WORLD TRADE
ORGANIZATIONG/AG/NG/W/91
21 December 2000
(00-5597)
Committee on Agriculture
Special SessionOriginal:  English
NEGOTIATING PROPOSAL BY JAPAN ON WTO AGRICULTURAL NEGOTIATIONS
Japan has been implementing the Uruguay Round agreements in good faith, and is actively
engaged in the agricultural negotiations in accordance with Article 20 of the Agreement on
Agriculture.
In preparation for the negotiations, the Government of Japan has received opinions from a
wide-range of members of the society, including agricultural producers, the food industry, consumers
and non-governmental organizations.  The Government has also conducted official opinion polls and
has reviewed public comments concerning agricultural production and trade.  This negotiatingproposal has incorporated those views and comments, and is supported by a wide range of public,
including not only agricultural producers, but also the consumers themselves.
The proposal consists of the following: 1) basic elements to be considered in the negotiations;
2) market access; 3) domestic support; 4) rules and disciplines on exports; 5) state trading; 6)consideration for developing countries; and 7) response to the concerns of consumers and the civil
society.  The basic philosophy which underlies these proposals is the "coexistence of various types of
agriculture".
It is widely believed among the people of Japan that the 21st century should be an era of
peace, dignity and mutual respect, and that the various nations and regions of the international society
should coexist and mutually respect each country’s values based on their specific historical andcultural backgrounds.
Agriculture is the foundation of society in ev ery country, and provides a variety of functions
that are beneficial to the society.  As there are di fferences in the natural conditions and the historical
background from one country to another, the diversity and coexistence of agriculture among variouscountries need to be preserved.  In this regard, it is important to mutually recognize the necessity to
overcome the differences in production conditions among the countries.
Japan's Negotiating Proposal is based upon the fundamental philosophy of coexistence, as
mentioned above, and pursues the following five major points:
(i) Consideration of the multifunctionality of agriculture;
(ii) Ensuring food security, which is the basis of the society in each country;
(iii) Redressing the imbalance between rules and disciplines applied to agricultural
exporting countries and those applied to importing countries;
(iv) Consideration for developing countries; and
(v) Consideration for the concerns of consumers and the civil society.G/AG/NG/W/91
Page 2
These five points reflect the general consensus of the people of Japan, which itself is the
biggest net food-importing country, having imports  equivalent in amount to the consumption of
75 million people.
The trade rules that enable only a particular type of agriculture which focuses on the
efficiency to thrive, would naturally be rejected not only by Japan but also by other countries.
Similarly, Japan is in no position to agree on the outcome of negotiations if this only enables a small
number of competitive exporting countries to benefit from the international agricultural market.
Japan sincerely supports establishing, through the current agricultural negotiations, fair and
equitable rules and disciplines which will not only avoid damaging agriculture of each country, but
will allow its coexistence.G/AG/NG/W/91
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CONTENTS
I. BASIC ELEMENTS TO BE CONSID ERED IN THE NEGOTIATIONS ______________ 4
1.1 Examining the implemen tation of the UR agreements
1.2 Pursuit of the multifunctionality of agriculture and food security as the major issues of the ___
 agricultural policies worldwide
II. PROPOSAL ON MARKET ACCESS ___________________________________________ 7
2.1 Tariff levels
2.2 Access opportunities2.3 Tariff rate quota administration2.4 Safeguards2.5 Sectoral initiatives
III. PROPOSAL ON DOMESTIC SUPPORT _______________________________________ 12
3.1 Rules and disciplines on domestic support3.2 Levels of domestic support
IV. PROPOSAL ON RULES AND DI SCIPLINES ON EXPORTS______________________ 15
4.1 Export subsidies
4.2 Export prohibitions/restrictions, export taxes
V. PROPOSAL ON STATE T RADING ___________________________________________ 18
VI. PROPOSAL ON CONS IDERATION FOR DEVELO PING COUNTRIES ____________ 20
6.1 Rules and disciplines on border measures
6.2 Rules and disciplines on domestic support6.3 Rules and disciplines on exports and state trading6.4 Addressing food security concerns
VII. PROPOSAL IN RESPONSE TO THE CONCERNS OF CONSUMERS AND THE CIVIL
SOCIETY__________________________________________________________________ 22
7.1 Stable food supply
7.2 Providing safe food to the public
7.3 Providing information that enhances  consumers' confidence in choosing food
7.4 Disclosure of information on WTO agricultural negotiations
VIII. AGRICULTURAL NEGOTIATIONS IN THE CONTEXT OF A NEW ROUND _____ 25
(Annex)
Japan's Proposal Examined from the Viewpoint of the Multifunctionality of Agriculture and
Food Security_________________________________________________________________ 26G/AG/NG/W/91
Page 4
I. BASIC ELEMENTS TO BE CONSIDERED IN THE NEGOTIATIONS
Proposal
1. The current WTO negotiation on agriculture is of great importance as it will significantly
influence the worldwide trend of the agricultural policy in the 21st century.  It is, therefore, necessaryto examine thoroughly the experience gained  from implementing the Uruguay Round (UR)
agreements.  The negotiations should also respond to the challenges that need to be addressed by
various agricultural policies around the world.
1.1 Examining the implementation of the UR agreements
2. The agricultural agreement reached during the Uruguay Round was a new step forward in the
area of trade rules on agricultural products.  However, the instability of international food supply anddemand has yet to be eliminated, and a number of countries had no choice but to take additional
support measures under such circumstances. These facts reveal the need to further consider reality
whereby agriculture cannot be sufficiently managed by market mechanism alone.  Furthermore, new
issues relating to the consumers' daily life, su ch as genetically modified organisms (GMOs), have
emerged as technology itself advances.
3. Bearing this in mind, it is necessary to ex amine thoroughly the situation surrounding the
implementation of the UR agreements.  Taking into account the difficulties encountered in each
Member’s food and agricultural policies needing to be resolved, the negotiations should contribute to
solving such difficulties.
1.2 Pursuit of the multifunctionality of agricultu re and food security as the major issues of
the agricultural policies worldwide
4. The various types of agriculture in different countries and regions must be able to coexist in
the 21st century.  For that purpose, it is important for each Member to acknowledge the diversity ofagriculture resulting from the differences in the natural conditions and historical backgrounds.  Based
on this notion, it is essential to ensure that the benefits of the multifunctionality of agriculture can be
sufficiently reaped through sustainable production. It is further essential to secure a stable food
supply, which is indispensable for human life.  Thus, the negotiations should be conducted while
recognizing the above-mentioned elements as being the major issues of the agricultural policies
worldwide.
Background
1.1 Examining the implementation of the UR agreements
(a) The UR Agreement on Agriculture, which converted, in principle, all non-
tariff border measures into tariffs, was the outcome of a series of broad-ranging
negotiations, covering not only border measures, but also export subsidies and
domestic support.  This was a new step in the area of trade rules for agricultural
products.
(b) The international environment surrounding agriculture and agricultural
policies subsequent to the UR agreements clearly shows that it has become more
important to recognize that the market  mechanism alone can hardly suffice for
managing the public good aspect of agriculture, let alone agriculture itself.G/AG/NG/W/91
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(c) For example, while world agricultural trade has increased on the whole, only
a limited number of countries have enjoyed the benefit of such expansion.  While the
agricultural output in developed countries has increased, causing problems of over-
production, food shortage in developing countries has worsened.  Consequently, the
situation surrounding food security in many countries has become more serious.
(d) Although many countries are implementi ng policy reforms in response to the
UR agreements in order to reduce the degree of intervention on the agricultural
market, and are making a policy shift toward an approach more focused on stable
farm management, the recent de cline in the price of agricultural products has created
new problems and some countries have had no choice but to take additional support
measures.
(e) In addition, agricultural management, both in importing and exporting
countries, faces various difficulties due to the increase of imports and the unstable
supply and demand situation.  New issues relating to consumers' daily life have
emerged along with technological progress, such as in the area of genetically
modified organisms (GMOs).
(f) In this regard, it is necessary, as the first step in the current negotiations, to
thoroughly examine the global situation of  food, agriculture and the rural areas as
well as the implementation in each country since the UR agreements.  It is also
necessary to conduct such negotiations in order to resolve the difficulties in each
country and to allow the sustainable use of limited global resources in the long term.
1.2 Pursuit of the multifunctionality of agriculture and food security as the
major issues of the agricultural policies worldwide
1.2.1) Importance of the multifunctionality of agriculture
(a) Agriculture not only provides products for trade, but also produces some
multifaceted and publicly benefiting values through sustainable production activities.
These values, however, are not tradable and cannot be reflected in the market prices.
(b) The multifunctionality of agriculture is a concept which explains that
agriculture is an economic activity that not only produces food and fiber but also
creates both tangible and intangible values, which are embodied in various ways in
each country.  These ways may vary in accordance with the relevant factors, such as
geography, climate and the historical background of each country.
The general characteristics of multifunctionality are as follows:
(i) The benefits of multifunctionality cannot be obtained separately from
agricultural production (joint production);
(ii) It is difficult to preclude people from enjoying the benefits of
multifunctionality at no cost (public good aspects);
(iii) It is difficult to properly evaluate the benefits of multifunctionality in
monetary terms in the agricultural market (externalities).
(c) A common recognition of the concept and the contents of the multifuctionality
mentioned above has also been formed in the OECD.G/AG/NG/W/91
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(d) The multifunctionality of agriculture cannot be obtained through trade, but
only through the sustainable agricultural activities of each country.  Thus, some
forms of policy intervention are indispensable, in order to reap the benefits of
multifunctionality by placing domestic agricultural production as the basis of food
supply.
(e) With regard to using non-trade-distorting measures as methods of policy
intervention, there is not necessarily a consensus on the concept of non-trade
distortion.  It is regrettable that not much effort has been made in the area of
clarifying the concept of non-trade distortion, while similar efforts are underway with
regard to multifunctionality.
(f) The most important and difficult task of the agricultural trade negotiations is
to identify ways to harmonize the following two ideas: non-trade distortion and thecoexistence of the various types of agriculture of Members.  Such harmonization
would become possible by examining the respective trade rules and policies, taking
into full consideration of the characteristics of the multifunctionality of agriculture.
1.2.2) Importance of food security
(a)  Each government bears the responsibility of securing the stable food supply
which is indispensable for maintaining life and health: a stable supply of food is the
important issue relating to people's right to live.
(b) In particular, developing countries put their highest priority on food security.
While food-exporting countries are free to either export or not to export their goods,
importing countries, however, do not have such  a choice.  Food security is also one
of the most serious concerns among the consumers of Japan, as it is the largest net-
food importing country in the world.
(c) The supply and demand of food in the world tends to be unstable due to the
special features of agricultural trade; not only are exporting countries concentrated
in particular parts of the world, but trade is vulnerable to unusual climates.  Suchinstability is likely to increase in the short-term due to unusual climate change, such
as El Nino.  It is also likely that world food supply and demand may be tightened in
the medium and long term due to a possibl e increase in the demand of feed grain
resulting from a drastic rise in the population and in economic growth, mainly in
developing countries.
(d) Moreover, there is a growing trend that only a small number of countries are
gaining a greater export share of the major agricultural products.  The FAOpredicted that the target, set at the World Food Summit in view of halving the current
population of more than 800 million suffer ing from malnutrition by 2015, might be
delayed by 15 years, i.e. until 2030.  This explains the growing concern on ensuring
global food security.
(e) Given such circumstances, the agricultural negotiations should be conducted
by bearing in mind the importance of glob al food security, which includes assistance
to developing countries suffering from problems, such as starvation and malnutrition,
and also by maintaining a close coordination with other organizations, such as the
FAO.G/AG/NG/W/91
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II. PROPOSAL ON MARKET ACCESS
Proposal
5. The negotiations on the market access of agricultural products should be conducted in
accordance with the provisions of the Agreement on Agriculture: the Agreement stipulates that thelong-term objective of substantial progressive reductions in support and protection resulting in
fundamental reform is an ongoing process, and that factors, such as non-trade concerns, will be taken
into account.  The negotiations should also aim at resolving the difficulties encountered in the food
and agricultural policy of each country since the implementation of the UR agreements, as well as at
achieving well-balanced results for the purpose of enabling the various types of agriculture to co-
exist.
2.1 Tariff levels
6. Appropriate tariff levels should be decided in a manner that provides flexibility to individual
products, thereby accommodating such factors as an individual country's current situation of
production and consumption for each product, as well as the situation concerning international supply
and demand, while at the same time recognizing that the reform process is underway.
7. As for the products which became subject to tariffication as a result of the Uruguay Round,
the out-of-quota tariff rates should be decided fully considering such factors as the differences
between domestic and international prices, as well as the progress of domestic agricultural policy
reform.  When deciding the rates, consideration should be given to various elements, inter alia,securing the benefits of the multifunctionality of agriculture and ensuring food security.  The in-quota
tariff rates for these products should be decided in light of such factors as the trend of international
supply and demand and the actual situation of  domestic consumption of each product.
8. Tariff levels of processed agricultural products should be determined, while giving sufficient
consideration to the importance of food industry, which has developed in unison with agriculture.
2.2 Access opportunities
9. The current system, which requires Members to provide a certain level of access
opportunities, has the fundamental problem of imbalance between importing and exporting countries
in terms of their rights and obligations.  Such aspects of the system need to be improved.
10. The level of access opportunities should be decided giving sufficient consideration for such
factors as securing the benefits of the multifunctionality of agriculture and ensuring food security.
The level should also be decided according to the actual agricultural situation and the progress made
through the structural reform of each country.  Consideration should also be given to the different
situations of the international supply and demand of each respective product in order to provideflexibility when determining the appropriate level of access opportunities.
11. Besides the above-mentioned points, the system, which requires Members to provide a certain
level of access opportunities, has the following problems.  It is therefore important to make the
necessary improvements to the system.
(i) Since the level of access opportunities was determined according to domestic
consumption during the past negotiations, such level should now be reviewed,
considering the latest volume of consumption in order to achieve fair treatment.G/AG/NG/W/91
Page 8
(ii) As for the products subject to the special treatment concerning paragraph 2 of
Article 4 of the Agreement on Agriculture, there is a problem whereby the additional
level of access opportunities will be maintained, even after the special treatment
ceases to be applied during the implementation period.  There is, therefore, need for
improvement.
2.3 Tariff rate quota administration
12. Based on the principles described at the outset, each Member should respectively adopt the
methods that are based on their domestic conditions, for administering their tariff rate quota systems.
13. The tariff rate quota administration should be transparent and impartial.
2.4 Safeguards
14. Regarding seasonal and perishable agricultural products, a new safeguard mechanism with
special conditions should be introduced, in order to apply safeguard measures in a timely and
effective manner in a case where a rapid increase of imports were to occur.  This would also enhance
transparency for administering safeguard measures.
15. The special safeguard mechanism under the Agreement on Agriculture should be maintained,
bearing in mind the negotiating history of the Uruguay Round whereby the mechanism was agreed in
conjunction with tariffication as a package.
2.5 Sectoral initiatives
16. Japan does not support the idea to call for further sector-specific reductions in tariff levels in
addition to the commitments already called for with regard to general tariff reductions.
Background
2.1 Tariff levels
(a) Prior to the UR negotiations, countries had been allowed to maintain various
non-tariff border measures for agricultural products: quantitative import restrictions,
variable import levies, minimum import prices, discretionary import licensing,
non-tariff measures maintained through state trading enterprises, voluntary exportrestraints, and other similar border measures.  Such measures were then out of the
scope of trade negotiations.  The fact thus  indicates that negotiations on agricultural
trade were conducted, automatically taking into account the multifunctionality of
agriculture and food security.  In the UR agreements, a set of specific disciplines on
agricultural trade was introduced for the first time, and all border measures wereconverted into tariffs.
(b) Bearing such background in mind, the tariff levels of the products which
became subject to tariffication as a result of the Uruguay Round should be
considered, in the current negotiations, by paying particular attention to, inter alia,
the multifunctionality of agriculture and food security.
(c) Since the tariff system has become the only legitimate tool to adjust
differences in the natural and economic conditions of Members with regard toG/AG/NG/W/91
Page 9
agricultural trade, it is necessary to duly maintain its function.  Under such
circumstances, it is essential that an appropriate tariff level be determined,
considering the situation surrounding each product and the negotiating history,
thereby providing flexibility for each product.  This is important in order to continue
the reform process for substantial progressive reductions in support and protection.
(d) In the current agricultural negotiations, various products having
considerable differences in their economic and social significance are subject to the
negotiation.  In particular, the out-of-quota tariff rates for the products which
became subject to tariffication as a result of the Uruguay Round should be
determined, taking into full account such factors as the differences between domestic
and international prices, as well as the progress of domestic agricultural policy
reform.  The in-quota tariff rates for these products should also be decided,considering such factors as the trend of international supply and demand and the
actual situation of domestic consumption of each product: it is, therefore,
inappropriate to treat all products in the same manner.
(e) Tariff levels of processed agricultural products should be determined, fully
considering the sound development of the food industry in each country, which playsa significant role in the stable supply of good quality food.
2.2 Access opportunities
(a) While food-exporting countries can promptly impose export restrictions,
importing countries are obliged to provide a certain level of access opportunities
according to the rule that is, in principle, to prohibit border measures other thantariffs.  In other words, while exporting countries are free to either export or not to
export, importing countries have no such ch oice.  Improvement should be made on
such fundamental problem.
(b) A system which requires Members to provide a certain level of access
opportunities has also the following f undamental problems, and improvement needs
to be made by taking into account such problems:
(i) Access opportunities should be decided by giving sufficient
consideration for such factors as securing the benefits of the
multifunctionality of agriculture and ensuring food security.  These should be
decided based on the actual agricultural situation and the progress made
through the structural reform of each country.
(ii) A system requiring Members to provide a certain level of access
opportunities could have a considerable impact on international supply and
demand, and any question related to this system should be carefully
considered.  For example, it is necessary to make special consideration for
those products whose trade volume is relatively small compared with the
actual volume produced and whose scale of international market is small,unlike other products having a large traded volume.  Establishing the same
level of access opportunities for such products, regardless of the difference in
their trade structure, is not only infeasible, but may also create difficulties for
developing countries when purchasing food.  Thus, flexibility should be
provided to each Member in order to be able to establish an appropriatelevel of access opportunities by paying sufficient attention to such factors asG/AG/NG/W/91
Page 10
the international trade structure, the multifunctionality of agriculture and
food security.
(c) In addition to the above, such a system requiring Members to provide a
certain level of access opportunities has the following problems.  The system needs to
be improved taking them into account:
(i) Since a certain percentage of the actual domestic consumption
during the base period was used for deciding the level of access opportunities
during the previous negotiations, the base period should now be reviewed,
reflecting the variations in the volume of food consumption in each country in
order to achieve fair treatment.
(ii) As for the products subject to the special treatment concerning
paragraph 2 of Article 4 of the Agreement on Agriculture, the level of accessopportunities was set at an additional level.  It is an overly heavy burden and
lacks equity to require certain Members to continue providing such extra
access opportunities in the future, simply as compensation for few years'
delay in tariffication, even after the special treatment ceases to be applied.
Improvement should therefore be made in this regard.
2.3 Tariff rate quota administration
(a) Tariff rate quotas (TRQs) should be decided and administered by reflecting
the actual situation of agriculture in each Member, recognizing that the reform
process to achieve a long-term objective is now underway.  Different, specific
treatment is required for each product, ta king into full account the characteristics of
each product and its distribution pattern. It is, therefore, inappropriate to impose a
uniformed administration of TRQs through ignoring these factors.
(b) Tariff rate quotas should be administered in a transparent and impartial
manner.
2.4 Safeguards
(a) Seasonal and perishable agricultural products have difficulty in inventory
adjustments and although consumption itself remains stable, prices are elastic.  As a
result, unlike industrial goods, these products are more susceptible to a sharp fall in
prices, resulting from an increase in impo rts, thus having a huge impact on producers
over a short period of time.
(b) Given such characteristics of seasonal and perishable agricultural products,
it is necessary to introduce a new safeguard mechanism through which minor andshort-term measures can be applied automatically and effectively, based on simple
and basic conditions.
(c) By setting clear conditions for invoking a new safeguard mechanism, similar
to those for special safeguards, it will become possible to make measures transparent
and also prevent their abuse.
(d) The special safeguard mechanism under the Agreement on Agriculture
should be maintained, bearing in mind the negotiating history of the Uruguay Round
where this mechanism was agreed in conjunction with tariffication as a package.  It isG/AG/NG/W/91
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stipulated in the Agreement on Agriculture that the special safeguard mechanism
shall remain in force for the duration of the reform process.
(e) The mechanism of special safeguards is transparent and predictable, due to
the clarity of the requirements for its application as well as the tariff levels to be
applied.  The mechanism, therefore, constitutes by no means an obstacle to a smoothflow of trade.
2.5 Sectoral initiatives
Japan does not agree with the idea to call for further sector-specific
reductions in tariff levels (including zero-for-zero), in addition to the commitments to
be made for a general tariff reduction: such an approach does not evenly represent
the positions of both the food-importing and food-exporting countries.G/AG/NG/W/91
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III. PROPOSAL ON DOMESTIC SUPPORT
Proposal
17. When discussing a future framework and the levels of domestic support, due consideration
should be given to the multifunctionality of agriculture and the situation of food and agriculture ineach country.  Taking into account the experience to date from implementing the Agreement on
Agriculture, efficient policies should be promoted through focused measures and flexible actions,
responding to the changes of circumstances, so as to continue the process of agricultural policy
reform.
3.1 Rules and disciplines on domestic support
18. The present basic framework of rules and disciplines on domestic support should be
maintained so that the agricultural policy reform by each Member can be steadily promoted.
19. In light of the experiences to date from implementing the UR agreements, improvements,
such as the following, should be made with regard to  the requirements to be met in the "Green Box" in
order to promote agricultural policy reform by reflecting the real situation of agriculture;
(i) From the viewpoint of narrowing the gap between the actual trend of each Member’s
agricultural policy reform and the current agreement, the requirements for decoupled
income support, stipulated in Annex 2 of the Agreement on Agriculture, should be
improved, in order to reflect the real situation of production, including the factors ofproduction which are employed.
(ii) In view of introducing safety-net programs, which are necessary when promoting
market-oriented policy conversion, it is appropriate to ease the requirements on
measures, such as for income insurance and income safety-net programs, as well asthe restriction on the rate of compensation concerning those measures.
20. The "Blue Box" measures, which are exempt from the reduction commitment, should be
maintained.
3.2 Levels of domestic support
21. In order not to undermine the benefits gained in each country from the multifunctionality of
agriculture, the total AMS commitment levels should be determined in a realistic manner, in order to
keep pace with the progress of domestic agricultural policy reform.
22. The base level of the total AMS should be e quivalent to the final commitment level in the
year 2000 (ceiling), which was decided as a result of the Uruguay Round, in order to secure thecontinuity of agricultural policy reform.
Background
3.1 Rules and disciplines on domestic support
(a) Under the existing Agreement on Agriculture, domestic support is
categorized into three groups, namely, "green," "blue" and "amber," in accordance
with the degree of impact on trade and production.  Since Members, including Japan,G/AG/NG/W/91
Page 13
are currently implementing agricultural policy reform under this framework, any
drastic change that limits the coverage of  the "Green Box" would impair the smooth
implementation of agricultural pol icy reform in each country.
(b) In light of experiences to date obta ined from implementing the Agreement on
Agriculture, some of the requirements in the "Green Box" need to be improved inorder to reflect the points specified below (See points (i)-(iii).).  The improvement is
aimed at contributing to the promotion of agricultural policy reform through:
- narrowing the gap between the ongoing trend in agricultural policy
reform based on the actual situation of agriculture and the existing
agreements; and
- facilitating the smooth introduction of safety-net programs,
necessary for promoting market-orientated policy conversion.
  (i) Decoupled income support (Annex 2, paragraph 6)
a. The multifunctionality of agriculture, which is closely linked to
agricultural production, contributes to local society and the environment as
benefits for the public.  The reason why public spending on agriculture is
accepted in every country is mainly due to the public nature of agriculture,which is closely linked to agricultural production itself.
b. The existing requirements for decoupled income support have
become inappropriate with regard to the actual situation of agriculture,
because they prevent any link between the amount of payment and the level of
current production.  Furthermore, they do not take into account the aspectsof agricultural production as public goods.  In this regard, some countries,
which applied policies in compliance with the present requirements and
became unable to respond to the change in the production situation, have no
choice but to provide additional support for their producers.
c. In view of securing the benefits of the multifunctionality of
agriculture and of achieving financial effectiveness, it is necessary to reflect
the actual situation concerning agricultural production (including factors of
production) as much as possible when deciding the amount of payments,
while at the same time decoupling it from the current level of output.
  (ii) Income insurance and income safety-net programs (Annex 2, paragraph 7)
a. It is unreasonable to restrict the level of income loss that is eligible
for compensation, because a disparity of compensation among the farmers inneed will occur as a result of compensatory measures being based on a fixed
threshold level.  In addition, in light of the experiences gained from
implementing the Agreement on Agriculture, it has proved difficult to be able
to stabilize farm management without providing compensation for the loss of
income below 30%.
b. Farm management is vulnerable to the fluctuation of supply and
demand as well as to natural disasters.  In many cases, compensating only
70% of the income loss has been proved insufficient for continuing farming
when incomes drop drastically.  Consequently, most of the safety-netG/AG/NG/W/91
Page 14
programs implemented in several coun tries compensate more than 70% of
income loss.
c. It is therefore necessary to ease the restrictions on the requirements
and the level of the compensation ratio in order to reflect the actual situation
of agriculture.  Such changes, however, should not encourage producers toignore their sound sense of management.
  (iii) Payments for relief from natural disaster (Annex 2, paragraph 8)
It is not appropriate to restrict the level of the production loss eligible
for compensation, since, as described in (ii) above, disparity will occur
concerning compensation as a result of applying such measures.  Therefore,
necessary changes should be made.
(c) When reforming agricultural policies towards a more market-orientated
system, the "Blue Box" measures are essential as a transition stage for a smooth
policy conversion from "amber" to "green" policy measures.  As the "Blue Box"
measures are less trade-distorting and less production-stimulating than the "Amber
Box" measures, these should be maintained and positively recognized.
3.2 Levels of domestic support
(a) In order to secure the benefits of the multifunctionality of agriculture, a
certain level of policy intervention (domestic support) is indispensable.  This is
indeed taken into account by way of the agricultural policies of each Member,
through which the reform process is steadi ly being implemented.  From the viewpoint
of not undermining the benefits gained in each country from the multifunctionality ofagriculture, the total AMS commitment levels should be determined in a realistic
manner, in order to keep pace with the progress of domestic agricultural policy
reform.
(b) The levels of AMS in each country were decided by, for example, the
difference in the conditions of production and the gap in productivity betweenagriculture and other industrial sectors, for the purpose of sustaining agricultural
production in each Member.  It is, therefore, unreasonable to set the level of AMS as
a fixed percentage of each Member's total agricultural production.  The base level of
the total AMS should be equivalent to the final commitment level in the year 2000
(ceiling), which was decided as a result of the Uruguay Round, in order to secure the
continuity of agricultural policy reform.G/AG/NG/W/91
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IV. PROPOSAL ON RULES AND DISCIPLINES ON EXPORTS
Proposal
23. In view of redressing the imbalances of the rights and obligations between importing and
exporting countries, and of maintaining the food security of food-importing countries, rules anddisciplines on export-promoting and export-restricting measures should be established. (See examples
described in 4.1 and 4.2 below.)
24. Negotiations on these future rules and disciplines on exports should be conducted, by making
sure that an appropriate balance can be achieved with the outcome of negotiations on imports, in order
to reach a fair and equitable agreement that can be accepted by both exporting and importing
countries alike.
4.1 Export subsidies
25. To reduce further the amount of export subsidies and the volume of subsidized exports;
26. To strengthen disciplines on measures taken during the implementation period, such as
rollovers;
27. To bind the level of the unit value of the export subsidy, which will then be progressively
reduced during the implementation period;
28. To strengthen disciplines on the export subsidy on the products and the markets in which
developing countries are interested;
29. To strengthen disciplines on the export credit, bearing in mind the discussions held in the
OECD;
30. To strengthen disciplines on the domestic support that has a similar effect as that of export
subsidies, thus putting them under the export disciplines.
4.2 Export prohibitions/restrictions, export taxes
31. To tariffy all export prohibitions and restrictions (by replacing them with export taxes);
32. To bind all export taxes (including those possibly introduced in the future).  For products
subject to the export tax, to establish quotas in which a certain amount of exports will be exempt from
the export tax;
33. In the case where temporary and short-term measures to restrict exports become necessary
before export taxes are introduced, to clarify the disciplines applied on such emergency measures used
in order to adjust the volume of exports.  Measures for clarifying such disciplines are:
(i) To establish strict requirements for the application of such emergency measures;
(ii) To introduce consultations with other Members as a prerequisite for imposing
emergency measures, and to clarify the measures to be taken when the consultations
do not result in a satisfactory solution;G/AG/NG/W/91
Page 16
(iii) To obligate Members, when introducing emergency measures, to maintain the
proportion of exports to domestic production at the level of the preceding x years, in
order to allow importing countries to secure the necessary level of imports;
(iv) To limit the duration of such emergency measures.
Background
In the UR agreements, it was decided that all non-tariff border measures
were to be replaced by tariffs in principle and then bound and reduced.  In contrast,
the current rules and disciplines concerning exports, including export prohibitionsand restrictions and export subsidies, remain less strict than the rules and disciplines
on imports.
Mindful of such background, the rules and disciplines on exports need to be
strengthened much further, if the rules and disciplines on imports are also to be
strengthened.  If not, the imbalance betw een the rules and disciplines on imports and
exports would be further aggravated.
It is also important to strengthen the rules and disciplines on exports in light
of the food security of importing countries.  Given the characteristics of agricultural
exports for which a small number of exporting countries are predominant, rules and
disciplines to increase the stability and predictability on trade are required, in orderto ensure that the measures taken by exporting countries will not threaten the food
security of importing countries.
4.1 Export subsidies
(a) In order to establish a fair and market-orientated agricultural trading
system, further reductions in export subsidies are necessary.
(b) The current commitment on the reduction of export subsidies is modest
compared with those on border measures and on domestic support: for instance,
measures, such as rollover, are allowed in export commitments.  The rules and
disciplines on exports should be strengthened, including the elimination of such
measures as rollovers.
(c) Under the current WTO Agreement on Agriculture, import tariffs are bound,
and Members are not allowed to raise the bound tariffs on imports from specificcountries.  On the other hand, as long as a Member abides by the commitments on
export subsidies (namely, the commitment on an overall subsidy and the subsidized
volume of exports), it can freely decide how much subsidy to use on the exports to
specific countries.  This shows an imbalance in the rules and disciplines on imports
and exports.  The unit value of the export subsidy should be bound and reducedprogressively.
(d) Disciplines concerning the export subsidy on products and the markets in
which developing countries are interested should be strengthened.G/AG/NG/W/91
Page 17
(e) An export credit can have a similar effect as an export subsidy.  Appropriate
disciplines on export credits are, therefore, required, based on the discussions held in
the OECD, in order to prevent the circumvention of export subsidy commitments.
(f) Policy measures, which are currently categorized as domestic support, but
have the effects of an export subsidy, should be scrutinized and subject to thedisciplines on exports.
4.2 Export prohibitions/restrictions, export taxes
(a) Ensuring food security for its population is an important responsibility of
each government.  Export prohibitions and restrictions, which an exporting country
will take temporarily, can severely affect the food security of an importing country,
even if it can be considered a necessary measure for the exporting country in view of
ensuring its own food security.
(b) With regard to imports, all border measures, other than tariffs, have been
replaced by tariffs in principle.  On the other hand, Members can freely take export
prohibitions and restriction measures under the current Agreement.  Japan thus
proposes that all export prohibitions and restrictions be tariffied (i.e. replaced by the
export taxes).
(c) All import tariffs are bound and commitm ent has been made to reduce them
under the current Agreement, even though there exists no provision concerning
export taxes.  It is necessary, therefore, to bind the level of all export taxes, including
those possibly introduced in the future.  With regard to products subject to the export
tax, it is also necessary to establish quotas in which exports equivalent to a certainproportion of domestic production will be exem pt from the export tax.  Disciplines in
this regard should be defined.
(d) Furthermore, clarification of the disciplines on export restrictions is
necessary in order to prepare for a situation where an exporting country, if export
taxes have not been introduced, faces an urgent need to restrict exports.G/AG/NG/W/91
Page 18
V. PROPOSAL ON STATE TRADING
Proposal
34. Since state trading has a significant impact on the market, appropriate disciplines should be
established in order to improve its transparency and predictability.  Taking into account the impact ofstate trading on the international market, as well as the current rules, disciplines on state trading
should be further clarified, while at the same time make a clear distinction between export state
trading and import state trading.
35. In order to improve transparency with regard to the operation of state trading enterprises, the
volume and price of exports and imports for respective trade partners should be notified.  A
mandatory notification indicating the annual project of exports and imports should also be established.
36. In particular, with regard to export state trading, which has a considerable effect on the
international agricultural market as a whole, th e following disciplines should be made obligatory:
(i) to provide quarterly notifications of the amount and price of exports, the procurement
price and so forth;
(ii) the prohibition of financial assistance from the government;(iii) a contribution to the stabilization of the international market through, for example,
obligating minimum exports and stockholding in preparation for unforeseen
circumstances.
Background
(a) Since state trading has a significant impact on the market, state trading
enterprises should act responsibly under certain disciplines.
(b) It is therefore necessary to establish a clear set of disciplines on state trading
with further clarification made on the subjects and procedures concerning
notification, in order to enhance the transparency and predictability of the measures
taken by state trading enterprises.
(c) Regulations on state trading enterprises cover both export and import state
trading.  However, while import state trading only has an impact on the market
within a particular country, export state trading affects the entire international
market of a specific agricultural product.
(d) Under the existing agreements, disciplines on export state trading are less
strict than those on import state trading.  For example, export state tradingenterprises can implement measures to promote exports by setting lower export
prices than domestic prices.  They can also implement measures to adjust export
volumes to reflect the situation of domestic production.
(e) Mindful of the above-mentioned shortcomings of the existing disciplines on
state trading and of distinguishing export st ate trading from import state trading, it is
necessary to establish disciplines on export state trading which obligates a quarterly
notification of elements, such as the amount and price of the exports, as well as theG/AG/NG/W/91
Page 19
procurement price, and also prohibits financial assistance from the government.
Such disciplines will improve transparency and predictability.
(f) Since export state trading has a considerable impact on the international
market, its contribution to food security should be achieved through stabilizing
international agricultural trade.  To this end, obligating minimum exports andstockholding in preparation for unforeseen circumstances, or a comparable
contribution towards the stabilization of the international market through providing
funds, are necessary.G/AG/NG/W/91
Page 20
VI. PROPOSAL ON CONSIDERATION FOR DEVELOPING COUNTRIES
Proposal
37. Securing a stable food supply is the first priority for those developing countries suffering
from starvation and malnutrition.  Based on the dialogues conducted with developing countries, Japanproposes to provide them more consideration with regard to agricultural trade rules, as well as to
strengthen the scheme for assisting them in food se curity, in order to enable developing countries to
solve their problems through self-help.
6.1 Rules and disciplines on border measures
38. A wide range of flexibility should be given to developing countries with regard to the rules
and disciplines on border measures and their application, in order to ensure their food security.
6.2 Rules and disciplines on domestic support
39. Flexibility should also be given to developing countries concerning the rules and disciplines
on domestic support and their application, in order not to affect the support necessary to increase food
production for domestic consumption.
6.3 Rules and disciplines on exports and state trading
40. When strengthening the rules and disciplines on exports and state trading, measures to exempt
or ease obligations should be taken so as not to cause an excessive burden on developing countries.
6.4 Addressing food security concerns
41. The idea of a possible framework for international food stockholding should be examined, in
order to complement existing bilateral and multilateral food aid schemes and to enable loan of food in
the case of temporary shortage.
Background
6.1-3 Rules and disciplines on border measures, domestic support, exports and
state trading
(a) Many developing countries, in particular net food-importing countries, are
faced with serious problems, such as starvation and malnutrition.  For suchcountries, the first priority is to achieve food security, and this issue should be taken
into full consideration when discussing trade rules.
(b) Thus, special consideration should be given to those developing countries
suffering from such problems.  It is appropriate to provide flexibility with regard to
the disciplines and the levels for border measures and domestic support.
6.1.4 Addressing food security concerns
(a) Food security is a global issue as, (i) more than 800 million people are now
suffering from starvation and malnutrition, mainly in developing countries; and (ii) a
huge demand in food aid has arisen due to various disasters and economic crises.G/AG/NG/W/91
Page 21
(b) In order to address such challenges, food productivity in developing
countries should be enhanced in the long-term, while, in the short-term, it is
necessary to strengthen bilateral and multilateral schemes for food aid.  An idea of a
possible framework for international food st ockholding should be examined, which
shall complement existing bilateral and multilateral food aid schemes, and which willenable loan of food in the case of temporary shortage.G/AG/NG/W/91
Page 22
VII. PROPOSAL IN RESPONSE TO THE CONCERNS OF CONSUMERS AND THE
CIVIL SOCIETY
Proposal
42. Consumers and the civil society in Japan seek genuinely fair and equitable trade rules.  Japan
imports 60% of its food consumed domestically and is the largest net food-importing country in the
world.  As Japan is the largest “customer” of agricultural products in the world, Japanese consumers
and the civil society attach great importance to food safety, as well as to the relevant information
necessary when making the appropriate choice of food.  They also are keenly interested in the
consideration made on the importance of the multifunctionality of agriculture and the conservation of
the global environment and resources.
43. A wide-range of sectors from the Japanese soci ety have various concerns on agriculture as a
whole, and the following proposals reflect those conc erns that are directly related to the agricultural
negotiations.
7.1 Stable food supply
44. Reduction in support and protection in excess of that foreseen in Article 20 of the Agreement
on Agriculture would seriously impede nationwide efforts to increase the food self-sufficiency ratio,
and, therefore, would not be acceptable to the consumers and the civil society in Japan.
45. Measures that increase the instability of the international food market, including export
prohibitions and restrictions, and imposing export taxes and subsidies on actions destined for export
promotion, should be governed by more strengthened disciplines.  On the other hand, such a system as
import state trading, that has the role of mitig ating the impacts of a fluctuating international
agricultural market and of stabilizing the domestic food supply, should, therefore, be maintained.
7.2 Providing safe food to the public
46. Ensuring food safety should be a primary focal point when considering trade rules.  As for
any new issues arising subsequent to the UR agre ements, a review should be conducted to examine
whether the existing agreements have any problems addressing them. Quarantine and inspection
measures should also be improved and strengthened to ensure food safety in this regard.
7.3 Providing information that enhances co nsumers' confidence in choosing food
47. A scheme to provide information by way of appropriate labeling for both imported and
domestic products should be established so that consumers can choose food in full confidence.
48. Appropriate international rules should also be established under the auspices of the Food
Standards Committee of the CODEX with regard to the labeling of genetically modified organisms(GMOs).
7.4 Disclosure of information on WTO agricultural negotiations
49. In order to secure the transparency of the agricultural negotiations, adequate information
should be provided to the consumers and to the civil society, in addition to providing necessaryopportunities for expressing their views.G/AG/NG/W/91
Page 23
Background
7.1 Stable food supply
(a) The food self-sufficiency ratio in Japan is currently at 40% (in terms of
calories).  A considerable number of Japanese people are concerned about this
situation as the figure is far too low for a country having a population of more than120 million.
(b) Japan aims at increasing its food self-sufficiency ratio through efforts of both
producers and consumers, while, at the same time, promoting market-orientated
agricultural reforms in accordance with the Basic Law of Food, Agriculture and
Rural Areas.  In its Basic Plan for im plementing the Basic Law, the food self-
sufficiency ratio for 2010 is targeted at 45%, an increase of 5% from the current
40%.  The plan also aims at achieving an appropriate balance between domesticproduction, stable imports and food stockholding, thus securing a stable supply of
food to the population.
(c) Japan's proposals on market access and domestic support are based on the
needs of its consumers.  As the largest net food-importing country in the world, Japan
sincerely hopes that these proposals will be given serious consideration by all theMembers.
(d) In light of the unstable nature of the international food market, Japanese
consumers wish for a series of trade rule s that will minimize the impacts of a
fluctuating international market on their daily lives.
7.2 Providing safe food to the public
(a) It is basic policy of the Government of  Japan to ensure the safety of imported
food constituting a part of the stable food supply.  Trade rules that impede food safety
will not be accepted.  In this regard, quarantine and inspection measures should  be
improved and strengthened to ensure food safety.
(b) Since the UR agreements, new issues have emerged due to such factors as an
increase on GMOs, as well as the growing concerns of consumers with regard to food
safety.  Consumers in Japan expect adequate measures to be taken in order to supply
safe food to the public.
(c) Concerning food safety, the WTO needs to examine and identify issues
exclusively with regard to trade-related measures.  Such issues should include, for
example, whether the existing SPS Agreemen t can sufficiently respond to those new
issues that have emerged since the UR agreements.
(d) The issue of food safety, especially the GMO-related topic, is currently being
examined in other international organizati ons than the WTO.  The latest G8 Summit
in Kyushu-Okinawa adopted a communiqué praising the efforts by the OECD and the
Food Standards Committee of  the CODEX and encouraging full progress of the work
at stake.  Therefore, consideration on the matter in the WTO should be conducted incoordination with these organizations, thereby benefiting from the accumulation of
scientific knowledge in the OECD and the discussions in the Food Standards
Committee of the CODEX.G/AG/NG/W/91
Page 24
7.3 Providing information that enhances consumers' confidence in choosing
food
(a) Responding to the requests made by consumers, Japan has announced a new
standard for quality labeling under the Japan Agricultural Standards Law of
March 2000.  The labeling system of GMOs will be introduced on April 1st, 2001.
(b) Each Member is considering and introducing its own labeling system.  Work
on international rules should be expedited urgently in order to promote as early as
possible consumers' confidence when making the correct choice of food.
(c) Deliberations on this question are now underway in the Food Standards
Committee of the CODEX.  The work shall continue until a conclusion can be
reached in that forum.
7.4 Disclosure of information on WTO agricultural negotiations
In order to respond to the concerns of the consumers and the civil society,
information on the WTO agricultural negotiations should be sufficiently provided,
and necessary opportunities for expressing their views should be given, including to
non-governmental organizations (NGOs), consisting of farmers, consumers and so
forth.G/AG/NG/W/91
Page 25
VIII.  AGRICULTURAL NEGOTIATIONS IN THE CONTEXT OF A NEW ROUND
Proposal
50. The agricultural negotiations should be conducted and concluded in a single undertaking as a
part of a sufficiently broad-based new round.G/AG/NG/W/91
Page 26
(Annex)
Japan's Proposal Examined from the Viewpoint of the Multifunctionality of Agriculture and
Food Security
The concept of the multifunctionality of agriculture and food security is reflected in the
following part of this proposal as follows:
1. Market access
Appropriate levels of tariffs and access opportunities should be determined with flexibility,
taking into account various elements: securing the benefits of multifunctionality; ensuring food
security; the current situation of production and consumption for each product; international supply
and demand; and the progress of domestic agricultural policy reform.
In particular, due consideration should be given to the products which became subject to
tariffication as a result of the Uruguay Round, in order to secure the benefits of multifunctionality and
to ensure food security in each country.
Special safeguard measures should be maintained.
2. Domestic support
In order to enable each country to promote agricultural policy reform, while giving
consideration to securing the benefits of the multifunctionality of agriculture and ensuring foodsecurity, the following improvements should be made:
- requirements for "Green Box" policies should be improved, based on the experiences
of implementation;
- the "Blue Box" policies should be maintained;
- domestic support level should be determined in a realistic manner
3. Rules and disciplines on exports
Export rules and disciplines should be strengthened, since it is necessary to ensure the
stability and predictability of exports in order to ensure food security in importing countries.
4. State trading
Export state trading could affect the entire international market of a specific agricultural
product, as well as the food security of importing countries.  Therefore, disciplines on export state
trading should be clarified in order to improve its transparency and predictability.
5. Consideration for developing countries
Flexibility should be given to developing countries with regard to the disciplines and the
levels for border measures and domestic support, taking into full consideration that developing
countries put their highest priority on stable food supply.G/AG/NG/W/91
Page 27
The idea of a possible framework for international food stockholding should be examined, in
order to complement existing bilateral and multilateral food aid schemes and to enable loan of food in
the case of temporary shortage.
6. Response to the concerns of consumers and the civil society
As Japan is the largest net food-importing country in the world, its consumers and the civil
society are keenly interested in a stable food supply.  In this regard, reduction in support and
protection in excess of that foreseen in Article 20 of the Agreement on Agriculture, which may
impede efforts to increase the food self-sufficiency ratio, would not be acceptable to the consumers
and the civil society in Japan.
Moreover, measures that increase the instabil ity of the international food market should be
governed by more strengthened disciplines.  At the same time, systems such as import state trading,
which contribute to mitigating the impacts of a fluctuating international food market, should be
maintained.
__________