SUMMARY Report of the MEETING HELD on 24 SEPTEMBER 2009

RESTRICTED WORLD TRADE G/AG/R/56 10 November 2009 ORGANIZATION (09-5615)

Committee on Agriculture

SUMMARY REPORT OF THE MEETING HELD ON 24 SEPTEMBER 2009

Note by the Secretariat1

1. The Committee on Agriculture held its fifty-sixth regular meeting on 24 September 2009 under the Chairmanship of Ms. Valeria Csukasi of Uruguay.

2. The agenda of the meeting as set out in WTO/AIR/3418 of 14 September 2009 was adopted with the following modifications: (i) the addition of questions by Canada to Costa Rica relating to notifications in the context of domestic support commitments under Section II.B.(a) below; and (ii) the withdrawal by Thailand of a question posed to Indonesia under agenda item 1.B.(i).

I. THE REVIEW PROCESS

A. MATTERS RELEVANT TO THE IMPLEMENTATION OF COMMITMENTS UNDER THE REFORM PROGRAMME: ARTICLE 18.6

(a) Argentina: Total value of agricultural production for EC 27; and value of total production of basic agricultural products for selected new EC member States

3. Acknowledging the data1 on total value of agricultural production (VoP) supplied by the EC at the 54th Session of the Committee as well as that included in TN/AG/S/21/Rev.1, Argentina considered that the available VoP data was still incomplete. Argentina requested the EC to provide the following data for the period 1995-2000: (i) VoP data in local currencies for Cyprus, Czech Republic, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia for all years; for Estonia for the years 1995 to 1999; and for Bulgaria for the years 1995 and 1996; and (ii) relevant exchange rates for each year. The EC considered that the VoP data it had provided in the past to the Committee should be a good complement to the information contained in the document TN/AG/S/21/Rev1. Furthermore, in view of the ongoing template discussions in the Doha Round agriculture negotiations, the EC had no intention to provide additional data under the regular session. The EC pointed out that data were, however, publicly available at the EUROSTAT, both in terms of production value as well as exchange rates.

4. Referring to the timelines provided for in the "Notifications Requirements and Formats" 2 for domestic support notifications, Argentina noted that the Table DS:1 notification for the year 2007/2008 and 2006/2007 were outstanding. Argentina stressed that the data were essential to assess the effectiveness of the proposed overall trade-distorting support cuts in the Doha Round. The EC replied that the domestic support notification for the period 2006/2007 was under preparation. The data collection for the notification for the period 2007/2008 was yet to be initiated. The EC expressed similar interest in the state of preparation of Argentina's domestic support notifications.

1 This document has been prepared under the Secretariat's own responsibility and is without prejudice to the positions of Members or to their rights or obligations under the WTO. 1 Annex 1 of G/AG/R/54 and Corr.1 refer. 2 G/AG/2 refers.

G/AG/R/56 Page 2

5. In its follow-up comments, Argentina urged the EC to provide the data to the Committee noting that it would be important for verifying Doha schedules as well as in the context of the incorporation of certain data in the Draft Modalities.

(b) Argentina: EC tariffs: AVE calculation details for poultry (G/SECRET/25/Add.1); and new tariffs (G/SECRET/32)

6. Referring to the information already provided on 2 July3, Argentina asked the EC to provide the AVE calculation sheet for the poultry tariff line HS 0210 99 39. The EC stated that the tariff line HS 0210 90 29 had undergone a code change in the year 2002, i.e. to HS 0210 99 39. The detailed AVE calculations were officially transmitted to the WTO Secretariat in 2005. Argentina also enquired about the new tariffs for the various tariff lines that were currently under negotiation pursuant to Article XXVIII of GATT 1994.4 The EC responded that the new tariffs would be notified in due course. Moreover, the EC questioned whether these matters fell within the scope of Article 18.6 of the Agreement on Agriculture, and expressed the view that they would be more appropriately addressed under the procedures of Article XXVIII of GATT 1994.

7. Referring to the data on EC-25 export subsidy commitment levels provided by the EC at the 53rd Session5, Argentina noted that supporting calculations were needed for verification purposes. It specifically considered that the netting-out procedures previously referred to by the EC remained unclear, and that the data relating to the EC-27 commitment levels were yet to be distributed. In Argentina's view, the verification process had not even begun.

8. The EC responded that a working document was made available to Members during the 53rd Session. It described the EC-25 commitment levels on domestic support and export subsidies, outlining the methodology that the EC followed when consolidating the export subsidy and domestic support commitments for the EC-25. The document contained the results of the netted-out export subsidy commitment levels and aggregate Bound Total AMS figures. The same methodology was followed for consolidating the commitments during the previous enlargement, i.e. from EC-12 to EC-15.

9. Referring to the EC's latest Table ES:1 notification6 and the established timelines for export subsidy notifications, Argentina noted that the EC notification for the year 2007/2008 was now overdue. The EC replied that the notification for the period 2007/08 had already been submitted to the Secretariat for circulation to Members.7

(d) Australia and New Zealand: Re-introduction of export subsidies for dairy products by the EC and the United States

10. Australia reiterated its concerns over the on-going use of dairy export subsidies by the EC and the United States, stating that it sent wrong signals about protectionism. The use of export subsidies had a depressive effect on world dairy prices and a damaging effect on non-subsidizing producers such as Australia and many developing countries, Australia asked the EC and the United States whether they had considered removing those export subsidies given the recent improvement in international dairy prices. Also, referring to the U.S. assertion that the decision to reactivate dairy

3 Para. 15 of G/AG/R/55 refers. 4 G/SECRET/32 refers. 5 Paras 5-7 of G/AG/R/53 refer. 6 G/AG/N/EEC/57, dated 25 November 2008. 7 Circulated as G/AG/N/EEC/61 dated 15 October 2009.

G/AG/R/56 Page 3 export subsidies was in reaction to the damaging effect of the EC dairy export subsidies, Australia wondered whether the EC and the United States could consider a joint meeting to discuss a coordinated removal of their respective export subsidies. New Zealand noted that both the EC and the United States had previously characterized the re-introduction of export subsidies for dairy products as a temporary measure. In this context, New Zealand sought an indication as to the possible duration of the measure, given signs of stabilization in dairy markets.

11. The EC responded that it was carefully monitoring the situation on the dairy market but could not, at this stage, give an indication of the time it would take the dairy markets to recover to a point when export refunds would no longer be required. The EC was committed to phase out export subsidies upon the successful completion of the Doha Round, which would lead, inter alia, to a parallel elimination of all similar measures by other developed countries, including in the dairy market. The EC flagged its willingness to discuss these issues at any moment with any trading partner.

12. The United States indicated that, on 22 May 2009, the allocations under the Dairy Export Incentive Program (DEIP) had been announced for the period 1 July 2009 to 30 June 2010. The decision to maintain the use of the DEIP was not taken lightly. In operating the programme, every attempt had been made to minimize the impact on non-subsidizing foreign suppliers. The reintroduction of subsidies by the EC on dairy products in January 2009 continued to have a price- suppressing effect, a negative impact on the value of U.S. dairy exports, and had displaced the United States from a number of its traditional dairy markets. The United States continued to be willing to discuss with the EC the removal of respective export subsidies for dairy products. The EC disagreed that its export subsidy programme had a price-suppressing effect in the global dairy market. Rather, it considered that the EC's programme was a response to suppressed global dairy prices. In its view, the U.S. decision to provide dairy export subsidies had been taken autonomously rather than been induced by the EC.

13. In its follow-up comments, New Zealand underlined the damaging effects of export subsidies, especially on non-subsidizing producers including developing countries. Referring to the growing signs of stabilization in the international dairy markets, New Zealand considered that it was the perfect opportunity for the EC and the United States to show leadership with the prompt removal of export subsidies. Australia fully supported New Zealand's call for removing export subsidies, which would actually assist in the recovery of the current global situation for dairy products. Australia also urged the EC and the United States to meet bilaterally to discuss the removal of export subsidies. Argentina supported the points made by Australia and New Zealand and hoped to see an early elimination of export subsidies.

(e) EC : Switzerland's export subsidization of processed agricultural products

14. The EC considered that Article 11 of the Agreement on Agriculture precluded the payment of export subsidies on processed agricultural products in the absence of export subsidies for the related basic agricultural products. Referring to Switzerland's reply to a question by the EC in the context of the Switzerland's Trade Policy Review in December 20088, the EC asked Switzerland to explain how the payment of export subsidies on processed agricultural products, in the absence of export refunds for the related basic products, could be in compliance with Article 11.

15. Switzerland replied that Article 11 of the Agreement on Agriculture did not prohibit that WTO Members provide subsidies on incorporated agricultural products if the exports of the basic agricultural products contained in the incorporated products were not subsidized in the same manner. Switzerland considered that Article 11 could not be read as preventing Members to eliminate export

8 Paragraph 14 at page 93 of WT/TPR/S/208/Rev.1 refers.

G/AG/R/56 Page 4 subsidies on primary products without elimination of export subsidies on corresponding incorporated products. If that interpretation were to be given, Members would be forced to provide, or reintroduce, export subsidies on primary products so as to be able to grant export refunds to incorporated products, which might run contrary to the spirit of the reduction commitments assumed by Members in the Uruguay Round.

(f) United States : Chinese Taipei's rice tariff quota underfill: request for domestic price data for 2007-2008

16. Expressing its concerns over Chinese Taipei's tariff quota underfill for rice in the years 2007 and 2008, the United States sought weekly data on domestic as well as international prices linked to rice imports for the calendar year 2007. The United States also wondered why the internal prices for medium grain rice appeared to be isolated from the world market for much of the year 2008, moving in the opposite direction to the world price.

17. Chinese Taipei maintained that it provided full import opportunities up to the scheduled rice tariff quota amounts for 2007 ad 2008 in accordance with its WTO commitment. In the year 2007, a part of the tariff quota was, however, not awarded in the tendering process due to the high prices quoted by some suppliers which were in excess of the prevailing international prices. Similarly, in 2008, a part of the tariff quota remained un-awarded through tendering due to the international food crisis that led to a surge in rice prices. The bid prices for medium- and short-grain rice, in particular, during this period were even higher than domestic prices. As the international food crisis receded with rice prices gradually returning to normal levels, Chinese Taipei believed that the fill rate for successful tenders would expect to increase. For example, in 2009, apart from the country-specific tariff quota of 10,000 metric tons of long-grain rice, for which tendering still needed to be continued due to food safety related issues, the tendering processes for the remaining tariff quotas had been completed. Chinese Taipei would continue to provide full import opportunities in accordance with its WTO commitments.

18. Chinese Taipei stated that it had already supplied relevant information on domestic rice prices from 2007 to 2009 to the United States bilaterally. The data showed that international rice prices soared from January 2008 onwards, reaching a peak between April and May. From June 2008 onwards while the prices of American long-grain rice and Thai and Vietnamese rice started to decline, the prices of American medium-grain rice moved in the opposite direction and kept rising. Chinese Taipei also noted that since the main outlet for its rice production was domestic consumption, domestic rice prices were less affected by international price fluctuations, although domestic prices were generally higher than the average international prices. Chinese Taipei had two cropping seasons of rice: the first rice crop was harvested from June to September, was usually abundant, and made a major contribution to domestic stocks and prices.

19. The United States noted that the rice market was an interesting market and medium-grain rice prices did not always follow the trend in the prices of long-grain rice. The United States also felt that some of the price trends referred to by Chinese Taipei might be caused by the absence of some typical producers and exporters of medium-grain rice from the international market.

G/AG/R/56 Page 5

B. REVIEW OF NOTIFICATIONS

(a) Notifications in respect of which questions have been raised in advance of the issuance of the convening airgram

20. Since the 2 July session, 47 notifications had been circulated by the Secretariat. The Committee reviewed the notifications as listed in the agenda. Specific points raised with respect to these notifications and the responses thereto are summarized in Annex 1 to this report.

(b) Notifications subject to review in respect of which no questions have been raised in advance of the issuance of the convening airgram

21. The Committee took note of the notifications which had been circulated in advance of the date on which the notice convening the present meeting was issued, but in respect of which no questions had been raised by that date under the Committee's Working Procedures (G/AG/1). These notifications are listed in Annex 2.

(c) Notifications circulated or made available after the date on which the notice convening the present meeting was issued

22. The following notifications were subject to preliminary review and are to be reverted to at the next meeting for substantive review in accordance with paragraph 9 of the Committee's Working Procedures.

(i) in the context of the special safeguard (Tables MA:3 to MA:5): from Japan (JPN/151); and

(ii) in the context of domestic support commitments (Tables DS:1 and DS:2): from New Zealand (NZL/59).

(d) Points concerning notifications raised at previous meetings

23. The Chairperson recalled that delegations have the possibility to inform the Committee of the outcome of discussions which are of general interest, but which may have been pursued bilaterally as a result of the review of notifications.

(e) Counter-notifications

24. The Committee took note that no counter-notifications had been received under Article 18.7 of the Agreement on Agriculture.

(f) Deferred replies to questions raised under the Review Process

25. There were no deferred replies to questions previously raised.

(g) Overdue notifications

26. An updated room document, dated 23 September 2009, showing the current status of compliance with notification obligations, was made available by the Secretariat.

27. Australia's questions to several Members regarding their overdue notifications are reflected in Annex 3. Egypt stated that the domestic stakeholders had been asked to provide the information necessary for the preparation of Egypt's outstanding domestic support and export subsidy notifications

G/AG/R/56 Page 6 for the period 1998-2008. While some problems had arisen with the collection of data, Egypt hoped to be able to submit the notifications soon and looked forward to discussing the issue in depth.

II. OTHER MATTERS WITHIN THE PURVIEW OF THE COMMITTEE

A. TRANSITIONAL REVIEW UNDER PARAGRAPH 18 OF THE PROTOCOL OF ACCESSION OF THE PEOPLE'S REPUBLIC OF CHINA (WT/L/432)

28. The Committee held its eighth annual review under paragraph 18 of the Protocol on the Accession of the People's Republic of China. The United States had submitted questions and comments to China in advance of the meeting,1 covering the following topics:

(a) the application of VAT exemptions and rebates;

(b) transparency of China’s tariff quota administration regime;

(c) domestic policies supporting the grains sector and the pork industry; restrictions on foreign investment in the agricultural sector; and

(d) increasing government involvement, including with respect to the possible nationalization of wholesale agricultural markets.

(a) Statement by China

29. China noted that, in the previous transitional reviews, it had already clarified its VAT exemption policy applying to farmers who sell "self-produced" grain products in China. China reiterated that it was a developing country, that its agricultural sector continued to be characterized by scattered and small-scale agricultural production, a low level of modernization, a huge rural population, and less than optimal production capacity. In those circumstances, the relevant administrative bodies experienced difficulties in directly levying VAT.

30. A VAT exemption policy therefore applied to "self-produced" units and individuals who are directly engaged in producing primary agricultural products, i.e. crop growing and harvesting; animal husbandry; as well as fishing (i.e. the "direct production chain"). However, a 13 per cent VAT continues to be collected where sales transactions are effected after the purchasing and processing of the primary agricultural products. In other words, the VAT exemption policy is only aimed at the primary agricultural products that are in the direct production chain. Should the transaction be made at wholesale or retail stage, then a 13 per cent VAT would be levied. China considered that imported agricultural products, including grains, already benefit from a full tax rebate upon exportation. Hence, imported agricultural products are also exempt from taxation before entering China's customs territory. China levies a 13 per cent VAT on imported agricultural products, i.e. the same VAT rate that applied to entities that are engaged in the wholesaling and retailing of domestic agricultural products.

1 G/AG/W/72.

G/AG/R/56 Page 7

31. In China's view, therefore, the discrimination claims advanced by the United States were unjustified, as the same tax exemption regime applies to both (i) "self-produced" agricultural products that are sold directly by Chinese farmers before entering the domestic wholesale or retail markets; and (ii) imported agricultural products, before entering China's customs territory. Once all agricultural products entered in the domestic chain of transactions, the tax burden applying to both foreign and home-grown agricultural products was the same.

32. China stressed that it had faithfully complied with all transparency commitments, including those relating to tariff quota administration, since its accession to the WTO. All the details concerning its tariff quota regime, including the announcement of annual tariff quota volumes, application procedures, allocation and re-allocation methods, were promptly and appropriately published on the websites of the Ministry of Commerce and the National Development and Reform Commission. The serial reference numbers of all pertinent documents were also duly listed in Annex 1A of China's yearly submission to the Committee on Market Access in the context of the transitional review mechanism. On the U.S. request that information on companies holding tariff quota licences be released, China observed that the Chinese private sector was concerned by demands that confidential business information be disclosed as this could adversely affect competitiveness. China believed that such concerns should be respected, and were in full conformity with WTO rules, notably paragraph 3 of Article XIII of the GATT 1994.

33. In response to the U.S. questions, China also confirmed that:

(a) in the framework of its 2009 stockpiling operations, its purchases of oilseeds would reach 5 million tonnes, representing a 3.5 million tonne increase from 2008 targets;

(b) farmers continued to benefit from direct subsidies for planting grains in 2009;

(c) total support for pig breeding farms amounted to 2.5 billion Yuan in 2008. For payments related to the artificial insemination of sows, the central budget covered 60 per cent of the support while the remainder was covered by the local budget. Due to insufficient statistical capacities, China had not yet collected data on total spending under this programme in 2008;

(d) China had no intentions to remove the equity cap applying on foreign investments in the agricultural sector.

34. Finally, China sought further clarification on the specific kind of nationalization and consolidation policies referred to by the United States in its questions, as it was not aware of the existence of such policies.

(b) Follow-up questions and comments by Members and China's responses

35. The United States thanked China for its responses and enquired whether these could be supplied in writing to enable capital-based officials to further study and clarify any matters. China responded that there was no mandate nor mechanism requiring China to provide written answers. Should such concerns be raised under the Trade Policy Review Mechanism, China would be able to provide written answers. The United States encouraged China to provide written answers and observed that, as was the case with much of the Committee's agenda, the provision of written answers was particularly useful in assisting delegations in better understanding the responses supplied.

G/AG/R/56 Page 8

36. With respect to the Committee's report on the transitional review to the CTG, the Committee took note that the Chairperson would submit a factual report on her own responsibility. The report would make reference to all relevant documents submitted in the context of this review and make reference to the Secretariat's summary report of this meeting reflecting the discussions held under this agenda item.2

B. MULTILATERAL REVIEW OF MINIMUM MARKET ACCESS COMMITMENTS FOR RICE UNDER SCHEDULE LX-REPUBLIC OF KOREA (G/MA/TAR/RS/98)

37. The Committee held a multilateral review of the implementation of Korea's commitments under Schedule LX – Republic of Korea with regard to the special treatment extended for rice. In its introduction to the communication entitled "Minimum market access commitments for rice"3 which had been circulated in advance of the meeting, Korea referred to the allocation of the minimum market access throughout the implementation period and provided information on the annual implementation record from 2005 to 2008, the administration of the global quota and the public auctioning of imported table rice conducted by the Agricultural Fishery Trade Corporation. The Chairperson invited interventions from the floor. There were no comments.

C. IMPLEMENTATION-RELATED ISSUES

38. Paragraph 2 of the Doha Ministerial Decision on Implementation-Related Issues and Concerns4 instructs the Committee to follow up on three distinct matters:

(a) Members must develop disciplines on export credits as per Article 10.2 of the Agreement on Agriculture;

(b) the Committee must examine possible means for improving the effectiveness of the implementation of the NFIDC Decision;

(c) the Committee must also ensure that Members' tariff quota regimes are administered in a transparent, equitable and non-discriminatory manner, keeping such regimes under review.

39. The Chairperson recalled that the situation had not changed since the circulation of the reports to the General Council5 on these issues. The Chairperson further noted that an addendum to the Compendium of Documents on Implementation-Related Issues had been issued on 1 September 2009 to reflect the recent circulation of: (i) a Table NF:1 notification by Cuba, and (ii) a Table MA:1 notification by El Salvador.6 In November the WTO Secretariat will update the Compendium and circulate a revised background note on the implementation of the Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries.7

2 The report was subsequently circulated in document G/AG/26 (dated 1 October 2009). 3 G/AG/W/71 refers. 4 WT/MIN(01)/17 (dated 14 November 2001). 5 G/AG/16 (dated 4 July 2003) and G/AG/16/Add.1 (dated 13 June 2006) refer. 6 See G/AG/W/70/Add.2. 7 See G/AG/W/42/Rev.11 for the latest revision.

G/AG/R/56 Page 9

40. Argentina stated that, without prejudice to the provisions of Article 10.1 of the Agreement on Agriculture, the establishment of additional and specific disciplines on export credits, export credit guarantees and insurance programmes remained an outstanding implementation issue resulting from the Uruguay Round Agreement on Agriculture. Argentina therefore requested that this item be retained on the agenda of the Committee on Agriculture in regular session.

D. FOLLOW-UP: IMPROVEMENT OF TIMELINESS AND COMPLETENESS OF NOTIFICATIONS AND OTHER INFORMATION FLOWS ON TRADE MEASURES (G/AG/GEN/83 AND G/AG/GEN/85)

41. The Committee considered the Suggested Work Programme that was circulated at its 2 July session.8 The Chairperson urged delegations who had not filled the survey questionnaire9 to do so. This would ensure that all interests, particularly those of developing countries, be adequately reflected in the work programme. As a follow-up to the open-ended informal consultations held on 13 July, Members were invited to consider each of the elements listed in the suggested action plans (i) for the Committee and (ii) for the Secretariat, respectively.

(a) Possible action plan for the Committee

42. The Committee agreed to implement the following programme elements as soon as possible:

(a) The room document showing compliance with notification obligations will be circulated by the Secretariat as an official and unrestricted WTO document, before each formal meeting of the Committee.10

(b) Creation of an electronic list of notifications sorted by notification requirement, Member, document symbol, implementation year covered and date issued: in view of the general support expressed during the 13 July consultations, the Secretariat had emailed a preliminary compilation of notifications issued since 1995 to all delegations in August 2009. The Chairperson recalled that, in July, there was also some interest in the official distribution of that compilation in hard copy because developing countries had reported difficulties in accessing the web. A recently updated list had been posted on the WTO web site to enhance accessibility. 11 The Secretariat undertook to update the electronic list once a month.

(c) Electronic transmission facility: full support was shown towards this initiative during the 13 July consultations, particularly as it would usefully complement the monthly release of the above-mentioned electronic list of notifications. In response, the Secretariat had created a list server to facilitate the dissemination of agriculture- related documents on a subscription basis. The Chairperson announced that the list server would be fully operational on 25 September.

43. The Committee decided to maintain the following items in the Suggested Work Programme to afford Members another opportunity for discussion:

(a) As regards the possible issuance of (i) the room document compiling the questions posed by Members before each formal session; as well as (ii) the written responses supplied by Members after each formal session; as official and unrestricted documents, the Chairperson reported that two Members had expressed reservations in

8 Annex 6 of G/AG/R/55 refers. 9 G/AG/GEN/83. 10 The first document was circulated as G/AG/GEN/86 on 2 October 2009. 11 See http://www.wto.org/english/tratop_e/agric_e/ag_list_notif_e.xls

G/AG/R/56 Page 10

the 13 July consultations. In their view, other WTO bodies' procedures were not necessarily adequate in the field of agriculture. Implementing this suggestion might even be counter-productive as it could stifle the Review Process. From the transparency point-of-view, the current practice was not only amply sufficient, but it would also ensure that delegations do not feel inhibited in supplying spontaneous and detailed responses. In this light, the Chairperson invited Members to reflect on the following three options:

(i) to maintain the current practice of posting such documents on the Members' password-protected web site;

(ii) to ask the Secretariat to prepare and circulate such documents as unrestricted, since there was a lot of support for this option during the 13 July consultations;

(iii) to ask the Secretariat to prepare and circulate such documents as restricted in accordance with the 2002 General Council Decision12, meaning that they would be automatically derestricted 60 days after the date of circulation, unless requested otherwise by a Member.

(b) Notifications-related datasets (Table MA, DS, and ES series): Since 1995, the Agriculture and Commodities Division (AGCD) has maintained datasets containing the information notified by Members in documents circulated in the G/AG/N/-- series. In the 13 July consultations, participants had expressed support for those datasets to be released to Members only, or alternatively, to the public as well. Their helpfulness in enhancing Members' analytical capability was highlighted, being understood that they had to remain purely factual (i.e. no conceptual analysis). The Committee requested that the Secretariat prepare such datasets and initially post them on the Members' password-protected web site, as and when they become available. The Chairperson pointed out that the next round of consultations would not be held before the November meeting. This would allow all delegations to become acquainted with the information contained in those files before discussing the dissemination policy.

(c) Compilation of "best practices": the Chairperson recalled that, building on the ideas contained in the questionnaire-based survey, Members had been invited to send further inputs to enrich the debate on "best practices" in the area of preparation of notifications. Rather than extending the deadline for receipt of Members' contributions, the Committee asked the Secretariat to circulate a first compilation based on the few contributions so far13 in order to help focus the Committee's discussions in future.

12 WT/L/452. 13 Subsequently circulated in G/AG/W/73 dated 15 October 2009.

G/AG/R/56 Page 11

44. With no objection from the floor, the following programme elements were removed from the Committee's action plan :

(a) Consultations on prescribed notification timelines and templates: The Chairperson recalled that this item had been listed in the Committee's action plan in response to the survey results.14 The membership, however, had expressed strong reservations, both in the 13 July consultations and during the September formal meeting.

(b) Preparation of factual briefing notes on recently-issued notifications by the Secretariat: As in the above case, strong concerns were expressed by some Members during the 13 July consultations. In their view, this task fell beyond the Secretariat's mandate and the thin line between "facts" and "evaluation" could be easily crossed.

(b) Possible action plan for the Secretariat

(i) Technical assistance

45. The Chairperson observed that, as far as technical assistance was concerned, Members were very supportive of all of the items listed in the Suggested Work Programme and aimed at improving the timeliness and completeness of notifications.

46. The Committee took note of the on-going Geneva-based Workshop on Agriculture Notifications. Members thanked the Secretariat for delivering on this important objective. A number of useful recommendations for the future were outlined.15 Some delegations called on this type of activity to be repeated in subsequent years. Other delegations considered that there needed to be some time for reflection prior to taking any decision in respect of the continuation of such activities (i.e. venue, format, cost-benefit analysis compared to other delivery modes such as e-learning, improvement of Members' own notification record, etc.). As the need for the Committee to first undertake an evaluation was stressed, this item was maintained in the Secretariat's action plan for further discussion.

47. Members concurred that the following technical assistance features would need to be implemented on a priority basis:

(a) Revision of the ITTC Notifications Handbook: in this context, the feedback received during the on-going Geneva-based Workshop on Agriculture Notifications, as well as some of the handouts and material that were distributed, will be taken into account by the Secretariat in producing the final version (slated for distribution towards the end of 2009 or beginning of 2010).

(b) Self-training module on agriculture notifications: The Chairperson informed Members that a pilot version could be released towards the end of March 2010. Members' interest in a more elaborate e-training module incorporating user support features was noted. With a view to develop this tool at a later stage, the Secretariat was requested to investigate the availability of funds.

48. The Chairperson recalled that the "better targeting of training sessions towards notification- related issues" by the Secretariat was already the case to a certain extent. As to the organization of "specialized regional courses", the AGCD had taken steps to sensitize the ITTC on this matter. As a result, the 2010/2011 WTO Technical Assistance Plan would respond to Members' concerns with the

14 Paras. 31 and 32 of G/AG/GEN/85 refer. 15 See Secretariat report on this technical assistance activity (forthcoming).

G/AG/R/56 Page 12 inclusion of relevant events in this area. However, the detailed coverage of such courses was largely demand-driven. Members were urged to take the necessary steps to directly advise the ITTC of their technical assistance needs, before the finalization of the 2010/2011 biennial plan.

49. The delegation of Fiji indicated that the information flowing through its Foreign Affairs department was often channelled to capital-based officials in charge of notification matters at a very late stage, which explained why some of the prescribed deadlines were not complied with. Fiji believed that it would be important to establish a direct communication line between the WTO Secretariat and the capital-based officials responsible for the preparation and submission of agricultural notifications.

(ii) Data requirements

50. The Chairperson underlined that some of the initiatives listed in this category had already been implemented and would be therefore deleted from the next version of the Suggested Work Programme. The Secretariat would be awaiting any feedback or suggestions for improvement directly from end users.

51. For example, in the 13 July consultations, some Members had indicated willingness to engage in any kind of consultations or working groups to examine ways in which the public or Members' web sites might possibly evolve. In the meantime, the public web site had been enhanced to facilitate user access to notification-related tools and information. The agricultural web pages had been briefly introduced during the Workshop and a more detailed presentation would be made during the 19 November meeting of the Committee. In this context, the Chairperson invited Members to test the recently-launched agricultural web pages.16 The idea of printing a booklet had become less urgent, and perhaps even redundant, given Members' current prioritization of several technical assistance elements and information tools, notably the Notifications Handbook and the newly created agriculture web pages.

52. As noted in paragraph c above, the electronic transmission facility (list server) had also been launched, allowing the dissemination of agriculture-related documents on a subscription basis. During the Geneva-based workshop, delegations had been advised that, in the longer term, a CRN-based on- line dissemination facility would be implemented.

53. The Chairperson reported that Members continued to accord the highest priority to the development of a database on specific implementation-related concerns raised since 1995 during the Review Process. In the 13 July consultations, participants had hinted that this database would essentially consist of an archiving system of questions and answers. In anticipation of the important resource implications that this project might have, the AGCD had submitted a detailed IT Business Case to the internal Working Group responsible for the allocation of IT funds within the Secretariat, and was awaiting a decision in this respect. The Chairperson encouraged Members with experience in building such databases to contact the Secretariat for an initial exchange of ideas.

54. On the suggested online submission of notifications by Members directly to the CRN by computerized means, the Chairperson recalled that during the 13 July consultations, some Members had seemed to prefer the on-going system raising concerns that (i) this implied foregoing the valuable technical assistance by the Secretariat in verifying the submissions; and (ii) this could disrupt the existing channels of communications between the various departments involved in the preparation of agriculture notifications under each pillar.

16 See http://www.wto.org/english/tratop_e/agric_e/ag_work_e.htm

G/AG/R/56 Page 13

55. In the wider WTO context, it was noted that the SPS and TBT areas had pilot on-line submissions systems in place, and that other WTO divisions might follow suit. No specific project existed as yet on a WTO-wide basis. In view of the support received from certain delegations attending the Workshop, the Chairperson suggested that this item be maintained on the action plan. The Secretariat was requested to consult with the relevant experts within the WTO as to the type of validation procedures that might be necessary for a prospective on-line system to be viable, in the light of Members' initial concerns as expressed above.

56. Based on the above discussion, the Secretariat was requested to update the Suggested Work Programme to be considered at the November meeting of the Committee on Agriculture.

E. OTHER BUSINESS : ANNUAL REPORT TO THE COUNCIL FOR TRADE IN GOODS

57. In line with past practice, a short and factual draft report for the CTG on the work undertaken by the Committee in the course of 2009 had been circulated before the meeting in order to facilitate Members' consideration of this matter.

58. Korea proposed that a reference to the multilateral review of minimum market access commitments for rice held at the present meeting be added to the report. The Chairperson indicated that the report would also incorporate a paragraph on the outcome of the Workshop on Agriculture Notifications held from 22 to 24 September 2009. The Committee took note of the draft report and the statements made and agreed that, after updating as appropriate, it would be submitted to the CTG on the Chairperson's responsibility.17

F. OTHER BUSINESS : PROVISIONAL SCHEDULE OF MEETINGS FOR 2010

59. According to the Committee's rules of procedure, regular meetings of the Committee are to be held in March, September and November. The Committee took note of the provisional schedule of meetings for 2010. The dates for each regular meeting would continue to be confirmed at the preceding meeting of the Committee. The question of whether there was a need for a regular meeting in June 2010 would be determined by the Chairperson following the March 2010 meeting in consultation with Members. Moreover, the following schedule may need to be re-visited in light of developments in the negotiations on agriculture:

(a) [11 and 12] March 2010;

(b) [10 and 11] June 2010;

(d) [18 and 19] November 2010.

G. OTHER BUSINESS : DATE OF THE NEXT MEETING

60. The next (57th) regular meeting of the Committee on Agriculture is scheduled to be held on 19 November 2009. On this basis, the reminder airgram will be issued on 26 October 2009 and the convening airgram will be issued on 9 November 2009.

17 The report was later circulated in G/L/894 (dated 9 October 2009).

G/AG/R/56 Page 14

Annexes

Page

Annex 1 Summary of points raised with respect to notifications 15

Imports under tariff and other quotas (Table MA:2) 15 Brazil - G/AG/N/BRA/24 15 Canada - G/AG/N/CAN/77 and CAN/79 15 Canada - G/AG/N/CAN/79 16 China - G/AG/N/CHN/16 16 Iceland - G/AG/N/ISL/29 17 United States - G/AG/N/USA/69 17

Special safeguard (Tables MA:3 to MA:5) 17 Japan - G/AG/N/JPN/146 17 Japan - G/AG/N/JPN/148 18

Domestic support (Table DS:1) 18 Australia - G/AG/N/AUS/73 18 Costa Rica - G/AG/N/CRI/24 19 Malaysia - G/AG/N/MYS/25 21 Malta - G/AG/N/MLT/10 22 Switzerland - G/AG/N/CHE/47 22 Uruguay - G/AG/N/URY/38 23

New or modified domestic support measures (Table DS:2) 24 European Communities - G/AG/N/EEC/58 24

Export subsidy commitments (Tables ES:1 to ES:3) 24 Canada - G/AG/N/CAN/78 24

Annex 2 Notifications subject to review in respect of which no questions have been raised in advance of the issuance of the convening airgram 26

Annex 3 Additional questions on notifications raised by Australia 28 under agenda item 2.B(vii) "overdue notifications"

Annex 4 Costa Rica: Value of rice production and GDP (2004-2007) 29

G/AG/R/56 Page 15

Annex 1

Summary of points raised with respect to notifications

III. IMPORTS UNDER TARIFF AND OTHER QUOTAS (TABLE MA:2)

A. BRAZIL - G/AG/N/BRA/24

1. Question by the EC - The EC note Brazil's intention to eliminate the tariff quota for wheat and the related negotiations with Canada and the United States. Could Brazil report on the progress of the negotiations with Canada and the United States?

The tariff rate quota regime for wheat is not currently in place and negotiations have not advanced recently. Though the United States and Canada have expressed interest in the tariff quota for wheat, Brazil considers the current regime which applies a 10 per cent MFN tariff to wheat more beneficial than the potential tariff quota regime for all trading partners, including the United States and Canada. Brazil is one of the world's largest importers of wheat; about 60 per cent of its domestic demand is supplied by imports.

B. CANADA - G/AG/N/CAN/77 AND G/AG/N/CAN/79

2. Questions by Australia - Following up on previous discussions on Canada's tariff quota for "fluid milk" (64,500 tonnes), Australia seeks further clarification on the matter of imports of fluid milk by consumers for personal use. In previous responses, Canada has explained the procedure for the importation for personal use under General Import Permit #1. Can Canada outline the procedure for the importation of fluid milk for commercial use by Canadian entities, like dairy processors? If a procedure for commercial imports is not in place, can Canada explain how the tariff quota is being administered on a genuine global basis and consistent with WTO commitments?

Canada notes that it answered similar questions on the administration of its fluid milk tariff quota as recently as the 55th regular meeting of the Committee on Agriculture held on 2 July 2009. Canada's reply can be found in the summary report of the meeting.1

Canada's Table MA:1 notification on the administration of tariff quotas (G/AG/N/CAN/45) notes that Canada's tariff quota for fluid milk is administered on a global basis and is subject to General Import Permit #1, which regulates the importation of dairy products for personal use, so that any resident of Canada may import fluid milk. There are no formal applications for any resident of Canada to import fluid milk in Canada. Consumers importing fluid milk must only invoke General Import Permit #1 when completing the normal customs entry document.

Canada's current administration of this tariff quota, as outlined in Canada's Table MA:1 notification of 2 August 2001 (G/AG/N/CAN/45), is consistent with its WTO obligations.

1 The responses are summarized in report G/AG/R/55, para 3 of Annex 2.

G/AG/R/56 Page 16

C. CANADA - G/AG/N/CAN/79

3. Question by EC - The EC note that several tariff quota fill quantities exceed the tariff quota size. What was the tariff treatment for the quantities imported in excess of the tariff quota size?

The respective in-quota tariffs for each "over-filled" tariff quota are applied to the total notified volume of imports of these products.

D. CHINA - G/AG/N/CHN/16

4. Questions by Australia - Australia notes that there was significant underfill for wheat (0.45 per cent), corn (0.69 per cent) and rice (6.2 per cent), followed by sugar (40.1 per cent). These tariff quotas are in the magnitude of millions of tonnes and form an important part of China's accession package.

(a) Can China explain the reasons for these tariff quotas being so significantly underfilled?

China witnessed consecutive good harvests in the past years which ensured sufficient domestic supply and a stable food price. On the other hand, the price on the international market has kept increasing, especially since 2006. As a consequence, the majority of Chinese enterprises were allowed to import food from overseas markets.

In respect of sugar, the record high production in 2007 and 2008 together with already very high volumes of stocks led to tremendous oversupply in certain markets causing a weakened demand and consequently a low fill rate in the sugar tariff rate quota.

(b) Will China consider adjusting its tariff quota administration to increase the fill rates and provide the access envisaged as part of China's accession?

China sees no need to adjust the tariff quota administration since low fill rates are caused by market conditions.

5. Questions by EC - The EC note the relatively low fill rates for China's tariff quotas during the reporting period, except for cotton and wool.

(a) Could China elaborate on the reasons?

Same response as provided under paragraph a above.

(b) Could China inform about the tariff treatment of cotton that is reported to be imported outside the tariff quota quantity?

Most of the out-of-quota amount of cotton imported was subject to an interim tariff lower than 40 per cent, and the rest was subject to the out-of-quota tariff of 40 per cent.

G/AG/R/56 Page 17

E. ICELAND - G/AG/N/ISL/29

6. Questions by Australia - Australia notes the significant number of tariff quotas that Iceland has notified – 86 tariff quotas in 2005-2006, covering a range of products with relatively small commitment quantities. Also a number of the tariff quotas remain underfilled or are non- operational. Has Iceland considered reforms to its tariff quota system to consolidate the number of tariff quotas and simplify its schedule? Are all these tariff quotas required to protect domestic producers?

Attention is being drawn to the fact that 66 tariff headings associated with a number of products relevant to Iceland's current access commitments are not subject to any tariff quota system upon import, but only to applied rates of duty that are equal to lower than the corresponding in-quota rates. Currently Iceland does not consider reforming its tariff quota system. This matter has been dealt within in the Doha Round of negotiations and Iceland would certainly meet its future commitments in this regard.

F. UNITED STATES - G/AG/N/USA/69

7. Question by the EC - The EC note a relatively low tariff quota fill for non-fat dried milk and cotton; and a certain erosion during the years notified of the tariff quota imports for beef and Emmental. Could the United States explain the reasons for this?

Market conditions, including the falling value of the dollar during the period, explain the low tariff quota fill and the variations noted.

With respect to non-fat dried milk, rapidly growing global demand and adverse weather conditions in Oceania contributed to a shortage of available exportable supplies from New Zealand and Australia and high global prices. As a result, the United States non-fat dried milk was competitive on world markets, and therefore there was little incentive for importers to purchase non-fat dried milk into the United States.

Cotton import demand was low as production was stable and consumption continued to decline, resulting in near record exportable supplies.

With respect to beef, several countries account for the majority of imports under the tariff rate quota. In addition to the market conditions, some of these countries have been subject to disease-based trade restrictions that have constrained shipments.

Demand for Emmental was weakened due to the high international prices of cheese and lack of available exportable supplies. In addition, the weak dollar was a further factor in making the imported Emmental less competitive with domestic supplies.

IV. SPECIAL SAFEGUARD (TABLES MA:3 TO MA:5)

A. JAPAN - G/AG/N/JPN/146

8. Questions by EC - What were the external reference prices that Japan used for its price- based SSG for "yogurt; frozen, preserved or containing added sugar, or other sweetening matter, flavouring, fruits or nuts (excluding frozen yogurt)" (HS 0403.10.190)? What was the source of these prices?

G/AG/R/56 Page 18

The trigger price for the product in question is established by multiplying the external prices for basic products, skim milk powder (SMP) and cream, by their proportion. The external price of SMP is the estimated c.i.f. price based on the International Dairy Agreement (IDA) minimum price, adding freight and transaction costs from New Zealand. As the IDA minimum price of cream is not available, the external price of cream is the estimated c.i.f. price based on the f.o.b. price of New Zealand, the main export country, adding freight and transaction costs from New Zealand.

9. Follow-up comments: In response to EC's enquiry, Japan clarified that the source for the estimated prices had been New Zealand's data.

B. JAPAN - G/AG/N/JPN/148

10. Questions by EC - What were the external reference prices that Japan used for its price- based SSG for "milk powder containing added sugar or other sweetening matter, of a fat content, by weight, exceeding 5 per cent but not exceeding 30 per cent" (HS 0402.29.119)? What was the source of these prices?

As noted in the notification, no imports were implemented in 1987 and 1988. Japan considers the c.i.f. price for 1986 as the average c.i.f. price for the years 1986 to 1988 and uses it as the basis for calculating the trigger price.

V. DOMESTIC SUPPORT (TABLE DS:1)

A. AUSTRALIA - G/AG/N/AUS/73

11. Questions by EC - The EC note on page 7 of the notification an amount of $A 40.90 million for a "reduction in Australian Quarantine and Inspection Service (AQIS) fees and charges".

(a) How is the partial recovery of inspection fees and services operated and what is the calculation method for the subsidy?

It is Australian Government policy that from 1 July 2009 100 per cent of the costs of inspection fees are charged to industry. There is no budgetary provision to continue funding the partial recovery of inspection fees beyond 1 July 2009.

(b) Is there a link between the level of subsidization and the amounts charged to importers for the intervention of the AQIS?

There is no link between the partial recovery of inspection fees and import inspection fees. The amount charged to importers operates on a fee for service, cost recovery basis (see answer to the next question).

(c) Is it correct that these amounts charged to importers have recently been increased and if so, could Australia comment on the reasons for this increase?

A 2008 review of Australia's inspection fees found that the costs incurred by the AQIS for conducting import inspections exceeded the fees that were charged to importers for the service (the fees had not been reviewed since 2005). As a result, on 1 July 2009 Australia amended its import inspection fees to reflect the costs incurred.

G/AG/R/56 Page 19

12. Follow-up comments: The EC further enquired if there was any possibility of reintroducing the subsidy in the future. Australia undertook to respond in due course. The United States flagged its interest in this issue.

B. COSTA RICA - G/AG/N/CRI/24

(a) General

13. Questions by Australia - Costa Rica has notified product-specific and non-product specific support, but has not provided information on its value of agricultural production and the value of its rice production in 2004, 2005, 2006 and 2007. Can Costa Rica provide information on its value of production?

The value of total rice production in the period 2004-2007 is reproduced in Annex 4.

(b) Supporting Table DS:1 for 2004-2007

14. Questions by the United States:

(a) Under the "Productive conversion programme", what are the "objectively demonstrated structural disadvantages" referenced in Annex 2, paragraph 11(a) that these producers face?

The Green Box productive conversion programme is aimed at enhancing the competitiveness of small and medium-sized agricultural producers, increasing their participation in the domestic market and ensuring their effective integration in international markets, as well as improving the living conditions or well-being of small farmers through the financing of investment projects.

The beneficiaries are located in rural areas at a considerable distance from the relatively more developed regions of the country and have limited access to basic services such as infrastructure, energy supply and bank loans for project financing.

Given such constraints, these producers receive organizational, standardization and marketing support from the Government, since they lack training in administrative management, post harvest management, product processing, and marketing and sales, and they do not have access to market intelligence or marketing information concerning their products.

(b) Under the "Farming and livestock protection and development trust for small and medium-sized producers" programme, Costa Rica states that this support is given to "producers who experienced difficulties as a result of…the behaviour of the international prices of agricultural goods." How does this meet the criteria of Annex 2, paragraph 11(c), which states that the amount of payments shall not be related to or based on the prices, domestic or international, applying to any production undertaken in any year after the base period ?

The programme known as the farming and livestock protection and development trust for small and medium-sized producers (FIDAGRO) contributes to the country's economic and social development through financial recovery (that is, debt purchase and restructuring) and reinsertion into productive activity of small and medium-sized agricultural producers

G/AG/R/56 Page 20

who, as a result of natural disasters, erratic fluctuations in international and domestic prices of agricultural goods and inputs and specific market conditions, have lost their financial autonomy and are not eligible for credit from financial intermediaries.

The debts purchased are restructured for a maximum period of 15 years, with a three-year grace period on the principal and interest, at a fixed interest rate of two percentage points below the lowest basic borrowing rate calculated by the Central Bank of Costa Rica.

There is no direct relation between international prices and the amount of support that producers may receive; rather, this constitutes a form of additional support provided through the purchase and restructuring of debts contracted with financial entities.

15. Questions by the United States - We note that Costa Rica exceeded its AMS level. We appreciate Costa Rica's commitment to transparency. What steps has Costa Rica taken or will take to ensure that the AMS level will not be exceeded in the future?

The government of Costa Rica is examining the AMS figures for 2007 and 2008 and making the relevant calculations. The information will be communicated to the Committee on Agriculture as soon as it is available.

Costa Rica attaches the utmost importance to compliance with its WTO commitments and respect for the principle of transparency and reiterates its adherence to such principles.

16. Questions by Canada -Costa Rica reports a Current Total AMS during 2007 in excess of its scheduled commitment level. This appears to violate Article 3.2 of the Agreement on Agriculture which states that "... a Member shall not provide support in favour of domestic producers in excess of the commitment levels specified in Section I of Part IV of its Schedule".

(a) What mechanism did Costa Rica have in place until 2007 to ensure that Total AMS expenditures were within its limits?

(b) What steps did Costa Rica take in 2008 to avoid a recurrence of a violation in that year and later years?

Same response as provided under paragraph 15 above.

17. Follow-up comments: Australia noted that the question on the total value of agricultural production (VoP) was linked to the ongoing exercise of seeking best practices in the Committee on Agriculture and urged all Members to provide the total VoP when submitting Table DS:1 notifications. Australia clarified that its interest was partly linked to the question raised by the United States with regard to the AMS notified by Costa Rica, as providing the total VoP was instrumental in determining how the AMS had been calculated with regard to de minimis. The United States and Canada looked forward to receiving more information once Costa Rica concluded its analysis. Canada noted its appreciation of Costa Rica’s commitment to transparency in its notifications.

G/AG/R/56 Page 21

C. MALAYSIA - G/AG/N/MYS/25

(a) Supporting Table DS:1 for years 1999-2007: Price Subsidy and Guaranteed Minimum Price

18. Question by Australia - Can Malaysia provide more information on this programme?

19. Question by the EC - It is stated that the measure only applies to paddy farmers. The amount notified in 2007 is RM 444 million, which corresponds to more than half of the amounts notified in the Green Box. What paragraph of Annex 2 is concerned and could Malaysia elaborate on how this measure complies with the criteria there?

20. Question by the United States - How does Malaysia justify these programmes as Green Box given that they appear to be available to all rice farmers, are seemingly tied to price and/or production levels, and explicitly exist to "prevent the price of paddy from falling too low" and to "ensure that farmers receive a reasonable income"?

Malaysia's paddy rice farmers are among the poorest of the poor in the country. Considering the income status of the rice farmers this instrument is used as an income support measure for resource-poor farmers.

70 per cent of the farmers work in areas of only between 0.1 and 5 acres, with an average national yield of 3.5 tonnes per hectare and a medium area of about 1.014 hectares. The annual income of this category of farmers is estimated to be at RM 4,387, equivalent to approximately US$104.44. This income is well below the national poverty line of RM 836, i.e. US$239 per month.

Another 18 per cent of paddy farmers work in areas of 5 to 10 acres or between 2.023 and 4.046 hectares. Considering that incomes of paddy farmers are directly related to the size of farms that they operate, the government extends this instrument only to those working in areas of 6 acres or less for the purpose of alleviating poverty among resource-poor farmers.

In this respect, of the total 250,000 farmers in Malaysia, only about 135,000 are actually eligible for the support. The "Guaranteed Minimum Price" (GMP) has been in existence since 1949; it acts as a psychological floor price for the farmers, and as a political floor price for the government.

Since 1995, paddy price records showed that national paddy prices have not fallen below the GMP. There has been no government spending to maintain this GMP. As such, for the last 10 years the GMP has never functioned as an economic floor price.

Malaysia continues to monitor the effect of such support and has concluded that it does not have the effect of price support leading to significant supply response.

Malaysia is a rice importing country which produces only 65 to 70 per cent of its domestic requirements. Between 600,000 and 1 million tonnes are imported annually to meet consumption needs. Under such circumstances, the policy instruments utilized for this subsector are unlikely to contribute to distortions in global rice trade.

G/AG/R/56 Page 22

(b) Supporting Table DS:2 for years 1999-2007: Fertilizer Subsidy Scheme

21. Questions by the United States - Could Malaysia explain how its Fertilizer Subsidy Scheme meet the criteria of Article 6, paragraph 2? In particular, how does Malaysia target what appears to be a generally available input subsidy towards low-income or resource-poor rice producers?

The fertilizer subsidy is only provided to farmers operating less than 10 acres.

22. Follow-up comments: Australia noted that the reason for posing the question related to how the actual measure met the Green Box criteria and requested that the response be provided in writing in order to make its own assessment. The EC found that the extensive reply shed more light on existing concerns. However, the EC would study the measures in more detail as they contained price elements which continued to cause concerns with regard to the purity of the measures in the Green Box. Malaysia's effort in submitting overdue domestic support notifications was appreciated by Australia, the EC and the United States.

D. MALTA - G/AG/N/MLT/10

23. Question by Australia - Can Malta provide more information on the Green Box measure (i) "structural adjustment assistance provided through investment aids" in 2001-2003?

The coordination with Malta is underway. A written reply will be provided as soon as it is available.

24. Question by the United States - Could the EC/Malta provide more detailed information about the measure "direct payments to producers" and how it meets the criteria of Annex 2, paragraph 6 for decoupled income support?

Same response as provided under paragraph 23 above.

E. SWITZERLAND - G/AG/N/CHE/47

(a) Supporting Table DS:1: General Direct Payments

25. Questions by the United States - Could Switzerland provide more information about this programme and how it meets the criteria of Annex 2, paragraph 6 for decoupled income support? In particular, if payment is made in part related to "supply of foodstuffs", then how does it meet criteria in paragraph 6(e) – no production required - and paragraph 6(b) – not tied to the type and volume of production?

More information on Switzerland's direct payment system can be found in the latest Trade Policy Review report.1 General direct payments are contributing to the fulfilment of the overall aim of agricultural policy as described in the Federal Constitution. They are granted on a fixed surface area, thereby no obligation for production, nor relation to the type or volume of production is included. Consequently the scheme is in line with the obligations set out in Annex 2, paragraph 6 of the Agreement on Agriculture.

1 Paras 13-14 and 16 of Chapter IV(2)(ii) of WT/TPR/S/208/Rev.1 refer (p.92-93).

G/AG/R/56 Page 23

(b) Supporting Table DS:1: Regional Assistance Programmes

26. Question by the United States - Could Switzerland provide more information about its regional assistance programmes and how they meet the criteria for Annex 2, paragraph 13, particularly with respect to disadvantaged producers?

The regional assistance programmes are described in detail both in the relevant Ordinance as well as in the annual Agriculture Report published by the Federal Office for Agriculture.2 As regards the accessibility of the regional assistance programme, farmers in disadvantaged areas can benefit of such measures. The description and classification of disadvantaged areas is mainly following the classification of mountainous areas, starting from the hill zone up to the high Alpine regions. Equally the slope level is a parameter considered in the structure of such measures.

27. Follow-up comments: The United States would review the response and may require assistance in order to identify the document referred to.

F. URUGUAY - G/AG/N/URY/38

28. Questions by Australia - Can Uruguay provide more information on its Green Box measures (b) "Payments under environmental programmes" and (c) "Direct payments to producers"?

"Payments under environmental programmes" relate to the Responsible Production Project, whose main aim is 'to promote the adoption of economically and environmentally viable, integrated and effective management systems for natural resources used in agriculture, including biodiversity' through the adoption of technologies, management practices and production systems that are compatible with sustainable development, particularly among small and medium-sized family farmers. As part of an integrated approach, the project promotes improved natural resource management while helping to increase productivity.

Its specific objectives are: to ensure the adoption of conservationist soil management systems and natural pasture restoration practices; improve the use of soil, water and biodiversity resources in agricultural, livestock and fishery activities; make use of biodiversity in the rural productive sector; develop a public information system on natural resource and biodiversity management; build local and national capacity with a view to developing integrated natural agricultural resource management projects; encourage studies and research on natural resource and biodiversity management; identify new priority areas for biodiversity in Uruguay; improve pesticide management; raise awareness of the activities conducted under the project and the rural productive sector's awareness of integrated natural resource and biodiversity management.

The measure notified as 'direct payments to producers' has two components: (i) traceability and (ii) animal health and food protection. The first component provides support for an extensive campaign to disseminate information, raise awareness, provide training, and develop management and planning skills in respect of the Animal Identification and Registration System (SIRA). It also provides support for the design and implementation of instruments and tools used to coordinate SIRA

2 Available at http://www.blw.admin.ch/dokumentation/00018/00498/index.html?lang=fr [10 November 2009]

G/AG/R/56 Page 24

databases at national level. The second component supports institutional capacity building at national level with a view to the development of procedures for attracting, training, supervising and qualifying human resources, thus ensuring the availability of professionals to carry out official duties relating to animal health control, general animal health management, and the strengthening of procedures that guarantee the safety of food of animal origin. This measure was mistakenly notified as 'direct payments to producers' when it should have been notified as a Green Box measure under 'General services' (items (b), (c), (d) and (e)).

VI. NEW OR MODIFIED DOMESTIC SUPPORT MEASURES (TABLE DS:2)

A. EUROPEAN COMMUNITIES - G/AG/N/EEC/58

29. Questions by the United States - The United States notes with interest the EC's reply at the July 2009 meeting of the Committee on Agriculture to the U.S. question regarding its notified Blue Box support meeting Article 6, paragraph 5 criteria.

(a) Could the EC elaborate on how it concludes that the fixed payment criteria in itself implies any notion of "production-limiting" ?

Article 6.5(a) of the Agreement on Agriculture states that direct payments under production-limiting programmes shall not be subject to the commitment to reduce domestic support if such payments are based on fixed area and yields or if livestock payments are made on a fixed number of head.

The EC Blue Box payments are either based on fixed area and yields or on a fixed number of head. Therefore these payments comply with the conditions required for Blue Box compliance in Article 6.5. The respect of the requirements stipulated in Article 6.5 means that the support schemes are production-limiting.

(b) Could the EC also describe and give an example of how this works in practice ?

Examples of these support schemes can be found in notification G/AG/N/EEC/58. For instance, the payments for arable aid are based on fixed area and yields, published in legislation. Equally, for instance, payments for suckler cows are made on a fixed number of head published in legislation. References to relevant legislation are contained in Supporting Tables DS:3 of notification G/AG/N/EEC/59.

30. Follow-up comments: The United States felt encouraged with some of EC's comments and undertook to look at the response. Green Box as well as other boxes need to be in good order. Australia indicated its interest. Australia understood that the programmes notified under item 3.(d) and 3.(c) omit production and that production limitation was not an objective, but rather an additional requirement.

VII. EXPORT SUBSIDY COMMITMENTS (TABLES ES:1 TO ES:3)

A. CANADA - G/AG/N/CAN/78

31. Questions by Australia:

G/AG/R/56 Page 25

(a) Further to Australia's previous questions on dairy export subsidies, Australia notes that Canada subsidized 16,404 tonnes of Skim Milk Powder from 1 August 2007 to 31 July 2008 (as reported in Table ES:1), but total exports of Skim Milk Powder for the same period were reported as 16,246 tonnes (based on Table ES:2). Can Canada explain the discrepancy (i.e. what happened to the additional 158 tonnes of subsidized exports)?

Canada's export subsidy commitment for skim milk powder is slightly higher than the total exports reported. This discrepancy is due to the use of different data sources: subsidized exports of skim milk powder, cheese, butter, and other milk products are reported by the Canadian Dairy Commission and total exports are reported by Statistics Canada. It should be noted that Statistics Canada may revise its data up to four years afterwards.

(b) The total exports of cheese and "other milk" products (Table ES:2) were significantly higher than the amounts reported as subsidized (Table ES:1), 4,843 tonnes and 41,152 tonnes higher respectively. Given that Canadian dairy prices are often 2-3 times world prices, can Canada explain the incentive for producers to export, when internal prices make the internal market more profitable? How is the price of milk used in exported dairy products is calculated? Is it based on the cost of production, U.S. prices, world prices, or some other basis? If some other basis, please specify?

During the 1 August 2007 to 31 July 2008 marketing year, world prices for certain dairy products were high, creating an incentive for some Canadian processors to export their products. Regardless of the product's final destination, no pricing differential is applied to the milk used in the product's production.

(c) Could Canada clarify whether dairy exports are eligible to receive export credit guarantees from the Canadian Government? If so, could Canada provide details of the value and volume of any credit guarantees actually provided to dairy exports? Are other products eligible for export credit guarantees from the Canadian Government and if so, can Canada provide details of the actual value and volume of the credit guarantees?

Export Development Canada (EDC) is an autonomous, Crown-owned corporation with a commercial mandate that serves as Canada's national export credit provider. EDC is financially self-sustaining and operates on commercial terms. EDC does not offer a single programme covering the agriculture sector in its entirety; however, agricultural exporters, including exporters of dairy products, are eligible to apply for export credit guarantees and other financing arrangements through various EDC programmes including EDC's bulk agriculture programme. Additional information on the operations of EDC can be found at EDC's website, www.edc.ca

G/AG/R/56 Page 26

Annex 2

Notifications subject to review in respect of which no questions have been raised in advance of the issuance of the convening airgram

(i) administration of tariff and other quota commitments (Table MA:1) - El Salvador G/AG/N/SLV/30

(ii) imports under tariff and other quota commitments (Table MA:2): - Dominican Republic G/AG/N/DOM/17 - El Salvador G/AG/N/SLV/29 - Indonesia G/AG/N/IDN/29 - New Zealand G/AG/N/NZL/58 - Nicaragua G/AG/N/NIC/23

(iii) special safeguard (Tables MA:3 to MA:5): - El Salvador G/AG/N/SLV/31 - Iceland G/AG/N/ISL/27 - Indonesia G/AG/N/IDN/28 - New Zealand G/AG/N/NZL/57 - Nicaragua G/AG/N/NIC/21 - Chinese Taipei G/AG/N/TPKM/69 - Uruguay G/AG/N/URY/37

(iv) domestic support commitments (Table DS:1): - Dominican Republic G/AG/N/DOM/18 - Israel G/AG/N/ISR/42 - Jamaica G/AG/N/JAM/7 - Nigeria G/AG/N/NGA/9 - South Africa G/AG/N/ZAF/71 - Chinese Taipei G/AG/N/TPKM/68

(v) new or modified domestic support measures exempt from reduction (Table DS:2) - Australia G/AG/N/AUS/74

(vi) in the context of export subsidy commitments (Tables ES:1 to ES:3): - Barbados G/AG/N/BRB/18 - Cape Verde G/AG/N/CPV/1 - China G/AG/N/CHN/15 - Cuba G/AG/N/CUB/37 - Dominican Republic G/AG/N/DOM/19 - Estonia G/AG/N/EST/13 - Honduras G/AG/N/HND/28 - Honduras G/AG/N/HND/29 - Iceland G/AG/N/ISL/28 - Iceland G/AG/N/ISL/28/ADD.1 - Indonesia G/AG/N/IDN/27

G/AG/R/56 Page 27

- Indonesia G/AG/N/IDN/27/CORR.1 - Nicaragua G/AG/N/NIC/22 - Nigeria G/AG/N/NGA/10 - South Africa G/AG/N/ZAF/70 - Trinidad and Tobago G/AG/N/TTO/11 - Uruguay G/AG/N/URY/36

G/AG/R/56 Page 28

Annex 3

Additional questions on notifications raised by Australia under agenda item 2.B(vii) "overdue notifications"

Question for China

1. Australia notes that the Room Document entitled "Compliance with notification obligations" dated 7 September 2009 (thereafter the "Compliance Document") indicates that China has outstanding Table DS:1 notifications for the period 2002-2008. Could China please advise when it intends to submit these outstanding notifications?

Question for Egypt

2. Australia notes that the Compliance Document indicates that Egypt still has outstanding domestic support and export subsidy notifications for the period 1999-2008. Could Egypt please provide an update on when it intends to submit these outstanding notifications?

Questions for India

3. Australia further notes that the Compliance Document indicates that India has the following outstanding notifications: Table MA:1; Table MA:2 for the period 2003-2008; Table DS:1 for the period 1998-2008; Table ES:1 for the 1995 and the period 2001-2008. Could India please provide an update on when it intends to submit these outstanding notifications?

Questions for Israel

4. Australia further notes that the Compliance Document indicates that Israel has outstanding Table MA:1; Table MA:5; Table DS:1; Tables ES:1 and ES:2 notifications. Could Israel please provide an update on when it intends to submit these outstanding notifications?

Question for Korea

5. Australia notes that the Compliance Document indicates that Korea has outstanding Table MA:5; Table DS:1 and Table ES:1 notifications. Could Korea please provide an update on when it intends to submit these outstanding notifications?

Question for Turkey

6. Australia notes that the Compliance Document indicates that Turkey has outstanding Table DS:1; Tables ES:1 and ES:2 notifications. Could Turkey please provide an update on when it intends to submit these outstanding notifications?

G/AG/R/56 Page 29

Annex 4

Costa Rica: Value of rice production and GDP (2004-2007)

Year Value of total rice production Agricultural GDP Share of rice in agricultural GDP (in US$) (in US$) (per cent)

2004 51,886,541 1,451,799,621 4

2005 50,871,841 1,622,464,039 3

2006 53,700,723 1,808,079,532 3

2007 69,782,513 1,948,156,766 4

Source: MAG, on the basis of information provided by CONARROZ and COMEX.

______