WORLD TRADE
ORGANIZATIONG/AG/NG/W/94
21 December 2000
(00-5614)
Committee on Agriculture
Special SessionOriginal:  French
WTO:  NEGOTIATIONS ON AGRICULTURE
Proposal by Switzerland
As a contribution to the negotiation process begun in March 2000, Switzerland submits
herewith its preliminary ideas concerning the agenda of the negotiations under Article 20 of the
Agreement on Agriculture.
1. Impact of the disciplines of the WTO Ag reements on world agricultural trade and
agricultural trade in Switzerland
1.1 World trade
Since the entry into force of the Uruguay Round Agreements, there have been numerous
detailed studies to assess the evolution of world agricultural trade.1  The summary of the results by the
WTO Secretariat points to a general trend towards an increase in agricultural exports which extends,
as well, to the developing countries as a group.  Some of the developing countries have increased their
market shares.  Exporters, however, have not always benefited from this expansion in trade.  The
evolution of prices and quantities depends on a wide variety of factors, and it is therefore difficult to
assess the extent to which the WTO Agreements have contributed.  It seems fairly clear, however, that
these developments are contingent on a whole range of factors other than market access conditions,
for example consumer preferences and distribution systems, so that the studies conducted so far willhave to be constantly updated to ensure that we have access to as precise as possible an analysis of the
situation.
With respect to the evolution of domestic support measures, there is a trend everywhere
towards a considerable reduction in the aggregate measure of support (AMS), as opposed to theProducer Subsidy Equivalent (PSE) of the OECD c ountries which has been stable or even on the
increase since 1995.  There are several reasons for this:  firstly, the calculation of the share of the PSE
relating to price support refers to world market prices, which decreased for a number of products
during that period, while the AMS is calculated on the basis of fixed reference prices (1986/88);
secondly, the PSE covers all budgetary payments, whether or not linked to the production of food andfibres (amber and green boxes), while the AMS essentially measures market price support.
Consequently, the level of the PSE does not reflect the full range of agricultural policy reform, forinstance the adoption of partially or completely d ecoupled instruments.  Indeed, reductions in the
AMS and the increase in green box measures serve as better indicators in this respect.
                                                     
1 Document G/AG/NG/S/16 of the WTO Secretariat, dated 9 October 2000, contains the summaries of
74 studies.G/AG/NG/W/94
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1.2 Agricultural trade in Switzerland
The Uruguay Round commitments and the domestic reform mentioned above have led to a
considerable reduction in domestic aid in the form of amber box measures (1995:  Sw F 4.3 billion;
1999:  Sw F 2.9 billion) and an increase in green box payments (1995:  Sw F 2.7 billion;  1999:Sw F 3.5 billion).
But the opening up of the agricultural market has also enabled the developing countries to
increase their market shares.  Over the past few years they have succeeded in progressively increasing
their agricultural exports to Switzerland, which have risen from Sw F 1 billion in 1990 and 1995 to
Sw F 1.2 billion in 1999.  Moreover, since the curren t value of total final production in Switzerland is
on the decrease (1990:  Sw F 8.8 billion, 1995:  Sw F 7.3 billion), imports from the developing
countries compared to that production have increased from 10 per cent in 1990 (11 per cent in 1995)
to 16 per cent in 1999.
2  This shows that the developing countries do in fact have access to the Swiss
agricultural market.
2. Implementation by Switzerland of its obligations under the WTO Agreements coupled
with domestic agricultural reform
In June 1996, the people and cantons of Switzerland approved, by a vast majority (77 per cent
of voters and all of the cantons), a new constitutional article on agriculture, which lays down
guidelines for the new agricultural policy.  The go al:  agriculture oriented towards the market and
towards sustainable development.  The means:  separating price policy from income policy andproviding contributions for payment of services, notably environmental, supplied in the public
interest.  The production of food and fibres is increasingly regulated by the market.  However, the
State makes direct payments for non-commercial services in agriculture (public goods), which are
generally decoupled from production, for example, maintenance of the countryside, decentralized
inhabitation and conservation of natural resources.  This new orientation has been accompanied bysharp reductions in price support.  And yet the reforms must continue, in particular as regards
competitiveness, the environment, and social aspects.
This reform process goes hand in hand with Switzerland's Uruguay Round commitments.
Thus, while pursuing its domestic reform, Switzerland is prepared to continue along the course set at
Marrakesh.  However, the next step in the reform of the agricultural trading system must not
jeopardize the domestic adjustments currently being introduced.  According to Article 20 of theAgreement on Agriculture, while the reform process concerns the three traditional pillars, namely
market access (paragraph 6.1), domestic support (paragraph 6.2) and export competition
(paragraph 6.3), it should also take account of the mu ltifunctionality of agriculture (Section 3) and the
specific interests of the developing countries and the economies in transition (Section 4).  And there
are other elements that are important for agriculture:  geographical indications (paragraph 5.1),labelling as a means of informing consumers, for instance on production methods (paragraph 5.2),
food safety (including the precautionary principle), and measures to promote animal welfare and
sustainable development (paragraph 5.3).
3. Taking account of non-trade concerns, including multifunctionality
Since the beginning of the 1970s, and particularly over the last decade, the population of
Switzerland, both urban and rural, has become in creasingly aware of the positive and negative
external effects of agriculture, in other words the non-commercial services of agriculture.  The
Government has therefore sought ways of ensuring that the quantity and quality of those services
                                                     
2 Cf. Agricultural Report 2000 of the Federal Office for Agriculture, pages 22 and A12 (see under
http://www.blw.admin.ch/agrarbericht/f/index.htm), and Swiss foreign trade statistics, 1990-1999.G/AG/NG/W/94
Page 3
corresponded to the demands of society and to the requirements of the above-cited constitutional
article, of the new Law on Agriculture of 1999, and of other legal texts, in particular environmental
legislation.
Switzerland is aware of the fear felt by certain Members that the reduction in product-related
support and the liberalization of trade would bring about a slowdown in the production of foodstuffs
and a consequent decline in non-commercial agricultural services below the level demanded by
society.  It is also aware that others feel that these Members might be tempted to justify their
excessive protection and production-related support measures by invoking the need to preserve the
non-trade effects of their agriculture.  While the conciliation of these viewpoints represents a major
challenge for the negotiations on agriculture, Switzerland nevertheless considers that it is possible to
think in terms of mutually satisfactory solutions through an appropriate adjustment of the WTOprovisions.
On the basis of the experience acquired in implementing the Uruguay Round agreements,
Switzerland is convinced that increased trade liberalization will not automatically lead to the
achievement of all of the societal objectives, and that indeed, certain non-trade goods will not beproduced in the quantities and quality sought by the community.
Each Member has a sovereign right to set its political objectives on the basis of its history,
geography and culture, and to decide accordingly on the quantity and quality of non-trade goods to
produce.  Switzerland feels strongly that the multilateral negotiations on agriculture must not passjudgement on the advantages and utility of the numerous non-trade concerns, which in any case are
constantly evolving.
On the other hand, disciplines are necessary in order to ensure that measures taken for the
purpose of achieving societal objectives do not harm the interests of other countries.  Switzerland istherefore prepared to participate in a broad debate on the question as well as in subsequent
negotiations on the general rules that should accompany the measures relating to non-trade concerns,
and believes that there are a number of transparent, specific and targeted instruments that can be used
to that end.
In other words, rather than addressing national political objectives, the negotiations should
focus on the conditions governing the measures taken to achieve them.  A more effective controlmechanism will also be needed.
Finally, non-trade concerns, like special and differential treatment, cannot be separated from
the disciplines governing market access and domestic support.  These aspects will have to be
examined throughout the negotiations and taken into account in preparing the rules and disciplines foragricultural trade in the future.
4. Improvement of special and differential treatment
The concept of special and differential treatmen t (S&D) is extremely important in helping the
developing countries to ensure their future economic growth and their integration in world trade.  It is
therefore closely linked to the specific needs of th e developing countries in their different situations.
In the light of these specific situations, the S&D measures clearly need to be adapted and revised on a
periodical basis.  They will be more effective if they focus on development objectives, particularly in
the least-developed countries.  Switzerland, which is already among the countries offering the bestmarket access possibilities to the LDCs, plans further significant improvements in that respect.
For the time being, S&D more often than not takes the form of extended deadlines or,
sometimes, total or partial exemption from reduction commitments.  Net food-importing developingG/AG/NG/W/94
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countries also benefit from special provisions.  However, the S&D concept is inevitably transitional
by its very nature.
Switzerland takes the view that the current negotiations should seek solutions that are more
apt to meet the specific needs of the developing countries.  In the market access area, for example,instruments should be introduced that would enable the small emerging economies that depend
heavily on exports of a few specific goods to face the increasing competition resulting from tariff
reductions agreed multilaterally, and to protect themselves against the consequent erosion of
preferential margins.
Unlike the S&D concept, non-trade concerns are not linked to any specific stage of
development;  in fact, they apply to all societies.  While it is true that the S&D measures cancontribute to giving concrete form to such concerns in the developing countries, it is also essential to
develop a long-term horizontal system which would provide all countries with the necessary
instruments in this respect.
5. Other agricultural policy objectives
Switzerland would like to see three subjects which are being dealt with in other WTO bodies,
and which are particularly important from the agricultural policy point of view as well, addressed
during these negotiations:  the protection of geographical indications (5.1), the problems relating to
production methods (5.2), and the internalization of environmental costs (5.3).  It does not, however,
propose that they should be dealt with in special meetings of the Committee on Agriculture  − other
WTO bodies should be mandated for the purpose, where this has not already been done.  Moreover,
recent events show that it is essential to define, within the competent bodies, the modalities governing
the application and scope of the precautionary principle.  Given the importance of these topics for the
agricultural reform process, this work will have to  be completed before it is possible to achieve any
ambitious results in the agricultural negotiations specifically.
5.1 Geographical indications
The provisions relating to geographical indications are enshrined in the Agreement on Trade-
Related Aspects of Intellectual Property Rights (TRIPS Agreement).  Members are currently
discussing a number of central issues within the Council on TRIPS, set up for that purpose.  These
questions include, in particular, the development of a system for notifying and registering wines and
spirits which enjoy so-called "additional protection", and the extension of such protection to products
other than wine and spirits.  This extension to other products is crucial for Switzerland, which isreputed, inter alia , for its cheeses.  A successful outcome of the negotiations within the Council for
TRIPS in this respect would contribute to achieving a more equitable agricultural market.
5.2 Technical regulations
Consumers require more and more information on agricultural products.  Some of this
information has long been provided as a matter of course, for example the list of ingredients,
nutritional value, time-limit for consumption and warnings on the risks for persons suffering from
allergies.
However, consumers would also like to be informed concerning the production method of a
product.  This information could concern the primary production or the packaging of the final product,since many consumers need to be able to make their choice not only on the basis of the physical
quality and price of the products, but also on the basis of their tastes and their ethical and moral
convictions.G/AG/NG/W/94
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Today, there are any number of compulsory declarations and voluntary labels by which
consumers are able to identify products containing GMOs and production methods which respect, for
example, the environment and animal welfare.
If they are to be well balanced, the resu lts of the negotiations must take account, inter alia , of
consumer interests.  It is therefore essential to determine whether the existing disciplines are sufficient
even in the evolving and dynamic context of societal preferences.  In particular, these disciplines must
be designed to prevent practices which could mislead the consumer without constituting disguised
barriers to trade.
5.3 Environment
In conformity with the internationally approved principles and multilateral agreements on the
environment, Switzerland considers that further re form must not only avoid harm to the environment,
but that indeed, it must seek solutions favourable to the economy, to social conditions and to the
environment ("win-win-win situations").  To that end, it is important to take account of the following
points:
- The negotiations should focus on the reduction of trade measures having a direct
negative impact on the environment;
- specific measures may be needed to internalize the externalities of certain agricultural
production methods;
- all measures likely to have a negative impact on the environment or to aggravate such
impact must be addressed, including specific support measures, such as the provision
of irrigation infrastructure at prices which do not cover environmental costs.
We would like to recall in this connection the proposal submitted by Switzerland to the
Committee on Trade and Environment on ways of making trade and environmental instruments
mutually profitable.3
6. Further commitments
Switzerland is prepared to negotiate further commitments as undertaken by every Member
under Article 20 of the Agreement on Agriculture.  It is convinced of the need to clarify the rules of
the game in order to preserve the multifunctional character of agriculture in all countries.  In
particular, there is a need to establish precise ru les governing the instruments enabling agriculture to
produce non-commercial goods in response to the quantitative and qualitative requirements of societyand the needs of consumers.  Consequently, Switzerland proposes that we begin by negotiating the
relevant rules, disciplines and criteria.  Once an agreement has been reached in that respect, it will be
possible to determine the percentages of reduction for the three above-mentioned pillars.  Switzerland
stresses the need to develop and apply different methods adapted to each pillar, and where
appropriate, to each product.
Another topic that needs to be addressed and which interests the developing countries in
particular is the improvement of their access not only to the markets of the industrialized countries,
but also to those of the other developing countries.
                                                     
3 WT/CTE/W/168.G/AG/NG/W/94
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The peace clause will have to be extended for the duration of the negotiations and the reform
process in order to ensure their success.  Switzerland proposes that a formal decision be taken to that
end at the beginning of the next negotiation phase.
6.1 Market access
6.1.1 Tariffs
Switzerland is prepared to address the tariff part of the market access negotiations on the basis
of an application/offer procedure, possibly supplemented by a tariff reduction formula, the aim being
to fix an average percentage for reductions on bound rates.
As regards tariffs applicable to the developing countries that are poorly integrated in the
global market and those that are net-food importers, a flexible approach is needed.  The same applies
to the transition countries with comparable characteristics.
Switzerland proposes the granting of special concessions to the least-developed countries
(LDCs) and other developing countries, and the deve lopment of specific measures in their favour so
that they can maintain and improve their position on the global market for agricultural goods.
By adopting this approach, which must result in concrete commitments, it will also be
possible to take account at least partially of the particular needs of Members and their specificagricultural production structures.  The diversity of the countries and the products concerned calls for
a product-by-product and case-by-case approach.
6.1.2 Tariff quota allocation methods
A recent study by the WTO Secretariat
4 revealed that the tariff quota allocation method has
not in itself had any uniform impact on real market access.  It is the particular circumstances (such as
the absolute difference between in-quota rates and out-of-quota rates) as well as the allocation
modalities and their implementation which first and foremost determine to what extent market access
is guaranteed, for the totality of the quota.  Apart from the guaranteed access condition, the choice of
the method of allocation must remain free.
It is therefore proposed not to exclude any methods of allocation in advance, but to examine
the rules and disciplines required to ensure that the specific application guarantees market access.  To
that end, it would be useful to draw up a list of methods of allocation which offer particular
advantages in specific situations, such as auctioning.
A formula should also be developed for the countries wishing to abolish tariff quotas for
certain products and to shift to a "tariff only" system, drawing inspiration from Article XXVIII of the
GATT 1994 to define the relevant modalities.
6.1.3 Special safeguard provisions (SSG)
The special safeguard provisions constitute an important instrument for Switzerland in that
they enable the Swiss authorities to afford a certain amount of protection to agriculture in case of
unforeseeable fluctuations in the quantities imported or the import price.  However, Switzerland only
uses these provisions as a last resort, and has done so only once over the past five years.  A number of
corrections are nonetheless needed to take account of the experience acquired and the current
                                                     
4 G/AG/NG/S/20.G/AG/NG/W/94
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situation.  With respect to the special safeguard provisions based on price, these corrections include
above all:
- Having the reference period coincide with the three most recent calendar years for
which the necessary statistical data is available, so that current trade flows can bebetter taken into account;
- simplifying the system of additional tariffs in order to enhance transparency, for
example, through a uniform proportional additional charge.
6.2 Domestic support
6.2.1 Amber and blue boxes
As regards amber and blue boxes, Switzerland proposes waiting to negotiate the criteria and
scope of the different instruments until an understanding has been reached in principle on the
instruments to be applied with respect to non-trade concerns.
This approach will help the negotiations in that it will be easier to classify the measures
enabling non-trade concerns to be taken into account on the basis of a proper definition of the blue
box (as well as the green box – see 6.22).  This would provide a proper basis for assessing the merits
and utility of the measures in question with due regard for the specific needs of Members, inparticular the developing countries.  The certainty deriving from such an understanding would
encourage Members to make more extensive reduction commitments than they would if the scope of
their rights and obligations with respect to domestic support remained obscure.
This would lead to the negotiation of a further reduction of current total AMS in accordance
with the bound values.
6.2.2 Green box
Thanks to the green box, it should be possible to address most, if not all, of the non-trade
concerns in a dynamic context.
Switzerland is convinced of the need to examine certain existing rules in this area, in
particular those concerning the instruments that would enable agriculture to produce non-commercial
goods (multifunctionality) in quantities and of a quality demanded by society.  These instruments
must be transparent, specific and targeted.
Since the green box can contain only measures that have little or no impact on production and
trade, we must exclude an absolute multilateral ceiling.  Indeed, each Member must define the
quantity and quality of non-commercial goods that it  wishes to produce in addition to the commercial
products.  Production costs for these public goods vary considerably from one country to another, and
a green box ceiling might well impede the achievement of societal objectives.
6.3 Export competition
To begin with, we must define the future scope of the disciplines governing export
competition.  It is important to include all of the in struments used in this area, and the disciplines to be
agreed must also extend to the forms of support that are not currently covered by the Agreement on
Agriculture.  These include, in particular, all of the measures likely to have equivalent or similar
effects to subsidies, including tax subsidies, State trading, price pooling and export credits.G/AG/NG/W/94
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To ensure that food aid measures can fulfil their role of providing direct and effective
assistance to populations in distress, disciplines in this area will also have to be strengthened.  It is
important, in particular, that food aid should be granted only where there are real crises and for a
limited period of time in order to prevent any negative impact on the local agricultural production
structure and hence to maintain the local capacity to  contribute to food security.  (Principles:  no
permanent aid;  combat the damaging phenomenon of increased aid during low price periods and
reduced aid when prices are on the rise;  commitments covering domestic food aid as well;  aid in the
form of grants only.  The Food Aid Convention of 1999 could serve as a basis for the development of
disciplines in that area.
Concerning additional reduction commitments to be negotiated, Switzerland proposes flexible
reductions by groups of products according to the bound values and using a formula to be agreed.
In order to increase the total amount of the reductions, a procedure should also be developed
whereby a greater reduction on product A could be compensated by an increase on product B along
the lines of the procedure for the unbinding of tariff commitments under Article XXVIII of the GATT
1994, in accordance with a formula to be agreed.
6.4 Export restrictions
Switzerland proposes the elimination of all export restrictions on agricultural products and the
binding at zero of all export tariffs (with a flexibility clause for the LDCs).
7. Negotiation agenda
To contribute substantially to the basic reform of the world trading system in the agricultural
area, which aims in the long term, at achieving substantial progressive reductions in support andprotection, and developing a fair, market-oriented system, the negotiations should comprise the
following elements:
1. Clarification, simplification and adjustment of the rules of the Agreement on Agriculture in
the light of the experience acquired in implementing the reduction commitments and the
impact of the commitments on agricultural trad e.  In this connection, it is particularly
important to ensure that due consideration is given to non-trade concerns and to special anddifferential treatment for the developing countries, least-developed countries, islands, land-
locked developing countries, countries in transition and small vulnerable economies.  To that
end, further analyses should be conducted, inter alia  by assessing the impact of agricultures
on development, particularly in the developing countries.  Moreover, the rules must be in
keeping with the objectives set forth in the prea mble to the Agreement, particularly as regards
sustainable development and consumer interests.
2. Analysis and appropriate development of instruments by which to take better account of non-
trade concerns and the legitimate interests of the developing countries, the least-developed
countries, the countries in transition and the small vulnerable economies.  These instrumentsmust be designed to avoid, as far as possible, distorting the market and/or must be recognized
as being based on established WTO rules.
3. Given the major impact that certain provisions of other agreements and the work of other
bodies can have on the outcome of the negotiations, there must be close coordination betweenthe group negotiating on agriculture and these other bodies (Council for TRIPS for
geographical indications, the TBT Committee for labelling, the SPS Committee for food
safety issues, the Committee on Trade and Environment and the Committee on Trade and
Development, including the Sub-Committee on Least-Developed Countries, for all issuesG/AG/NG/W/94
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concerning the environment and development and those covered by other international
organizations and instruments, for exampl e the Convention on Biological Diversity).
4. The negotiations on market access should aim at progressively reducing tariffs and should
take due account of non-trade concerns and special and differential treatment on the basis ofthe work carried out in accordance with paragraphs 1 and 2 above.  As for tariffs, they should
be negotiated on a product-by-product and case-by-case basis in the framework of an
application/offer procedure supplemented, where appropriate, by a tariff reduction formula.
5. The negotiations on domestic support must lead to a progressive reduction of amber box
measures which cause market distortions.  An appropriate definition must also be found for
the blue box and green box so that non-trade concerns and special and differential treatmentcan be better taken into consideration.  These definitions should take account, inter alia , of
the following elements:
- Development of rural areas;
- poverty alleviation;- sustainable use of natural resources;
- environmental protection (including biodiversity);
- maintenance of the countryside;
- food security;
- food safety (including the precautionary principle);-a n i m a l  w e l f a r e .
6. As regards the negotiations on export competition, they should target a substantial and
progressive reduction in all types of programmes in that area, bearing in mind the need for
special and differential treatment of certain WTO Members.
7. Special measures for the negotiations and the implementation stage:  the special rules
designed as support measures for the ongoing reform, such as the special safeguard clause and
the peace clause, must remain in force throughout the reform process.
The beginning of the negotiations, the different stages and the assessment remain to be
discussed.  For the negotiations to achieve a solution acceptable to all Members, what is needed is acoordinated and consensual approach with due consideration for the interests of all parties.
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