RESTRICTED
WORLD TRADE G/AG/W/27
21October 1996
ORGANIZATION(96-4393)
Committee onAgriculture
DRAFT
TheMarrakesh Ministerial Decision onMeasures Concerning thePossible Negative
Effects oftheReform Programme onLeast-Developed and
NetFood-Importing Developing Countries
Report bytheCommittee onAgriculture fortheSingapore Ministerial Conference
I. Introduction
1. TheDecision onMeasures Concerning thePossible Negative Effects oftheReform Programme
onLeast-Developed andNetFood-Importing Developing Countries ("the Decision") wasadopted by
Ministers atMarrakesh asanintegral partoftheUruguay Round outcome. AcopyoftheDecision
... isannexed tothisreport.
2. While recognizing thatimplementation oftheresults oftheUruguay Round asawhole would
benefit allparticipants, theDecision alsorecognizes thatduring thereform programme leading togreater
liberalization oftradeinagriculture least-developed andnetfood-importing developing countries may
experience negative effects interms oftheavailability ofadequate supplies ofbasic foodstuffs from
externalsourcesonreasonabletermsandconditions,includingshort-termdifficultiesinfinancingnormal
levels ofcommercial imports ofbasic foodstuffs. TheDecision accordingly establishes mechanisms
which provide for:(i)review oftheleveloffoodaidandtheinitiation ofnegotiations intheappropriate
forum toestablish aleveloffoodaidcommitments sufficient tomeetthelegitimate needs ofdeveloping
countriesduringthereformprogramme;(ii)theadoptionofguidelinesonconcessionality;(iii)financial
andtechnical assistance under aidprogrammes toimprove agricultural productivity andinfrastructure;
and(iv)differential treatment inthecontext ofanagreement tobenegotiated onagriculture export
credits. TheDecision alsotakes intoaccount thequestion ofaccess totheresources ofinternational
financial institutions under existing facilities, orsuchfacilities asmaybeestablished, inorder toaddress
short-term difficulties infinancing normal levels ofcommercial imports.
3. Article16:1oftheAgreementonAgriculture("theAgreement")providesthatdevelopedcountry
Members oftheWTO shalltakesuchaction asisprovided forwithin theframework oftheDecision,
withprovision being made inArticle 16:2fortheCommittee onAgriculture tomonitor, asappropriate,
thefollow-up totheDecision. Inlinewithitsterms ofreference (WT/L/43) theCommittee ischarged
more generally withoverseeing implementation andaffording Members theopportunity forconsulting
onanymatter relating totheimplementation oftheprovisions oftheAgreement, including Article 16.G/AG/W/27
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4. Intermsofparagraph6thereof,theDecisionissubjecttoregularreviewbytheWTOMinisterial
Conference. TheCommittee 'sworking procedures (G/AG/1, para. 18)require theCommittee
toprepare areport onthefollow-up totheDecision forthepurposes ofthisreview. Thepresent
report, which wasadopted bytheCommittee atitsmeeting on..October 1996, istherefore submitted
forconsideration bytheMinisterial Conference, inaccordance withthereporting procedures forthe
SingaporeMinisterialConference(WT/L/145),asabasisforitsreviewoftheprovisionsoftheDecision.
5. Section IIofthisreport summarizes theprocedures established formonitoring thefollow-up
totheDecision aswellasthestepstaken bytheCommittee toassist inmaking theDecision operational;
Section IIIoutlines thefollow-up withrespect totheaction provided forwithin theframework ofthe
Decision; andSection IVsetsoutrecommendations forconsideration bytheMinisterial Conference
inthecontext oftheirreview oftheprovisions ofDecision pursuant toparagraph 6thereof.
II. Procedures forMonitoring theFollow-up totheDecision
6. IntermsoftheworkingproceduresadoptedbytheCommitteeatitsfirstmeetinginMarch1995,
systematic monitoring ofthefollow-up totheDecision isconducted onanannual basis attheregular
November meetings oftheCommittee. Inaddition, theworking procedures provide thatthere shall
beanopportunity atanyregular meeting oftheCommittee toraiseanymatter relating totheDecision.
Inpractice questions relating totheimplementation oftheDecision havebeenraised ateachmeeting
oftheCommittee withmany ofthematters raised being pursued ininformal consultations thathave
ledtodecisions being taken bytheCommittee. Themainpoints raised inthecourse oftheCommittee 's
discussions ontheDecision aresetoutintherelevant sections oftheSecretariat summary reports on
theCommittee 'smeetings (G/AG/R/1 to6refer) andarereferred toasappropriate inSection IIIof
thisreport.
7. Themonitoring process isstructured oncontributions byMembers generally aswellason
thebasis ofnotification requirements relating toactions provided forwithin theframework ofthe
Decision (G/AG/2, pages 33and34refer). Thus donor Members arerequired atleastannually to
submit notifications withrespect tothefollowing matters: (i)thequantity offoodaidprovided to
least-developed andnetfood-importing developing countries; (ii)theproportion ofsuchfoodaid
provided infully grant form orappropriate concessional terms; and(iii) technical andfinancial
assistance under aidprogrammes. Inaddition, anyMember maynotify other relevant information
withrespect toactions taken within theframework oftheDecision.
8. SinceimportantareasoftheactionprovidedforwithintheframeworkoftheDecisionarematters
within thecompetence oroperational responsibility ofotherinternational organizations, theCommittee
invited andmade provision fortheactive participation inthemonitoring process byobservers from
thefollowing international organizations: theFAO, theWorld Food Programme, theOECD, the
UNCTAD andtheInternational Grains Council (Food AidConvention) inrespect, interalia,offood
aid,agriculture development andrelated matters; andtheIMFandtheWorld Bank mainly inrespect
ofmatters relating toaccess tothefinancial resources ofthese organizations.
9. Thefirstmonitoring exercise, which wasundertaken atthe20-21 November 1995 meeting
oftheCommittee, wasbased essentially oncontributions byMembers andobserver international
organizations, since atthatstage intheimplementation process thenotifications (which maybebased
onacalendar, marketing orotherannual basis) hadnotbecome due.These notifications arenowcoming
onstream andwillbetaken intoaccount asappropriate intheNovember 1996 monitoring exercise.G/AG/W/27
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10. TheDecision asadopted atMarrakesh described butdidnotlistthecountries thatweretobe
covered bytheDecision. Following extensive informal consultations onthissubject, theCommittee
atitsNovember 1995 meeting adopted adecision ontheestablishment ofaWTO listofnetfood-
importing developing countries (G/AG/3 refers). Thisdecision wasadopted ontheunderstanding that
being listed didnotassuchconfer automatic benefits since, under themechanisms covered bythe
Marrakesh Ministerial Decision, donors andinternational organizations concerned would havearole
toplay(G/AG/R/4, paragraph 17,refers).
11. TheWTO listitself wasinitially established attheMarch 1996 meeting oftheCommittee.
Inaddition toleast-developed countries asrecognized bytheUNEconomic andSocial Council, the
listcurrently comprises thefollowing sixteen developing country WTO Members which notified their
request tobelisted andhavesubmitted relevant statistical dataregarding theirstatus asnet-importers
ofbasicfoodstuffsduringarepresentativeperiod:Barbados,Côted'Ivoire,DominicanRepublic,Egypt,
Honduras, Jamaica, Kenya, Mauritius, Morocco, Peru, SaintLucia, Senegal, SriLanka, Trinidad and
Tobago, Tunisia andVenezuela (G/AG/5/Rev.1 refers). Thelististobereviewed bytheCommittee
atitsregular March meetings.
III. Follow-up withrespect totheMeasures provided forwithin theFramework oftheDecision
Food Aid(subparagraphs 3(i)and(ii)oftheDecision)
12. Paragraph 3oftheDecision specifies certain mechanisms agreed tobyMinisters inorder to
ensure thattheimplementation oftheresults oftheUruguay Round ontrade inagriculture doesnot
adversely affect theavailability offoodaidatalevelwhich issufficient tocontinue toprovide assistance
inmeeting thefoodneeds ofdeveloping countries, especially least-developed andnetfood-importing
developing countries. These mechanisms include agreement byMinisters:
(i)toreview theleveloffoodaidestablished periodically bytheCommittee onFood Aid
under theFood AidConvention 1986 andtoinitiate negotiations intheappropriate forum to
establish aleveloffoodaidcommitments sufficient tomeetthelegitimate needs ofdeveloping
countries during thereform programme;
(ii)toadopt guidelines toensure thatanincreasing proportion ofbasic foodstuffs isprovided
toleast-developed andnetfood-importing developing countries infullygrant formand/or on
appropriate concessional terms inlinewithArticle IVoftheFood AidConvention 1986.
13. AtitsNovember 1995meeting theCommittee commissioned apreparatory work programme
(G/AG/4 refers) covering subparagraphs 3(i)and(ii)oftheDecision, aswellasprocedures forthe
submissionofdetailedproposals.AtitsMarch1996meetingtheCommitteeembarkedonanexamination
of,andexchange ofviews on,issues relating tofoodaidlevels andcommitments, aswellason
guidelines relating totheconcessionality offoodaid.Forthispurpose theCommittee hadbefore it
abackground note(G/AG/W/20), prepared bytheSecretariat attherequest oftheCommittee, which
indicated thatbothinternational foodaidcommitments andtheactual volume offoodaidhaddeclined
inrecent years. Representatives oftheFAO, theUNWorld Food Programme andtheInternational
Grains Council/Food AidCommittee contributed tothese discussions. Asagreed bytheCommittee
atitsMarch 1996meeting, informal consultations wereundertaken onbehalf oftheChairman onthe
implementation ofthepreparatory work programme.G/AG/W/27
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Technical andFinancial Assistance under AidProgrammes toImprove Agricultural Productivity and
Infrastructure (Subparagraph 3(iii)oftheDecision)
14. Members oftheCommittee consider thatthefollow-up totheDecision intheareaoftechnical
andfinancial assistance under aidprogrammes would needtobeassessed, interalia,inthelightof
thenotifications tobesubmitted totheCommittee inadvance ofthemonitoring exercise tobeundertaken
atthemeeting oftheCommittee inNovember thisyear. Inthisgeneral context Members recognized
thatimproving agricultural productivity andinfrastructure inleast-developed andnetfood-importing
developing countries isafundamentally important objective andthattechnical andfinancial assistance
provided under aidprogrammes hasakeyroletoplayinhelping torealise thisobjective. While noting
that,given budgetary restraints, account hadtobetaken ofcompeting priorities andoftherelative
effectiveness ofvarious forms ofassistance, Members agreed thatfullconsideration should continue
tobegiven inthecontext oftheiraidprogrammes torequests fortheprovision oftechnical andfinancial
assistance toleast-developed andnetfood-importing developing countries toimprove theiragricultural
productivity andinfrastructure.
Differential Treatment intheContext ofanAgreement onAgriculture Export Credits (Paragraph 4
oftheDecision)
15. Under Article 10:2oftheAgreement, which relates totheprevention ofcircumvention ofexport
subsidy commitments, Members undertake to"work towards thedevelopment ofinternationally agreed
disciplines togovern theprovision ofexport credits, export credit guarantees orinsurance programmes
and,afteragreement onsuchdisciplines, toprovide export credits, export credit guarantees orinsurance
programmes onlyinconformity therewith". Further work ontheelements ofanoutline understanding
isrequired. Attheappropriate stage theCommittee onAgriculture willneedtoconsider howan
understanding inthisareacould bemultilateralized within theframework oftheAgreement on
Agriculture andhowtheprovisions ofparagraph 4oftheDecision havebeentaken intoaccount.
Access totheResources ofInternational Financial Institutions under Existing Facilities orsuchFacilities
asmaybeEstablished (Paragraph 5oftheDecision)
16. Paragraph 5oftheDecision recognizes thatasaresult oftheUruguay Round certain developing
countries mayexperience short-term difficulties infinancing normal levels ofcommercial imports and
thatthesecountries maybeeligible todrawontheresources ofinternational financial institutions under
existing facilities, orsuchfacilities asmaybeestablished, inthecontext ofadjustment programmes,
inorder toaddress suchfinancing difficulties. Inresponse totherequest made inthisregard atthe
September 1995meeting oftheCommittee, theDirector-General inhisconsultations withtheManaging
Director oftheIMFandthePresident oftheWorld Bank raised anumber ofquestions concerning
therespective contributions oftheFundandtheBanktothefollow-up under paragraph 5oftheDecision.
17. Theresponses oftheFund andtheBank toquestions concerning thescope forimproved
conditions ofaccess orfacilities fornetfood-importing developing countries (scope forproviding some
degreeofpriorityinaccesstoexistingfacilitiesandforsofteningconditionality,prospectsforestablishing
newfacilities toassist netfood-importers andways inwhich theWTO could assist theFund andthe
Bank tobemore forthcoming inthese matters) were presented anddiscussed inthecourse ofthe
Committee 'sNovember 1995monitoring exercise. Ingeneral, given therange offacilities available,
theIMFandtheWorld Bank didnotconsider thatitwasnecessary, atthepresent stage, toestablish
special Uruguay Round-related facilities. Netfood-importing developing country Members expressed
theirdisappointment regarding theaccessibility ofexisting facilities andthescope forestablishing new
Uruguay Round-related facilities atthepresent stage, particularly inviewoftheexplicit reference by
Ministers tosuchfacilities inparagraph 5oftheDecision. TheDirector-General 'sspecific questions,G/AG/W/27
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theFund'sandtheBank'sresponses thereto andthesummary oftheCommittee 'sdiscussions are
contained indocuments G/AG/W/12 &Add.1 andG/AG/R/4.)
IV. Recommendations forConsideration bytheMinisterial Conference
18. InthelightoftheCommittee 'sdiscussions onthefollow-up totheDecision, thefollowing
recommendations aresubmitted forconsideration bytheMinisterial Conference inthecontext ofits
review oftheprovisions oftheMarrakesh Ministerial Decision onMeasures Concerning thePossible
Negative Effects oftheReform Programme onLeast-Developed andNetFood-Importing Developing
Countries:
(i) that,inanticipation oftheexpiry ofthecurrent Food AidConvention inJune1998
andinpreparation fortherenegotiation oftheFood AidConvention, action beinitiated
in1997 within theframework oftheFood AidConvention, under arrangements for
participation byallinterested countries andbyrelevant international organizations as
appropriate, todevelop recommendations withaviewtowards establishing alevelof
foodaidcommitments, covering aswidearange ofdonors anddonable foodstuffs as
possible, which issufficient tomeetthelegitimate needs ofdeveloping countries during
thereform programme. These recommendations should include guidelines toensure
thatanincreasing proportion offoodaidisprovided toleast-developed andnetfood-
importing developing countries infullygrant formand/or onappropriate concessional
terms inlinewithArticle IVofthecurrent Food AidConvention, aswellasmeans
toimprove theeffectiveness andpositive impact offoodaid;
(ii) thatdeveloped country WTO Members continue togivefullconsideration inthecontext
oftheiraidprogrammestorequestsfortheprovisionoftechnicalandfinancialassistance
toleast-developed andnetfood-importing developing countries toimprove their
agricultural productivity andinfrastructure;
(iii) thattheprovisions ofparagraph 4oftheMarrakesh Ministerial Decision, whereby
Ministers agreed toensure thatanyagreement relating toagricultural export credits
makes appropriate provision fordifferential treatment infavour ofleast-developed and
netfood-importing developing countries, betaken fullyintoaccount intheagreement
tobenegotiated onagricultural export credits;
(iv) thatWTO Members, intheirindividual capacity asmembers ofrelevant international
financial institutions, takeappropriate steps toencourage theinstitutions concerned,
through theirrespective governing bodies, tofurther consider thescope forestablishing
newfacilities orenhancing existing facilities fordeveloping countries experiencing
Uruguay Round-related difficulties infinancing normal levels ofcommercial imports
ofbasic foodstuffs.ANNEX
DECISION ONMEASURES CONCERNING
THE POSSIBLE NEGATIVE EFFECTS OFTHE
REFORM PROGRAMME ONLEAST-DEVELOPED AND
NET FOOD-IMPORTING DEVELOPING COUNTRIES
1. Ministers recognize thattheprogressive implementation oftheresults oftheUruguay Round
asawhole willgenerate increasing opportunities fortradeexpansion andeconomic growth tothebenefit
ofallparticipants.
2. Ministers recognize thatduring thereform programme leading togreater liberalization oftrade
inagriculture least-developed andnetfood-importing developing countries mayexperience negative
effects interms oftheavailability ofadequate supplies ofbasic foodstuffs from external sources on
reasonabletermsandconditions,includingshort-termdifficultiesinfinancingnormallevelsofcommercial
imports ofbasic foodstuffs.
3. Ministersaccordinglyagreetoestablishappropriatemechanismstoensurethattheimplementation
oftheresults oftheUruguay Round ontrade inagriculture doesnotadversely affect theavailability
offoodaidatalevelwhich issufficient tocontinue toprovide assistance inmeeting thefoodneeds
ofdeveloping countries, especially least-developed andnetfood-importing developing countries. To
thisendMinisters agree:
(i) toreview theleveloffoodaidestablished periodically bytheCommittee onFood Aid
under theFood AidConvention 1986 andtoinitiate negotiations intheappropriate
forum toestablish aleveloffoodaidcommitments sufficient tomeetthelegitimate
needs ofdeveloping countries during thereform programme;
(ii) toadoptguidelinestoensurethatanincreasingproportionofbasicfoodstuffsisprovided
toleast-developedandnetfood-importingdevelopingcountriesinfullygrantformand/or
onappropriate concessional terms inlinewith Article IVoftheFood Aid
Convention 1986;
(iii) togivefullconsideration inthecontext oftheiraidprogrammes torequests forthe
provision oftechnical andfinancial assistance toleast-developed andnetfood-importing
developing countries toimprove theiragricultural productivity andinfrastructure.
4. Ministers further agree toensure thatanyagreement relating toagricultural export credits makes
appropriate provision fordifferential treatment infavour ofleast-developed andnetfood-importing
developing countries.
5. Ministers recognize thatasaresult oftheUruguay Round certain developing countries may
experience short-term difficulties infinancing normal levels ofcommercial imports andthatthese
countries maybeeligible todrawontheresources ofinternational financial institutions under existing
facilities, orsuchfacilities asmaybeestablished, inthecontext ofadjustment programmes, inorder
toaddress suchfinancing difficulties. Inthisregard Ministers takenoteofparagraph 37ofthereport
oftheDirector-General totheCONTRACTING PARTIES toGATT 1947 onhisconsultations withthe
Managing Director oftheInternational Monetary Fund andthePresident oftheWorld Bank
(MTN.GNG/NG14/W/35).
6. Theprovisions ofthisDecision willbesubject toregular review bytheMinisterial Conference,
andthefollow-up tothisDecision shallbemonitored, asappropriate, bytheCommittee onAgriculture.