and the
role domestic production can play in achieving this objective while the second(AIE/68) addressed policy measures, including production supports, that were
considered necessary in order to achieve certain multifunctional objectives;
- Japan's paper (AIE/61) on food security focused on domestic production as a vital
element of food security while their paper (AIE/60) on multifunctionality outlinedtheir principal concerns under this heading and pointed out that the emphasis
attributed to different non-trade concerns varied from one country to another;
- The paper by the United States (AIE/64) suggested that measures to address non-
trade concerns needed to be targeted and decoupled from production in order toachieve their objectives and that negative effects on other countries should be
avoided.  In this regard, the paper suggested that existing Annex 2 provisions should
be sufficient to cater for Members' non-trade concerns;
- In their paper Switzerland (AIE/67) put forw ard a number of criteria for assessing the
measures used to address non-trade concerns and suggested that existing Annex 2
provisions were not sufficient to meet certain multifunctional objectives;  and
- The EC paper (AIE/73), which was distri buted during the meeting, was about the
instruments which could be used to achieve multifunctional policy objectives.
"(iii) In the discussion the critical importance of food security, especially for developing
countries, was recognized and the crucial role played by international trade in achieving food
security was stressed.  It was suggested that reducing trade-distorting protection and support
would help many developing countries to improve their export performance and thus their
ability to finance their food security needs.
"(iv) It was also pointed out that self-sufficiency did not necessarily mean food security as
such a policy could not address the dangers associated with disease or natural disasters.
However, the view was also expressed that domestic production, along with trade and food
stockpiles, were all essential elements of food security and that adequate levels of domestic
production were needed to address certain threats to food security, including economic crises.
"(v) Differing views were expressed on the need for linkage between production measures
and the achievement of multifunctional objectives.  On the one hand it was considered that
fully decoupled supports were capable of meeting such objectives, while on the other hand it
was suggested that in the absence of some form of production support many importantmultifunctional objectives could not be realized.  Doubts were also expressed about the ability
of the current provisions to cover the wide range of non-trade concerns which often differedG/L/322 Annex III
Page 58
from one country, or group of countries, to another.  However, it was also stated that certain
trade-distorting subsidies, especially export subsidies, could not be justified on the grounds
that they contributed to the achievement of multifunctional objectives.
"(vi) On market access the United States paper on High In-Quota Tariff Rates (AIE/56)
suggested that some analytical work was needed to assess the relationship between tariff-quota fill and applied in-quota tariff rates.  In this regard it was noted that the applied tariff
rate was only one of many factors affecting tariff-quota fill.
"(vii) The issue of tariff-quota administration was addressed in the EC's paper
"Administration of Tariff Rate Quotas" (AIE/71) which outlined the EC's experience with
different methods of licence allocation.  The paper also discussed auctioning as a possible
method of quota allocation and concluded that, while there was no single best method, somemodalities for administration may be useful.
"(viii) While there was support for the EC's conclusion that better rules on tariff-quota
administration were needed questions were raised regarding the legality and effectiveness of
auctioning tariff quota licences.
"(ix) The EC paper (AIE/66) "Product Co verage of the Agreement on Agriculture"
suggested various alternatives for updating Annex 1 of the Agreement on the basis of the HS
96 tariff nomenclature.  In this regard it was pointed out that account might also need to be
taken of any further changes to the Harmonized System.
"(x) The subject of export regulations was introduced by Japan in their paper (AIE/62).
The paper suggested that the rules on export restrictions needed to be strengthened in order to
have a better balance between the rules and disciplines on market access and those on export
restraints, including coverage of the operations of importing and exporting state tradingenterprises.
"(xi) In the course of the discussion it was noted that export restraints can adversely affect
food security.   It was also suggested that import restrictions were a more important source of
distortion in world trade and this was reflected in the more extensive disciplines on suchrestrictions.  Another point that was highlighted was that export restrictions were often
applied by developing countries to promote the development of processing industries by
offsetting tariff escalation in some developed country markets.
"(xii) In this general context, in additi on to suggested improvements in the anti-
circumvention disciplines of Article 10.1 of the Agreement on exporting STEs, reference was
also made to the, so far unfulfilled, undertaking in Article 10.2 to arrive at internationallyagreed disciplines on export credits.
"(xiii) The paper by Cuba, the Dominican Republic, El Salvador, Honduras, Nicaragua,
Pakistan, Sri Lanka and Uganda "Issues Related to Special and Differential Treatment"
(AIE/63) highlighted the difficulties facing agriculture in developing compared to developedcountries and the need for more effective provisions on special and differential treatment.
The follow-up paper by El Salvador, Cuba, Honduras, the Dominican Republic, Pakistan, Sri
Lanka and Zimbabwe "Special and Differential Treatment, Non-Paper 2" (AIE/70) went on to
develop some of the issues raised in AIE/63.
"(xiv) These two papers noted that developed countries have provided much higher levels of
support and protection which has given them a considerable advantage over developing
countries and that the current provisions in the Agreement were, in some cases, inappropriateAnnex III G/L/322
Page 59
for developing countries.  In order to allow them to develop their agriculture sectors the
papers suggested that consideration should be given to measures to improve market access for
products from developing countries, to give them flexibility on their domestic supports and to
make the Decision on Net Food-Importing De veloping Countries more operational.
"(xv) There was general agreement that special and differential treatment for developing
countries was needed to take account of the difficulties they faced, although it was pointed
out that development needs often varied from one developing country to another.  It was felt
that improving market access for products of interest to developing countries and reducing
competition from subsidized production and exports would be of considerable help although
different emphasis was placed on flexibility in implementing commitments.
"(xvi) Mauritius introduced their paper "Agriculture in Small Island Developing States"
(AIE/65) which set out the Plan of Action adopted by the FAO Council at its meeting in June
1999.  It was pointed out that the Plan of Action was now an official document of the General
Assembly of the United Nations.  While it was noted that the Plan also included some
suggestions which were outside the scope of the agriculture negotiations, there was extensive
support in favour of the relevant issues being addressed in the future negotiations.
"(xvii) The paper by Malaysia, Myanmar, Philippines and Thailand, "Continuation of the
Reform Process After the End of the Implementation Period" (AIE/59) outlined some options
for continuing reform after the end of the implementation period.  In introducing its paper
"Agreed Conclusions of an UNCTAD Expert Meeting on Trade in Agriculture" (AIE/58)
Uruguay pointed out that these conclusions had been agreed by all participants at that
meeting.
"(xviii) Other new papers presented at this meeting were; AIE/69 by the United States on
trade in agricultural biotechnology products; AIE/72 by the EC on food quality, reputationand geographical origin and AIE/74 by Uruguay on the report by the Chairman of an
FAO/Netherlands Conference "The Multifunctional Character of Agriculture and Land".  On
the EC paper, an opinion was expressed that the issue of intellectual property should not be
raised in this forum.
"(xix) It was noted that Secretariat background papers on products of interest to developing
countries (AIE/S13) and revised background pape rs on export subsidies (AIE/S3/Rev.1) and
domestic support (AIE/S2/Rev.2) had been circulated since the June 1999 meeting of the AIE
process.  It was also noted that revised background papers on tariff-quotas (AIE/S1 and
AIE/S4) and a paper on export credits would be circulated in the near future.
"(xx) Finally it was noted that, should there be any additional papers that Members
proposed to submit in the near future that these papers would be circulated and included in the
list of AIE papers with an appropriate annotation."
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