RESTRICTEDWORLD TRADE
ORGANIZATIONTN/AG/R/7
24 March 2003
(03-1703)
Committee on Agriculture
Special Session
SUMMARY REPORT ON THE SEVENTEENTH MEETING
OF THE COMMITTEE ON AGRICULTURE SPECIAL SESSION
HELD ON 28 FEBRUARY 2003
Note by the Secretariat1
1. The Special Session of the Committee on Agriculture, which was established by the General
Council (WT/GC/M/53), is pursuing negotiations under paragraphs 13, 14 and other relevant
provisions of the Doha Ministerial Declaration and held its seventeenth meeting on 28 February 2003.Mr. Stuart Harbinson chaired the meeting.
2. The agenda as contained in WTO/AIR/2030 was adopted.
I
TEM A(i):  R EPORT BY THE CHAIRPERSON ON THE MAIN FEATURES OF THE DISCUSSIONS
CONCERNING POSSIBLE MODALITIES , INCLUDING RULES -RELATED ELEMENTS
3. The Chairman presented his summary report of the main features of the informal discussions
on 24-28 February 2003 which took place on the basis of the Chairman's First Draft of Modalities for
the Further Commitments issued on 17 February 2003 (TN/AG/W/1).  A copy of the report is attached
(Annex 1).
ITEM A(ii):  S TATEMENTS BY MEMBERS
4. The delegate of Switzerland read a joint statement on non-trade concerns on behalf of
Bulgaria, Chinese Taipei, Iceland, Israel, Liechten stein, Mauritius, Norway and Switzerland.  The
statement has been circulated as document  TN/AG/GEN/1, dated 14 March 2003.
5. Although the outlook seemed grim regarding possi bilities to bridge the gap in positions and to
promote convergence among delegations, Brazil remained committed to the process as it was the only
way forward.  The representative of Brazil pointed out that WTO Members were operating under a
single undertaking process and with an ambitious mandate to carry out.  It was a false premise to
suppose that in the confines of agriculture alone it would be possible to bring together protectionistand export-efficient countries, subsidizers and countries that did not count with strong treasuries to
boost their farmers’ competitiveness.
6. The representative of Brazil noted that the chaotic picture which emerged from world farm
trade called for urgent action.  Firstly, because the reform process was moving at a very low speed
and its results had yet to materialize, secondly, because countries were, on a daily basis, paying theprice for the inequities prevailing in agricultural tr ade in terms of declining export revenues, barriers
to trade and falling prices of agricultural products.  On market access, what was needed was a higher
level of ambition to get rid of trade prohibition under the guise of prohibitive tariffs.  In addition, it
                                                     
1 This document has been prepared under the Secret ariat's own responsibility and is without prejudice
to the positions of Members or to their rights or obligations under the WTO.TN/AG/R/7
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was necessary to expand tariff quotas substantially and improve their administration.  Export
subsidies were an anomaly which found no parallel in other sectors and had to be eliminated quickly.
The timeframe of a decade set out in the Chair's draft modalities for eliminating export subsidies had
to be reduced drastically.  As a measure of equity, equivalent forms of export subsidization had also to
be rigidly disciplined.  Finally, trade-distorting domestic support had to be substantially reducedquickly.  Brazil encouraged the Chairman to proceed with the work initiated and to continue to have
the Doha mandate as his guidance.
7. In the view of South Africa, it was clear that the high levels of protection in the North had in
fact been, and continued to be, a major cause of increasing poverty in developing countries,
particularly on the livelihoods and rural communities.  There were many case studies which
underlined this view, for example canned fruit in South Africa, etc.  In addition, SPS and TBT related
trade rules had in many cases prevented the supply of products from African countries to theEuropean Union and other OECD markets.  The ne gative development impact of these policies had
been recognized by President Chirac of France himsel f, in a recent statement.  The delegate of South
Africa noted therefore that African countries had a great interest in a robust and ambitious set of
modalities for the liberalization of agriculture.  It was for this reason that they made a massive down
payment in Doha by agreeing to the launch of a comprehensive round which included a number ofissues of interest to the European Union and other agricultural protectionist countries.
8. South Africa urged vigilance in developing any trade-distorting rules on labelling, food
safety, and geographical indications, etc.  If those rules created more problems for developing
countries, they would need greater technical assistance and capacity building and flexibility for
developing countries.  Such an outcome should be avoided.  However, as the playing field was stilluneven and protection in the North unlikely to disappear shortly, there was a need for genuine
capacity building to improve the overall efficiency of developing countries, particularly poor and
vulnerable economies.  This included help to address the issue of "preference dependence" by
supporting in particular diversification programmes.  South Africa wished to call on all WTO
Members to focus attention on the plight of those countries who would suffer significant adjustmentcosts as a result of their preferences being eroded.  Positive measures had to be put in place to enable
them to (i) manage their adjustments over a longer period, where this was possible, (ii) have greater
flexibility to support their "sensitive" sectors through domestic support measures, and (iii) rely on a
package of measures including technical assistance and development funds to be put in place by
developed countries and all major beneficiaries of trade liberalization to facilitate the adjustment
process of preference-dependent countries.  In that regard, South Africa fully supported statements
made in the course of the week's meetings by Namibia, Swaziland, Kenya and Uganda, among others,on the issue.  The representative of South Africa urged that a principle should be established in the
negotiations that poor and vulnerable countries should not bear the burden of loss of preferences.  He
concluded by stating that the excellent job done so far by the Chairman would only be able to meet
expectations if the European Union and other protectors of agriculture were genuine about meeting
their Doha commitments and produced more ambitious negotiating proposals.
9. The United States noted that it remained committe d to a substantial result in the agriculture
negotiations which increased the equity across the WTO Membership.  Reform was needed for the
economic growth of each WTO Member.  In addition, a big result was needed to meet the mandate
from Doha and to move the Doha Development Ag enda forward.  Finally, meaningful reform of
agricultural trade was critical to preserve the credibility of the WTO as an institution.  The UnitedStates' approach to reform had focused on the need to address the core problems in international trade:
high tariffs, high allowed levels of trade-distor ting support and export subsidies.  As a number of
analytical studies had shown, it was only through a substantial result, particularly in market access,
that the United States saw meaningful income gains for all Members.  The United States was prepared
to fully engage in such a process, under the Doha timelines.  The United States believed that therewere serious consequences in sticking to the status quo in agriculture and even though it could live inTN/AG/R/7
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such a world, it preferred to live in a world of multilateral trade reform, affecting all pillars in all
countries.
10. The representative of Uruguay thanked the Chairman for the timely delivery of the first draft
of modalities.  Despite the divergences that Uruguay ha d with the said draft, and the fact that it would
have liked to see in it a much higher level of ambition, Uruguay considered that this first draft was aminimum starting-point for the work and the disc ussions of Members in order to substantially
improve it and create a base for the second draft of modalities to be tabled by the Chair at the end of
March.  The representative of Uruguay further commented regarding some voices and critics stating
that the first draft of modalities was unbalanced;  he wished to point out that the most that could be
said was whether the draft was or not in line with the level of ambition of the Doha agricultural
mandate but overall balance would have to be seen in the context of all the areas of negotiations.
11. In addition, Uruguay did not consider that the reform process of world agricultural trade
would end with the proposals presented by the Chairman in the first draft of modalities.  In that
regard, Uruguay wished to conclude, in these round of negotiations, the said reform process.  To that
effect, Uruguay was prepared to negotiate on the deadlines under which commitments should be
reached.  The objective was important and Uruguay hoped that all Members, in particular those
developed Members which had applied the most trade-di stortive policies in that area, would rise to the
occasion and exercise true leadership.  In concluding, the representative of Uruguay expressed the
hope that the level of ambition of the second draft of modalities would be substantially improved in
line with the mandate given by Ministers in Doha.  This would allow for a successful conclusion of
the agricultural negotiations which then would be key for successful results in the other areas of
negotiations in the Doha Development Agenda.
12. The representative of Mauritius stated that, upon the request and on behalf of a group of
countries, and in response to the call by the Chairman during the week's negotiations for collective
guidance, he was pleased and honoured to present to the Chairman a list of countries that were in
favour of a Uruguay Round approach to tariff reducti ons (the list has been reproduced in JOB(03)/53).
After reading the full list of countries, Mauritius pointed out that including the European Unionmember States, this group of countries amounted to a total of 75 Members which represented a
majority of the Membership.  This list was not exhaustive and an updated list would be presented to
the Chair at the next special session.  Mauritius hoped that such a manifestation of collective guidance
would be duly taken into account in the second draft of modalities.
13. Mauritius also stated that after having welcomed earlier in the week the understanding of one
member of the Cairns Group on preferences, it now welcomed the points made by a another Cairns
country on preferences, namely the statement made by South Africa on its own behalf.  However,there was still a long way towards understanding the particular difficulties of preference-receiving
countries and the willingness of such countries to undertake trade rather than bank on forms of
support that were not yet forthcoming.  Mauritius noted that it still had the NFIDC issue in mind, but
nevertheless welcomed the emerging consensus on paragraphs 14 and 56 of the first draft of
modalities and was eagerly awaiting a reasoned and reasonable consensus in that regard.
14. New Zealand pointed out that at Doha it was trade ministers who met and agreed on the
mandate.  They recognized the importance of a wide Doha Development Agenda and agriculture was
discussed in great detail but it was just one element.  The Doha mandate represented a broad-based,
political commitment about the future of world trade and the world economy, and an integral part of
that was the recognition that now was the time for agriculture to come in from the cold.  New Zealandand the Cairns Group were not prepared to see this broad political mandate, agreed by Ministers in
Doha, re-written in a Committee of officials in Gene va, at the urging of a few developed agriculture
protectionists.  Especially when most of those countries had benefitted from 50 years of liberal
conditions in industrial trade.  The representative of New Zealand noted that of course reform was not
easy, but nor was it easy for agricultural producers elsewhere in the world, no matter how efficient, noTN/AG/R/7
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matter how dependent on agriculture, to compete against the treasuries of developed countries in the
Northern Hemisphere.  The Chair's second draft had to be entirely faithful to the Doha mandate, in
both approach and ambition.
15. To keep with the Chair's request to be as short as possible and not be repetitive, the
representative of Romania did not wish to repeat the earlier statement made during the informalmeeting (see Annex 3 of this report).  However, Romania stressed the importance for the Membership
to better understand the conditions and situation of the Romanian agriculture which required, in
Romania's view, the maintenance of the Uruguay Round formula in order to not only take into
consideration special and differential treatment for developing countries but also non-trade concerns.
16. The representative of Pakistan stated that after hearing Members during the last days of
informal meetings, Pakistan did not feel very optimistic about the outcome as positions seemed to be
entrenched which made the Chair's task unenviable and difficult.  Pakistan further noted that it had anegative AMS, did not provide export subsidies, had no non-tariff barriers, had implemented its
Uruguay Round obligations and despite all this was still  awaiting for any substantial benefits to accrue
to Pakistan's agricultural sector.  It was clear that liberalization in the agricultural sector was crucial
and more so for developing countries as they would largely gain if a meaningful liberalization took
place.  It was clear for Pakistan that the elimination of export subsidies, substantial reductions in alltypes of domestic support, the elimination of non-tariff barriers, tariff peaks and escalation along with
reductions in every tariff was the only way to guarantee a potential development in the sector.
17. In assessing the Chair's first draft of modalities in that light, Pakistan said that it was a step
forward but it failed to go far enough.  Pakistan hoped that as the Chair got into the tedious task of
drafting a second document on modalities, he would be able to come up with a meaningful second
draft that could provide some type of a bridge between widely divergent positions.  This was no easy
task, and the Chair would need a lot of support from the Members in terms of flexibility.
18. The representative of Colombia thanked the Ch airman for the first draft of modalities which
in his opinion fell within the framework set by Ministers in Doha and which focused, with a few
exceptions, on how to accomplish the reform objectives .  However, Colombia was of the view that the
draft was not ambitious enough, particularly in the area of domestic support where the levels of trade-
distorting support which would remain in the long term were still excessive.  Furthermore, disciplines
were needed in order to avoid that the Green Box became dangerously Amber or Blue.  The
representative of Colombia stressed that for developing countries, the best special and differential
treatment was the reform of the three pillars, but unfortunately the Chair's proposal fell short of that
objective.  Furthermore, that objective would not be attained if geographical indications, labelling,
food safety, were to be included into the agricu ltural negotiations as doing so would only in less
access to markets and hence would be contrary to the mandate designed by Ministers in Doha.
19. Colombia also noted that the modalities which would be negotiated in agriculture were going
to have repercussions in the level of ambition in the other areas of negotiation and could, hence, put in
danger the viability of a successful negotiating round.  For this reason, Colombia could not accept the
idea that each and every area of negotiation had to have its own internal equilibrium, as in that case,the negotiations would not have been a single undert aking.  Colombia would continue to work with
the Chair in a constructive spirit and wished to than k the Chair for his audacity in handing Members a
document which in certain areas, for example special and differential treatment and export subsidies,
did remain very close to the levels of ambition reflected in the mandate given by Ministers in Doha.
Colombia hoped that in his second draft the Chair would be able to obtain a definite agreement onmodalities.TN/AG/R/7
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20. The representative of Thailand thanked the Chairman for submitting his first draft of
modalities and for his efforts to move the negotiations forward.  However, it seemed that for the time
being it would not be possible to bridge the positions of Members as long as some major players had
no mandate to move away from their initial positions and were not ready to engage in serious
negotiations yet.  Furthermore, Thailand could not comprehend the rational of major developedcountries which proposed high levels of liberalization in services and non-agricultural products and
very low levels of liberalization in agricultural products.  Thailand could only encourage the Chair to
come up with a revised draft of modalities which took into account the legitimate concerns of
Members as well as the ambitious mandate given by Ministers in Doha.
21. On domestic support, Thailand was of the view that there were problems with the level of
ambition and with the disparity of commitment levels among Members.  The way out was to reduce
both trade-distorting Amber and Blue Boxes to zero within a reasonable implementation periodtogether with the elimination of de minimis  payments as well as capping and reducing the direct
payments under paragraphs 5, 6, 7 and 11 of Annex 2 of the Agreement on Agriculture.  On export
subsidies, Thailand believed that the first draft pr ovided the right direction to phasing them out but
implementation had to be shorter.  The Chair's draft strengthening rules and disciplines on export
credits, food aid and export state trading enterprises provided Members with a good basis for furthernegotiations and agreement.  On market access, there had to be substantial improvement as provided
in the Doha mandate and proposals to reduce tariff rates by 10 or 15 per cent within a 10 year period
were not at all realistic.  In addition, tariff peaks and tariff escalation had to be addressed to the
benefit of developing countries and tariff quotas substantially expanded.  On S&D, Thailand still
wondered how the Chair's proposal on SPs could help  both improve food security, rural development
and livelihood security concerns of developing countries and promote trade between developing
countries.  Thailand would not be able to accept modalities which imposed discrimination against
products to be liberalized as well as discrimination among developing countries with respect to
preferential schemes not fully in conformity with the enabling clause.
22. The representative of Korea extended his appreciation to the Chair and the Secretariat for the
timely delivery of the first draft of modalities.  Korea noted firstly, that consensus should be based on
reality rather than ambition, namely the realities faced by Members at home.  The current
methodologies and the quantitative targets in the draft, particularly for tariff and AMS reductions
were, in Korea's view, too unbalanced and ambitious to be acceptable and implemented.  In that
regard, Korea fully shared the concerns expressed in the joint statement delivered by Switzerland on
behalf of a number of other Members.  Secondly, Korea that the special and differential treatment
provisions mentioned in the Chair's first draft of modalities should be further elaborated upon with aview to making them more effective and operational.  For instance, Korea noted that the scope for
strategic products should be broad enough to acc ommodate the diverse concerns of developing
countries.
23. The representative of Poland merely pointed out that Poland's full statement (see Annex 4 )
reflected the positions taken by Poland during the course of the week's meetings, particularly on threemajor aspects, namely Poland's opposition to certain specific arrangements proposed in all three
pillars of the modalities paper, Poland's plea for a realistic recognition of the various forms of
agriculture and finally, its support for the Urugua y Round formula as a basic framework for further
negotiations.
24. Kenya took the floor to highlight a few issues which it thought should be given prominence in
the Chair's revised text (see also statement from  informal meeting in Annex 3 of this report).
Regarding tariffs, Kenya stressed that tariff protection was the only form of protection available for
many developing countries including Kenya.  Any approach to tariff reduction had to be able to assist
these countries improve their competitiveness and diversify their production.  On the strategic
products concept, SPs should be exempted from tariff reduction and be de-linked from the SpecialAgricultural Safeguard.  Concerning the Special Safeguard Mechanism, Kenya was of the view thatTN/AG/R/7
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the Chair's revised text should include a specific modality for the new SSG proposed by developing
countries based on the various proposals tabled by a group of developing countries including Kenya.
In addition, Kenya still maintained that the proposed SSG should not be based on the current Article 5
and that this Article should cease to apply for developed countries at the beginning of the
implementation period.  Regarding preferences, Kenya hoped that the revised text would come upwith concrete ways of quantifying the preferences expected to be lost, before converting that into
some form of domestic support or other assistance as compensation.  Finally, on special and
differential treatment, Kenya believed that the revised text should build the confidence of developing
countries in the WTO by changing the language of S&D provisions to ensure that they met the
developmental concerns of developing countries.  Indeed this was what the Doha Development
Agenda was all about, and Kenya expected meaningful and practical S&D provisions in order to
induce positive and long-lasting agricultural development in developing countries.  In that respect,any ambiguous language had to be avoided.
25. The representative of Egypt thanked the Chair for the effort made in producing the draft
modalities paper for which his delegation was very grateful.  Egypt believed, as it had said earlier,
that the paper lacked ambition in various areas.  Egypt wished to see in the second draft a much
higher level of ambition in the domestic support area, some clarifications on the new conceptsintroduced in the market access area, particularly on SPs, and more specifics on the export
competition side particularly in relation to net-food importers and LDCs.
26. The delegation of the Kyrgyz Republic welcomed the first draft of modalities as a necessary
and important step to reach an agreeable common solution before the Cancún Ministerial.  However,
the Kyrgyz Republic was concerned about flexibil ity in the market access commitments for the
recently-acceded and vulnerable WTO members which were exposed to market volatility while
reforming their national economies.  This situation had not been duly reflected in the first draft text
and the Kyrgyz Republic sought further consultations in order to work out acceptable terms for that
group of countries.  The representative of the Kyrgyz Republic also pointed out the wide gap which
was anticipated to remain if a special safeguard measure for strategic products was allowed for certainMembers while previously made commitments, in particular those of newly acceded Members, were
not taken into account
27. The Kyrgyz Republic also expressed concern about the fact that despite progressive tariff cuts
and reduction, the policy tools available to the original WTO Members and those who acceded during
the last 5 years differed significantly.  Hence, the Kyrgyz Republic requested further developments on
the modalities recognizing the high level of market access commitments undertaken during the
accession process.  Furthermore, the Kyrgyz Republic strongly argued against the reduction ofexisting de minimis levels of support for vulnerable transition economies which would hamper present
and future agricultural reforms.  In its non-paper submitted earlier in the process, the Kyrgyz Republic
had highlighted the necessity to take into account non-trade concerns which could remedy some of the
serious negative impacts on producers facing high marginal costs of production.  In that regard,
certain flexible policy mechanisms had to be made available within the existing Green Box measuresas was stated in the joint paper presented by Switzerland on behalf of a number of countries.
28. The representative of India thanked the Chairman for his strenuous efforts to get Members to
engage seriously in negotiations.  Indeed, a vast majority of Members found it truly difficult to bring
about revolutionary changes in their agricultural sector.  In developing countries, especially those with
large populations dependent on agriculture, it was not simply a numbers game in the negotiations buta matter of dealing with core development and human  issues.  On the other hand, in countries with
highly developed and organised farming sectors, it was largely about commercial considerations.
Concerning the important concept of strategic products developed by the Chair, India was of the view
that it could also be called sensitive products or, as in India's case, survival products on which the
livelihood of our low-income, resource-poor farmers depended.  India wanted flexibility indetermining the range of such products to ensure th at the "right to live" of its farmers was respected.TN/AG/R/7
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An early understanding on the issue would help delegations such as India to make a considered
assessment of the entire package of proposals and would facilitate the framing of responses on the
remaining elements of the package.  In addition, rega rding the drastic tariff cuts suggested in the draft
paper, the level of ambition in that respect had to be lowered considerably before any agreement could
be reached.  Finally, in order to achieve wholesome results in the negotiations, India strongly urgedthat the elements in the various attachments be finalised along with the modalities.
29. Hungary noted that it was quite evident that the overwhelming majority of demandeurs and
several developing countries were generally satisfied with the approach taken in the first draft of
modalities, while a significant part of the Membership had fundamental problems with the said draft.
This seemed to support Hungary's assessment that the first draft was unbalanced.  Therefore in
Hungary's view, there was a clear need for a substantial modification of almost all parts of the draft
text if any convergence was to be achieved.  Concerning the continuing misportrayal of a basicconcern that a major part of the Membership had regarding the position of the demandeurs and the
first draft, Hungary wished to clarify that what they were asking was that no Member should be
exempted from additional market-oriented commitmen ts and no Member should be left without any
benefit from the agricultural negotiations.  Finally, Hungary shared India's view that the attachments
and all the issues regarding future disciplines had to be finalized together with the modalities.
30. Malaysia urged the Chairman to increase the level of ambition in the second draft of
modalities so as to fulfill the mandate provided by Ministers in Doha despite calls by some Members
to the contrary.  In so doing the Chair had to take fully into account S&D provisions for all
developing countries while ensuring that those S& D provisions would not negatively impact on the
trade of other Members, particularly other developing country Members.  One such example was theconcept of SPs.  In raising the level of ambition, Ma laysia reiterated that the Chair needed increased
ambition in the market access area, particularly regarding tariff cuts on tariffs beyond 100 per cent, in
all markets both developed and developing, such that  the outcome would only be tariffs at a two-digit
level and not at a three-digit level as in the present draft modalities.  Malaysia also looked forward to
an increased level of ambition in the areas of domestic support and export competition in particularconcerning the obligations of developed countries.  (See also statement in Annex 3 of this report).
31. China was of the view that a much higher level of ambition should be reflected in the Chair's
second draft of modalities concerning the eliminat ion of export subsidies, disciplining and reducing
export credits and the substantial reduction of domestic support.  The tariff reduction formula to be
reflected in the Chair's second draft had to effectively address the huge disparity and inequity among
Members regarding tariff levels and tariff structures and reduce tariff peaks and tariff escalation.
China also noted that there had to be sufficient consideration on S&D treatment, not only in terms oflonger implementation periods, but also regarding lower reduction rates.  Developing countries'
concerns on food security, rural development and livelihood security had to be adequately addressed.
There should be no further strengthening of disciplines on the activities of state trading enterprises in
developing countries and the proposals in the first draft on strategic products and a special safeguard
for developing countries had to be kept.  China also stressed that there should not be any furtherexpansion of tariff quota quantities nor tighter disciplines on tariff quota administration for recently-
acceded Members such as China.  It was very difficult and unfeasible for newly-acceded Members to
make any further substantive commitments until fu ndamental changes had taken place in the current
unbalanced and unfair pattern of international agricultural trade.
32. In Canada's view, the main objective of the negotiations should be to create a fairer
international trading environment, where Members, and in particular developing countries, could
compete on a level playing field, without having to compete with other government treasuries.
Hence, in preparing his second draft, the Chair should focus in particular on eliminating export
subsidies more quickly, on clear rules without loopholes to prohibit export subsidies through export
credit and food aid, and on far deeper reductions in trade-distorting domestic support, both in theAmber and Blue Boxes.  During the course of the week, Canada had also raised serious andTN/AG/R/7
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fundamental concerns with the approach taken to market access and to export state trading enterprises.
Canada trusted that the Chair had heard them and would address them in preparing his second draft.
33. Argentina stated that the first draft of modalities was a base on which to pursue the
negotiations.  However, it was necessary to, on the one hand, raise substantially its level of ambition
in line with the Doha mandate, and on the other hand, introduce specific modifications in order toavoid contradictions between the said mandate and the draft modalities.  On the issue of export
competition, Argentina was concerned that the draft did not recognize the fact that paragraph 1 of
Article 10 of the Agreement on Agriculture was a baseline discipline to prevent the circumvention of
Uruguay Round export subsidy commitments.  Argentin a could clearly not accept proposals which led
to the reopening of commitments in that area.  Concerning special and differential treatment,
Argentina did not share the approach taken in the first draft of modalities which amounted to the
pursuit of support for development strategies based on economic autarky and protectionism on the onehand, and on the other hand taking only into account the needs of a few developing countries, while
ignoring those of other developing countries which were based on the promotion of external trade.
Argentina was of the view that if the second draft of modalities failed to rectify its approach to special
and differential treatment, there was a risk for a very important rift and divergence among developing
countries.
34. The representative of Guatemala stressed that all subsidies distorted markets and Guatemala
therefore supported the proposal by the Cairns Group to remove all domestic supports within a given
time-period.  Guatemala also wished to remove the de minimis rule, for developed Members.  Finally,
in Guatemala's view, both the concept of strategic products and paragraph 27 of the draft modalities
were a departure from the Doha Mandate.
35. Norway stated its wholehearted support for the interventions made by Switzerland and
Mauritius.  Norway stressed that the larg e number of Members supporting the Uruguay Round
approach for tariff reductions was a significant development which should be fully reflected in the
second draft of modalities. Norway further noted that it had been both surprised and disappointed by
the Chair's draft modalities paper.  It was surprise d because the draft went further than Norway would
have had ever expected in favouring the interests of competitive exporting countries at the expense of
non-competitive importing countries.  Norway was disappointed because there was an abyss between
the Chair's and its own proposal.  Norway was of the view that the draft simply lacked the basic
characteristics of a compromise with which all Members could live, and it did not take non-trade
concerns into consideration as foreseen by the Doha mandate.
36. Norway went on to suggest a set of guiding princi ples for the Chair's second draft.  First, the
modalities needed to allow all Members, irrespective of production conditions and competitiveness, toaddress their non-trade concerns through a certain degree of domestic agricultural production.  A tariff
harmonization formula was simply not appropriate because it did not take into account the differences
in production conditions.  An unmodified Uruguay Round formula was therefore the only way
forward and Norway proposed an average tariff reduction of 36 per cent and a minimum tariff
reduction of 10 per cent for each tariff line.  Regarding domestic support, the existing framework ofthe Green and Blue Boxes had to be continued and no caps introduced.  Norway had suggested that
AMS support to products for the home market should be subject to a reduction of 20 per cent, while
the export-oriented AMS should be subject to a reduction of 60 per cent.  Concerning export
subsidies, Norway agreed to an average reduction of the budgetary outlays of export subsidies of
60 per cent, provided that flexibility was given in dealing with the different products.  However, the
Doha Declaration would only be honoured if all forms of export subsidies were treated equally.
Finally, Norway fully recognized the need for spec ial and differential treatment of the developing
countries, and endorsed several of the proposals made in that regard, including longer implementation
periods and lower reduction rates in all three pillars.TN/AG/R/7
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37. Barbados felt that the Chair's second draft s hould focus on the inter-linkages between the
three pillars of market access, export subsidies and domestic support, as well as on the need to strike a
balance between the differing levels of ambition demonstrated thus far.  Barbados remained
committed to the process of agricultural trade liberal ization;  however, it wished to stress that the
Doha mandate also stated that:  "… special and differential treatment for developing countries shall bean integral part of all elements of the negotiations … so as to be operationally effective and to enable
developing countries to effectively take account of their development needs, including food security
and rural development."  Barbados wished to reiterate, from the perspective of a SIDS which was also
a NFIDC, the importance of non-trade concerns and the need to ensure that they were adequately and
effectively addressed within any elaborated rules and disciplines.  Barbados looked forward to seeing
in the second draft enhanced and improved provisions  dealing with preferences, as well as drafting
details in respect of paragraph 56, and elaboration of further details regarding strategic products,which Barbados found was a useful concept.
38. Djibouti noted that despite the Chair's tireless efforts, Members had not made any real
progress.  Agriculture was a difficult sphere, full of problems and disequilibria, therefore Members
had to try to find solutions which responded to everybody's needs in order to present a definite draft to
Ministers at the Fifth Ministerial in Cancún.
39. Indonesia stated that, while the Chair had in general heard its calls for a robust formula to
tackle tariffs in all markets, the proposed modali ties was still not addressing the imbalances between
developed and developing countries .  Agricultural reform had not only to open and to provide more
liberalized agricultural trade, but it also had to lead  to much fairer trade in agriculture, so that all
developing countries could reap the benefits of trade and attain food security and rural development.Indonesia believed that that development dimension in the first draft text had to be preserved,
therefore it welcomed the inclusion of Strategic Products, which were intended to address the
particular concerns of developing countries.  Indonesia also appreciated that special and differential
treatment was dealt with, as an integral part of each pillars.  Those elements had to be developed
further.
40. Japan started by expressing its full support to the joint statement made by Switzerland on
behalf of Members who recognized the critical importance of achieving proper balance between trade
and non-trade concerns in the modalities.  Non-trade concerns needed to be appropriately addressed in
various aspects of the modalities, and "flexibility", "continuity" and "balance" were the key in that
regard.  In terms of the tariff reduction commitment, the Uruguay Round formula would allow for
enough flexibility to address Members' different prio rities, it would allow for a continuous reform and
it would allow for a balanced and equitable sharing of the reform burden among Members.  The listand the number of Members who supported the Uruguay Round formula, as introduced by Mauritius,
clearly demonstrated that this was a well shared view among Members.  In addition to the tariff
reduction formula, the serious imbalance and excessive ambition in a number of important areas in the
first draft needed to be fundamentally redressed.  Japan concluded by noting that the interests of those
who delivered, rather than those who simply demanded and hardly paid, had to be fully respected inestablishing modalities, that Members were fully aware of that sheer reality after going through
intensive consultations, and that Japan was fully committed to the Doha Mandate and to work
constructively towards the establishment of comprehensive and realistic modalities by the end of
March.
41. The representative of the European Communitie s stated that the European Communities was
fully committed to the Doha Development Agenda.  The proof of the European Communities'
engagement was in its proposal for modalities for further trade liberalization, for the creation of
export opportunities for least-developed countries, for the protection of the preferences of the weakest
of the developing countries, for a balance in the burden-sharing between developed countries.  Indeed,
the European Communities was prepared to offer significant concessions in its own market andmodify its own policies.  In the view of the European Communities, over-ambitious calls from aTN/AG/R/7
Page 10
minority of export-oriented Members, some not even being in a position to offer concessions
themselves were of little value.  The European Communities, therefore, called for a comprehensive,
balanced and therefore doable approach in all the areas:  market access, domestic support, export
competition, S&D, non-trade concerns in order to achieve the successful establishment of modalities
by the end of March.
42. Further to stating its full support of the joint statement made by Switzerland on its behalf and
that of a number of other countries, Iceland noted that the first draft of modalities was a valiant but
ultimately flawed attempt to move work forward, both  in terms of its approach and scale.  A far better
balance and greater respect for the different interests of Members were needed if Members were to
achieve their common objective.  Iceland requested from the Chair a true representation of the full
scope and diversity of the high levels of ambition already demonstrated by individual Members in the
process, developed and developing alike, expressed in conformity with the process of progressiveliberalization launched by the Agreement on Agriculture.
43. Jamaica urged the Chair to reflect in his new draft the many very constructive points that had
been made by small vulnerable economies like Jamaica which depended, on the one hand, on
preferential market access which was the basis on which to promote rural development, poverty
alleviation and sustainable livelihoods and, on the other hand, who needed the fullest possibleflexibility in retaining tariffs and applying safeguar d measures so as to assist their small-scale and
other vulnerable farmers.  In that context more work  would be necessary to elaborate in particular, but
not solely, paragraphs 14 and 56 of the first draft.  Finally, Jamaica also wished to associate itself with
the statement made by Barbados.
44. Paraguay stressed the need to foster a positive atmosphere for the upcoming Cancún
Ministerial meeting and reiterated its support for the multilateral trade system.  Paraguay also asked
for improved market access in developed countries for products that were of special interest to
developing countries.  The negotiations had to be oriented towards the needs of developing countries,
especially those whose needs had not been met by the Uruguay Round Agreements.  Paraguay
believed that it was necessary to take into account the fact that trade liberalization in itself was ameans to attain economic development and, in that context, the most adequate mechanisms had to be
provided in harmony with the Doha Mandate.
45. The Czech Republic stated that the approach of some delegations who had tried, in the course
of the week's informal meetings, to divide th e Membership into two groups, those who wanted
reform, and those who blocked it, was not fair, did not correspond to the nature of the negotiations
and was not realistic.  The Czech Republic remained committed, consistent and expected the second
draft to better reflect its concerns and interests.
46. The representative of the Slovak Republic noted that several divergences remained on all
pillars of the agriculture negotiations.  Members were yet to agree on how to pursue the reforms, on
how to proceed with reductions of protection across the board, on how quickly to undertake the
reform process, and on how to address the concerns of several groups of Members.  The Chair's first
input had seemingly not reflected enough potential elements for future consensus-building onmodalities.  The Slovak Republic hoped that the Chair's second draft would include more convergent
elements for real bridge-building by the end of March.
47. Referring to its statement on market access at the informal meeting (see Annex 3), Senegal
underlined the situation of certain developing countries, among which Senegal, which ran the risk of
sustaining harm if new special safeguard measures of any kind were linked to a tariff reductioncommitment.  Senegal invited the Chair to take that  concern into account in his forthcoming draft of
the modalities.TN/AG/R/7
Page 11
48. As one of the co-sponsors of the joint statement made by Switzerland on non-trade concerns,
Chinese Taipei wished to reiterate that, for the sake of non-trade concerns and the survival of
vulnerable family farms in both developing and developed countries, the Uruguay Round approach
had to be the fundamental basis for the negotiations.  Moreover, as one of the newly-acceded
countries, Chinese Taipei stated its full support to a joint statement made by Croatia earlier in theweek at the informal meeting (see Annex 3).
49. Bangladesh, on behalf of WTO LDC Members stated that the Chair's draft modalities
although a possible basis for negotiation, presented imbalances on the three main pillars of
negotiations.  Bangladesh was of the view that support provided under the Blue and Amber Boxes had
to be completely eliminated.  Support under the Green Box should be maintained within limits but the
shifting of trade-distorting support to the Green Box also had be eliminated.  Bangladesh supported a
number of the first draft's proposals, namely the maintenance and enhancement of support measuresunder Article 6.2 of the Agreement on Agriculture, the abolition of the special agricultural safeguard
for developed countries, the development of a Special Safeguard Mechanism for developing
countries, and the concept of strategic products for developing countries.  The concept of SPs was
good, however, its numbers and criteria for selection had to be carefully devised in the second draft of
modalities.  Regarding paragraph 53 and the proposal to provide LDCs with flexibility, the sentencewithin the square brackets was not acceptable to Bangladesh as WTO LDC Members had unilaterally
liberalized their agricultural sector and continued to liberalize at the pace considered appropriate from
their own development perspective.  On paragraph 54, concerning the proposed duty- and quota-free
access of LDCs to developed country markets, Bangladesh sought some explanations on how this
commitment would be implemented, namely the actual modality, e.g.  tariff or quota elimination forone group of or for all products, the timeframe, and the binding nature of the commitment within the
WTO framework.  Bangladesh also stressed that  the stringent application of SPS and TBT measures
which impeded real access of LDCs products on developed country markets, should be addressed in
the next draft of modalities.  Finally, referring to a presentation by UNCTAD, the representative of
Bangladesh noted with concern, what had appeared to be negative implications of the Chair draftmodalities specifically for LDCs.
50. The representative of Uganda stated that he wished for the statement made earlier in the week
in the course of the informal meeting to be added to the records of the formal meeting (see Annex 3),
with two addenda.  The first one was that export subsidies were a double-edged spear.  They unfairly
rendered products of the weak economies non-competitive on the international market and also even
in their domestic market.  The second paragraph which was added was to say that the reform of the
Agreement on Agriculture had to be fair and equitable and Uganda's interpretation of fair and equaltreatment entailed treating the unequal unequally.
51. The Philippines noted that there was very little time left before the deadline set by Ministers
to establish the reform modalities.  The Philippines urged the Chair to ensure that the modalities
would faithfully serve the development agenda of this negotiations.  In that regard, in the view of the
Philippines, the modalities would be gauged by the fo llowing:  (i) their ability to deliver the sense of
equity which many developing countries were asking for and which could only be achieved through
ambitious reforms in developed country agricultural policies in all three fronts – market access,
domestic support and export subsidies – plus caution on addressing issues such as non-trade concerns
which should not result in further disadvantaging developing countries;  and (ii) sensitivity to
developing countries' needs for policy flexibility in pursuing developmental objectives.  To this end,effective instruments related to special and differential  treatment had to remain an integral part in the
reform modalities.  Finally, the Philippines urged the Secretariat to provide Member countries with
indicative estimates of the likely welfare impact of the Chair's revised draft proposal in relation to
tariff reduction, export subsidies, and domestic support, for broad groupings of Member countries,
i.e., developed, developing, and least-developed countries.  The Philippines' sense was that the currentdraft favoured developed countries much more than it did developing and least-developed countries.
If so, this was inconsistent with the development agenda of the Doha Declaration.TN/AG/R/7
Page 12
52. The representative of Bolivia stated that S&D treatment in market access should not be a step
backwards towards protectionist distorting practices.  Strategic products had to be defined
multilaterally by each Member on the basis of statistics, food aid, imports, exports, among other
factors.  Regarding the SSM, in order to avoid any negative effect on trade between developing
countries, there should be a number of requirements.  First, the SSM would be applied only toproducts which had a bound tariff of a maximum of 50 per cent.  Secondly, parallel to the application
of safeguards, a tariff quota would be established at the level of 40 per cent of domestic consumption.
Thirdly, the AMS for a given product would apply for 4 years and would not be applied to that
product for a minimum period of 2 years thereafter.  Regarding the second draft of modalities,
Bolivia, like many other delegations, hoped that it would reflect a higher level of ambition.
53. Israel joined others in expressing its appreciation to the Chair for his sincere efforts to bridge
the gaps between Members and move the negotiations forward.  Israel was of the view that everycountry had the right and obligation to maintain its agricultural sector regardless of its ability to
support the sector.  Since Marrakesh, tariffs had been reduced substantially and Members had to
continue in that direction whilst establishing a minimum reduction rate which would express, among
other things, consideration for non-trade concerns.
54. The representative of Côte d'Ivoire noted that despite sharp and relevant criticism the Chair's
draft remained as a guide for the negotiations.  Côte d'Ivoire wished to support what had been said by
previous delegations concerning the interests of developing and least-developed countries.  The
representative of Côte d'Ivoire pointed out that his statement had been guided by prospective thinking
reflecting the confused situation reigning in his country at present.  As regards tariffs, Côte d'Ivoire
was of the view that the harmonized system, with only ad valorem  tariffs, would make it possible to
have similar tariffs and avoid subjective reduction operations.  Market access for tropical products had
to be freed in order to favour the promotion of such produce and their horizontal and vertical
diversification.  Regarding export credits, Côte d'Ivoire was concerned about food aid which because
of its humanitarian image and nature, had to be flexible but should not be a pretext for production
surpluses to be dumped at a very low prices.  Finally, the representative of Côte d'Ivoire stressed thatin light of the state of civil war in which Côte d'Ivoire had found itself since 19 September 2002, with
several thousand deaths having been recorded and millions of displaced persons, Côte d'Ivoire's
ability to continue with its earlier WTO commitments was now eroded and it was not really in a
position to undertake further commitments in the immediate future until war ceased and until some
sort of inventory had been made.  The representative of Côte d'Ivoire appealed to all Members to take
into account the particular predicament Côte d'Ivoire was in when new commitments were contracted.
55. The representative of Ecuador thanked the Chair for his continuing efforts to establish a
balance which would enable the negotiations to move forward.  Ecuador, like many other developing
countries, had said that it could not commit itself to greater tariff reductions while distortions through
high export subsidies and disproportionate levels of support from developed countries remained.
Furthermore, and in line with the Cairns Group position, the proposed time period for the removal of
subsidies should be substantially shorter than that proposed to apply to tariffs.  Finally, Ecuador wasof the view that substantial improvements regarding market access had to apply to all countries
participating in the negotiations in order to also  guarantee fair and equitable conditions for South-
South trade.
56. Turkey considered the first draft of modalities as not more than a first attempt to identify
possible ways to solutions.  In that respect, it was Turkey's belief that the week's discussions wouldfurther contribute to bridging gaps and moving the process forward.  Turkey was of the belief that the
second draft, under the Chair's wise guidance, would serve as a constructive tool to bridging existing
gaps and would reflect all concerns to be addressed on the basis of the Doha Mandate.
57. The representative of Chile thanked the Chair for his efforts to come up with this first draft of
modalities.  Referring to the list of countries which had been mentioned as being in favour of aTN/AG/R/7
Page 13
Uruguay Round approach to tariff reductions, Chile noted that it was not a question of number, but
rather one of quality.  It was a question of whether or not those modalities met the requirements of the
Mandate, as behind the Mandate there was the purpose of ending a situation where a few countries
pocketed the profits.
58. Costa Rica hoped that the Chair would come up with a second draft which would be designed
to complete the reform process although it perhaps could consider longer deadlines.  Costa Rica was
concerned that some developed countries were, once again, indifferent to the real needs of developing
countries.  Their offers, apparently generous, clearly attempted to perpetuate the differences and
divergences which the existing rules created for their own interests.  From what Mauritius said, it was
clear that the European Communities had achieved a skilful but perverse arrangement allowing them
to give up the opening up of their agricultural sector, in exchange for those preferences and other
protectionist measures which they were trying to create at the multilateral level within the WTO.Nevertheless, throughout this week, many other de veloping countries had expressed positions which
moved in quite another direction and which the Chair should take into account when preparing his
second draft.  Costa Rica recalled that it had been said that the level of ambition should be greater in
respect of all three pillars, that the opening up of the agricultural sector was the true way towards
building up the sustainable development of devel oping countries which was highly dependent upon
agriculture, that it was necessary not to block but rather to promote South-South trade, that the tools
for food security and rural development could not be those which held up trade between developing
countries.  The new draft modalities should not be modalities which discriminated against products,
nor modalities which created discrimination among developing countries with regard to preferential
schemes.  Finally, the new draft modalities should create tools for developing countries to combatsubsidies coming from developed countries, and express all tariffs on an ad valorem basis.  The
representative of Costa Rica concluded that it was not acceptable to have a final result with
tremendous imbalances between agriculture negotiations and negotiations in other areas such as in
market access for non-agricultural products and in services.
59. In light of time constraints, Australia submitted its formal statement for circulation in the
Annex of this report (see Annex 4).  The representative of Australia went on to make a few brief
points.  Australia was of the view that the week's  discussions had been disappointing to some extent,
that Members had not been able to bridge gaps, but there had been some very useful ideas that had
come out of the discussions.  The representative of  Australia cited the following ideas:  (i) the support
for an earlier phase-out of export subsidies along the lines that President Chirac had suggested;
(ii) the strong support in the house for a more substantial reduction in trade-distorting domestic
support which would be critical if developing countries were to play their role in market access;(iii) the support for a tiered approach to the reduction of domestic support along similar lines to those
that the Chair had put forward on tariffs;  (iv) the suggestion of the cap on all tariffs for both
developed and developing countries;  (v) the notion of raising the ambition in all three pillars but
providing for a longer implementation period;  and finally (vi) the adoption of criteria for sensitive
products for developing countries.  Australia concluded by stating that the Cairns Group urged theChair in his next draft to continue to remain faithful to the Ministerial Mandate.
60. Tunisia stated its wish that its requirements be taken into account as far as possible in the
Chair's second draft of modalities.  In particular, Tunisia highlighted that net food-importing
developing countries should be included in paragraph 56 of the Chair's second draft in order to benefit
from the additional measures of flexibility mentioned therein.
61. The delegation of Morocco took the floor to request that the statements it had made in the
informal meeting be added to the formal record of the meeting (see Annex 3).  Morocco also informed
the Chair that the African Group was finalizing its position in connection with the Chair's first draft of
modalities.  The text of the African Group would be given to the Chair shortly after the meeting.TN/AG/R/7
Page 14
62. The representatives of Croatia (on behalf of Albania, Croatia, Georgia, Jordan, Lithuania,
Moldova and Oman), Cuba, the Dominican Republic (on behalf of Honduras and the Dominican
Republic), Sri Lanka, and Venezuela  took the floor simply to request that their statements made at the
informal and/or formal Special Session form an integral part of the record of the 7th Formal Special
Session (Annexes 3 and 4).  Other similar requests made during the informal meeting have also beenaccommodated in Annexes 3 and 4 of this report.
63. The Chairman noted that many calls had been made for national positions to be reflected in
the second draft.  It was obvious, however, that many of those positions were conflicting and
Members had to take that into account in factoring in what they could expect.  The Chairman urged
Members again to reflect on the lack of progress and the reasons for that and also to reflect carefully
on the lack of time available to meet the Mandate.  That latter aspect had only been commented on by
very few delegations at the meeting.  There was a tendency for each to look to the others and regardthem as intransigent.  Perhaps that was true, but it was the Chair's view that it might be more fruitful
for Members to examine their own positions and ask themselves what they could do to move the
process forward.  As the Chairman, he just wanted to remind Members that he could try to facilitate
the negotiations but in no way could he act as a substitute for genuine negotiation between
participants.
I
TEM B:  O THER BUSINESS
Date of the next Special Session64. The Chairman noted that under the work programme the next formal and informal Special
Sessions would take place from 25 to 31 March.  Under the Doha Ministerial Declaration modalities
for further commitments were to be established on 31 March.
65. The Chairman also asked Members to note for planning purposes, bearing in mind that the
negotiations did not end on 31 March, that the following provisional reservations had been made for
Special Sessions after the end of March:
- 26 and 27 June and 1 July (regular Committee on Agriculture meeting on 30 June);
- 16 to 18 July;- 22 to 24 September and 26 September (regular Committee on Agriculture meeting on
25 September);
- 17 to 19 November and 21 November (regular Committee on Agriculture meeting on
20 November).
The Chairman stated that he felt it prudent to make those provisional reservations because, as
Members were aware, it was almost impossible to get times and rooms unless rooms were booked
well in advance.
Chairman's Report to the Trade Negotiations Committee
66. The Chairman outlined his report to the Trade Negotiations Committee (TN/AG/8).  A copy
of the report is attached (Annex 2).TN/AG/R/7
Page 15
Annex 1
JOB(03)/49
Report by the Chairman of the Special Session, Committee on Agriculture
28 February 2003
The purpose of this week's Special Session meetings has been to consider the first draft of
modalities for further commitments which was circulated as TN/AG/W/1 on 17 February.  This draft
is based on the work carried out in the course of a series of formal and informal Special Sessions of
the Committee on Agriculture and in related inter-sessional and technical consultations conducted in
accordance with the mandate provided by Ministers at Doha and with the work programme as adoptedby the Special Session in March last year.
Consideration of the first draft of modalities was undertaken in plenary informal sessions and
in a variety of informal consultations, both among st participants themselves as well as in the
consultations that I have undertaken myself  which, of course, I will continue to pursue.
I do not propose to attempt to sum up the views which have been expressed on either the first
draft of modalities as a whole or on its component elements.  To attempt to do so at this juncture
could, I feel, distract from, rather than facilitate, the essential process of further interaction among
participants.
There continue to be, perhaps not surprisingly, important divergences amongst participants on
the first  draft of the modalities as a whole, as well as on many of its details.  Nonetheless, the
discussions this week have been engaged and pursued in a constructive spirit with active and broad
participation.  The first draft of modalities has been useful in inaugurating a much more intensive andfocused phase in the agriculture negotiations.
On the major issues concerning the proposed approaches elaborated in the first draft of
modalities, I have to say that little if any collective guidance has so far been forthcoming.  This is not
to say that some useful ideas have not been canvassed informally or that the process in which we are
now engaged will not generate elements of possible compromise.  But as you are all aware the
Ministerial deadline is now looming. I would strongly urge all delegations to remain engaged in thedays and  weeks ahead and to intensify their efforts to find solutions that can attract broad-based
support.
Our informal work on the first draft of modalities would seem to me to suggest that in a
number of areas there is a need, and indeed a willingness, to undertake further technical work as partof the follow-up to this week's meetings.  The c oncept of strategic products and related criteria, the
architecture of a possible special safeguard mechanism for developing countries, tariff quota
administration, export credits and food aid  are some  examples of what I have in mind.  Moreover, as
I indicated in the body of the draft modalities paper, there is a need, while respecting the diverse
positions in this area, to further explore how and where a number of issues raised in the context ofnon-trade concerns might be approached.
In the light of the work carried out, including my contacts and consultations with participants,
I shall reflect carefully on how to register the results of our work this week.  There are several ways in
which this might be done.  In any event, the draft modalities, as they stand, or as revised orsupplemented, will remain under my responsibility as your Chairman and are without prejudice to the
positions of participants. But it is my earnest hope that you yourselves will also carefully reflect on
the lack of progress to date and on the consequences of continued inertia for these negotiations and
the negotiations under the Doha Development Agenda as a whole. Only your constructive
engagement will create the space for establishing modalities in line with the Doha mandate.TN/AG/R/7
Page 16
Annex 2
TN/AG/8
SEVENTEENTH SPECIAL SESSION OF THE COMMITTEE ON AGRICULTURE
Report by the Chairman, Stuart Harbinson, to the Trade Negotiations Committee
I. STATUS OF WORK
1. The Special Session of the Committee on Agriculture, which is pursuing negotiations under
paragraphs 13, 14 and other relevant provisions of the Doha Ministerial Declaration as agreed by theTrade Negotiations Committee (TN/C/M/1), held its seventeenth formal meeting on 28 February
2003.  The agenda as set out in WTO/AIR/2030 was adopted.
2. In accordance with the programme agreed in March 2002, the Special Session considered the
First Draft of Modalities for Further Commitments that was circulated on 17 February (TN/AG/W/1).
The Chairman presented a report on his own responsibility concerning the main features of thediscussions at the informal Special Session held on 24-28 February.
3. The Chairman's report will be included in th e Secretariat summary report on the seventeenth
formal Special Session (to be issued as TN/AG/R/7).  A number of statements were made by
participants in the formal meeting regarding the ne gotiations and the various ideas put forward in the
First Draft of Modalities.  Participants' statements and contributions will also be reflected in theSecretariat summary report.
II. OUTSTANDING ISSUES
4. At the informal and formal Special Sessions participants undertook an intensive and detailed
discussion based on the First Draft of Modalities.  In addition, many delegations held bilateral and
plurilateral meetings during the week on their own initiative while I, as Chairman, held consultations
with many delegations.  These consultations will continue in the weeks ahead.
5. The first draft was useful in inaugurating a much more intensive and focussed phase in the
negotiations.  However, little common ground emerged on fundamental issues.  While there was some
progress on a number of technical aspects and a willingness to continue work there was little
collective guidance to assist in preparation of a second draft of modalities.
III. FURTHER WORK
6. It will be necessary to reflect carefully on how to register the outcome of the discussions at
the Special Sessions and associated consultations.  Delegations must also reflect carefully on the lack
of progress to date on the consequences of it continuing.  Constructive engagement by and between
participants is urgently needed to create the sp ace for a modalities package in line with the Doha
mandate and to comply with the deadlines designated by Ministers.
7. Technical consultations will continue on a number of issues, such as the concept of strategic
products and related criteria, the architecture of a possible special safeguard mechanism for
developing countries, tariff quota administration, export credits and food aid.  Moreover, as indicated
in the First Draft of Modalities, there is a need, wh ile respecting the diverse positions in this area, to
further explore how and where a number of issues raised in the context of non-trade concerns might
be approached.TN/AG/R/7
Page 17
8. Under the work programme the next Special Session is to be held on 25 to 31 March.  Under
the Doha Ministerial Declaration modalities for further commitments are to be established on 31
March.TN/AG/R/7
Page 18
Annex 3
Statements by Members at the Informal Special Session of the Committee on Agriculture
held on 24-28 February 2003
Statement on behalf of Albania, Croatia, Ge orgia, Jordan, Lithuania, Moldova and Oman
Speaking on behalf of Albania, Croatia, Geor gia, Jordan, Lithuania, Moldova and Oman, I
would like to thank you for the First Draft of Modalities for the Further Commitments.
The countries on behalf of whom I have the honour to speak must reiterate the fact that we
had consistently raised in the course of the ongoing DDA negotiations the issue of the specificsituation of the recently-acceded countries in respect of agriculture.  We believe that Members are by
now aware that countries who recently acceded to the WTO made very extensive market access and
domestic support commitments, often going far beyond those that had been made during the Uruguay
Round.  Ministers in Doha have apparently recognized the significance of these commitments in
paragraph 9 of the Doha Ministerial Declaration.
Our countries did in all occasions state that we had very limited possibilities to make further
reduction commitments.  We have made a very strong case and presented several proposals on the
necessity to include meaningful specific flexibil ity provisions for recently-acceded Members in the
modalities for future commitments in the agricultural area.  We had also expressed our strongexpectations, most recently in our joint statement during the last TNC meeting that proposals and
concerns of recently-acceded Members should be adequately reflected in the first draft of modalities.
Unfortunately, we note with regret and disappointment that this has not been the case.  The
proposals for recently-acceded countries in the first draft of the modalities text are falling short ofanything that we were expecting or hoping for.  In fact, the proposals on the table are such that their
acceptation would definitely impede the reform process and in many aspects the functioning of our
countries' respective agriculture sectors.
Therefore, it would be impossible for our countries to join any consensus on a text which
would not have real and meaningful specific flexibility provisions for recently-acceded Members with
respect to market access and domestic support.
Our countries have been seriously engaged in the ongoing negotiations.  We remain
committed to continue participating actively and constructively in further process, however, on the
basis of such text that would, contrary to the pr esent one, fully reflect the legitimate concerns and
proposals of recently-acceded Members.TN/AG/R/7
Page 19
Statement by Barbados, Trinidad and Tobago, and Jamaica
Paragraph 9
While increased market access opportunities for developing countries is a welcome objective,
the language in this paragraph seems to be merely more of the "best endeavour" language which is so
problematic within existing Uruguay Round Agreements.
Paragraph 10
Tariff reduction formula
As mentioned previously, we are very concerned by the high level of ambition contained in
the paper vis-à-vis  the tariff reduction formula for non-SP products in developing countries.  This
approach is flawed since it completely ignores the special role that tariffs play in developing
countries' economies, as well as the interplay between the three pillars of the Agreement onAgriculture.  The Swiss formula, however, is equally unacceptable since it would also deny us the
necessary flexibility to ensure our participation in further agricultural liberalization while still
maintaining an agricultural sector.  Instead, we urge you to apply the pure Uruguay formula and the
percentages thereunder of an average reduction of 36 per cent with a minimum reduction of 15 per
cent for developed countries and an average reduction of 24 per cent with a minimum reduction of10 per cent for developing countries.
Strategic products
We view the introduction of the concept of "strategic products" as a step in the right direction.
As a form of special and differential treatment it has real potential for redressing some of the
imbalances which currently exist in the Agreement on Agriculture as well as permitting developing
countries to pursue their legitimate development objectives.
In terms of the products themselves, we prefer a self-declaratory approach and insist on the
use of the HS 4-digit level designation for these products.  Bearing in mind the nature of these
strategic products (i.e. as products necessary for food security, rural development and/or livelihoodsecurity), we feel strongly that these products should not be subject to any tariff reductions.  To do
otherwise would be to risk emptying the concept of its value and meaning.
We look forward to further work in this area and signal our interest in any consultations
thereon.
Paragraph 13
We feel that developing countries should be given flexibility in implementing their reduction
commitments by permitting them to undertake non-linear tariff reductions for some sensitiveproducts.
Paragraph 14
Preferential Schemes
This is a matter of critical importance for our countries since it has serious implications for
the future survival of our agricultural sectors and thereby for some of our vital non-trade concerns
such as rural development, food security and protec tion of the environment.  We are of the view that
the issue of preferences needs to be addressed in a more coherent and sustainable manner than isTN/AG/R/7
Page 20
currently the case in paragraph 14.  Such an approach would have to take into account other policy
instruments such as domestic support commitments and the special safeguard provision which
impinge on preferences.  In this regard, we wish to refer you to JOB(02)/161 which we presented
during the last Special Session, together with a number of other developing countries.  We also wish
to endorse the comments made by Swaziland yesterday on this issue and hope to be able to give youfurther concrete guidance on this matter shortly.
We also have a number of concerns with paragraph 14 as it currently stands:  firstly, the
proposed modality will not have the desired effect of preserving vital preferential margins since
products subject to preferences would still be subject to the deep cuts proposed in paragraph 7(i)
(45 per cent reduction at best).  While eight years would result in an extension of the period of phased
reduction, this would still equate to over 5 per cent per annum in tariff reduction which would in turnplace severe pressure on preferential markets with serious consequences for import volumes and
prices.  Secondly, we have some difficulty with the conditionality contained in the third sentence of
paragraph 14.  We are not sure that this is an appropriate standard against which to judge the
importance and value of preferences in the respective preference-receiving countries.  In any event,
we would at least wish to have the language amended to speak of "agricultural exports" as opposed to"merchandise exports" and the percentage in square bracket reduced.  We are also concerned with
other measures that would have a negative impact on the value of our preferential access, such as the
removal of in-quota tariffs (paragraph 20) and the expansion of TRQ volumes.  Equally, we
wholeheartedly support Canada's call for the deletion of 2(f) of Attachment 1 dealing with tariff rate
quotas.
Paragraph 24
Special Safeguard Provision
As mentioned previously, we do not believe that SP products should be subject to any tariff
reduction, far less the radical cuts envisaged in para graph 10.  Accordingly, we would wish to de-link
the question of application of the special safeguard and tariff reductions, leaving developing countries
free to apply the special safeguard for all SP products.
Paragraph 25
While developing countries such as Barbados have found some limited value in the use of the
current SSG in Article 5, we feel strongly that the mechanism needs to be significantly improved if it
is to be truly "operational and allow developing countries to effectively take account of their
development needs."  Accordingly, we support the need for review of Article 5 and the call by many
of the Members for this review to be completed at the time of agreement on the modalities .
Paragraph 26
State Trading Enterprises
We wish to stress the need to differentiate between the roles played by state trading
enterprises in developed countries and developing countries, particularly small, vulnerable countries
such as SIDS.  While appreciative of the spirit of paragraph 3(d) of Attachment 2, we would like to
see the language strengthened considerably to give the necessary degree of assurance to developing
countries that in fact they will not find themselves unduly constrained.TN/AG/R/7
Page 21
Paragraphs 27 & 56
Other Market Access Issues
We cannot accept a two-tiered approach to the negotiations whereby progress is made on
certain issues of importance to some Members, while other issues, of critical importance to other
Members, are relegated to the back burner, to be resolved at some unknown and unspecified time.
We also take this opportunity to flag our concern ab out the failure to deal with the issue of NFIDCs in
a concrete manner.TN/AG/R/7
Page 22
Statement by Bulgaria
Our more general views on the first draft are reflected in the common statement of the
CEFTA Plus group, presented by Slovenia which I n eed not repeat and to which I would like to add
some more specific elements.
We cannot accept the first draft of modalities in TN/AG/W/1 as a basis for further
commitments for negotiations in agriculture.  The dr aft is, from the point of view of our interests,
grossly unbalanced and cannot serve as a point of departure on which we can positively build.  In
order in engage, as was suggested by the Chairman of the TNC, in a further process of "positive
linkages", it is necessary that each participant in the negotiations, although not necessarily in favourof each single element of the modalities, finds therein a positive balance so that these modalities as a
whole, would be acceptable to that participant.  Only on such a basis can participants then engage in a
process of identification of further win-win ar rangements.  Such a basis is now not at hand.
I would like to refer to a remark by yourself in your introductory statement which relates to
procedures and in which you mentioned that changes to the text should be acceptable to all.  First, the
text should be acceptable to all, before we make the changes and I am afraid that if we do not first
accept the text, we would be undertaking a very fundamental departure from the intergovernmental
nature of decision-making in this organization which is based on consensus.
At this moment I would like to react to an approach, and you urged us to focus on approaches,
which was very eloquently outlined in the morning by Argentina, but which was also referred to by
others, and that was that the draft should be assessed not the on basis of Members' interests, including
the requirement that as a package, it should be acceptable as a whole from the point of view of the
interests of each single Member, but that it shoul d be assessed exclusively only on the basis of the
"principles agreed in Doha" and the "obligations which follow from these principles".  This really
implies that in fact the negotiations as such we re concluded at Doha and what remains is just to
implement the "obligations" undertaken in Doha, irrespective of the balance of interests and
irrespective of what the package implies for the respective Member.  This view has already been
explicitly stated last week at the consultations at  TNC level on implementation issues and at that time,
this approach was specified by some Members who also stated that implementation issues were not
part of the negotiating agenda and that in fact insistence on implementation issues detracts from the
"obligations on agriculture".  So we see fairly clearly what is behind this approach that at this stage
we should not be looking at our commercial interests.  In fact this approach leaves no space
whatsoever for mutually-acceptable packages of concessions.  What some members of the Cairns
Group seem to be looking for is only concessions by others without accepting to match these
concessions with contributions on their own part.  It is evident that this approach implies a radicalchange of the fundamentals of the multilateral trading system as established half a century ago, and
the fundamental departure from the inter-governmental character of the WTO. This kind of approach
is totally unacceptable to my delegation.  If those delegations continue to insist on this approach, I can
suggest that they bring a dispute under the WTO dispute settlement system and not waste their time in
negotiations.  I can assure them in advance that we  will be prepared to promptly implement the DSB
recommendations on such a dispute.
Our approaches to the modalities were expressed at the previous meeting of the Special
Session of 24 January 2003.  Unfortunately they were not taken into account.  Our positions have not
changed and we continue to insist that they be reflected in the text of the modalities.  Although wecannot accept the draft as a whole, nor any of its elements, we are prepared to discuss the issues
reflected in it on the basis of the proposed structure.  That is acceptable.TN/AG/R/7
Page 23
Some of the approaches of the draft which are particularly unacceptable to us are the
following:
- We cannot accept the approach to try to adopt modalities only on some aspects relating
solely to the reduction commitments to be reflected in the Schedules.  We are of the viewthat the modalities must be comprehensive and include the new rules or the amendments to
existing ones which are to be agreed in the course of the negotiations.
- We are not ready to accept harmonization approaches under the form of different reduction
rates for different tariff bands.  We can accept only simple linear tariff reductions for all
bound tariffs with a single minimum reduction rate for each tariff line and a single average
reduction rate.
- The levels of ambition reflected in the bracketed proposals for reduction rates are far
beyond anything which might eventually be acceptable to us.  As we have stated
previously, even if all other elements of the modalities fully reflect our own wishes, we
would not be able to go beyond the reduction rates in the Uruguay Round.
- We continue to insist that the proposals for flexibilities for recently-acceded countries and
for economies in transition be adequately reflected in the modalities.
- As we have previously stated, we are of the view that the reduction formulae should be the
same for developed and developing countries with the same reduction rates but possibly
with longer implementation periods for deve loping countries. We can agree with lower
cuts for least-developed countries but not for developing countries generally since we do
not have clarity as to which countries exactly would be included in that category.  We can
not accept separate sets of commitments for categories of Members which are notobjectively defined.TN/AG/R/7
Page 24
Statement on behalf of the CEFTA Plus countries
It is my pleasure to be able to present on behalf of the CEFTA Plus countries, namely
Bulgaria, Croatia, Czech Republic, Estonia, Hung ary, Latvia, Lithuania, Poland, Romania, Slovak
Republic and my country Slovenia, our common initial reactions on the First Draft of Modalities for
the Further Commitments in the area of WTO Negotiations on Agriculture.
We are aware that it was definitely not an easy task to prepare the first draft of modalities to
be agreed by the Members on the background of so many different and even conflicting proposals.
Therefore, your professional attempt to do so deserves our highest admiration and respect.  We
sincerely recognise and appreciate all your efforts and energy devoted to the preparation of the draft.
The key in the situation of a very wide variety of different opinions in the agricultural
negotiations is in finding a balanced text in the middle ground, which each delegation can accept as a
whole, although it may have reservations on some aspects of it.
However we find the prepared document unbalanced with respect to the previously presented
positions of WTO Members.  We are disappointed with the concept and the substance of the first
draft.  CEFTA Plus countries expected a better balance between the ambition to allow new market
opportunities and the ambitions to preserve different models of agriculture among the Members,
including those which in some cases even face the danger of disappearance of their agriculture.  It is aspecial concern for our group that our modest proposals for countries of our region were totally
disregarded.
We would like to recall our previous positions taken during numerous meetings and presented
by our countries in the form of negotiating proposals.  We underline our full commitment forcontinuation of reforms to be undertaken on the basis of the Uruguay Round type formula approach.
In our view only this approach can fulfil our mandate from Doha and provide balanced results.
In this regard we think that the NTCs, as often expressed also by our group of countries, have
been totally disregarded and are not reflected in the first draft of modalities.
We can not accept a hierarchical several steps approach, where some items will be declared as
more important and be fixed first whereas the left over should be dealt with sometimes in the future.
In conclusion, allow me to assure you that the countries on behalf of which I am speaking,
namely Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania,
Slovak Republic and Slovenia, are prepared to take a responsible and active role in finding suitablesolutions in this – for all Members - high priority area of Doha Development Agenda.  However, this
could only be done on basis of such proposals which would in all elements of the future modalities
reflect in a truly balanced manner the different interests of WTO Members.TN/AG/R/7
Page 25
Statement by China
Market Access
Tariffs
The major concern of China in the area of market access is to substantially reduce tariff peaks
and tariff escalation in developed Members, which is not foreseen by the formula suggested in
paragraph 7 of the first draft.  It gives too much flexibility to developed Members, allowing for the
maintenance of high level tariffs which impedes trade.  China calls for ambitious harmonization
formulae in tariff reductions.  Moreover, the way the first draft addresses the problem of tariffescalation falls short of assurance as well.  It is requested that improvements should be made in the
second draft.
Strategic Products
We welcome the notion of SP products.  Recently acceded Members which have made
substantive reduction commitments in accession negotiations have good reasons to declare SP
products from its sensitive products, including TRQ products.  China proposes that SP products not be
subject to reductions.  Tariff reduction should not be the precondition of according SSM to SP
products.
Tariff Quota AdministrationChina requests to:
- delete 2(g) from Attachment 1.  There are two reasons for this.  Firstly, in accordance with
China's regulation on processing trade, imports under processing trade have to be re-exported.
Secondly, during China's accession negotiations, in calculating the basis of TRQ volume
commitments, the imports under processing trade were already taken into account.
- clarify the meaning of the word "charges" in 2(i).  China is of the position that each Member
will have the right to determine its own TRQ administration methods, including auction.
- delete 3(b)(ii).  Each Member has its own situation.  China has a huge number of enterprises.
Without having due restrictions on the qualifications of applications, China will be left in a
situation whereby it will have to divide quotas into small lots which gives rise to commercial
non-viability.
- add after "Tariff quota licences" in 3(b)(iii), "which take effect on the first day of the calendar
year".
- add at the end of 3(b)(iv), "The licences for this purpose shall be effective before the end of
the calendar year".
SSG
China requests to change paragraph 23 as "The provisions of Article 5 of the Agreement on
Agriculture shall cease to apply for developed Members upon the conclusion of the Uruguay Round
implementation".  At the same time, as stated above, for paragraph 24, we believe tariff reduction
should not be the prerequisite of according SSM to developing Members on SP products.  SSM
should not be based on Article 5 of the Agreement on Agriculture.TN/AG/R/7
Page 26
State Trading Enterprises
We believe Article 17 of GATT suffices to address the issue of state trading enterprises.
Export Competition
Export Subsidies
Paragraphs 28 through 31 lacks ambition in phasing out export subsidies.  China proposes that
developed Members reduce their export subsidies by 50 per cent in the first year of implementation
and eliminate the remaining export subsidies in equal annual instalments in two years.
Domestic Support
Blue Box
China requests that the Blue Box be incorporated into Amber Box totally and subject to AMS
reduction.
Amber Box
China is of the view that developed Members should reduce their AMS level by 50 per cent in
the first year of implementation and eliminate the remaining AMS support in equal instalments in two
years.  Reduction shall be made on aggregate bases as well as on product-specific bases.
Recently Acceded Members
To address the issue of recently acceded Members, the following concerns should be taken
into account:
First of all, recently acceded Members have made tremendous commitments and therefore
would feel extremely difficult to make further substantive reductions.
Secondly, the modality should have the effect of substantially reducing the disparities
between Members in terms of tariffs, tariff rate quotas, export subsidies and trade-distorting domestic
support.TN/AG/R/7
Page 27
Statement by Colombia
Colombia wishes to express special thanks to you, and to the Secretariat, for the efforts you
have made in preparing the first draft of modalities for the new commitments in agriculture.  As youhave requested, we would like to make some general comments about the document.
We have reviewed your document in the light of the Doha mandate, the proposals we have
submitted with the Cairns Group and our particular interests in the issue, and have reached the
conclusion that the primary merit of your document is that it comments on the three pillars in the
sense specified both in the Agreement on Agriculture and in the Doha Ministerial Declaration.
Colombia therefore views your document as an important step towards achieving these objectives;and considers that it should be used as a basis for preparing the draft of modalities that you will have
to submit prior to the meeting at the end of March.
Colombia agrees with your proposed approach and level of ambition with regard to export
competition, involving the elimination of all forms of export subsidies in accordance with the Doha
mandate.  This has been an objective pursued by the Cairns Group since its creation, and therefore we
welcome the fact that this goal has been incorpor ated in your document.  Colombia shares most of
your views on special and differential treatment in favour of developing countries, which is reflected
in each of the three basic pillars of negotiation, as mandated in Doha.  Nevertheless, we consider that
some of your statements on the matter should be revised.  We also welcome the fact that yourdocument refers to non-trade concerns such as food  security and rural development, in accordance
with the Doha Agenda for Development.
However, Colombia believes that your document stops short of many of the aspirations of the
Cairns Group and the long-standing expectations of our farmers in this negotiating process.  We aredisappointed with the lengthy time-frame for the proposed reform of export subsidy commitments, the
partial reduction in domestic support and tariff levels and the absence of stricter disciplines in all
areas of domestic support.  Your document does not indicate that you do not consider it viable in this
negotiation to achieve the long-term objective set at the conclusion of the Uruguay Round in 1994.
The proposed reform is only partial and would be applied in the medium term with a view to
completion in about 2015.  Even though 30 years will have passed since the launch of the Uruguay
Round, we will not have achieved the agricultural reform desired by a large majority of WTOMembers, most particularly the developing countries.
Market Access
As requested, we will now turn to a number of specific issues and examine each of them in
turn.
Tariff escalation
Regarding paragraph 7, which contains your pro posal on how to address the problem of tariff
escalation, while we agree that a product's level of processing should be taken into account when
applying the formula, we are concerned about the fact that this is left open to negotiation on a case-
by-case basis, as there is no list of products based on the production chain.  Therefore, your proposal
does not solve the problem of tariff escalation.  Colombia has been applying this concept for some
time in its negotiations on regional agreements and could provide this forum with the lists it hasprepared in that regard.TN/AG/R/7
Page 28
Non-ad valorem tariffs
In paragraph 8 on non- ad valorem tariffs, your proposal is limited to setting out how to
allocate tariff items to each of the three tariff reduction categories, but offers no solution to the
problems of minimum prices and variable tariffs inherent in this form of tariff.  We entrust you withthis task.  The tariff equivalents in ad valorem terms should be consolidated.
Tropical products and the substitution of illicit products
We welcome the fact that reference is made in paragraph 9 to the fullest liberalization of trade
in tropical products, whether in primary or processed form, and of products for the substitution of
illicit crops, thus giving effect to the preambular statement in the Agreement on Agriculture; suchliberalization would benefit many developing countries .  We will contribute later with a draft schedule
for each case.
Strategic products for developing countries
Regarding the products deemed strategic for developing countries in respect of their food
security, rural development and/or livelihood security concerns, as mentioned in paragraph 10, we
consider that the products currently designated with the symbol "SSG" could be grouped with the
products designated with the symbol "SP" for the purposes of the tariff reduction mentioned in
paragraph 12.  We propose the deletion of the sentence in brackets in this paragraph.
Preferential schemes
We have many questions and doubts regarding your proposal on preferential schemes.  Our
understanding is that the longest period would be accorded exclusively for products that account for atleast 25 per cent of the exports of a country enjoying preferential access.  On this assumption, your
proposal would accommodate only certain concerns and would penalize countries such as Colombia
that have developed an export diversification policy.
Introducing the 25 per cent concept into the multi lateral system would lead to discrimination
between countries benefiting from preferential schemes.  This discrimination would become even
more acute if the preferences given to countries whose products accounted for less than 25 per centwere eliminated for products that received preferential treatment in other countries and if, in order to
fulfil this requirement, they were also granted a longer reduction period.
Your proposal raises further questions such as the following:
How could we guarantee that the preferences are maintained?  Would there be any
commitment from countries that accord them and would waivers be accorded simultaneously by other
countries where necessary? What is the scope of the phrase: "maintain … the other terms and
conditions"?
Tariff quotas
With regard to tariff quotas (paragraphs 15 to 21), we agree with your approach to increase
the tariff quota volume, as long as the tariff levels  are maintained within the quota.  Our goal is to
eliminate tariff quotas as soon as possible.  This also applies to tropical products and those required toreplace illicit narcotic crops.  Therefore, we would like to request the revision of paragraph 20, as it
does not address the proposal (JOB(02)/113) submitted by Colombia jointly with Bolivia, Ecuador
and Peru.  We propose that tariff quotas  should not be applied to such products.TN/AG/R/7
Page 29
Tariff quota administration
Concerning paragraph 22 and Attachment 1, although you propose that the disciplines on
tariff quota administration should be given further consideration, our delegation would like to reiterate
some of the points raised previously and expand on our views pertaining to certain aspects of yourproposal.  We cannot accept that, while all methods of tariff quota administration are supposedly
endorsed even though the quota fill rate during the period of application may have been very low, the
use of certain conditions that have proved to be non-restrictive in terms of market access, with one of
the highest fill rates, is penalized.  This proposal discriminates against various developing countries.
For this reason, we object to the prohibition of conditions such as domestic purchasing requirements
(paragraph 2(b)), seasonal restrictions (paragraph 2(c)) and the MFN stipulation, as it is harmful to
regional agreements (paragraph 2(f)).  We also object to paragraph 3(b)(i), as access opportunitiesshould be guaranteed during the year under consideration and should not involve the opening of tariff
quotas from the beginning of the year.  An eight-month tariff quota validity period is excessive for
seasonal quotas.  Therefore, we take exception to paragraph 3(b)(iii), because when there is more than
one annual harvest, imports hamper the normal marketing of the crops.  We maintain that, as a general
rule, the provisions of the Import Licensing Agreement should continue to apply.
Special safeguard provisions
Regarding the special safeguard provisions mentioned in paragraph 23, we are of the view
that the sentences contained in both sets of brackets should be deleted so that the mechanismimmediately ceases to apply for developed countries.  Concerning special and differential treatment,
we endorse the proposal made in paragraph 24 and consider that the products currently designated in
the Schedule with the symbol "SSG" could also be covered by the new designation "SP" for the
purposes of the reduction programme.  We stress that Article 5 should continue to apply, as its stands,
for products for which developing countries are currently entitled to use such provisions.  We wouldlike to propose the deletion of paragraph 25, as it undermines paragraph 24 and creates uncertainty
among countries entitled to apply the special agricultural safeguard in force.  In any case, this matter
should be defined before any schedules are prepared.
Non-trade concerns
As far as paragraph 27 is concerned, we reiterate the view put forward by our delegation,
particularly at last week's meetings, emphasi zing that under no circumstances must non-trade
concerns be used to accord greater protection, as this would be contrary to the Doha mandate.
Export Competition
First of all, we welcome the level of ambition set in terms of export competition, through the
proposed phasing out of all forms of export subsidies, in accordance with the Doha mandate.
Nevertheless, we are concerned as much about the flexibility that is accorded during the phasing-out
period as about the number of years that the reduction will take.
Although you propose that the disciplines on export credits should be given further
consideration, we also wish to express concern with regard to certain aspects of Attachment 4.
The special and differential treatment as specified in subparagraph 4(a)(iii) and in paragraph 9
could tip the balance of competition with domestic production by according special financingconditions for imports;  therefore, we would prefer those aspects to be totally eliminated.  This type of
special and differential treatment could ultimately do more harm than good to developing countries.
Concerning the treatment for net food-importing countries and least-developed countries, we are
willing to discuss the matter, taking into account the Marrakesh Ministerial Decision.  Nevertheless,
we consider that a developing country enjoying preferential treatment in terms of the credit it receivesTN/AG/R/7
Page 30
for the payment of its imports should not be allowed to re-export the same product or export any
processed product.  If that were to occur, it sh ould be understood that any future special treatment in
that regard would automatically be cancelled.  We would like clarification of whether the proposal
made in paragraph 6 on the subject of non-conforming financing support allows for the broadening of
the base of export subsidy commitments made in the Uruguay Round.  Likewise, paragraph 12 isconfusing and warrants editorial clarification.  We reserve the right to raise these issues again at a
later stage.
We must ensure that the terms and conditions suggested for export credits are adjusted as far
as possible to the normal financing conditions of international markets.  For that reason, we are
concerned about the requirement of a cash payment, when the normal practice in short-term financing
is full financing of the import value.  As for the repayment of capital by importers of breeding cattle,we do not think it is necessary to require six-monthly instalments when the cattle farmer has yet to
generate some income from his business.
Lastly, we welcome the fact that your proposal on export restrictions and taxes takes into
account the concerns expressed by Colombia and other developing countries;  therefore, we supportyour proposal on special and differential treatment.  We have doubts about the advisability of
distinguishing between previous and new measures in terms of general provisions, however, because
we do not wish to find ourselves compelled to notify the types of measures we apply, as these may
vary over time according to our needs.
Domestic Support
As we mentioned in our general statement, we are concerned as much about the approach as
about the ambition set forth in the document in terms of domestic support.
We believe that your proposal would allow rich countries to continue to support their
agriculture with all types of measures.  Rapid calculations show that domestic support in all three
Boxes in the European Union, the United States and Japan would, at best – and assuming that the
Amber and Blue Box and the de minimis  reductions do not eventually become support of the Green
Box type – drop from US$243 billion to US$181 billion (a total reduction of only 25 per cent).  This
is extremely difficult for us to accept.  It may be  true that the Green Box payments are less harmful,
but it is also true that they continue to be distorting, especially the direct payments and the enormousamounts involved.  We have said before that the best special and differential treatment for developing
countries is to achieve in these negotiations the elimination of subsidies that distort trade and
production.
Regarding this pillar, we request a radical change in the structure of the Agreement on
Agriculture.  We cannot continue to accept the fa ct that developing countries are still obliged to
compete in highly disadvantageous conditions.  We cannot continue to accept these imbalances
against developing countries and must therefore abolish the Blue Box, reduce the Amber Box to zero,
limit and reduce programmes 5, 6, 7 and 11 of Annex 2 and place a ceiling on the maximum amount
allowed in other Green-Box programmes.  The flexibility that allows the transfer of support from oneBox to another must be eliminated.  Another difficulty is that you propose that the revision of
Annex 2 should be given further consideration;  this should be done before 31 March 2003.
Our delegation has referred on various occasions to the link that should exist between the
three pillars.  For this reason, we share the concern expressed by numerous developing countries thatthere be a correlation between the disciplines to be adopted on domestic support by the developed
countries.  The market access commitments we are trying to secure in agricultural trade will be viable
only if we inject into your proposal a greater level of ambition in terms of domestic support.TN/AG/R/7
Page 31
Conclusion
In conclusion, Mr Chairman, Colombia is of the view that your document should serve as the
basis for the draft of modalities that you will submit to us next month.  We would like to reiterate that
the Doha Round of negotiations has been called the Development Round.  The approach taken toachieve such a goal cannot merely be directed toward extensive special and differential treatment in
favour of developing countries, as this, in many cases, cannot be applied for lack of resources.  Once
again, in Colombia's opinion, the best special and differential treatment for developing countries is the
elimination of trade – and production – distorting subsidies in developed countries and the opening up
of these markets for all products.  This must continue to be the primary objective of this negotiating
process.  At the same time, we must bear in mind that the level of ambition we achieve in the
modalities adopted for agriculture will serve as a point of reference for all the other negotiations thatare under way.  Depending on the outcome, we may have a round, a mini-round, or worse – if
countries lose interest and devote their efforts to  regional and bilateral agreements, thereby weakening
the multilateral trade system.
Colombia stands ready to continue to work with you in a constructive manner and is hopeful
that your revised document will meet the expectations and interests of developing countries and that
we will be able to agree on the modalities, as scheduled, by the end of March.TN/AG/R/7
Page 32
Statement by Cuba
Like the previous speakers, I would like to thank you, and the Secretariat, for submitting your
first draft of modalities.  While we recognize the difficulty in finding a middle ground on several ofthe issues currently under negotiation owing to the divergences which still exist between the
Members, we feel that many of the legitimate concerns of our country and of other developing
countries, which have been submitted in writing during the previous three stages of the negotiations,
have not been adequately reflected in your document.
In principle, we consider that the necessary recognition of the interrelationship between the
three negotiating pillars, as an issue which has been raised repeatedly by many developing countries,should form part of your negotiating platform.
As regards tariff reductions, we consider that to apply the same principle used in the Uruguay
Round, whereby the developing countries had to reduce their tariffs by two thirds of both the average
reduction and the minimum reduction per tariff line of the developed countries, would be to disregardthe development needs of developing countries, such as food security and rural development, which
are reflected in the Doha Declaration.  This principle would perpetuate the inequities of the present
agreement.
Regarding the new special safeguard mechanism for the developing countries, we appreciate
that in its present form its application is confined to strategic products that are subject to the general
tariff reductions corresponding to all other products – in other words, not only is its application
limited to certain products which have yet to be determined,  it is also contingent upon particular tariff
reductions.  We feel that this link inherent in your proposal does not respond to the needs expressed
by the developing countries in various negotiating proposals.
With regard to State trading import enterprise s, those that fulfil food security and rural
development objectives in developing countries are not properly reflected in the best-endeavour
provisions which form part of your proposal.
As regards export restrictions, we believe that a fair assessment of the results of the
discussions held in this respect should not include only the prohibition of new measures, but it shouldalso reflect the prohibition of export restrictions in general.  We therefore request that you eliminate
the explicit reference to the institution of new prohib itions, as it is not only the new ones but also the
old ones that should be prohibited.
Last, but not least, we would like to emphasize the need to find a solution to the problem of
the non-implementation of the agreements reached during the Uruguay Round concerning the
Decision on Net Food-Importin g Developing Countries.TN/AG/R/7
Page 33
Statement by Cyprus
When we committed ourselves to engage in these negotiations, it was with the sincere desire
to fully participate in the multilateral reform process which would allow our country, as well as all the
others, to improve international trade and, conseque ntly, with the legitimate hope to benefit from the
outcome even though, given the size of our economy, not as much as others.
In particular, we were aware, right from the beginning, of the fact that our country was not
very likely to benefit very much from trade liberalization in agricultural products.  Our agricultural
sector is very vulnerable because of the particular conditions of our country's poor soils, poor and
erratic rainfall, mountainous terrain – and our farmers are struggling to survive, especially in anumber of regions which are considered very disadvantaged and resource-poor.  Agriculture has
already been abandoned to a considerable extent in these regions, causing great damage to the
environment and leading to depopulation and breakdown of the social and economic fabric of the
rural regions.
We are also aware that an economy based mainly on services and tourism, like the one of
Cyprus, cannot afford to stand idle and ignore legitimate concerns such as those related to the
environment and the preservation of traditional landscape in rural areas.
Our Delegation stressed repeatedly in the past how important it is for Cyprus to promote rural
development, to maintain the environment and to preserve the social and economic fabric in the rural
areas.  However, looking at your proposal Mr Chairman, I regret to say we feel that our NTCs have
been ignored, while other aggressive and over-ambitious positions were incorporated in it.  We
believe that those countries which are presently in favour of unbridled free trade will be brought to
realise one day that, from a global point of view, their ambitious positions of today were short-sightedand dictated by their national interest alone, irrespective of the cost to, or repercussions on, others.
It is this Delegation's belief, Mr Chairman, th at, if approved, your fo rmula approach not only
will not allow our agriculture to survive but, on the contrary, will lead to its total extinction with real
and tragic repercussions on the whole of our econom y and our social cohesion.  Our formal position is
that we simply cannot go along with your proposal  as it stands.  We favour a Uruguay Round formula
approach, as the only possible framework which will allow WTO Members, as a whole andindividually, the necessary flexibility to face the special sensitivities and to meet our national policy
objectives and to, eventually, earn the approval of our societies for whom, at the end of the day, we all
work.
It was surely not by chance or by accident that this formula was adopted at the end of the
Uruguay Round and, while being ready for the necessary reforms and restructuring, we are not ready
to engage in even more uncertainty than our world presents nowadays by discarding a valuable
instrument for the only sake of liberalization at all costs.
For us to join a consensus, we need to know that our commitments will be realistic and
manageable, and that we will have the adequate time to implement them.TN/AG/R/7
Page 34
Statement by the Czech Republic
At the outset, I would like to associate fully my delegation with the statement made by the
distinguished representative of Slovenia who spoke on behalf of a group of countries, including  theCzech Republic.
I too would like to add my voice to many of those who have already expressed their gratitude
to you for the untiring efforts you, together with the colleagues from the Secretariat,  have put to
evolve the first draft of modalities for further commitments in agriculture.  Without your dedication
and widely acknowledged expertise on the issues at hand, the first draft would have never seen the
light of day.  This must have been a mammoth task and your leadership deserves our admiration.
I would also like to appreciate the manner in which the draft has been introduced.  As pointed
out by the Chairman, it  represents no more than a first attempt to identify possible paths to solutions.
Neither qualitative nor quantitative parameters included in the text do claim to be agreed in whole or
in any part.
It is not yet an arbitrary text.  We still do have some time for compromises and mutually
agreed solutions following constructive discussions.  And this is what this series of meetings is
supposed to be about.  We are here to engage in more focussed and result-oriented exchanges and on
this basis to provide the Chair with more definite guidance for the preparation of the second draft ofmodalities.
From this perspective, I do not think I have to comment, as many previous colleagues have,
on  the nature of the draft, I mean whether it can be accepted as a basis or a starting-point for further
discussions or not.  It is obvious that we will have a second draft.  And we have every confidence thatthis second draft will be much more that just a mere revision of its predecessor.
This statement is unlikely to come as any surprise for anyone in the room.  My delegation
belongs to those for whom the draft falls far short of what they would be comfortable with or could
accept.  For us, the text is a disappointment, in that it is too ambitious and unbalanced in many
respects.
In many areas, including export subsidies, tariff quotas, special safeguards, treatment of Blue
Box subsidies, the draft is not in line with the letter and spirit of the Agreement on Agriculture and the
parameters of the mandate given to us by Ministers in Doha.  Here, the draft goes beyond the
reasonable limits of what is achievable and doable, given some important societal objectives of
agriculture and political constraints.  The overall le vel of ambition is thus excessively high, albeit very
uneven and questionable with regard to various elements of the reform process.
Overall, the draft contains a number of important biases.  The first relates to the fact that it
seems to have been predominantly influenced by one particular school of thought, that is the one that
has been advocating a radical approach based on deep cuts in supports and protection.  If adopted inthe existing or only slightly modified form, the moda lities would have resulted in an uneven spread of
the burden both amongst developed countries and as well as amongst major exporters and importers,
developed and developing alike.  This bias will have to be changed as there is no room for the
primacy of the proposals and positions of some Members over those of the others.
There is an intense imbalance between trade and non-trade concerns, the latter being side-
stepped for further consideration with the explanation which we do not necessarily share.  For us, any
kind of a two-tier approach is not a viable way of proceeding.  We believe that trade and non-trade
concerns are two sides of the same coin.  Therefore, they  have to be tackled in an integrated way andTN/AG/R/7
Page 35
be negotiated in parallel.  Otherwise, it would be extremely difficult if not impossible to arrive at a
generally acceptable package of results.
Finally, the draft seems to be one-sided by placing exclusive focus on tariffs while totally
setting aside non-tariff barriers.  But the experience has shown that in too many countries, includingsome of the major proponents of a radical approach, it is extremely difficult to do the business and
enter the market not because of high duties but rather due to the complexity of respective import
regimes and very often sophisticated sanitary and phytosanitary procedures.
We can easily understand  the rules of the game which are applicable in a consensus building
process.  We have never expected all the Czech Republic's positions and concerns, presented both
individually or collectively, to be accommodated in the drafting exercise.  However, the fact that mostof our major concerns have failed to be addressed in any meaningful way in the text is a matter of
deep concern to my authorities.  It also applies to  the issue of additional forms of flexibility for certain
groupings.  We look forward to considering this issue at any appropriate time between now and the
March deadline.  But I should like to make my delegation's view as clear as I can to say that we may
not be able to feel a sense of ownership in any moda lities as long as the issue of additional flexibilities
remain unresolved.
To conclude, let me mention the following.  The first draft, as we understand it, is an
unavoidable consequence of a situation where no serious collective efforts have been made by us, I
mean WTO Members, to reconcile diametrically opposed views on a large number of issues related tothe continuation of the reform process in agriculture.
Whether we like it or not, we all have to accept that thus far the exercise has been
predominantly about own interests and aspirations.  This way of proceeding had its own logic in a
proposal driven phase of negotiations.  However, it has to be changed when we are now poised tomove with determination to a new phase during which we are supposed to set the scene for genuine
negotiations aimed at balanced, substantial and generally acceptable results.
Now the time has come to start tabling compromise proposals and focussing on potential
meeting points.  The precondition for that is to look less at own positions and understand better the
interests and concerns of others.  This is a process to which we all have to contribute.  It is not just a
job for the individual at the helm of this important body.
It is obvious that we do not like very much your text.  But we like you.  Our confidence in
your wisdom and ability to use best judgement of the situation and delegations' positions remains
intact and we look forward to working with you as well as all Members with a view to paving the way
for major breakthroughs and finding an approach which is acceptable to all.TN/AG/R/7
Page 36
Statement by Dominican Republic and Honduras
Firstly, we would like to thank you and the Secretariat, for your efforts in producing this first
draft of negotiating modalities.  We believe that the text provides a basis for continuing thenegotiations and that it should be developed in order to enhance the prospects of the developing
countries.
There are two key aspects of the text which we feel should be improved:  the first concerns
special and differential treatment for the developing countries in the area of market access, and the
second relates to the reforms needed to address trade-distorting domestic support.
As regards special and differential treatment, we are pleased to see that your text takes into
account the proposal of a list of products which are strategic in terms of food security, rural
development and/or livelihood security concerns.  This is extremely important for a large number of
developing countries, as most of their populati ons are dependent on agriculture.  We therefore hope
that, in the course of our discussions, we will succeed in reaching a satisfactory agreement on areasonable number of products to be included in such a list, which we trust will be at the four-digit
level of the HS, as proposed by other delegations.
However, there is one aspect which concerns us, and that is that your text proposes a tariff
reduction for the strategic products in question.  In most developing countries, the tariffs on theseproducts are bound at very low levels, and the dependency of a great many farmers on such
production makes it very difficult for us to endorse the proposed tariff reductions.  Your text further
proposes the elimination of subsidies over a 10-year period and a very timid reform of domestic
support, which is something as damaging to us as the export subsidies themselves.  We wish to
emphasize that we are not against the commitment to tariff reductions but that it will remain verydifficult for us to undertake until a genuine and substantial reform takes place within the pillars of
domestic support and export competition.  We therefore consider that unless no real commitment is
established to reduce domestic support, strategic products should not be subject to additional tariff
reductions.
Nevertheless, we would like to point out that the minimum reduction of 5 per cent for
strategic products, as proposed in paragraph 12 of your document, is virtually inapplicable, as in orderto achieve the average 10 per cent reduction rate, there has to be a minimum cut of over 5 per cent per
tariff line.
Another important point in the area of special and differential treatment is the special
safeguard mechanism.  Firstly, your text proposes that the right to apply this mechanism should belinked to the realization of the tariff reductions envisaged in paragraph 10, where, incidentally, the
reductions are deeper than those provided for in paragraph 12.  In our view, such a proposal seriously
jeopardizes the effectiveness of the mechanism, given that - as we have previously pointed out - the
tariffs on these products are already bound at very low levels and we cannot continue applying further
tariff reductions.  We need a special safeguard mechanism which protects us from subsidized imports.Therefore, we propose that the right to use the mechanism should not be linked to the amount of the
tariff reduction, but to the level of the bound tariff.TN/AG/R/7
Page 37
Secondly, the proposed mechanism is based on Article 5 of the Agreement.  As we have
stated on previous occasions, the existing mechanism is difficult for developing countries to use, and
although it bears several similarities to the special safeguard mechanism that we have proposed, it is
by no means as simple, effective and automatic.  Likewise, your text proposes that the mechanism be
defined at some point after the modalities have been adopted.  This would make it impossible for ourcountries to formulate our negotiating offers, as we would be unable to assess the options for
determining which treatment should apply to strategic products.  In this respect, we feel that we
should engage in an exhaustive discussion on this mechanism at the earliest possible opportunity, so
that it can be adopted together with the modalities.
As regards the necessary reforms to the domestic support pillar, we feel that the text should be
more ambitious.  It proposes that the trade-distorting support granted under the blue and amber boxesbe reduced, and not eliminated as we had suggested.  We believe that this is the pillar which should
undergo the most important reforms.  We had therefore proposed the elimination of the blue box, and
the reduction to zero of the amber box, over a period of six years beginning in 2005.
With regard to the green box, our proposal was that it should be substantially reformed, which
meant deleting paragraphs 5,6,7 and 11 of Annex 2 of the Agreement on Agriculture.  Finally, we
proposed setting a ceiling for the amount of support, which would be 10 per cent of the value of total
agricultural production.
We do not believe that your text strikes a proper balance between the pillars of market access
and domestic support, since it focuses on market access and is very timid regarding domestic support,
which is where the most serious distortions in agricu ltural trade occur.  The text is thus detrimental to
the poorest countries, as tariffs are their only defence mechanism.  We request that this situation be
remedied in the course of the forthcoming discussions, so that we can adopt the negotiating modalities
by the proposed date of 31 March.TN/AG/R/7
Page 38
Statement by Ecuador
My delegation joins those who have thanked you for making available to the Members of this
Organization the first draft of modalities for further commitments in the negotiations on agriculture.
By way of general and initial reactions, the Delegation of Ecuador considers that the
proposals made in document TN/AG/W/1 have warranted positive interest, which we trust, once some
necessary changes have been made, will permit us  to join the consensus of approval for these
modalities.  Reaching this consensus will no doubt enable us to find a better approach not only to the
negotiations on agriculture, a central element of the Development Round, but to the Doha Round as a
whole.
In general terms, any modality that we adopt mu st take into account the fact that there is a
close and interrelated link between the three pill ars forming the basis of the Agreement, and must
specifically take into consideration, as articulated in the Doha Declaration, the provisions on special
and differential treatment, which are essential for developing countries such as Ecuador.
Against that background, Ecuador considers that the proposed modalities do not redress the
systemic imbalance in the Agreement on Agriculture, because while substantial agricultural tariff
reductions are proposed on the one hand, on the other, the conditions such as subsidies that have
caused serious and obvious trade distortions in the agricultural sector are maintained.  For example, aproposal is made to extend subsidies and domestic support by at least 10 years.  The negotiation
process should evolve in the context of a firm commitment to bring about a substantial reduction in
the export subsidies and domestic support applied by the developed countries.  A substantial reduction
in the very short term of subsidies and domestic support will facilitate the negotiations on tariff
reductions.
Furthermore, with regard to export subsidies, we do not support special and differential
treatment that allows for the implementation of highly distorting measures, precisely at the expense of
the developing countries.
Market access
This delegation has indicated on several occasions that Ecuador, in all probability like the
majority of developing countries, is of the view that any market access commitments made will
depend on the extent of the reform in terms of the elimination of subsidies and other distortions in
global agricultural trade.
The document prepared by the Chairperson provides for substantial reductions and therefore
requires Members to compete without greater protection.  However, the competitive conditions
required as a result of tariff reduction will be seriously jeopardized by persistent market distortions
caused by continuing subsidies and excessive levels of domestic support.
Ecuador will not make a commitment to reduce tariffs as long as the distortions created by
export subsidies persist and as long as the disproportionately high levels of domestic support are
maintained in the Blue, Amber and Green Boxes without any disciplines to significantly limit their
scope.
In this respect, the time-frame for the reduction and prompt elimination of subsidies must be
significantly shorter than the proposed tariff reduction implementation period.
In the case of the tariffs maintained by Ecuador, the tariff reduction formulas identified by the
Chairperson would involve a substantial reduction not only of the bound levels but also of the levelsTN/AG/R/7
Page 39
that are currently applied.  Ecuador is aware that all countries have to contribute to the significant
improvement of market access;  however, developing countries such as Ecuador cannot dismantle
their tariff protection as long as trade distortions continue and if the developed countries try to
maintain prohibitive tariffs that represent real obstacles to imports.
The Chairperson’s document takes up the proposal put forward by Ecuador and other
countries to substantially improve access conditions for tropical products.  In its proposal, Ecuador
also referred to the early establishment of a list of products that identifies tropical products, to prevent
a repetition of what happened during the Uruguay Round, when certain countries unilaterally drew up
an extremely reduced list of tropical products.  Ecuador considers it unacceptable that a tropical fruit
such as the banana should be excluded from classification as a tropical product.
We believe that tariff quota volumes should be expanded while favourable special and
differential treatment conditions are maintained for the developing countries.  Tariff administration
methods should be designed to guarantee access on a most-favoured nation basis.  We also believe
that the Chairperson's document –  although based on the technical work of the Committee – should
be further elaborated and improved, primarily to secure conditions for access and special anddifferential treatment.
Ecuador notes with interest the proposal in the Chairperson's text with regard to the special
safeguard mechanism, but considers that this mechanism should be used only for the benefit of those
developing countries that are confronted with sudden surges of imports affecting domestic production.
Ecuador endorses the proposal made by Argentina and other countries to implement a system
of compensatory measures that would obviate the need  to prove injury in respect of products entering
the market by means of distorting subsidies.  We consider that this proposal should be included in the
second draft of modalities, as it constitutes one of the most suitable ways of combating what isunquestionably the result of unfair trade, especially as the peace clause will come to an end next year.
Export competition
The Doha mandate on export competition shows a commitment by the Members to reduce,
with a view to phasing out, all forms of export subsidies.
As Ecuador has already said, the progress that can be achieved in the field of export
competition will depend on advances made in market access.
We will not repeat the comments offered by other delegations, such as Argentina, with whom
we agree in many respects.  Instead, we will focus on other issues of interest to us.
The Chairperson's proposal entails a substantial dismantling of tariffs;  on the other hand, it
maintains the distortions caused by vast export subsidies and excessive levels of domestic support,
particularly on the part of developed countries.  This will lead to a deep systemic imbalance that
would make competition practically impossible or at least very difficult for many developingcountries.
In that respect, it is worth mentioning that on its accession to the WTO in 1995, Ecuador, like
the other countries that joined the Organization after the entry into force of the Uruguay Round
Agreements, moved forward with its agricultural reform, binding over 90 per cent of agricultural
products at a maximum level of 30 per cent;  only about 10 per cent have higher tariff ceilings, of
which only three products are bound at levels above 50 per cent.  This small group of three products
corresponds to all the products bound by most developed countries at levels far exceeding 100 per
cent.  Because of this, Ecuador was "persuaded" to stop granting any form of export subsidy.TN/AG/R/7
Page 40
In terms of export competition, these are the most difficult issues that Ecuador and most of
the countries –  particularly all the developing countries that joined the WTO after 1995 – will have to
address in undertaking further agricultural reform.
Therefore, Ecuador clearly cannot undertake to carry out deep tariff reductions as long as the
distortions created by huge export subsidies and the disproportionately high levels of domestic
support are maintained in the Blue, Amber and Green Boxes without any disciplines to limit the use
of such support.
Ecuador considers that the time-frame for reducing subsidies with a view to their elimination
should be significantly shorter than the implementation period for the proposed tariff reductions.
Moreover, this much shorter time-frame for reducing subsidies  should apply equally to all the
countries involved in this process;   indeed, fair and equal conditions of competition should also be
guaranteed in South-South trade.   This is because many developing countries are competing for
almost the same market and, in many cases, with virtually the same products (for instance, tropical
products and products designed to substitute illicit crops, or those that will be known as strategicproducts).  Therefore, this is another systemic imbalance that must be avoided.
Ecuador does not wish to undermine the position of the developing countries in any way, as
the objectives of the common cause are clear and we are fully committed to them.  However, neither
can we be the kind of developing country that, after the entry into force of the WTO Agreements, was"persuaded" significantly to dismantle its tariff protection mechanisms and to eliminate all forms of
export subsidy (of which we have a significant number), nor can we be obliged, as a result of badly
conceived special and differential treatment, to pay one of the highest prices in this reform process,
simply because a significant group of developed countries has introduced elements into this process
virtually as a fait accompli , with huge subsidies that could now be extended for as long as a decade.
Furthermore, we wonder how we can be certain that this whole exercise will not be repeated in ten or
12 years' time, which certainly does not contribute to the predictability of the multilateral trading
system.
We fully support special and differential treatment, but not when it is granted partly at the
expense of some parties which should, in fact, benefit from such treatment.
The kind of special and differential treatment that would truly benefit the developing
countries in this sphere is a substantial reduction and the promptest possible elimination of all the
distorting subsidies and domestic support maintained by many of the developed countries.
In addition to the opinions already put forward, we fully concur with the view that the
question of modalities for further agricultural commitments should not be confused with the peace
clause under Article 13 of the Agreement on Agriculture, which will cease to be valid or implemented
as of 31 December 2003.  According to Article 1(f) of the Agreement, the implementation period for
the peace clause is a nine-year period commencing in 1995;  therefore, it must end on
31 December 2003.
In conclusion, the sole purpose of this statement is to contribute to an exercise that is essential
for levelling out the playing field and for re-establishing competitive conditions which will prevent
indiscriminate and unbalanced openness, with no equitable cost-regulating mechanisms, from creating
greater distortions and bringing about the collapse of the main sector – which is the mainstay of manydeveloping countries, and instead will ensure the kind of openness that enables us all to reap the
benefits of economic liberalization.TN/AG/R/7
Page 41
Domestic support
During the course of the week, our delegation has drawn attention to the various qualities of
your draft of modalities and has recognized the efforts made to strike the right balance for these
negotiations to proceed.  Nevertheless we should point out that your proposals on domestic supportare the most tentative;  they are lacking ambition and require a lot of work, largely because the
reductions in levels of effective domestic support would be negligible and, in some cases, would have
no real impact.
In this regard, Ecuador fully supports the proposals put forward by the Cairns Group, as it too
considers that while domestic support should continue to be disaggregated, it should be substantially
reduced until it reaches de minimis levels.  The time-frame for such a reduction must be shorter than
the period stipulated for tariff reduction, to ensure that the opening-up of markets is effective and non-
distorting.
Although domestic support, particularly under the Amber and Blue Boxes, may, in theory, be
less distorting than export subsidies, the fact that the budgets for such support are much higher meansthat the impact on markets is equally or even more serious.
The six reports of the Panels and the Appellate Body in the Canada –  Dairy  case reveal that
there is such a fine line between export subsidies and domestic support that it is difficult to
differentiate between the injury caused by one type of  subsidy and another.  In any event, this dispute
has highlighted the need for a comprehensive reform process that will reduce to the maximum extent
possible the distortions resulting from Blue or Amber Box subsidies.
Concerning the Green Box, we believe that the disciplines to be established should be strict
enough to prevent the budgets intended for the Blue or the Amber Box from filtering into the GreenBox.  In this respect, the second draft of modalities should try to use more appropriate wording based
on the proposals made, primarily, by the Cairns Group.TN/AG/R/7
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Statement by Iceland
General statement
I would like to begin by joining others in thanking you for the draft before us.  We appreciate
your difficult and unenviable position in trying to bring the very divergent views that have been
expressed in this process together in a single, consolidated document containing draft modalities.
  Unfortunately, in light of the various positions that have been elaborated in this forum, we
see these first draft modalities as being seriously out of balance.  In our view, they simply do not stand
up to the criteria of compromise in either quantitative or qualitative terms.
With respect to the general approach, we see a fundamental need to address all elements of
our negotiations as a package, to be agreed to in its entirety.  To disregard non-trade concerns at this
stage and deal with them in some obscure shape or form later on in the process simply is not an
acceptable approach.  We have consistently raised a number of issues of critical importance to us inrelation to factors such as geographical location, population sparsity, harsh production conditions and
various other non-trade concerns with which you are familiar.  The point we have been trying to make
is that different conditions may require different approaches, whether for developed or developing
countries, and that the system needs to respect the coexistence of various types of agriculture if
fundamental provisions of the Agreement on Agri culture are to be respected and upheld.  The
principles of equity and fairness, for example, do not necessarily run in parallel with harmonization
and the definition of progressive liberalization surely does not encompass that we in one swift move
deprive each other of the means to engage in agriculture and safeguard its very existence.
With respect to what some have called the level of ambition found in this draft, we see it as
going well beyond the process we have been engaged hitherto, as well as the Doha mandate.  We have
no quarrel with the reform process as such, but as radical a departure as this from the structure we set
off with as of the Uruguay Round does not provide our agricultural sector with either the time or the
flexibility to adapt to the realities imposed by s ubstantial reform and the advancement of the long-
term goals of the Agreement on Agriculture, with which we as Members of course agree.  We went
dutifully through the first round, certainly not without aches and pains.  Our ambition now is not to be
knocked out in the second, but rather go the full distance and leave the ring standing.  That is whatshould be important here, that we all make it to the finish line intact.  We simply fail to see how the
approach and the size and pace of reduction commitments elaborated in this first draft can
accommodate that basic requirement.
It is all too clear from our discussions to date that the existence of Icelandic agriculture is of
no concern to some delegations in this room.  But it does matter to us, and we will continue to
participate actively and constructively in these negotiations with the future viability of our agriculture
in mind.TN/AG/R/7
Page 43
Market Access
Iceland belongs to the large and growing number of delegations in this room who are
advocating the UR approach to these negotiations.  We have emphasized that the principles of
continuity and adaptation are crucial concerns of our in this process.  Our relatively vulnerableagricultural sector must be afforded a realistic opportunity to adapt to the realities imposed by
substantial reform and advancement of the long-term goals of the Agreement of Agriculture.  That is
the process we signed on to;  that is the process we should stick with.  We have also repeatedly
stressed the importance of non-trade concerns and drawn attention to the different needs of individual
Members in this respect.  The UR approach provides the necessary flexibility for us to meet our
diverse policy objectives within a framework of substantial reform and from this we do not wish to
depart.  Our proposal in terms of market access is an average tariff reduction of 36 per cent with aminimum reduction of 10 per cent.
Iceland cannot accept the application of a tariff harmonization formula for the simple reason
that it in no way takes into consideration the challenges we face in maintaining a vibrant agricultural
sector in our northern neck of the woods.  Our production conditions are in many ways as difficult asthey come and our relative economic uncompetitiveness is a pure dictate of nature.
Erosion of the flexibility we require to afford the necessary degree of tariff protection for the
select few products that form the backbone of our agricultural sector could only have serious
consequences, not only for our agriculture, but our society as a whole and a range of values thatemanate directly or indirectly from our agricultural activities.  We already import more than half our
domestic food consumption in calorific terms.  Contra ry to what some may think, the Icelandic market
is actually very open, not least to products of great significance to developing countries.
We can support many elements of the draft modalities in terms of S&D and we hope these
will provide us with a sound basis for our further work.  We are like many others, however, concerned
about the erosion of preferences that may impact negatively on many vulnerable developing countries.
We have not envisaged or proposed the expansion of TRQs and fail to see the rationale
behind this aspect of your proposal.  We similarly fail to see the rationale behind the elimination of
the SSG for developed countries.  This should remain in place for the duration of the reform process,
as stipulated by the Agreement on Agriculture.  We do support clarification of the disciplinesapplicable to TRQ administration to increase transparency and the attainment of market access
opportunities.  What you have proposed here is a fair start, but further work is nevertheless required.
Finally, we would like to flag our disappointment with the general approach of your proposal
to leave some important aspects of our work for possible later resolution, after we may have agreed onthe reduction targets.  We see this as a package, to be agreed to in its entirety across all three pillars
and suggest an approach that conforms to this view.TN/AG/R/7
Page 44
Domestic Support
On domestic support, we have great difficulty with both the approach and the scale of the
reduction commitments proposed in the draft modalities.  We continue to favour an approach
consistent with the process we have been engaged in to the present day, i.e. a UR-formula.  We alsoneed to see a realistic degree of flexibility in further disciplines to take into account the very different
conditions that exist in different Member countries.  Due consideration must be given in this respect
to non-trade concerns.
With respect to the AMS, we have been reluct ant to discuss figures while the degree to which
non-trade concerns is to be taken into account remains unclear.  If anything along the scale you have
proposed is to be considered, we see great merit in the proposal put forward by Norway ondistinguishing between support to products for the domestic market and support to products destined
for exportation.
We cannot go along with your proposal of capping on a product-specific basis and favour
maintenance of the current calculation methodology.
We fail to see the rationale behind the proposed capping of the Blue Box and its inclusion in
the AMS for reasons other delegations have already commented on.
We cannot go along with the tightening of Green Box criteria as an avenue to accommodate
some very important non-trade concerns.  We are particularly disappointed to see the proposed
restrictions with respect to environmental programmes.  There are positive elements on Green Box
widening in attachment 7 and 8 that can be worked with, but further elaboration is necessary if we are
to be able to move forward here.
Finally, we would like to echo the comments made by the Delegation of Norway with respect
to inflation, and the need to take its possible effects on commitment levels into full consideration.TN/AG/R/7
Page 45
Statement by India
I thank you for your first draft of the Modalities Paper on Agriculture. This is a valiant
attempt on your part to take the negotiations to a higher level of engagement.
India stands ready to work with this draft although we have substantial concerns with not only
the level of ambition expressed in the paper but al so with the imbalance in the ambition levels in
respect of different pillars.
The draft represents an attempt, modest as it may be, to address some of the imbalances in the
Agreement on Agriculture, which many developing countries have pointed out since the beginning of
the negotiations.  You have recognised the essentially different character of agriculture in the majority
of developing countries.  We need to develop this concept further and to make it truly effective.  To
achieve that objective, we look forward to enlarging and further developing the concept of Strategic
Products for food and livelihood security and rural development.
Having said that, many developing countries, especially those with an overwhelming majority
of their poor populations dependent on agriculture, are not in a position to apply the drastic tariff cuts
suggested in the draft paper.  The level of ambiti on in this respect should be lowered considerably
before an agreement can be reached.  The manner in which various categories of tariff reduction have
been constructed also imposes a disproportionately high burden of tariff reduction on developingcountries.
This is primarily because the root causes of distortions due to very high domestic support
have been touched only at the fringes.  The retention of the concept of aggregation of all domestic
support as opposed to the product-specific reduction commitments and the unbridled scope forshifting domestic support from the Amber Box to the Green Box makes all domestic support
reduction commitments rather illusory. The point made by several countries regarding balance
between the three pillars and the concept of balance of interests between countries are of relevance in
this context.
We also need to achieve wholesome results in these negotiations and we fail to see how one
can do so unless the attachments are also finalised along with the modalities.  We strongly urge thatthe elements in the various attachments are finalised along with the modalities.
During the course of this week, we would like to show how major developed country
exporters of certain commodities, by making use of the existing flexibilities, have in fact increased
support substantially on particular products during 1995 – 2000.  The quantum of such increase is inthousands of percentage points.  This has meant exporting these products at prices 22 – 57 per cent
lower than even their cost of production without infringing any of the existing WTO disciplines.  In
such a situation, we would press for meaningful a nd effective inter-linkage in the commitments under
three pillars.  As the paper stands now, the tariff reduction is highly ambitious and militates especially
against those developing countries, which have no other financial means to protect their poorproducers from unfair competition.
Market Access
Thank you for your obvious effort in putting together the first draft of the modalities paper.  I
will try confine myself to a few broad issues relating to market access.  My focus would be on the
problems of developing countries like India which have huge rural populations dependent on
agriculture.TN/AG/R/7
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First, we would agree with many of our colleagues here who have stated that the rates of
reduction of tariffs proposed for developing countries are much too high.   We believe that the level of
ambition in the market access pillar is pitched considerably higher than on domestic support andexport competition, thus creating the much talked about "imbalance".  We would, therefore, seriously
urge you to consider, whether the harmonization approach you have adopted in the paper will take thenegotiations forward.  "Flexibility" is the key word  and such flexibility must recognize the sheer
diversity of agricultural operations in different developing countries, including in their respective
scale of operations and in their number of agro-climatic zones.  The aim should, therefore, be to
preserve such crops as are essential to protect the livelihood of farmers, as also to maintain food
security at all times for all.
I should like at this point, to refer to the point made by the distinguished delegate of Malaysia
that strategic products should be multilaterally negotiated.  This, in our opinion, would negate the
very purpose of the scheme, which is to give a certain degree of comfort to countries in respect of
products that are of strategic importance in the context of food security, livelihood security and/or
rural development.  As the distinguished Ambassador of Indonesia and the distinguished delegate of
Barbados have mentioned, a decision on strategic products has to be taken only on the basis of self-
declaration.
Secondly, it is our view that market access cannot be equated with tariffs alone.  Market
access depends on a whole range of factors, inclusive of non-tariff barriers of various kinds,quantitative restrictions including tariff rate quotas and the administration of tariff rate quotas, SPSand TBT measures and, also, the extent of subsidy and domestic support given to agricultural products
in developed countries.  When the Ministers talked about substantial market access, they were
referring to all these factors collectively and not just  to tariffs.   Some of these issues have indeed
been dealt with in your paper, but by barely scratching the surface.  The point is that we cannot move
forward rapidly on one aspect of market access without simultaneous and commensurate movement in
others.
Thirdly, we have to be clear about the needs of developing countries while negotiating market
access.  Articles XXVIII  bis  and XXXVI of GATT clearly enumerate the factors to be borne in mind
while negotiating tariff levels for developing countries.  These include not only the concept of less
than full reciprocity but, also, a recognition of individual development, financial and trade needs of
developing countries and their revenue requirements.
Fourthly, you have developed in your paper the important concept of strategic products and
you have also indicated the criteria on the basis of which such products shall be determined, namely,
food security, rural development and/or livelihood security concerns.  It is essential, that the list of
strategic products is as wide and broad-based as possible.  You would recall that developed countries
and some developing countries during the Uruguay Round got entitlement to use special safeguardsfor hundreds of tariff lines regardless of the fact that they had undertaken minimal
 market-access
commitments.  These special safeguards are not being proposed for elimination during thisimplementation period.  Therefore, tariff lines in comparable numbers must be considered under the
special products category.  It is also important that the developing countries retain the flexibility todetermine the products under the strategic products category.
Fifthly, we would like to point out that SSG for SP products under paragraph 24 appears to be
subject to review of provisions of Article 5 of Agreement on Agriculture envisaged under
paragraph 25.  We have grave apprehension that any such review process may not be completed by astipulated date, given our experience with the Rules of Origin, the Doha deadlines and many other
such exercises undertaken by this organization.  We, therefore,  propose that SSG be available on SP
products irrespective of the review of Article 5.TN/AG/R/7
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Finally, a word about South-South trade to which some of our distinguished colleagues have
referred.  You would recall that South-South trade has, in fact, been addressed in Article XXXVI,
paragraph 4 of Part IV of GATT.  It says, "less developed contracting parties agree to take appropriate
action for implementation of provisions of Part IV for the benefit of trade of other less developed
contracting parties, insofar as such action is consistent with their individual present and future
development, financial and trade needs  taking into account past trade developments as well as the
trade interests of less developed contracting parties as a whole."  South-South trade has in fact grown
at a much more rapid rate than any other global trade.  While negotiating this provision, the
contracting parties must have been guided by the fact that South-South trade, though important,
should not lead to impoverishment of small and marginal farmers in another poor country.  As our
distinguished colleague from Swaziland pointed out the day before yesterday, one developing country
should not be made better off at the expense of another, particularly when we are talking of peopleliving on the brink of  poverty.
Domestic Support
We are happy to acknowledge that some of the concerns expressed by developing countries
with regard to domestic support have been addressed in your report.  We note, in particular,
Attachments 8 and 9 of the report which show an understanding of some of the problems faced by
developing countries.
We need to be sensitive to the many handicaps that several developing countries in Asia,
Africa, and other parts of the world face in relation to this sector.  The most significant difference
between the developed world and the developing world is the overwhelming dependence of the bulk
of the population on agriculture.  While, in developed countries, barely 3 to 4 per cent of the
population depends on agriculture for their means of living, the corresponding figure in developingcountries is in excess of 50 per cent in most  cases.  The UNCTAD Trade & Development Report,
1998 indicated, for example, that the share of agriculture in the labour force of low income countries
was as high as 75.4 per cent in West Africa and 78.5 per cent in East and Southern Africa in the year
1990.  A similar situation prevails in India and in several other parts of Asia.  The significant fact is
that despite the employment of such large numbers in agriculture, their contribution to the gross
domestic product is relatively low, signalling low productivity and unfavourable terms of trade.  The
lack of adequate infrastructure in developing countries to process, store, and transport agriculturalproducts, and the inadequate availability of capital at reasonable rates of interest, further adds to the
farmers'  burden.  Inadequate processing facilities and lack of adequate research and development
facilities only makes matters worse.  Marketing continues to be a major handicap, particularly since
most farmers belong to the small and marginal category, with very little financial resources at their
command to wait for better prices to dispose of their stocks.
It is in this context, therefore, that we appreciate some of the measures you have included in
the first draft.  Attachment 8 brings about certain necessary changes for ensuring food security, and
for protection of small scale farmers.  It makes m odifications relating to income insurance and income
safety net programmes, and incorporates S&D in structural assistance and regional assistanceprogrammes.  Attachment 9 introduces certain exemptions from domestic support reduction
commitments that would serve to introduce measures to redress some of the severe handicaps faced
by small and marginal farmers in developing countries that I had alluded to earlier.
I must say that we are more than a little surprised at some of our developed country
colleagues, who expressed some reservations relating to these measures.  I am surprised because they
have themselves been investing huge sums of money to preserve agriculture, which provides
employment, as I said, to barely 3 to 4 per cent  of their population.  Th e UNDP recently published a
report entitled "Making Global Trade Work for People".  On domestic support, this is what they said:TN/AG/R/7
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"The Agreement on Agriculture's domestic support disciplines allow industrial
country agri-businesses to buy and sell agricultural crops at prices below the cost of
production, creating unfair competition for farmers in both developing and more
efficient industrial countries. Indeed, many critics argue that by enabling the use of
their preferred instruments for agricultural support, while cracking down on tariffs,quotas and subsidies in developing countries, the most powerful agriculture-exporting
industrial countries engineered the Agreement on Agriculture so that its special and
differential treatment works for them rather  than for developing countries. This has
had major negative consequences for food security, farmer livelihoods and
employment in developing countries".
I entirely agree with all our colleagues who advocate harmonization of domestic support to
the agriculture sector.  I invite them  to first harmonize domestic support in all boxes at the level atwhich we provide domestic support to agriculture sector, and only then demand harmonization of
tariffs.  If they are not prepared to do that, we would expect a much higher degree of sensitivity from
them to the real problems faced by very poor people in countries such as mine.TN/AG/R/7
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Statement by Indonesia
Market Access
On the issue of market access, at the outset we would like to express our support on the
general approach you have taken on tariff reduction formula, SSG, and tariff quota for developed
countries members. We feel that with the current imbalances in the AoA, your approach for developed
countries' further market access commitment can be a platform towards the establishment of a fairer
agricultural trading system.  Having said this, we however would like to express our dismay  that you
have taken the same approach on tariff reduction formula and tariff quota for developing counties.
We must again underline that except for tariffs, developing countries have limited or almost no accessto any other kinds of support for their poor subsistence farmers.  We thus feel, developing countries'
further commitment on market access should not be given as a freebie  for developed countries, but
rather must be linked to  the approach and level of ambition sought for in domestic support and export
subsidies reform in developed countries.
Tariffs Reduction Formula (Paragraph 7-13).
On the issue of ambition of tariff reduction formula  for developed countries , we feel that your
proposal is not ambitious enough.  There are tariffs in developed countries, which basically prohibit
trade from taking place.  Even after applying your proposed formula, some developed countries will
still have tariff peaks, which are twice above Indonesia's highest bound tariff.  For Indonesia, whilst
we can go along with your compromised harmoniza tion approach, to tariff reduction in developed
countries, we feel that the level of ambition must be increased, particularly to address developed
countries' tariff peaks.  Moreover, we would like to support those who have put forward proposals that
developed countries put a down-payment of 50 per cent tariff reduction in the beginning of the
implementation period.
For developing countries, we view the current tariff reduction formula as being too ambitious.
Given the less than ambitious proposed reform in the domestic support and export subsidies, as well
as the absence of linkages, the proposed tariff reduction formula, would, in real terms mean that
developing countries, are undertaking greater co mmitment in the current agriculture liberalization
process.  We simply see this, as not being fair, not to mention deviating from the development spirit
of the Doha Development Agenda.
In this connection, we are of the position that the proposed average reduction rate for
developing countries should be reduced .  We believe that your current proposal does not really reflect
the difference in the level of development among WTO Members.  It also fails to take into account the
fact that tariffs are the main, if not the only, instrument available to developing countries to protect
their agricultural sectors.  In regard and in view of the current imbalances, and the lack of ambition
for reform in domestic support and export subsidies, as a maximum, developing countries should only
be required to undertake one third (1/3) of developed countries' average reduction rate.
Moreover, Indonesia believes that a minimum tariff protection is required in the agricultural
sector in developing countries, and that the elimination of tariffs may indeed not be a sound objective.
We should be very cautious in reducing already low bound tariffs.
You have proposed an expansion of the TRQs as contained in paragraph 15, up to 10 per cent
of the current domestic consumption of the product concerned for developed countries, and
paragraph 18 mentions 6.6 per cent for developing countries.
Up-dating the reference period for domestic consumption would entail in principle, a larger
increase in quota volumes than would be the case if the Uruguay Round base period were used, inTN/AG/R/7
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particular in developing countries where population has grown faster than in the developed countries.
Therefore we would just like to ask your indulgence, and enquire about the basis on which you
expand the tariff rate quota 6.6 per cent.
In paragraph 18, an option is given to maintain quota volumes at lower levels for 25 per cent
of the products under TRQs if for an equivalent number of products, quotas expand to a larger
percentage than the one proposed as the general rule.  Developing countries would not be asked to
expand quotas for strategic products, even if the minimum market access commitments of 5 per cent
of consumption, resulting from the Uruguay Round are lower than the same percentage of "current"
consumption figures.
A positive development from the Uruguay Round is the provision on paragraph 20 of your
text, of providing in-quota tariff free access to tropical products, whether in primary or processed
form, as well as to products of particular importance for the diversification of production from the
growing of illicit narcotic crops and crops whose non-edible or non-drinkable products, although
lawful, are recognized as being harmful for human health.
Strategic Products
On the issue of strategic products, we would firstly like to acknowledge the effort and
sensitivity you have shown,  to the plight of developing countries.  We can support the approach you
have taken to put strategic products as a special and different category of agricultural products.
However, we do not share the approach you have proposed on how to deal with strategic products.
To avoid long and antagonizing debate on the criteria of SP, we suggest that developing members be
allowed to self declare the number and products which they consider as SP.
We have, on many occasions underscored the importance of food security and rural
development to the economic, political, and social stability of developing countries.  For Indonesia,we have also become increasingly concerned by the involvement of unemployed SP subsistence
farmers, in harboring social and political radicalism.  With over 70 million subsistence farmers
involved in farming of SP, ensuring that these farm ers can continue farming, is not just important to
safeguarding food security and rural development, bu t it has also become an important security issue
for the country and the region.  For these reasons we again convey, our genuine plea to exclude SP
from reduction commitment.  With limited governme nt resources, tariffs are our only means of
support to our SP farmers.  Moreover, most of our SP currently already have very low bound tariffs;
further reduction would make tariff an ineffective source of support. We thus cannot accept any
further reduction of tariff on SP.
On the issue of applying non- ad valorem tariffs, we are of the position that, for countries with
lack of administrative infrastructure in tariff en forcement and lack of awareness in good governance,
they should be given greater flexibilities to the use of non- ad valorem  tariffs or specific tariffs, for
certain agricultural products particularly SP.  We believe this is important, as it will provide greater
certainty and assurance of effective tariff implementation as well as ensuring certainty for government
on revenue received from tariffs.
Special Safeguard Mechanism
On the issue of SSG, we support your approa ch to eliminate SSG for developed countries.
However on the level of ambition, we are of the position that this should take effect at the end of the
implementation period of Uruguay Round, and not at the end of the implementation period of our
current negotiations.
On SSG for developing countries, we are questioning your approach of using SSG as an
incentive to reduce tariffs on SP products.  We view the purpose of SSG as to protect vulnerableTN/AG/R/7
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subsistence farmers in developing countries, from the influx of artificially cheap or subsidized
products. We are of the firm position that all SP have automatic access to SSG, without having to
firstly go through general tariffs reduction.
Having said this, we however feel that the approach you have suggested may have some
merit, if it were to be applied to non-SP.  This approach can be used to encourage greater tariff
reduction on non-SP.  We would be willing to consider greater tariff reduction on non-SP if these
products have access to SSG.   We must however stress, that this is upon the condition on the outcome
of the review of the current SSG.
Moreover, we would also stress that if there is to be an SSG review, such review must be
completed and be part of the modalities package to be agreed by end of March.  Indonesia would notbe in a position to consider any modalities, which do not include a clear and agreed SSG mechanism.
In this regard we question the ambition to undertake a complete review of the current Article 5 SSG
mechanism.
Export subsidies
We thank you for delivering your thought as contained in your first draft modalities on the
issue of export subsidies. We recognize that you had a formidable task to perform having to take on-
board the varying interests of Members in your attempt to be as inclusive as possible.
We welcome your draft modalities paper which proposes the elimination of export subsidies.
Although the elimination of subsidies would go in line with the Doha mandate, the time-frame
proposed is too long, considering that developing countries are being asked to substantially reduce
their tariff over the same time period.
According to the Agreement on Agriculture, coun tries that provided subsidies by the time the
Agreement came into effect and inscribed those subsidies in their schedule of commitments, are
allowed to provide subsidies.  However, only several developing countries provide subsidies and are
denied the right to do so in the future.  The proposed modalities paper does not address this inequity.
On the contrary, a limited group of countries will continue to provide subsidies for up to 10 years incompliance with WTO rules while at the same time, the vast majority of WTO members are deniedthat right.
With regard to the product coverage of commitments on export subsidies, no change is
proposed to the current framework.  This means that commitments would be undertaken by product or
product groups, providing further flexibility in the implementation by shifting support amongproducts within a group.  We would like to insist that commitments should be undertaken on a
disaggregate or product-specific basis.
In addition, no distinction should be made among categories of products.  All export subsidies
should be eliminated within five years or less.  This would match the implementation period
established for developed countries in other areas.
Special and differential treatment
With regard to S&D, your first draft of modalities mentions that developing countries would
have to eliminate export subsidies.  However, they are provided longer time frames for the
implementation of commitments.  In any case, only a few developing countries have the right to
provide export subsidies, according to their schedules.  Therefore, this is not a S&D provision of
interest to many developing countries.TN/AG/R/7
Page 52
We are of the view that the retention of Article 9.4 of the Agreement on Agriculture should be
given special consideration.  Therefore, we welcome your drafting as contained in the current Special
and differential treatment provisions which maintains internal transport and freight charges and
subsidies for developing countries throughout the implementation period .
Export credits
We have learned that disciplines on export credits are developed in Attachment 4 of your
draft. There are two options reflected within brackets in paragraph 1.  The first option  prohibits any
export financing support programme which does not conform with the agreed disciplines;  the second
option  would provide further flexibility by allowing countries to inscribe in their schedules
commitments regarding non-conforming export financing schemes in terms of quantity of exports andbudgetary outlays.  The first option would provide for more stringent disciplines on export financing
support.  Under the second option Members would agree that subsidized exports under non-
conforming export financing is a legitimate form of support under a revised AoA, although subjected
to reduction commitments.
However, there is no clear indication as to the implementation period for the reduction or
elimination of the non-conforming financing support programmes.  It should be noted that by
indicating that these programmes are considered ex port subsidies according to the AoA, it could be
argued that the same implementation period of 10 years would apply.
We welcome the special provisions for export financing support programmes destined to
developing countries and financing of basic foodstuffs imports by Least-Developed Countries and Net
Food-Importing Developing Countries.  However, you did not suggest any specific figure for this.
Food Aid
On Food Aid, you have proposed to substitute the current Article 10.4 of the AoA by a new
article presented in Attachment 5 of the text.
It is proposed that WTO Members agree on a definition of food aid.  Any food aid transaction
that does not conform with such a definition, would be treated as an export subsidy and counted
against the export subsidy commitments of the Member concerned.
The proposed definition in your draft of modalities could be too restricted by being limited to
food aid in fully grant form.  In particular, it should be considered that the levels of food aid could
diminished as a result.  Concessional food aid may be important from the perspective of the food
recipient countries and the WTO disciplines on food aid should take this into account.
In addition, there are considerations related to the way food aid is actually distributed that
impinge on the possible impact of such aid in the local production of the recipient country, regardless
of whether it is provided fully in grant form or not.
We are of the opinion that a preferred approach may be to work on the basis of concepts
already developed within the framework of the Food Aid Convention including the "Principles of
surplus disposal and consultative obligations", an d the system of "Usual Marketing Requirements",
and provide to such framework the surveillance mechanism which is lacking, in connection with the
work of the WTO.
Export taxes and export restrictions
We continue to believe that export taxes and export restrictions are not part of the Doha
Mandate,  whereas for us market access means access to markets, and not access to the supply such asTN/AG/R/7
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the issue of export tax. These instruments are very useful, not only can enhance environmental
protection, but can also be used for domestic industry to provide value added products.
Furthermore, including export taxes I am afraid would violate Article XI (1) of GATT 1994.
And we appeal you to revisit paragraph 38 and 39 of the draft modalities.
Domestic Support
Listening to the discussions during the past four days, we note that this is one of the most
important pillars in the agriculture negotiations.  Having learned your first draft of modalities we
come to the point that the general framework for domestic support is preserved.
Specific and targeted modifications to the Green Box – least trade-distorting - are proposed in
your text, but  no attempt was made to address the problem of the level of support.  Trade-distorting
support under the Blue Box and Amber Boxes would be reduced but not eliminated by the end of the
proposed implementation period.  In addition, developed countries would maintain the de minimis
exception, although reduction commitments are imposed on such payments.
As you may recall addressing the problem of the level of support, some developing countries
had proposed to establish a cap on all domestic support and the elimination of some of the direct
payments currently included in the Green Box.  None of these proposals have been reflected in your
text.
As a consequence, Members with the financial strength to exploit these loopholes will
continue to shift support from one box to the other without affecting the overall level of support.
We observe that some modifications are introduced in the specific criteria under the different
programmes currently recognized as least-trade-distorting, in order to address some of the problems
encountered during the implementation period.
Special and differential treatment
 
On special and differential treatment, flexibility is introduced as regards the implementation
of some programmes and two new types of measures  are contemplated.  These are the possibility to
provide domestic support for the production of staple products and payments to 'small scale family
farms'.
This flexibility might not be very effective for developing countries since this would entail
direct payments to farmers.   For most developing countries with large agrarian populations made up
of small farmers, the prospect of having the financ ial means to provide direct payments to the 'family
farms' looks very distant.
Article 6.2 of the AoA (special provisions for developing countries).  We are quite
comfortable with your text, which proposes to expand the content of Article 6.2  in benefit of
developing countries.  In this regard we can go along with the suggestions by the delegation of
Malaysia that other forms of targeted support which are integral part of development programme by
developing countries, should also be included in the last element of the expansion of Article 6.2.
On the de-minimis  exception   (Article 6.4 of the AoA).   It is gratifying to note that the de
minimis exception of up to 10 per cent currently available to developing countries would be
maintained.  As appears in paragraph 52, it is also suggested, although in brackets, that developing
countries be allowed to credit negative product-specific support to the non-product-specific support.TN/AG/R/7
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Finally, as the importance of the Strategic Products has been recognized in the area of market
access, we are of the strong view that to make Strategic Products as tool for assisting developing
countries to achieve food security and rural developmental objectives, greater linkages between
market access and domestic support for SP must be given.  In this regard we believe that SP should
have explicit flexibilities and special consideration in all areas of domestic support.TN/AG/R/7
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Statement by Israel
Israel wishes to express its appreciation to you for your sincere efforts to bridge the gaps
between the Member states as reflected in the first draft of modalities.
We were very pleased that you found it appropriate to include in the model several ideas and
proposals which were presented by us.  But our satisfaction was short-lived.
As expected, your detailed work was the cornerstone of the discussions in Tokyo ten days
ago.  I take the liberty in stating that the Tokyo talks revealed a worrisome and problematic matter:
There are still key Members which once again are asking:  "Why deal with agriculture differently thanwith industry and services? Why give agriculture preferential treatment?"  These questions led the
discussions in Seattle to an embarrassing dead end, and were omitted from the agenda in Doha.  Now,
a month before the end of March, we are being asked to return to the point where we were two and a
half years ago.
And who is asking these questions?  Those who annually colour many millions and billions of
dollars intended for the Green Box!  Those who divide them into dozens of new categories to large
estates in their own countries!  In fact, the questions are asked by those who have increased by tenfold
the percentage of their export to countries which have already become net importers.
My dear colleagues, the answer has already been given: Agriculture is different and is
essential to each country.  Every country has the right and obligation to maintain it, while practising
liberalization and adapting itself to the special conditions of local agricultural production.
The fact that someone prefers imported cars more than locally-produced ones does not
necessarily have to lead us to hurt the small farmers in remote regions around the world.  The fact that
someone who produces sheep meat at low cost wants to put other countries' farmers out of business,
can in no way pressure us into agreeing to a destructive model.
Agriculture is a way of life that has been practised for many generations over centuries.
Therefore, the changes must be made moderately and gradually.  In such a way, we integrate
liberalization in production with sensitivity to the ability and needs of the farmer who must invest andadjust himself to the new reality.
In your professional document you decided that the Uruguay formula would serve as the basic
model.  Your figures have to be adjusted in such a way that they will be more moderate and
implemented over a long period.
Israel proposed balanced and responsible parameters in accordance with this principle.Tariff rates for each Member state were established and agreed upon in Marrakech.  Since
then, according to the commitments, tariffs have been  reduced substantially. We must continue in this
direction while establishing a minimum reduction rate which will express, among other things, a
consideration for NTCs as was agreed upon in Doha.
Israel explained already that the huge sums which countries allocate to the Green Box are a
serious impediment to those countries which do not  have such budgets.  In preparation for this
meeting, I tried to learn about all the "Green" programmes and categories of those countries.  There
are dozens of them, old and new, large and small.  For what reason? Why there are so many?  Why
does a country create so many types of "Green" measures?TN/AG/R/7
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The time has come for us to be honest and say openly – it is in order to adapt governmental
assistance to every need, and to subsidize farm production in the right colour in the "sacred Green
Box"!
This places a great burden on other countries' farmers.  So if nobody cuts the Green Box
support, we must be fair enough and agree at least to a more moderate reduction of the Amber Box.
I believe that these are the directions we should take, in addition to the special and differential
treatment which is of such vital importance to the developing countries.
It is important that we concentrate only on issues included in the Doha mandate and not
broaden our discussions to matters which would best be left to other, more suitable forums.  This is inorder to avoid deepening the disputes and differences of opinion which exist in any case.
I would like to conclude with a remark from a completely different angle altogether.In my previous remarks to this distinguished forum, I stressed that a very small number of
Member states actually control about 70 per cent of world agricultural trade.  So this organization
should not deal only with the question whether Canada will sell more or less food to Japan, or if
Australia and New Zealand increase their export to Switzerland and Austria.  This liberalization
should enable additional tens of developing countries to  take part in world agricultural trade.  The real
question, then, is which model will change the present reality?  In our opinion, the model should offer
tariff reductions to developing countries only and not to everyone.  Until now, all the reduction have
contributed mainly to improving the trade of the developed countries. In this way, perhaps, we will
realize our wishes in the Uruguay Round.
This model must also include a reduction of direct Green Box supports, the very wide use of
which damages the competitive ability of the producers in the developing countries.
We think that it is worth taking time to reflect on these remarks during our busy days of
discussions.TN/AG/R/7
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Statement by Kenya
This delegation would like to join other delegations in thanking you for submitting the first
draft modalities paper in good time.  We do realize the difficult task before you and the Secretariat intrying to strike a balance in an area where extreme differences exist.  We would like to associate
ourselves with the statement made by Morocco on behalf of the African Group.
Members will recall the constructive engagement by developing countries in these
negotiations with the aim of ensuring the survival of their agricultural sectors through the removal of
the imbalances that currently exist in the Agr eement on Agriculture.  In general, the proposed
modalities do not address most of the concerns expressed by this Group of countries and indeed thepaper an attempt to continue with the overall architecture of the AoA including the imbalances.
On Market Access the proposed reduction of tariffs is very ambitious in particular for a low
income developing country like Kenya.  Indeed, throughout the negotiations process many developing
countries expressed concern regarding the effects of further reducing tariffs on agricultural productsand sought exemption from tariff reductions for certain agricultural products.  Contrary to this,
developing countries are expected to sacrifice by reducing their tariffs while export subsidies will
continue to devastate their economies for 10 more years.  In addition the paper proposes an increase in
domestic support since it does not strengthen the disciplines related to Green Box by for instance
limiting the expenditures on this box.
We believe that there is need for the same level of ambition in all the three pillars of the
negotiations and indeed it is for this very reason that developing countries have been pointing out the
need to recognize the interplay among the three pill ars of the negotiations.  This recognition is absent
in your paper.
A positive development from the Uruguay Round in your paper is the recognition that in a
revised Agreement on Agriculture there is need to designate strategic products on the grounds of food
security, rural development, alleviation of poverty and livelihood conservation.  However, there is
need to review the proposed approach towards "S P" Products to ensure that developing countries
derive the expected gains from this concept.  On the Special Safeguard Provision we note the
acknowledgement that there is need for an SSG for de veloping countries to effectively take account of
their development concerns.  However, we are disappointed that the new safeguard mechanism would
be available to developing countries only after a review of Article 5 of the AoA.  We did propose that
the proposed SSG should not be based on the current Article 5 and that this Article should cease to
apply for developed countries within the first year of implementation.  There is need to clarify when
the review will be undertaken.
On preferences we note that this issue has been  raised in the first draft modalities.  However
considering that the ACP/EU preferences would enter into a new phase as of 2007/2008 we doubt
whether three years of prolongation would suffice for the beneficiary countries.  In addition we
require a binding commitment in this area.
On non-trade concerns we expect legitimate non-trade concerns tabled by developing
countries to be taken on board in the revised modalities paper.  These concerns related to food
security, rural development and poverty alleviation.
The provisions on Special and Differential Treatment are given on an issue-by-issue basis
seemingly with a basic principle of a longer implementation period and lower reduction
commitments.  However, the draft does not address itself to how the special and differential treatment
as a whole would be made operationally effective in order to meet the development concerns ofTN/AG/R/7
Page 58
developing countries.  In addition, we note th at the draft does not make any suggestion on the
treatment of the Marrakesh Decision as a whole.
Last but not least, if the revised modalities are to address the concerns raised by developing
countries in these negotiations which aimed at revamping their agricultural sectors, the best endeavourlanguage of the Uruguay Round must be avoided in or der to ensure that we come up with binding and
economically-viable commitments in the concluded Agreements.TN/AG/R/7
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Statement by Malaysia
My delegation wishes to thank you for the first draft of the modalities on agriculture. We
recognize that you had a formidable task to perform having to take on-board the wide and varyinginterests of all Members, which in many instances, are almost irreconcilable – in your attempt to be as
inclusive as possible.
You have produced a draft which in Malaysia's view could be used as useful points for the
negotiations.  However, there are certain aspects of the draft modalities, which in our view must be
beefed-up.  And this primarily lies in the market access pillar.
While you have, generally speaking, heard our calls for a robust tariff cutting formula to
tackle tariffs in all markets, both developed and developing, the proposed modality does not provide
for deep cuts to products which currently have very high bound tariff rates in developing countries;clearly, the approach you have suggested will largely leave intact the current very high level of bound
tariff rates at the end of the 10 year implementation period, and this will have implications on South –South trade.  Thus, we call on you to address this shortfall in your improved second draft.
Similarly, the proposed modalities also allow developing countries to declare a certain
number of agricultural products as "Strategic Products" and these products can then avail themselves
of the Article 5 SSG mechanism.
We recognize your genuine attempt to address developing country concerns with respect to
food security, rural development and livelihood security concerns – and we thank you for this effort.
However, the modality allows for too much flexibility and could result in adverse implications on
intra developing country trade.  Thus, we would urge you to include in the second draft the conceptthat the list of "Strategic Products" must not just be limited, but be negotiated with other Members
and it is not sufficient to simply have a self-declaration.
At this stage, and until we see a revised modality that results in deep tariff cuts for currently
very high bound tariffs, Malaysia is unable to agree to extending the Article 5 SSG mechanism to
other developing countries.  Furthermore, the criteria for the invocation of the Article 5 SSG
mechanism should be tightened, along the lines of the views we had expressed in the technicalconsultations chaired by you in December 2002 and January 2003.  In this regard, Malaysia urges you
to also consider the alternative proposal of a countervailing mechanism submitted by Argentina,
Ecuador and a number of other developing countries, including Malaysia.
Still on the subject of the SSG – we wish to reiterate that the Article 5 SSG should cease to
apply for developed countries immediately upon the co nclusion of the UR implementation period, and
not as proposed in either of the alternatives in paragraph 23.
On the subject of the expansion of tariff quota volumes for "Strategic Products", paragraph 18
does not require developing countries to expand such quota volumes at all.  In this regard, we submitthat the modality should provide for a minimum expansion.
On export competition, we welcome the modality that calls for the eventual elimination of
export subsidies. Similarly, we welcome the flexibility that is provided to developing country
providers of export credits to other beneficiary developing countries.
We also wish to reiterate that export taxes are not export subsidies, and not  a part of the Doha
mandate.  Moreover, including export taxes would vi olate Article XI(1) of GATT 1994.  We urge you
to revisit paragraph 38 and 39 of the draft modalities.TN/AG/R/7
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On domestic support, although we are disappointed  that the Green Box is not subjected to any
cap, especially on the direct payments provisions, we take note of the proposed amendment that could
reduce its abuse.  We are also disappointed that the Cairns Group proposal that would discipline the
use of domestic support subsidies by developed countries has not been taken on-board.
On the de minimis provided for in Article 6.4, Malaysia would like to see both forms of S&D
treatment provided for in paragraphs 51 and 52 of the draft modalities be retained for all developing
countries.
We wish to reiterate the relevance and importance of the proposal of the Cairns Group that
developed countries make a 50 per cent down payment in the initial year of implementation.  This is
to compensate for the disruption in the on-going reform process by developed countries as theimplementation period for developed countries ended in 2000.  We urge you to re-insert this aspect in
your second draft.
Finally, we wish to refer to paragraph 56 of the draft modalities paper where it is suggested
that Members will further consider the possible introduction of additional forms of flexibility forcertain groupings.  As we have re-iterated this on so many occasions, we view this with serious
concern as this could result in discrimination between developing countries.  This is contrary to the
Enabling Clause.  It will also result in the creation of new groups of developing countries in the WTO
and elsewhere.
We recognize the difficulties faced by some of our developing country trading partners.  For
example, by those who call themselves as vulnerable developing countries.  But we submit that the
S&D treatment that is to be formulated should adequately take care of these concerns without creating
any new sub-category of Members.  In this rega rd, we have serious concerns in providing S&D
treatment to all transition economies as many of them have characteristics of industrializedeconomies.
We urge you to address the concerns that we have brought to your attention in this
intervention in your second draft of the modalities.  My delegation, will, as appropriate, add on to
what I have said today, in the discussions in the next couple of days.
Market Access
Malaysia would like you to address the issue of high tariffs in both developed and developing
country markets in your second draft of the modalities.  By this, we mean those bound tariffs which
are currently in excess of 100 per cent.
While agreeing to your "banded approach" which would result in some degree of
harmonization of tariffs, the percentage reduction in your first band is far too low – and would allow,
for example, developing countries to still have very high tariffs, even after the 10-year
implementation period.  Thus, we want you to adhere to the Doha mandate
 and the formula  be such
that the end-result of the reduction process  would only be 2-digit bound tariffs  – and not 3-digit as per
your current modality.
On TRQ expansion – we agree with the positi on of New Zealand, although we do differ on
the treatment of "Strategic Products".  We will come to this point, shortly.
On the subject of "Strategic Products", whilst we thank you once again for having considered
the concerns expressed by many developing countries on the subject of food security and rural
development, we fear that this concept could be abused.  We must remember that what could be
identified as being a "Strategic Product" to one developing country from the view point of foodTN/AG/R/7
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security concerns could be of export interest to another Member.  Thus, we need to carefully
circumscribe what constitutes a "Strategic Product":
(a) at the 6-digit level – and not at the 4-digit level as proposed by some;
(b) develop multilaterally-agreed criteria as to what products indeed qualify as "SP".
(c) negotiate multilaterally the list of products that developing countries prepare based on
the criteria to be developed and agreed upon.
We cannot agree to any self declaration of the list of "SP" – even if it is based on multilaterally agreed
criteria, as there is still the avenue for abuse.
On the subject of extending the Article 5 SSG to all developing countries, as stated in our
Overview, we cannot agree to this proposal until we see deep cuts for developing countries as well as
stated earlier in this intervention.
Furthermore, we need to review  the current Article 5  – conditions  under which this SSG  can
be invoked.  In this regard, we are not going to repeat what we had stated in the technical
consultations you had on this subject.  Examples of this review, include the point that the trigger
mechanism should be volume-based and NOT price-based.
In this regard, we urge you to also incorporate the alternative SSG expounded by Argentina
and a few other developing countries on a Counter-Vailing Mechanism of which Malaysia has also
co-sponsored.
Returning to the subject of "SP", it is our view that "SP" products should continue to be
subjected to minimum tariff reductions – as per your proposal.  Even more important is the issue of
TRQ expansion relating to strategic products– where, it is important that there should be some
minimum TRQ expansion.  This is because, in our view, food security concerns can also be met
through some level of imports.  Closing the borders completely on account of food security concerns
is not the appropriate answer, as it could mean huge costs to the government in terms of ensuring an
adequate level of food supplies to its domestic constituents.
We urge you to factor-in these considerations into your revised second draft of the modalities
paper.
Export Competition
Export Subsidies
9 years is too long . Should follow the Cairns Group proposal of three years at 50 per cent
down payment in the first year of implementation.Export Taxes
As stated by Argentina, export restriction and export taxes are NOT export subsidies.  Export
taxes are outside our mandate. Furthermore , seeking disciplines on export taxes violates GATT
Article XI(1).
Export Credits
Should be rules-based.  In this regard, we draw your attention to paragraph 12 of
Attachment 4.  If our understanding is correct , this provision disables developing countries  like
Malaysia from availing itself  of the S&D treatment for certain products .  And this means that theTN/AG/R/7
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S&D treatment provided for in this paragraph will be available for some products and some
developing countries, whilst not for others. Thus, it means discriminating between developing
countries, and this is not acceptable to us, a cardinal principle.  Due to the foregoing "discrimination",
developing Members like Malaysia are thus put on an equal footing with other developed countryproviders of export credit, and we will have to compete with developed country providers within the
meaning of paragraph 9 of Attachment  4.  Thus, we urge you to rectify , this anomaly, and include into
your second draft, S&D treatment for all exporting developing country providers of export credit for
all products.
Paragraph 34
Article 9.4 to be retained.
Exporting STEs
We welcome the proposed disciplines on exporting STEs.
Domestic Support
Malaysia wishes to see you raise the level of ambition in treating domestic support subsidies
of the developed countries, in terms of the Blue and Amber Boxes .
You also need to deal with the fact that there is already a disruption in the reform process  on
the part of the developed country Members as their reform ended  in the year 2000 .  In this regard, you
can seek counsel from the proposal of the Cairns Group  on Domestic Support, which includes a
50 per cent down payment by the developed countries.
We also want a cap on the Green Box, notwithstanding the proposed amendments in your
draft modalities which attempts to tighten its usage and prevent its abuse.
Similarly, still on the Green Box, we wish to reiterate  that Animal Welfare , as important a
subject as it is should not be treated in this House.   In this connection, it is important to note that
Malaysia attaches great importance to this subject.  We have, in recent years, amended some outdated
Ordinances dealing with animal welfare.  However, this subject, as dear as it is to us has no place in
this House, which is not a Kennel  or cage  for animals but for human welfare.
Generally speaking, we find the S&D provisions OK.  However, we have some comments on
Attachment 9, on Article 6.2 of the AoA .  In Attachment 9, you have attempted to enumerate the
various forms of domestic support that could be provided by developing countries that would be
exempted from any reductions.  However, in our view, almost all the types of support that you have
enumerated therein can easily be folded into the existing Article 6.2.  But, we will not object to such a
format.  However, our fear is that having an enumerated list could be interpreted by some to mean that
this list is comprehensive.  As you are aware, there could be some measures pursued by developing
countries that could fall within the cracks .  And this is a real fear, given the increasing legal
dimension of our debates in this House.  Thus, we submit to you that something along the following
lines be added as an additional item ( xii) “Other forms of targeted  support which are an integral part
of development progress of developing countries.”  We also seek clarification with respect to the
phrase "…to the extent that these commitment would otherwise be applicable to such measures"
incorporated in the chapeau of Article 6.2 in Attachment 9.  To us, this phrase is limiting.TN/AG/R/7
Page 63
Statement by Mauritius
General Comments
We fully support and endorse the statement made by the distinguished representative of
Barbados.  We have taken good note of the first draft.  We have also noted that the figures therein are
just indicative, nothing more.  We would like to comment on some aspects of the negotiations by
referring, as appropriate to some elements of the first draft:
Level of ambition.   This in our understanding means that the diversity and variety of
agricultural systems are given due recognition and more importantly, the means to exist.  For us, levelof ambition does not mean that the large multi-commodity exporting countries that have benefited
from the UR should now try to take everything including the meagre shares of the vulnerable DCs.
Intent and consequential measures. The reference to preferences and the importance thereof
to small vulnerable countries is a redeeming feature but the level of tariff reduction and theimplementation period indicated in the first draft and some of the proposals on TRQ contradict the
laudable intent on preferences.  In fact, we would end up with a loss of the much-needed preferences
with severe adverse consequences on our fragile socio-economic fabric.
Work to be completed.  There is a need for further elaboration on the issues referred to in
paragraph 56 and in respect of NFIDCs/LDCs in the domain of export credits and other forms of
export competition.  We have, however, taken good note that our work this week will bear in mind
paragraphs 53 to 56 of the first draft.  The elements referred to therein as well are vital for us and we
will never accept to end up without anything on these paragraphs just for the sake of the theoretical
reasons advanced by some.
Vulnerability.   Some participants seem to discard this aspect;  vulnerability is not a choice nor
is it a consequence of the inefficiency of our farmers, it is a fact of life which we have to reckon with.
And in this regard, we appeal to those who have been endowed with a generous environment and vast
natural resources to understand our predicament and not simply dismiss it in a cursory manner.  We
should always remind ourselves that the small vulnerable countries represent the vast majority of DCs
and S&D should come to them first and foremost.
We reiterate our support to the process and we will continue, within our limited means to
work towards a reasonable and reasoned consensus so as to achieve equitable and balanced results in
agriculture.  For small vulnerable countries where agriculture is vital, balance in agriculture is
essential.
To conclude, we are expecting a second draft which ensures the necessary coexistence of
diverse agricultural systems and in particular those that are considered by the Rome Summit as
operating in low potential areas.
We would be making focused interventions when we deal with the contents of the first draft.
Market Access (Paragraphs 7 to 27)
We fully endorse the statements made by Swaziland and Barbados on behalf of Trinidad &
Tobago and Jamaica, the EC and Switzerland on various issues relating to Market Access.  To take on
board your request that we avoid competition, we shall take the statement of Barbados, Trinidad &
Tobago and Jamaica as a basis and tender supplementary comments.TN/AG/R/7
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Paragraphs 7 and 8
(i) Rate of Reduction
A tariff rate of 100 prior to the UR has been reduced to 64 by the UR/36 approach;  a further
reduction of 36 per cent applied to the final bound rate of 64 will bring it to 41 i.e. to say a 59 per cent
reduction would have taken place over two rounds.  This is much more than what has been achieved
in two rounds in any other sector.  Accordingly, we cannot but say that anything above 36 per cent
would be too much.
(ii) Ad valorem  issue.  The conversion envisaged adds an additional complexity to our work.
Argentina has pointed out that we need a multilateral agreement on methodology.  Noted, then wewould spend a lot of time to come to something which does not address real concerns of countries
while we have something simple in the UR approach, which does not require sophisticated
negotiations.
(iii) In case we have to come to ad valorem , then a longer representative period would be more
appropriate (we refer you to Attachment 7, paragraph 2(a)).
Regarding the tariff escalation issue, we believe it is  more of an S&D issue and should accordingly be
referred to in paragraphs 9 to 13.
Paragraph 14
(i) Paragraph 7 is in clear contradiction, and to the extent possible may mean a rate of reduction
of 15 per cent or less but certainly not the figures referred to in paragraph 7.
(ii) We welcome the concept of vital products, indeed they are vital for food procurement, rural
development and protection and preservation of the environment.
(iii) Implementation should mean the same number of years as in paragraph 13.  In addition, the
concept of moratorium referred to in paragraph 55 should be explored.
TRQ(i) Vulnerable countries would have their preferences eroded to the extent possible;  one of the
ways of mitigating losses would be enhanced access and the proposal at paragraph 17 to limit of
expansion to MFN does not help vulnerable countries.  Hence a share of TRQ expansion in vital
products should be reserved to vulnerable countries.
(ii) Paragraph 2(f) of Attachment 1 could preclude TRQ referring to preferential arrangements
and should accordingly be deleted.
SSG
We entered the UR on the basis of a protracted compromise and Article 5.9 says that it should
as long as the reform process is on.  We can build on it but we cannot eliminate it.  We agree with
your proposals on paragraphs 24 and 25.
Paragraph 26:  STE importing
We note that the attachment on STE export (Attachment 6) is more favourable than the one
on STE import and we request that the latter be aligned on the proposals for STE export.TN/AG/R/7
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Paragraph 27
Geographical Indications:  small countries have products which could be used in a niche
marketing approach and in this regard the lack of decision on GIs does not help.
Paragraph 56
We reiterate the proposals of JOB(02)/161 and the contents of paragraph 26 of the Overview
paper.
We welcome the stance of Chile on vulnerable countries.  This is according to us a good
example of how we can bridge gaps.  However, whilst noting his proposal for an examination offigures, we consider that this is not needed and would take considerable time as in fairness we would
have to examine the facts and figures of the 80 preference holders and those of the countries which
diversify away from illicit crops.  We believe that the vital products and their importance are known
and we need not engage a lengthy scrutiny process which would only delay the process for a
considerable time.
Mauritius and other SIDS have referred to paragraph 56 earlier on, so I would not repeat these
points.
Noting that paragraph 56 cross refers to TN/AG/ 6 i.e. the overview paper, I would therefore
concentrate on two elements of paragraph 26 of the overview paper, namely:
Subparagraph (i) “to provide legal security for existing non-reciprocal preferential trading
arrangements, for example in the form of grandfathering,”;
Subparagraph (v) “ to extend to small island developing states the facility currently available
for LDCs that enables special WTO compatible market access arrangements with developed
countries on terms that do not require extension of reciprocal preferences.  There is also the
proposal to extend the scope of duty and quota free access for agricultural products in terms
of importing countries granting such access and/or beneficiaries.”
To enable the fulfilment of these objectives, we consider amongst other measures that
subparagraph (f) and (g) of paragraph 2 of Attachment 1 have to be deleted and paragraph 6 of the
same Attachment has to be reinforced.TN/AG/R/7
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Statement by Morocco
My delegation would firstly like to thank the Chairman of the Committee on Agriculture for
his efforts in submitting this first draft of modalities to us in time for the Special Session.  Althoughthis text has the merit of providing a less complex basis for our work, Morocco feels that certain
proposals do not respond to the developing countries' objectives.  Furthermore, certain proposals for
S&D commitments may harm the already very fragile economies of such countries.  It is therefore
necessary to take the specific nature of developing economies into account.
As regards tariff-related S&D, it is proposed that a greater reduction rate be applied for high
tariffs.  In this case, it is important to remember that the high rates applied by developing countries aremostly a result of  the "tariffication" which occurred when non-tariff measures were transformed into
tariff measures, and are not the result of applying tariff escalation.
It is also very important to remember that agricultural production in the developing countries
is unsubsidized, unlike that in many developed countries.  Consequently, tariffs are the only means for
the developing countries, with their strong agricultural focus, to combat highly subsidized imports and
in this way maintain a certain level of production, which in turn provides some social stability.
With regard to the provisions on strategic products, the developing countries should be
afforded greater flexibility, in terms of both the number of products and the relevant tariff reduction
commitments.
As regards the special safeguard provisions, Morocco proposes that, within the S&D
framework, their coverage be extended to other products and application mechanisms improved.
Therefore, Morocco can only approve the proposal in paragraph 25, concerning the review of the
provisions of Article 5 of the Agreement on Agriculture for the purpose of establishing mechanisms
which are better adapted to the conditions of developing countries.
On the subject of export subsidies, Morocco once again emphasizes its commitment to the
elimination of export subsidies within the shortest possible time-frame.  Indeed, such subsidies limit
market diversification, especially for the developing countries, and have an adverse effect on their
food security.
As far as domestic support is concerned, Morocco approves the proposed amendments to the
Amber Box, which are consistent with the developing countries' development objectives.
As regards the AMS, it is needless for me to remind you of the paltry subsidies granted by
developing countries.  However, as long as a large number of developed countries continue to provide
substantial support for their own production, it is important for the developing countries to remain
flexible when granting subsidies which fall within the Amber Box.  On the other hand, it is also
important that the developed countries commit themselves to real reductions of their AMS, which
seriously impedes the production and exports of developing countries.
Finally, my delegation would like to express support for the proposal regarding preferences
which was put forward this morning by Kenya, an d also remind you of the initiative, taken in 1999
within the framework of South-South cooperation, to grant duty-free access for products from LDCs.TN/AG/R/7
Page 67
Statement by Norway
General comment
We have to admit that we are both surprised and disappointed by your draft modality paper.
Surprised because this proposal goes further than we had ever expected in favouring the interests of
competitive exporting countries at the expense of non-competitive importing countries.  Disappointed
because there is an abyss between the Chair's and our own proposal, and we see few attempts to
address our concerns.  Put into effect, the Chair's proposal, in particular its provisions on tariff
reductions, would have dramatic consequences for Norwegian agriculture.  This is not what we were
prepared for when we entered into this reform pro cess.  In our view, the draft simply lacks the basic
characteristics of a compromise with which all Members can live, and it does not take non-trade
concerns into consideration as foreseen by the Doha mandate.  Our objections do not only relate to
your figures.  It is as much a question of approach.
Norway is firmly committed to the deadline of agreeing to modalities by the end of March.
We hope this draft paper has not stimulated unrealistic expectations and a hardening of unworkable
positions.  If so, we risk a setback or even a dead lock.  We need now to look forward, and we would
like to suggest a set of guiding principles for your second draft.
First, the proposal needs to allow all Members, irrespective of production conditions and
competitiveness, to address their non-trade concerns through a certain degree of domestic agricultural
production.  A tariff harmonization formula is simp ly not appropriate because it does not take into
account the differences in production conditions.  Nominal tariff levels cannot be compared across
countries.  A high tariff may in fact yield less effective protection for a country with unfavourable
production condition than a low tariff in case of a country with favourable production conditions.  An
unmodified Uruguay Round formula is therefore th e only way forward.  Resulting from 8 years of
difficult negotiations, this formula is by definition a compromise.
As to our own quantitative proposal tabled two weeks ago, we have proposed average tariff
reduction of 36 per cent and a minimum tariff reduction of 10 per cent for each tariff line.
Second, as to domestic support, the paper should target the most trade distorting elements.
This implies that the existing framework of the Green and Blue Boxes should be continued and no
caps introduced.  As to AMS support, overall large reductions would only be possible if support to
exported products is penalized substantially more than support to products for the home-market.  We
have suggested that AMS support to products for the home market should be subject to a reduction of
20 per cent, while the export oriented AMS should be subject to a reduction of 60 per cent.
Third, as to export subsidies, Norway has consistently acknowledged the need for stricter
disciplines, and we are committed to the Doha mandate of phasing out such measures.  Concretely, in
this round, Norway agrees to an average reduction of the budgetary outlays of export subsidies of 60
per cent, provided that flexibility is given in de aling with the different products.  However, the Doha
Declaration will only be honoured if all forms of export subsidies are treated equally.  This is an
essential principle to be respected.  In other words, no loopholes for food aid and export credits.
Finally, Norway fully recognizes the need fo r special and differential treatment of the
developing countries, and we endorse several of the proposals made in this regard, including longerimplementation periods and lower reduction rates in all three pillars.  The weeks since we last met in
January have been quite eventful.  We are glad to see that a number of countries have tabled figures
that are quite similar to ours.TN/AG/R/7
Page 68
You have a difficult task.  In our opinion, this is not about mathematical compromises.  It is
about making commitments in " an equitable way among all  Members" , to quote the Preamble to the
Agreement on Agriculture.  It is about a careful balancing of the political sensitivity that characterises
the agricultural sector of individual Members, a sensitivity that is not evenly distributed among the
Membership.  It is about establishing an agricultural trading system that is fair to all, exporting as
well as importing, developing as well as developed Members.
To conclude, the next version needs to be fundamentally different for it to provide a useful
basis for "bridging the gaps", to use the motto from the last meeting.  We wish you good luck and lots
of wisdom in your work with your second draft.
Market access
As to market access, the question to Norwegian agriculture is "to be, or not to be".  We have
the world's northern-most agriculture.  Together with a handful of other countries we probably have
the world's most difficult production conditions.  Tariffs are nothing less than indispensable to secure
a certain degree of domestic production, and thereby securing non-trade concerns.
As we stated this yesterday, a tariff harmonization formula is simply not acceptable because it
does not take into account the differences in production conditions.  Nominal tariff levels cannot  be
compared across countries.  A high tariff may in fact yield less effective protection for a country with
unfavourable production conditions than a low tariff in case of a country with favourable productionconditions.  An unmodified Uruguay Round formula is therefore the only way forward.  Resulting
from 8 years of difficult negotiations, this formula is by definition a compromise.
We are of course standing by the Doha mandate of substantially improving market access
conditions, and we have therefore proposed a 36 per cent average tariff cut.  The minimum tariff cutrequired for each tariff line should not exceed 10 per cent.
Such concessions will be painful to Norwegian agriculture.  Production is likely to drop in
several important sectors, with substantial negative effects on our non-trade concerns.
As to minimum access tariff quotas we need to have in mind that the intention of this
arrangement was to provide a minimum of access in products for which such access did notpreviously exist.  This intention now being met, we do not see the rationale for expanding quotas
beyond the existing arrangements.
Finally, the special safeguard must be continued, as foreseen in Article 5.9 of the Agreement.
In the Uruguay Round we agreed to tariffication and the reduction of tariffs on the condition that aspecial safeguard mechanism was part of the overall reform package.
What then about the development dimension of your draft?  We are supportive of several of
the S&D elements embodied in your draft, including longer implementation periods and lower
reduction rates, with a total exemption for LDCs.  Improved market access is of vital importance tomany developing countries.  Developed countries should therefore provide duty- and quota-free
access to their markets for all imports from LDCs.   In this respect we feel that your draft should have
a stronger commitment.
Having said this, we are concerned about the negative effects of the erosion of preferences
that will flow from your tariff proposal.  This is particularly worrying because many of the vulnerable
developing countries that currently rely on preferential access are single-commodity exporters with
few alternative options.TN/AG/R/7
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Our agriculture is characterised by its extremes.  At present, we have only 50 per cent self-
sufficiency on a calorie basis.  Arable land represents only 3 per cent of the total.  We have the lowest
population density in Europe, next after Iceland, and agriculture makes up the backbone of our most
remote rural communities.  This is the reality that we are facing.  We will be working constructively
towards reaching an agreement by the established deadline.  However, we are not willing tocompromise our food security, our rural communities, our bio-diversity, identity and cultural heritage.
Export competition
As we underlined on Monday, Norway has consistently acknowledged the need for stricter
disciplines, and we are committed to the Doha mandate of phasing out such measures.  Concretely, in
this round, Norway agrees to an average reduction of the budgetary outlays of export subsidies of60 per cent, provided that flexibility is given in dealing with the different products.
However, the Doha Declaration will only be honoured if all forms of export subsidies are
treated equally.  This is an essential principle to  be respected.  In other words, no loopholes for food
aid, export credits and state trading enterprises.  As we see it, your proposal would still make itpossible to use food aid as a means of surplus disposal.  Therefore, food aid should only be granted in
response to appeals from specialised UN food aid agencies.  Food aid should not displace local
production or commercial imports.  This implies that food aid should not only be fully grant, nor
should it be directly sold on the local market.  We also need provisions to ensure a shift from aid in
kind to financial aid for the purpose of triangular transactions and local purchases.
On export credits, we see no justification for an emergency clause that is different for export
credits, as compared with for instance export subsidies.  The same goes with market differentiation.
We are not convinced could export credits to developing countries be subject to more lenient
provisions than export subsidies to the same destination?  Any special and differential treatment inthis area should be restricted to NFIDCs and treat credits and subsidies on an equal basis so as to
ensure that such provisions do not actually take  the form of S&D treatment for wealthy exporters.
Finally, your second draft should on the export competition issue, as well as on any other
issue, take a comprehensive approach in which all issues are dealt with in parallel.
Domestic support
As to domestic support, we believe that the first draft is far too ambitious with respect to the
Amber and Blue Boxes.  We also have major problems with some of the proposals relating to the
Green Box.  A second draft would therefore need to be fundamentally different from the first version
for it to provide a basis for further negotiations.
As an overall approach, the paper needs to target the most trade distorting elements. This
implies that the existing framework of the green and blue boxes should be continued and no caps
introduced.
Furthermore, as to AMS support, overall large reductions would only be possible if support to
exported products is penalised substantially more than support to products for the home-market.  We
have suggested that AMS support to products for the home market should be subject to a reduction of
20 per cent, while the export oriented AMS should be subject to a reduction of 60 per cent.
Moreover, we must address the erosion of the bound domestic support ceilings resulting from
inflation.  The erosion of domestic support commitments due to inflation reduces the predictability of
the multilateral trading system and increases the burden on countries that are already facing
constraints in their nominal domestic support commitments.  A more operationally effective
commitment in this area would make it easier to make larger concessions in terms of AMS reductions.TN/AG/R/7
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As to Blue Box support, a second draft must reflect the very fact that such support is far less
trading-distorting than Amber support.  Combined with production-limiting programmes Blue support
must be continued.
Finally, as to the Green Box we have major problems with several of the proposals, including
the ones relating to historic base periods that cannot be updated and the new restrictions suggested
with respect to environmental programmes.  Overall, we believe there is an urgent need to discuss
how domestic support can further non-trade concerns, within as well as outside the Green Box.  Some
of the concerns raised in Attachment 8 are common non-trade concerns of all Members, and we
should therefore consider whether such measures should be generally available.TN/AG/R/7
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Statement by Pakistan
Pakistan delegation welcomes your first draft of modalities. On the face of it, the document
appears to be balanced but a more careful study reveals that it fails to meet the aspirations set out byMinisters in the Doha Declaration.
In our view the main objective of modalities for further commitments should be to visualize a
situation where trade in agriculture is fully liberalized  in the next say 15 years.  This is the objective
which we set for ourselves in the preamble to the Agreement on Agriculture – "to establish a fair and
market oriented agricultural trading system" by "correcting and preventing restrictions and distortions
in world agricultural markets".  Unfortunately the proposals outlined in this draft do not meet thatvision.  Reduction commitment of 60 per cent on current tariffs of 90 per cent and higher would still
result in high tariffs on many commodities which are of export interest to developing countries.  In
our view, any tariffs which remain beyond 30-40 per cent, after the conclusion of these negotiations
would mean very little improvement in market access.  Moreover, tariff reduction formula does not
address tariffs peaks and escalations which will increase rather than decrease after the reforms have
been implemented.  Computer simulation models show that potential increase in trade in agricultural
goods will not be as much as we would have expected in the light of Doha mandate for substantial
improvements in market access.
Proposed reduction of export subsidies would have some, but limited, impact on prices of
agricultural commodities which have been artificially kept low.
We do not find comfort in your two-tiered appr oach to subsidy reduction commitments.  The
First Draft envisages phasing out of budgetary outlays and volume of subsidies (a) in five years for
agricultural products representing 50 per cent of the aggregate final UR final bound levels for allproducts subject to reduction commitments; (b) in nine years for the remaining products.  Considering
that export subsidies are the most pernicious form of anti-competitive trade practices we think we
should agree to an appropriate modality which allo ws for elimination, forthwith, of subsidies for the
first type of products and targets bringing down subsidies for the second group of products over a
five-year period.  Competitiveness of the majors should not be underwritten by allowing for continued
export subsidies.  In their recent statements both French President Chirac and EU Trade
Commissioner P. Lamy have conceded that subsidies hurt poor farmers.  Therefore, in the next draft,the Chairman can make more ambitious proposals.
With regard to paragraph 43 of your draft, we are of the view that there is no justification for
continuing with the Blue Box support measures a nd hence this box should be eliminated forthwith.
Your proposal in paragraph 45 (Amber Box ) regarding reduction of 60 per cent in the final
UR bound levels of AMS is not likely to result in substantial reduction of Amber Box support.  In our
view it will leave major players with substantial flexibility.  Therefore, they may not be obliged to
make any significant changes.
On paragraphs relating to Special and Differential Treatment (S&D ) we are of the view that
any traditional model of S&D treatment for developing and LDCs will not be adequate to provide
relief to these countries, if these remain best e ndeavour clauses.  An outcome that simply provides
longer implementation periods and lower commitments would not result in disbursing concrete
benefits to the developing countries.  Therefore, in the perspective of developing countries, which areat present handicapped and find it difficult to export to the developed markets, a different approach is
essential.  We need to ensure a level playing field by removing all distortions in agriculture trade.
This aspect is a pre-requisite to establish acceptable modalities for S&D and for ensuring progress in
these negotiations.TN/AG/R/7
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If we are serious to make this round a real development round, we all have to keep our
objective in focus while we agree on any modalities for further commitments.  If honestly liberalized,
agriculture is the sector which can result in exponential development benefits to all the Members
especially to developing countries and LDCs.
We would like to end our intervention on a positive note by appreciating the concepts of
"strategic products" and the termination of SSG  for developed countries in your draft.  We, however,
believe that in the case of developing countries, the availability of SSG should not be restricted toonly SP products.  In fact it should be avai lable for all products of developing products.
Finally, while we do appreciate your initiative in breaking the ice, we do not feel very
optimistic about the outcome.  The position seem to be entrenched which makes your task mostunenviable and difficult.  As you get into the tedious task of drafting a second document we hope that
you would be able to come up with a meaningful s econd draft that can provide some sort of a bridge
between the widely divergent positions maintained by Members.
This is no mean task.  You need a lot of support from Members in terms of flexibility and
accommodation.  We look forward to work closely with you towards this objective.TN/AG/R/7
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Statement by Paraguay
Market Access
Mr Chairman, first of all we concur with the delegations that emphasized the need to recall the Doha
mandate, and specifically the commitment by our Ministers "to comprehensive negotiations aimed at:
substantial improvements in market access".
Tariffs
As regards the section of your document concerning tariffs, Paraguay supports the use of the
Swiss formula presented by the Cairns Group and other delegations in this negotiating process.  It is
nonetheless examining your proposal of a harmonization formula as set out in the three subparagraphs
of paragraph 7.  On the other hand, Paraguay feels that this does not reach the level of effectiveness
and ambition set by the Doha mandate in order to achieve the reform of this sector sought for morethan 50 years, because it would have no impact on tariff peaks or tariff escalation.  The Australian
Ambassador gave the example of the current tariffs for processing a product such as rice pudding,
composed of rice, sugar and milk.
We would therefore urge you to revise this proposal and to seek some modality whereby all
high tariffs or tariff peaks restricting or even preventing market access would immediately be reduced
by a specified percentage, whereupon the harmonization formula would be applied for the proposed
five-year period.
Escalation
As for the reference to escalation in the paragraph that deals with the handling of products in
their primary form vs. processed products, we think it is a good idea to seek a more precise and
stricter approach to the issue, to avoid any misunderstandings in the future.
Non-Ad Valorem Tariffs
Turning to paragraph 8, we would like to see a single modality for calculating non- ad
valorem  tariffs so as to prevent any difference of interpretation if such calculations were to be left – as
your document suggests – to the discretion of each Member concerned.  We therefore reiterate the
proposal made by the Cairns Group and other Members to find a way of converting all tariffs into ad
valorem  tariffs.
Special and Differential Treatment
In order to assist all the developing countries without discrimination, we agree that it is
necessary to accommodate their particular needs and conditions.
Strategic Products
As regards the paragraph concerning strategic products, we are in the process of assessing the
possible impact and implications of this issue, primarily in terms of South-South trade, and hencereserve the right to return to  the subject at a later date.TN/AG/R/7
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Preferences
Turning to paragraph 14 on preferential schemes, we reiterate the position held by our
Delegation on previous occasions, which is that such schemes are highly beneficial to some
developing countries but have harmful effects for others.  Hence our concern that the current wordingof this paragraph may perpetuate the inequalities, inequities and imbalances in the multilateral system.
We believe that it is necessary to find a way to remedy such problems in these negotiations, for the
benefit of all Members, and urge you to continue examining the matter in your second draft of
modalities, with special emphasis on the Enabling Clause.
Tariff Quotas
We agree that tariff quota volumes should be expanded and that the process should take
account of Members making but little use of this modality.  Your proposal provides for an increase of
10 per cent of current domestic consumption of the product concerned, but this, in our view, is a very
modest figure if the goal is to achieve "substantial improvements in market access".  We would
therefore suggest that the percentage be raised to at least 18 or 20 per cent of current domesticconsumption.
Special Safeguard
We support your proposal to eliminate use of this mechanism by the developed countries.We believe that the developing countries should be able to avail themselves of some
mechanism of protection and defence against massive  imports of subsidized products, and we would
therefore welcome some provision to that effect in the second draft of modalities.
NTCs
Lastly, we would like paragraph 27 of your document to be deleted, because we have no
mandate in this connection (geographical indications, labelling, animal welfare).
Export Competition
Export Subsidies
Trade liberalization calls for the elimination of all distortions and unfair competition
mechanisms.
The focus of the section on subsidies in your document is, to our mind, consistent with the
ministerial mandate.  The timeframe is unduly lengthy, however, and we agree with many other
delegations that here elimination should be completed sooner than tariff reductions, that is, within the
shortest possible time.
As regards export credits, we share the views expressed by Argentina, Brazil and other
delegations that improved disciplines are needed to prevent the former from serving as a mechanism
for trade distortion and unfair competition.
We are in favour of reducing the subsidy component of export credits and government-
supported export credit guarantees and insurance programmes to the same extent as export subsidies.
We also consider that state trading export or import enterprises and transnational enterprises
holding monopolies that often wield greater power than States should be subject to disciplines.TN/AG/R/7
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Food Aid
We think that your document takes the right approach, but it should be more clearly drafted
and surpluses should be subject to disciplines.
Export Restrictions
For the developing countries, export tax is related to fiscal and food security issues;  it is by
no means a subsidy or a form of trade distortion.
Domestic Support
As regards the sections on Domestic Support in your first draft of modalities, the Delegation
of Paraguay shares and supports the views expressed by the delegations of the Cairns Group
Members.  What we are essentially seeking is a substantial reduction of all forms of agricultural trade-
distorting domestic support.
Paragraph 56 of the first draft of modalities concerning the possible introduction of additional
forms of flexibility for some developing country groupings makes no explicit reference to landlocked
developing countries, which we suggested should be taken into account in these "appropriate
treatment" negotiations, in order to enable such countries to enjoy the benefits offered by the systemwithout delay.
We would like this so-called Development Round to meet the hopes and expectations of
countries that are not sufficiently integrated in the multilateral trading system.  Above all, our hope is
that it will not turn out to be yet another Round that has attempted to make headway in a number ofspheres for the benefit of all Members, but has fail ed to address the needs of landlocked developing
countries.
Your first draft of modalities refers to docume nt TN/AG/6, in which you point out that a large
number of major issues remain outstanding.  We would therefore urge you – and stand ready to
provide any assistance and cooperation you may need in developing specific modalities – to include in
your forthcoming second draft of modalities special forms of treatment that accommodate theconcerns of landlocked developing countries.TN/AG/R/7
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Statement by the Philippines
General Comments
We thank you for issuing the draft modality, which we recognize as a product of your hard-
work and earnest attempt to forge this negotiation to establish reform modalities in time for the
deadline set to us in the Doha mandate.
We take comfort in the overall thrust of your paper which is broadly consistent with the
objectives of the reform process to achieve a market- oriented agricultural trading system as
confirmed in the Doha Declaration. There is a discernible track along this line, particularly in the areaof export competition where there is a definitive call for the elimination of export subsidies.
In market access, there is also a manifest drive to decrease border protection, although a
matter of concern is the likely asymmetries, instead of the desired harmonization, that would result
from the prescribed formula for tariff cuts, as well as the conservative approach to tariff quotas.
On domestic support the modality is likewise constructed to improve disciplines although
with a much lesser liberalizing bent.
We welcome the inclusion of concepts, such as that of "strategic products" which are intended
to address particular concerns of developing countries.  We also appreciate that S&D is dealt with as
an integral part of each pillar.  At face value, these provisions project a seemingly heavy orientation
towards developing countries.  Indeed, some countries have already hastened to criticize the draft for
what they perceive as a strong bias in favour of de veloping countries.  Unfortunately, at this point, we
have not come to the same conclusion.  Lest we be misunderstood, we do not say this to discredit thepurpose behind these provisions, but rather to point at the grave danger that their potential
effectiveness would be negated by the terms or provisos attached to them.  The enthusiasm by other
parties to reduce S&D to the minimum could result in tightly circumscribed conditions.
Moreover, viewed in tandem with the modest reform demanded from developed countries, it
is highly doubtful whether the S&D and other provisions for developing countries would translate to
meaningful flexibility for them.
We observe that the paper follows closely the structure of the present Agreement and clearly
envisages, once more, a disjointed approach to commitments in market access, domestic support and
export subsidies.  Herein lies the source of our great discomfort.  As it presently stands, the draft
modality seems to have ignored what many developing countries consider should be an overridingprinciple in this negotiations – the clear inter-lin kage in commitments in the three pillars that will
ensure the necessary and substantive balance in the outcome of this negotiation.  It is not evident how
the proposed modality could alleviate developing countries' disadvantaged positions under the present
agreement.  In contrast, what is clearly visible is that the modality would preserve, still to a large
extent, the wide array of trade-distorting instru ments for a few Members, while at the same time,
developing countries would be required to bring down tariffs which are already at comparatively low
levels.  We fear that this approach would no longer be sustainable for developing countries.  We must
say that a clear inter-linkage of commitments in th e three pillars is crucial for the sake of equity.
Anything short of an equitable outcome would be a betrayal to the development agenda of this round
of negotiation.TN/AG/R/7
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Market Access
Listening to the discussions during the past three days, we cannot help but note that the
development agenda of the Doha mandate appears to be receding in the background.  We wish to
bring that back to the foreground.
The developing countries must feel they now have an opportunity to correct the inequities
they perceive because of the imbalances that exist or may have even be aggravated by the Uruguay
Round.
Market access with respect to agriculture is key to the development of developing countries -
far more than it is to developed countries.
With respect to the proposed tariff reduction, cuts and caps must be applied to tariffs of
developed countries. All tariff peaks must be cut substantially to no more than 100 per cent in the first
year, down to 50 per cent by the third year, and reduced further to 10 per cent by the end of the
Round.
Tariff cuts and caps in developed countries should not be in any way linked with demand for
further tariff reduction in developing countries.
With respect to strategic products, as we have stated earlier, we see the potential of this
concept to address particular needs of developing countries.  However, we are also aware of the
problem arising from the lack of better guidance on what should constitute a strategic product.
Leaving the issue too open could result in an agreement on an arbitrary number that would not
necessarily offer flexibility for true strategic products but become a new way to impose quantitative
restrictions.  In this regard, we suggest discussing objective criteria to determine which would qualifyas strategic product with no limit in terms of HS digit number, but on value and accepted relevance of
the criteria, in effect setting down transparent rules based on criteria.
As a starting-point, we propose that staple crops should automatically be eligible.  We can be
guided by some definition of staple crops, for instance, that by the FAO.  For other products, another
criterion may be that a significant share of rural population is dependent on the product on a long-term
basis and that any disruptive impacts on its supply could cause social, political, or even peace andorder problems.
Domestic Support
The Philippines finds the Chairman's draft moda lities disappointingly least ambitious in the
area of domestic support by failing to bring AMS down to zero within an agreed period.  The
proposed reduction of 60 per cent in Amber Box appears high in terms of percentage but in absolute
terms would leave distorting domestic support meas ures at levels that would remain daunting to
developing countries.
We recall that in past discussions, a majority of Members have proposed to eliminate the
de minimis provision for developed countries.  The draft modality only goes as far as reducing by half
over five years the entitlement to this trade-distorting instrument.  Without prejudice on our position
to eliminate the Amber Box, we believe that the complete dismantling of the de minimis provision is
all the more significant in the light of the no n-elimination of AMS in the proposed modality.
We are happy to note that Article 6.2 has been retained with possible amendments to
accommodate additional exemption for developing countries' domestic support measures.  We recall
however, that some developing countries, including the Philippines, have also flagged the need toTN/AG/R/7
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enhance the legal certainty of this provision, by making sure that it would be immune from any
possible dispute challenge.
We have serious concerns with regard to the frail disciplines applied to the Green Box,
particularly the absence of a cap on the allowed levels of direct payments.  The proposed amendmentsto tighten the criteria of direct payments while desi rable, could not be a substitute to disciplines to
impose limits on the magnitude of support that should be channelled under the Green Box category of
policy measures.
Finally, the Philippines would like to bring to Members' attention, the simulation exercise
conducted by UNCTAD on the effects of the Chair's proposed modality to welfare improvement.
Such simulation indicates that the draft modality would have very little overall impact in welfareimprovement in developing countries, and even negative for least developed countries.  We deem
such a result to be grossly inconsistent with the Doha Development Agenda.  To avoid such an
outcome, we urge the Chair to ensure that a more ambitious reform would take place in agricultural
trade, in particular, through deeper cuts in domestic support, caps in tariffs, and elimination of export
subsidies in developed countries.TN/AG/R/7
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Statement by Romania
I wish to join those expressing thanks for the work done by you and the Secretariat in order to
have the first draft on Modalities.
I shall start by quoting from your first draft on modalities, the Doha Mandate and the spirit of
the Agreement on Agriculture:  the  long-term objective of negotiations in agriculture is to establish a
fair and market-oriented trading system through a programme of fundamental reform … and to
prevent restrictions and distortions in world agricultural markets.
Now if this is our objective, and the Doha mandate points at the areas: market access, better
rules and more fair trade, it is also extremely important to put as much as possible pragmatism in our
approach, not only ambition.
I do not know how to define the huge diversity of agricultural policies among our
membership.  There are countries where reform in agriculture has been completed or very close tothat, there are countries where reform has been carried out for many tens of years and Governments
still consider that the process should continue, there are countries where reform has not advanced not
because of lack of political will, but merely because of the scarcity of financial resources, and there
are countries as my own, where the objective of development and the resources dedicated to it had to
be redoubled during the process of transforming our entire activities into a functional marketeconomy.
There are delegations not eager to discuss the problems of the countries under this form of
dramatic transformation or to take into consideration their needs.  This is why I shall try to give you
some figures about agriculture in Romania, a deve loping country.  After 50 years of state property
over land and super-centralized policies, without any link to market rules, starting with 1990
ownership was given back to the former landowners .  Now we have more than 1.2 million landowners
(and I underline, landowners and not farmers) with an average area of 1.25 hectares.  The period after
1995 when the Uruguay Round started to be applied is obviously not enough to finish reform in
agriculture, mainly if you do not have a structure suitable to accelerate reform.
Does Romania need agriculture?  Could one third of its area, which is arable land, be left to
soil degradation?  Or more than 44 per cent of its population oriented toward other areas of activity?
Or in other words, when you have the soil and the population depending on agriculture, would it be
normal to rely on imports for your food?  Only because other countries completed their reform in
agriculture and became important exporters?  The effect of this disparity in reform is already
touchable:  the trade deficit for agriculture is important and we are now a net importer of agriculturalgoods.
And this, for a country which used to be an important producer and exporter in Europe.For us it is crucial to have the right to continue reform in agriculture.  The Agreement on
Agriculture preserves this right;  the DDA is reconfirming it now we have to establish such modalities
for negotiation so as to be sure that the reform process continues.
The present draft is too ambitious as far as liberalization is concerned.  It is proposed that
high tariffs were reduced by 60 per cent, medium ones by 50 per cent and lower ones by 40 per cent.It would seem that developing countries having higher tariffs have finished their reform and the
products for which they negotiated high tariffs need no more protection.
Unfortunately, this is not the case of my country.  Protection is still needed not only to allow
the process of reform but, at the same time, to put at equal footing the internal, not subsidizedTN/AG/R/7
Page 80
products, and the imports from countries capable to support their production and to subsidize their
exports.
In our opinion, in order to continue the reform process, ambitions in the area of market access
should not be larger than those in the Uruguay Round, at the most.
The idea of using the UR formula for market access in agriculture is not only a way to
preserve the right to continue reform in agriculture but, it is simple, allows for differentiation in
protection, according to the real conditions in each country and the policies already started.  The ten
years of implementation of the UR results will end in 2005.  There are many countries which did notsee the benefits of the previous round, but merely a larger access of imports on their own markets.  It
would not be appropriate to ask the same countries to accept larger tariff cuts than those who are themost important exporters of agricultural goods.
Applying the UR formula could eliminate the form of the drafted limited special and
differential treatment foreseen in the first draft pa per, as there could be proposed lower tariff-cuts and
a longer period of implementation for developing countries.  The selection of the strategic productscan also be done in a formula using average reductions.
We have seen the same huge ambition regarding tariff quota volume, domestic support and
certain export subsidies.
The imbalances noted in the area of market access are even more evident for these last areas.
In our view, these imbalances are so important that it is very difficult to start negotiations from such a
different treatment of the matters.
We would support modalities which are pragmatic and reasonable as to the increase of the
tariff quotas and which encompass all forms of export subsidy or export credits, food aid and other
distorting forms of supporting exports.
There are already studies which point at those measures of domestic support which are less
trade distorting.  If reform is to continue, this could not happen without the support of the
governments.  A reduction of 50 per cent of the Blue Box is ambitious but hardly acceptable!
A last point is that of NTCs.  Again, there is a common position in the Agreement on
Agriculture and in the DDA, but this matter is almost forgotten in the first draft.  And it might look
that many areas of huge interest and common agricultural policy measures used in Europe have been,
in a way, neglected.
Committed to the negotiations mandated at Doha, Romania will support all your efforts
toward such modalities which will enable us to really participate in these negotiations and, at the same
time to be capable to enforce the results of such negotiations, with the hope that the new opening of
the markets will benefit my country and that the process of reform in agriculture will not be brutally
stopped.
During the next discussions on the first draft, we reserve our right to intervene, on several
items, in a pragmatic way, taking into consideration the real needs of our country and how far our
agriculture could bear the challenge of further trade liberalization.TN/AG/R/7
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Statement by Senegal
Senegal has studied the First Draft of Modalities for the Further Commitments which you
submitted to us.  I would firstly like to thank you, and the Secretariat, for this document, whichrepresents an important step in the negotiations.
As you are aware, such an exercise cannot guarantee the total satisfaction of all concerned.
However, the document serves as a basis for di scussion, and is worth examining with a view to
making substantial improvements to some of its elements.
We note with satisfaction that the continued exemption of the LDCs from commitments has
been included.
Before turning to the main focus of my statem ent, I would like to associate myself with the
general statements made by Bangladesh on behalf of the LDCs, by Morocco on behalf of the African
Group and by Botswana on behalf of the ACP Group.
As regards market access, my delegation has focused its attention on three particular points:
Duty- and quota-free access for LDCs (paragraph 54)
In this regard there is a clear commitment by Member countries in paragraph 42 of the Doha
Declaration to "the objective of duty-free, quota-free market access for products originating from
LDCs".  The language of the draft text does not allow this objective to be achieved.  In our view, the
principle has already been established, and the current negotiations should simply examine the
modalities of the commitment, indicating, for ex ample, the time-limit for its implementation, which
could be set at a date prior to the end of the negotiations, i.e. as soon as possible.
Preferential schemes (paragraph 14)
We recognize your commendable attempt to deal with "long-standing preferences" with a
view to curtailing the erosion of margins which could result from tariff reductions.  However, the
formula that you have proposed will only serve to briefly postpone the process, when the idea isabove all to maintain preferential margins.  One ap proach to this situation may be to identify products
which are sensitive from the standpoint of Members' exports and to ensure that margins are
maintained for such products, it being understood that the identification criteria have yet to be
defined.  In any case, the 25 per cent of exports that you propose seems excessive, unless this figure
applies to several countries on a collective basis and not to one individual country.
Special safeguard mechanism (paragraphs 23, 24 and 25)
Your proposal regarding this issue would result  in LDCs being excluded from the benefits of
a special safeguard.  This exclusion would only make sense if exemption from reductions allowed allthese countries to respond to the situations targ eted by the special safeguard mechanism (falls in
import prices or surges in import quantities).  However, for several reasons this is not always the case.
Firstly, according to the schedules of commitments available from the Secretariat, certain LDCs
bound their tariff rates during the Uruguay Round.  Indeed, Senegal, as a developing country, bound
its own tariffs at that time.  Setting aside the high levels of bindings, the problem resides in theflexibility afforded to these countries in their use of tariffs:  for example, could they apply variable
levies within the limits of their bound levels?TN/AG/R/7
Page 82
I submit that the effect of the text would be to establish special and differential treatment to
the detriment of Senegal and certain LDCs, as the current special safeguard mechanism is a variable
levy, albeit one that is subject to restrictions.
To facilitate your drafting task, Mr Chairman, I suggest that you add the following paragraph
to this part of the text:  "It is agreed that LDCs which subsequently made binding or reduction
commitments on a voluntary or mandatory basis shall be afforded all the flexibility necessary in
situations in which other Members need to use a special safeguard mechanism."  In Senegal's case,
this wording would have the merit of removing certain ambiguities and uncertainties.  However, it is
understood that the other LDCs do not require this to be specified, if they are free from all
commitments in the WTO.TN/AG/R/7
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Statement by the Slovak Republic
Allow me to contribute to the joint statement on behalf of the CEFTA Plus countries
presented by the distinguished Ambassador of Slovenia.  At the outset we would like to thank you forthe preparation of this first draft of modalities in agriculture.  We appreciate very much all your
efforts done in this regard.  But my delegation cannot accept this first draft of modalities as a basis for
further discussion in agriculture.  We don't think that this draft is a balanced result of submitted
proposals that reflects our needs and interests.
According to the Doha mandate, we are of the view that non-trade concerns should be fully
reflected in the negotiations modalities.  As a part of a balanced package we insist on the inclusion ofNTCs, where specific rural development policies and the need for flexibility in domestic agricultural
policy should be fully recognized.
In regard to market access, our greatest concerns are connected with the proposed
harmonization formula for further reduction of tariffs.  We are of the view that this formula hasa number of negative effects, compared to the Uruguay Round formula.  Harmonization formula is
less flexible and can create serious damage for many countries.
We are also extremely disappointed with the proposal of the increasing of tariff rate quotas,
while the SSG should be eliminated.  In regard to  the SSG, we are convinced that Article 5 of the
Agreement on Agriculture for the entitled Members should be maintained until the reform process
will be completed.
We find the part on the export competition very unbalanced, especially in regard to export
subsidies elimination within the next few years, while other instruments of export subsidization likeexport credits remained undisciplined.  We insist on the equal treatment of all forms of export support
in accordance with the Doha mandate.  As far as export competition is concerned, the emphasis is put
down by the Slovak Republic at the export subsidies and their further reduction according to the UR.
Moreover, the Slovak Republic has been supporting a selective approach in reduction of future
committed limits according to importance of commoditie s.  With respect to the other issues under
export competition, the Slovak Republic joins those standpoints which are for clear and improved
rules and disciplines.
Furthermore, we are extremely concerned about the shifting of the minimally distortive Blue
Box to the trade-distortive Amber Box by its reduction by 50 per cent, whereas Amber Box should be
reduced by 60 per cent.  We are of the view that th e real differentiation between those two instruments
of the domestic support pillar should be fully reflected.  As far as the Amber Box is concerned, wesupport a further reduction of AMS in an aggregated manner.  In regard to de minimis clause, we
support the retaining of de minimis  rule in further commitments.
A special concern of my delegation is that our proposal for limited flexibilities for transitional
economies was totally disregarded.  We can support Special and Differential Treatment for thosedeveloping countries whose circumstances require such treatment and we insist on suitable reflection
of the limited concerns of transional economies.
In conclusion, I would like to underline that the Slovak Republic is ready to take
responsibility and remain committed to reaching an agreement on modalities that will have a morebalanced and comprehensive result for all WTO Members.TN/AG/R/7
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Market Access
The Slovak Republic wishes to join those countries which have been supporting the Uruguay
Round formula in further tariff reduction.  Your paper is going beyond our ambitions.  We consider it
practical in linkage with the UR continuity.  Li beralization during the last half century in non-
agricultural products has been very painful in more vulnerable, fragile and politically-sensitive
economies.  This formula is, as well, appropriate especially for agricultural products since it provides
flexibility in the light of selective approaches to tariff reduction in particular products.  This formula
type is convenient for the Slovak Republic which has lowered its duties significantly already duringUR negotiations, not because of low ambitions, but because of the painful and deep process which we
have undertaken in the last decades.  Here we would like to underline our proposals made during the
previous sessions in regard to transitional economies. Therefore, further rapid reduction according toother than the UR-formula would create serious damage to our agricultural sector.  For us it is a
question of having legal possibilities to protect such a sensitive sector.
The next issue under market access which we would like to touch on, is tariff quota
expansion.  We are ready to negotiate about the increase of the volumes of TRQs to a certain extent
but reduction of in-quota tariff rate reduction to zero level is a very sensitive issue and thus it is
deemed not acceptable.
As far as the special safeguard measure is concerned, we wish to underline the need of
temporary maintenance of this instrument until completion of the transition period.  Since the SSG
had shown its practical application in the UR impl ementation period, we consider it as very useful in
order to react flexibly against excessive import volumes or low prices.
Issues in the market access pillar like TRQs, SSG, NTCs should be seen in its complexity and
interrelations.
In regard to the LDCs, we are providing them duty-free and quota-free access.  We suggest to
spread out this approach to all WTO Members.
Export Competition
Let me comment on the part of your Draft relating to the pillar of export competition.
For the Slovak Republic export subsidy commitment is the most significant within export
competition.  The first draft proposing new reduction formula for export subsidies with their
subsequent entire elimination in the sixth year of imlementation is not acceptable for us.  The SlovakRepublic shares the proposal presented by the European Comission to reduce export subsidies by
45 per cent with a selective approach and possibility of phasing out export subsidies in (certain)
products, (or: in which subsidies were not utilised at all). Thus, the Slovak Republic is willing to
make a compromise as mentioned above.  However, maintenance of export subsidies in liberalised
extent for key commodities is of crucial significance for us.  The reason is that conditions foragricultural production in the Slovak Republic are limited due to the character and area of landscape
and thus our products can hardly compete with similar products produced by large Members.
Moreover, due to limited price support and export possibilities in the Slovak Republic the
subsidization is strongly important.
With regard to food aid we support establishing of principles which enable providing of food
aid for duly defined vulnerable countries in emergency circumstances but not for the purpose of
placing surpluses of agricultural products.  We enforce also the condition of fully grant form.  The
Slovak Republic keeps sharing the proposal presented by Japan to establish an international stock-
holding agency to store stocks for humanatarian purposes.TN/AG/R/7
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As far as export credits are concerned, we support strict disciplines;  it means that state-
supported and state-managed amounts and volumes of export credits should by bound and reduced in
the same rate as other forms of export competition.  To create fair international trade means moving
from export credit terms towards commercial terms.
Domestic Support
The Doha Ministerial Declaration committed all WTO Members besides substantial
improvement of market access to reduce all forms of support, especially those having trade-distorting
effects.  The same Declaration also encompassed  special and differential treatment for developingand least-developed countries by way of satisfying their development needs including food security
and rural development.  Paragraph 13 of the Doha Declaration comprises the idea which is taking into
account non-trade concerns, too.  However, NTCs unfortunately were not duly reflected in the
modalities elaborated in the first Draft.  It is the case of the Green Box package, modalities for which
did not incorporate NTCs in full extent.  It is not  our intention to repeat arguments mentioned during
previous sessions, but the proposal of Green Box categories, as set down in this Draft, is not
acceptable for our country.
With regard to the Blue Box, this category was considered during the Uruguay Round and the
subsequent implementation period as not- or minimally-distorting measures.  In this respect, keepingthis category in action, we do continue to support the existing level of Blue Box, setting down
provisions which ensure their appropriate and at the same time non-trade-distortive utilization.
Since the Slovak Republic shares the view that the UR approach should be continued, we may
consider  the reduction of total AMS up to 55 per cent.
We would like to emphasise also within this pillar the need of adequate taking into account of
new commitment implementation as well as NTCs characterised with specificity of agricultural
sectors among the WTO Members.  In this context the improved market access as well as substantial
reduction of all forms of trade-distorting support represent a major interest not only of developing
countries, but of all Members creating new rules of multilateral trading system.TN/AG/R/7
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Statement by Sri Lanka
Market Access
On Market Access, as stated yesterday, it is significant that strategic products have now been
recognised as an important concept in the negotiations.  We reiterate that recognition of SP products
should now be translated into effective measures in terms of product coverage, exemption from tariff
reduction and with a meaningful relationship to special safeguard mechanism.  On the suggestion that
SP products should be decided at a six-digit level it would be too restrictive as in order to
accommodate a certain product there may be need to cover three or even more tariff lines.  For
example rice has four tariff lines at six digit level.
Secondly, one of our concerns is centred on the proposed tariff cutting bands in your modality
paper.  We recognise very high tariffs and tariff peaks as high as 200 per cent should be lowered to a
maximum agreed level and thereby harmonizing tariffs.  However, as stated before, we question the
rationale for applying the same tariff reduction rate of 33 per cent to tariffs that are 120 per cent aswell as to 20 per cent thus treating 120 per cent and 20 per cent on an equal basis.  Therefore, tariffs
as low as 20 per cent to be reduced by 23 per cent and below 20 per cent by a minimum of 17 per cent
is unfair to developing countries who have low bound tariff levels.  Therefore, there is a need to create
a new band to address the reduction level of tariffs between 20 per cent and 120 per cent with another
simple average reduction rate in order to achieve a degree of equity.
Thirdly, on Special Safeguard Mechanism, in terms of your proposal for SP products
developing countries have the flexibility to apply SSG mechanism to be based on the provisions of
Article 5 of AoA.  However, developing countr ies who declare SP products and entitled for 10 per
cent tariff reduction cannot use the special safeguard mechanism, as products eligible for specialsafeguard will be subject to normal "three stage approach" as  proposed in paragraph 10.  We believe
that SP products and its negative relationship to SSM should be rectified.  There should also be more
clarity on what is being proposed.  Products to be designated under the SSM symbol will include
items already covered and designated with the symbol SSG by developing countries.  Does this mean
that developing countries who have a large number of products, for example a country with  293
items, where on certain products the tariff is also very high which are covered under the current SSG,
could decide to undertake a 10 per cent tariff reduction and designate them as SP products?  On theother hand, will the other developing countries have only a limited number of products, or will they be
entitled to the same number of products?  During the Uruguay Round, the only condition established
for having access to the safeguard provision was tariffication which means that high tariffs were
already in place for those products.  However, other developing countries will now be subject to
several conditions to have the right to use the safeguard provision:  (a) products must be strategic and(b) further tariff reduction should be undertaken fo r these products.  Under these conditions inequity
will be perpetuated.
However, our concern is that the proposal does not address the fundamental reason as to why
we were seeking a special safeguard mechanism.  Those countries who need a SSM are those whohave bound  tariffs at a lower level and the current lower bound tariffs do not permit them to address
import surges.  Therefore, for example for a countr y with a lower bound tariff level of 50 per cent to
say that if we choose to cut the tariff by 10 per cent, will not be entitled to use SSM, does not make
sense.  The new safeguard mechanism would be available to developing countries only after WTO
Members undertake a review of the current safeguard provision of Article 5 of the AoA, which  isinflexible and ineffective.  In paragraph 25 of the draft, participants are expected to undertake review
of the provisions of Article 5.  However, it does not say when.  In the absence of the type of safeguard
mechanism that will be available to developing countries they will not be able to decide whether they
could undertake the proposed 10 per cent tariff cut on SP products or opt for SSM.  Therefore, it
would be difficult for developing countries to decide which option to take by the time of drafting ofTN/AG/R/7
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schedules.  Therefore, a prior decision should be made on the type of the new SSM to be made
available to them.
As I stated yesterday, you have produced nine attachments to the draft on different issues.
Therefore, it is not unfair for us to expect an attachment on SSM with your second draft in March, asthis is an important issue to us.
Export Competition
We believe the elimination of subsidies as proposed in the draft goes in line with the Doha
Mandate.  However, the time frame proposed appears to be too long in particular, considering the factthat developing countries are being asked to substantially reduce their tariffs over the same time
period.
On paragraph 34 of your Draft, on S&D treatm ent many developing countries have argued
that Article 9.4 should be maintained.  Therefore, the proposal to maintain Article 9.4 for transportand marketing subsidies set out in Article 9.1(d) and (e) is a positive proposal which we endorse.
On export credits, under special and differential treatment on paragraph 10 of the
Attachment 4, in respect of import of basic food stuffs by LDCs and NFIDCs, we strongly support
that additional longer maximum repayment period of up to 30 months and differential and morefavourable interest rates should be provided to th em.  This is an important element for implementation
of the Marrakech Decision on NFIDCs since so far effective measures have not been taken to
implement this Decision.  Furthermore, meeting short-term difficulties in financing normal levels of
commercial imports is also of concern to these countri es.  In this context, we are concerned that under
the terms and conditions of export financing support in paragraph 4 (b) of Attachment 4, a minimumcash payment representing no less than 15 per cent of the contract value is required to be paid before
the starting point of the support credit.  It was due to short-term financing difficulties that these
countries proposed that a financing facility be created to address their concerns.  Therefore, in order to
implement effectively the Marrakesh Decision,  this minimum cash payment requirement should not
be applied to LDCs and NFIDCs.
On Food Aid, you have proposed to substitute the current Article 10.4 of the AoA by a new
Article as provided in Attachment 5 of the Draft Text.  We share the view that the definition of food
aid should be a broader concept and should be looked at not only from exporting countries'
perspective but also from the beneficiary countries' point of view as well.  Therefore, the definition on
food aid should not be too restrictive.  Concessional food aid is also important from the perspective of
food recipient countries and the WTO disciplines on food aid should take this into account.  It is alsonecessary to ensure that donor countries maintain the same level of food aid during the time of high
prices and when there is a shortage of supplies in the world markets.  The approach to food aid could
be on the basis of concepts already developed within the framework of the Food Aid Convention
including "the principles of surplus disposal and consultative obligations" and the system of  "usual
marketing requirements".  However, the framework of the Food Aid Convention, surplus disposal and
Usual Marketing Requirements lack a surveillance mechanism with a linkage to the work of the
WTO.  Therefore, the proposal that any Member may raise matters relating to donor member's
compliance with these principles and requirements under Article 18.6 of the AoA will provide this
vital linkage.
Domestic Support
On Domestic Support measures, under Special a nd Differential Treatment, you have proposed
in Attachment 8 possible new elements to be included under Annex II of the AoA.  Under these newTN/AG/R/7
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proposals the inclusion of a new paragraph 6 bis to allow payment to maintain domestic production
capacity of staple food crops for food security purposes and payments to small-scale family farms for
the purpose of maintaining rural viability and cultural heritage, are important.
While we welcome these proposed new elements, as well as other modifications for payment
to small-scale family farms these would entail di rect payments to farmers.  However, for most
developing countries with large agrarian populations made up of small farmers, the difficulty is that
they lack the financial means to provide direct payments to family farms.
As proposed in paragraph 48 of the draft maintaining provisions of Article 6.2 of the
Agreement and enhancing this Article as outlined in Attachment 9 to the Draft are positive and
important.  Article 6.2 deals with assistance whether direct or indirect to encourage agriculture and
rural development, in particular investment subs idies and agriculture inputs subsidies to low-income
resource-poor farmers.  Maintaining this Article and its expansion would address some concerns of
low-income, resource-poor farmers who are subsistence level farmers in many developing countries.
Therefore, measures such as transportation subsidies for agriculture products and farm inputs to
remote areas, marketing support programmes and programmes aimed at compliance with quality andSPS regulations, capacity building measures with the objective of enhancing the competitiveness and
marketing of low-income, resource-poor producers and government assistance for risk management ,
are important.  Therefore, we would support your proposal to enhance the provisions of Article 6.2 of
the AoA.  However, at the same time we should stress that the main constraint for developing
countries is the lack of financial resources to provide such assistance to low-income, resource-poorfarmers.
However, we would like to share the concern as expressed by Malaysia on the language in the
Chapeau of Attachment 9 which may limit the use of the provisions of Article 6.2.  Therefore, the
language of the Chapeau may need to be looked at.  We also would like to support the Indonesianproposal that SP products should also be co vered under the provisions of Article 6.2.
Another important proposal by developing countries related to Article 6.2 has been the need
to protect these measures from challenges based on the Subsidies and Countervailing Measures
Agreement.  Therefore, measures under Article 6.2 should not be subject to SCM Agreement.TN/AG/R/7
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Statement by Switzerland
We pay tribute to your attempt to present a first paper on modalities and we positively
appreciate the difficulties of your task given the controversial positions of Members in thisnegotiation.  Our criticism is addressed to the authors of various approaches rather than at yourself.
Let me stress that the Swiss mandate derives directly from our Constitution, which stipulates
a market-oriented agriculture as well as the multifunctional dimension of our agricultural policy;  this
means yes to market signals but with full respect of non-trade concerns.  We have engaged in further
agricultural reforms since the end of the Uruguay Round implementation period and there is a furtherreform programme currently discussed in Parliament.  I am under strict instructions to make thefollowing remarks:
We agreed in the Uruguay Round (Article 20) as well as in Doha to make one more step of
progressive agricultural trade liberalization.  Unlike some Members try to make us believe, we are not
now discussing the last step.  The Agreement on Agriculture was the starting point of these successivereform steps in Switzerland (for all product groups, in particular dairy and cereals).  We want these to
go on.  With the present set of approaches this goal will not be achieved.
The approach which is in front of us can only satisfy a very small number of large
competitive exporters.  Whilst it certainly contains positive elements in areas like food aid or exportcredits, we are surprised by the level of ambition, the lack of distinction between totally different
situations and as a result a totally unbalanced approach.  Some repeat the myth that there is a
historical imbalance.  There is not.  GATT 47 treated industrial and agricultural goods in the same
way.  Practice showed that this did not work.  The Marrakesh Agreement takes partly care of these
differences.  Furthermore, we deeply regret and are concerned by what is lacking in this paper simplybecause no serious efforts are made by otherwise ambitious Members to put the negotiations rules on
track, whether they are inside or outside the three pillars and especially to allow a better taking intoaccount of non-trade concerns.  As long as this process has not seriously started and specific
modalities have not been developed for these issues as well, we doubt how we could come to an
agreement on modalities by the 31
st of March.  We also resolutely oppose a two-tier approach as
mentioned in paragraph 4 of the first draft of modalities.  In other words, without knowing the rules of
the game both within and outside the three pillars, we cannot and we will not be able to seriously talkfigures.
For these reasons a new paper must be fundamentally different in order to serve as a basis for
negotiations on modalities.  In this respect I agree with some of the earlier speakers like Slovenia,
Norway, Hungary, Poland, the Czech Republic, Bulg aria, Chinese Taipei, Romania, Mauritius, Korea,
the EC, Japan and Estonia.  In particular we have first to agree on the rules for which the Second
Draft of modalities could become an initial basis.  These rules include issues outside the three pillars.
Among net importers supporting their agricultural sectors you have those with strong export
interests, those with some export interests and those which are just importing.  These situations haveto be dealt with differently as they imply differen t degrees of vulnerability.  That is why the idea of
modulation with regard to the three pillars might be useful.
The discussion would have been much easier without reduction figures since they have
largely missed the target and since they divert the attention away from the systemic discussion.Another much less ambitious shot may therefore reach the target of progressive liberalization, taking
into account S&D in the sense of different development situations as well as all NTCs .
In market access (let me remind you that Switzerland with its 7 million inhabitants is the
eleventh largest importer of agricultural goods in the world) the level of ambition is so high that itTN/AG/R/7
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would mean the end of agricultural activities in countries like mine.  This is in violation of the FAO's
food summit's principle that each country has a right to its own agriculture.  Furthermore, the
approach would certainly not enable us to find a political majority in the likely Swiss public vote
(referendum) on the results of our negotiations.  The Uruguay Round formula is the only possible
approach for us.  The harmonization approach is politically not feasible and is way above the Dohaobjective to proceed with substantial market access improvements.  Furthermore, there is a serious
conceptual problem with the fact that substantia l market opening should be performed without a
special safeguard mechanism.  Depriving countries during a reform process of such a mechanism
would lead to a blockage of the internal reform process.
With regard to export subsidies we are ready to agree to substantial cuts with a view to
phasing out all these subsidies in the next round.  Present efforts to address also export credits and
similar support measures are appreciated but not yet up to required levels of precision since they
allow for too many loopholes.  The same is to be said for export restrictions.
With regard to domestic support we note again an over ambitious approach, which risks to
block the internal reform process.  Furthermore, we do not agree with the proposed changes of
Article 12 of the Green Box except for the fact that it should explicitly cover payments to compensate
for higher costs due to higher animal welfare standards.  We support the idea to maintain the peace
clause for the whole process of reforms.
Let me reiterate what my Minister recently said:  the "Leitmotiv" of our endeavour is to come
to a fair and equitable outcome, as mandated by the Doha Declaration.  My Government is concerned
about the lack of balance both in the approach and in the figures chosen in the First Draft of
modalities.TN/AG/R/7
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Statement by Tunisia
Market Access
My delegation is grateful to you, and the Secretariat, for your admirable efforts in producing
this first draft of modalities.
With regard to tariffs you are undoubtedly aware that they are the developing countries'
principal means of protecting agriculture against subsidized exports from developed countries.
Furthermore, Tunisia, like other Mediterranean and ACP countries, enjoys preferential arrangements
which cover most of its agricultural trade.  We endorse the statements made in this respect by thedelegations of Mauritius, Morocco, Kenya, Swaziland and Botswana, amongst others, concerning the
clarification and reinforcement of the text on preferential schemes.
Consequently we feel that the approach adopted during the Uruguay Round is the only
approach which is realistic enough to produce balanced results and which is able to minimize thenegative effects that the new reform process would have on our economy and agriculture, particularly
the erosion of preferences which may be sustained by a NFIDC such as Tunisia.
In reference to paragraph 9 of your draft of modalities, we welcome the notion of strategic
products.  The list of such products needs to be as wide-ranging as possible and based upon self-determination.  Strategic products should be exempt from new reduction commitments.
As regards the paragraphs on tariff quotas, we feel that it is necessary to redefine the concept
of quotas so that the amounts are calculated according to the average level of imports over the most
recent years.  Once that job is done, we will then be able to discuss the revision of quota volumes.
In reference to paragraph 20 of your draft, we endorse all the proposals aimed at maintaining
the current levels of in-quota rates, given that these rates are already very low. 
With regard to the special safeguard provisions, we approve of your proposal to review the
provisions of Article 5 of the Agreement on Agriculture.  However, we insist that this review be
carried out before any agreement is reached on th e modalities for further agricultural commitments.
To this end, we would like the coverage of the revised special safeguard mechanism to be
extended to other products.  We also endorse the statements made by Argentina and Sri Lanka
regarding the creation of new compensatory mechanisms.
Domestic Support
As regards domestic support measures, we appr ove of adding new measures to the green box
which respond to the developing countries' non-trade-related concerns.  Such measures should address
two issues – ad hoc aid and the promotion of production with a view to ensuring food security.
- Ad hoc aid is distributed in the event of a natural disaster such as drought, thereby
allowing inputs to be subsidized and other operations to be carried out which ensure
the safeguard and recovery of the means of production.
- Promoting production with a view to ensuring food security involves all measures
aimed at encouraging the production of food products destined for local consumption,
including the market price support policies for these products.TN/AG/R/7
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As far as the amber box is concerned, your second draft should allow the developing
countries to exclude, from the calculation of the AMS, the support generated by the market price
support policies for agricultural products destined for local consumption and for which price support
is used for food security reasons.
With regard to the AMS reduction rate, we notice that your first draft is very ambitious.  In
this respect, we urge you to allow an AMS reduction rate for developing countries which is equivalent
to that agreed in the Uruguay Round, that is to say 13 per cent over 10 years.  The reductions should
be overall and not per product.
In reference to paragraph 56, we would like your second draft to include the category of net
food-importing developing countries (NFIDCs) alongsi de the vulnerable developing countries, so that
benefit can be derived from additional forms of flexibility in the commitments of the new round.TN/AG/R/7
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Statement by Turkey
Market Access
Stemming from the  reality that  tariffs are the  main instrument to ma intain the sustainability
of the agricultural sector of a country not having a special safeguard mechanism, complex tariffs, a
large amount of internal support or export  competition tools, Turkey considers the market access
issue as the most sensitive pillar of all the negotiation process.
Since the beginning of the negotiation process, we have repeatedly addressed how important
tariff protection is against the heavily subsidized agricultural imports from developed countries andthat further tariff reductions can only be considered provided that the developed countries
substantially reduce or eliminate the export subsidies and domestic supports unfairly distorting
agricultural trade.
From this perspective, the Uruguay Round Formula has been favoured for further tariff
reductions as the only appropriate method responding to the needs of developing countries by
allowing necessary flexibility especially for the most sensitive agricultural products.
Against this background, we are dissatisfied with the proposed  formula.  We do not think that
it is applicable categorizing the agricultural tariffs into three groups which will result in deep cuts.
Turkey supports the continuation of the Uruguay Round Formula for further tariff reductions
on the basis of increased proportional differences between the commitments of developed and the
developing countries.  With a view to eliminatin g existing imbalances, developing countries should
have the flexibility to identify some key or stra tegic products to be exempted from further reductions
or be reduced at minimum levels.
We have noted that the draft text of modalities provides a flexibility of applying lower rates
of reductions in a longer period of time for the "strategic products" of developing countries to be
listed in their Schedules of Commitments.  Althoug h provided flexibility for "strategic products" is
appreciated, the effectiveness of this approach will depend on the coverage with respect to food
security, rural development and livelihood security concerns.
We are certainly of the belief that the developing countries are in need of more than proposed.
In other words, the framework of flexibility for strategic products should be as large as possible to the
extent to cover the major concerns of developing countries like food security, rural development and
livelihood security.  Grouping of strategic products at 4-digit level instead of 6-digit may be helpful inextending the coverage of flexibility if we are really seeking some meaningful solutions to the
benefits of developing countries.
To give an example, can we assume fresh and chilled forms of a product as "strategic" while
frozen forms of the same product as non-strategic?  Developing countries where the degree of verticalspecialization in the food industry is relatively low, a food product is strategic or not in its entire form.
On the other hand, describing the strategic food at 6-digit level may result in trade diversion between
the tariff lines circumventing the objective of measure.
Another issue for the developing countries is their  lack of  opportunity, to apply both
minimum reduction rates and SSG for their strategic products.  Within this context, the sentences
written in the brackets in paragraphs 12 and 24, laying down conditionalities in the proposed draft text
should be removed.TN/AG/R/7
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We would also like to draw your attention to paragraph 8 on the tariff reductions for
developed countries.  Within the framework of the proposed methodology for the calculation of the
tariff equivalents, it is understood that developed countries will de facto continue to apply non- ad
valorem tariffs in the aftermath of the conclusions of the Schedules of new commitments.
As we have previously mentioned during the negotiation process, for the sake of
simplification and transparency, all specific and complex tariffs should be converted into ad valorem
ones and be consolidated.
And we invite the Members using these forms of  tariffs  to do so.  Otherwise, Turkey will
assume Members in general perceive the specific and complex forms of tariffs are also transparent as
much as ad valorem ones.
As it has already been mentioned, the SSG provision is one of the most unfair practices in the
AoA, used generally by developed countries.  Examining the proposed framework for the provisions
of Article 5 of the Agreement on Agriculture on Special Safeguard measures, it is understood that
developed countries will continue to apply these measures as long as the implementation periodcontinues or even two years after the end of the implementation period.
The proposed S&D treatment for developing countries for the SSG measures that are to be
applied for designated strategic products in compliance with their development needs is a  positive
step towards balancing the rights of these countries.
However, it is believed that current formulation provides the applicability of SSG measures to
only those strategic products which are subject to  minimum tariff reductions.
Developing countries should not be forced to choose either applying SSG measures or
applying minimum tariff reductions for the SPs within the framework of S&D.
As I have also stressed in my speech regard ing tariff commitments, the sentences written in
brackets in paragraphs 12 and 24 of the draft text should be removed.
Domestic Support
Amber Box
Turkey has declared before its support to eliminate trade-distorting domestic support over de
minimis level.  In this respect, 60 per cent reduction in AMS over a period of 5 years as a commitment
for developed countries does not fully reflect our expectation, and satisfy our mutual demand on the
way of liberalization in agriculture.  However, we welcome the suggestion in paragraph 45 of the
draft modality paper as an initial important step.
We also would like to reiterate our previous proposal in this point that the de minimis
domestic support should be included in the calculation of non-exempt AMS and be eliminated or
substantially reduced in an agreed time period.  Since it is one of the few points of mutual agreement
that the supports under AMS categorization are the most trade-distortive measures, there is no count
whether or not they exceed the de minimis level.  When the magnitude of AMS level used by
developed countries is taken into consideration, the inclusion of de minimis level in calculation of
AMS is going to be meaningful in terms of reducing trade-distorting effects of this category.
On the other hand, because of the fact that most of the developing countries have notified zero
level of AMS at the end of the Uruguay Round, they have limited themselves with the de minimisTN/AG/R/7
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level.  Nevertheless we welcome the proposal to maintain the de minimis level at 10 per cent as an
S&D treatment in paragraph 51.
Blue Box
We have heard various arguments of different parties on the nature and future of Blue Box
measures since the beginning of negotiations.  However, it is our understanding that this paper intends
to maintain the Blue Box category.
I will take this opportunity to address the imbalance in the paragraph 44 regarding S&D
treatment.
The draft text builds the new implementation period on the hypothesis to maintain one way or
another the Blue Box payments in paragraph 43.  Yet, in such a construction, the maintenance of this
measure for the developing countries is clearly limited simply to the present users, under S&D
treatment in paragraph 44.  It is a crucial deficiency of this paper to limit the users with the present
ones and deprive of the others ever to use a measure, which would continue to be legitimate in thenew implementation period.
It is our expectation that this round of negotiations should put an end to the injustice of the
existing Agreement.  As a result of the UR, developing countries have been locked into providing
very little support of AMS nature even if they would have the funds to support agriculture in thefuture.
The proposed wording of the S&D treatment for Blue Box measures seems to create the same
type of inequities experienced before.
To sum up, paragraph 44 should be improved in the next modality paper to grant the right to
all developing countries to use or introduce Blue Box measures in any time, in the new
implementation period.
Green Box
Turkey has declared on different occasions its support on the continuation of Green Box
measures within the framework of Annex 2.  A numbe r of reasons force developing countries to adopt
a cautious approach on the use of Green Box supports particularly by the developed countries.  It is a
fact that further commitments to reduce Amber Box measures would oblige developed countries to
shift their support instruments towards exempt support measures.
The total amount spent in the Green Box category by even all developing countries is much
less than some individual developed countries due to various economic and financial reasons.  Though
there is a general understanding that the Green Box measures are the least trade-distortive, it is a
necessity, as many Members in this room have many times pronounced, to introduce clear definitions
and set of rules in compliance with the objectives of Annex 2 of the AoA.
Although we welcome the addition of the reference to "fixed and unchanging historical base
period" to paragraphs 5, 6, 11 and 13 of the Annex 2, in Attachment 7 of the modality paper, as a
positive improvement in order to prevent misuse of this provision, we are still of the belief that a cap
has to be established in respect of payments under paragraphs 5, 6, and 7 of Annex 2 of the AoA fordeveloped countries.
On the other hand, the modification on paragraph 7 of Annex 2 is far from either a capping or
clarification, but somehow broadens the amount of relevant payments.TN/AG/R/7
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For the Attachment 7, it is understood that some of the proposals of the Members have been
taken into consideration.  Yet, the general structure of the Attachment 7 is still unclear and thus does
not respond to the needs of developing countries.  It seems that there still remain many flexibilities,
which can easily be misused.  No need to renew that we are obviously against any movement to
broaden the scope of Annex 2.
On the other hand, Turkey welcomes the possible new elements of S&D treatment for further
consideration.  However, as mentioned for Attachme nt 7, also in Attachment 8, different proposals of
Member countries, which sometimes reflect country-specific needs and conditions, are to be laid
down as they are.  So, this positive involvement in th e modalities should be improved so as to reflect a
"common understanding" of all the developing countries.  As a contribution in this regard, we propose
for the new paragraph 6  bis to be broadened in scope from merely staple "crops", also to include
staple "animal products".  Alternatively, these products can be renamed  as "staple food products".
Briefly, with respect to the proposal on pos sible new elements in Attachment 8, Turkey
appreciates the work already done.  However, we once more would like to stress the need for
clarification of proposed provisions here in order to better understand and the need for improvementof a common understanding for all developing countries with respect to variable needs and concerns
to avoid from accommodating  new types of measures that could be as much trade-distorting as they
were in their previous box.  Turkey is ready to work with other developing country Members to
improve the relevant new elements.
Article 6.2
Turkey would like to express that possible amendments for further consideration with respect
to Attachment 9 for the continuation of Article 6.2 of AoA, clearly reflects many different proposals
and concerns of developing countries.  We apprecia te the work that enabled to tailor much of them in
a skilful manner.  For the review of this modality paper, Turkey proposes to keep all the concerns laid
down presently, or according to the relevant proposals, which would come from other developing
country partners to elaborate or improve the existing structure.  We are ready to work with you and
other Members.TN/AG/R/7
Page 97
Statement by Uganda
A majority of previous speakers have not rejected your first draft in its entirety.  This reflects
the effort you put in its architecture.  I wish to indicate the areas in your draft where we finddiscomfort.  However, to be fair to you, I will also indicate those areas where we find some comfort.
Market access
The concern of my delegation under this pillar is the erosion of preferences without an
appropriate compensatory mechanism.  We should like to see commercial value retained in the quota-
free and duty-free market access opportunities and other preferential schemes given to developingcountries.  What is provided in the paper under preferences does not sufficiently address our concern.
Special and Differential Treatment
We welcome the approach of mainstreaming S&D.  However, much of the S&D provided for
in the paper concentrates on longer implementation periods and lower reduction commitments.  More
substance is required.
Export Subsidies
There is need for greater ambition in this area.  Export subsidies are a double-edged spear.
They unfairly render products of weak economies not competitive on the international markets and
worse still even in their own domestic markets.
Domestic Support
This is an area where you left the greatest task unresolved.  More ambition is needed to
restrict trade-distorting support.  Major markets of interest to developing countries remain closed
through the window of domestic support.  As you may have noticed from the Secretariat's paper on
use of domestic support, Uganda, for obvious reasons, has not used any of the provisions of the boxes.
LDCs
We welcome the unconditional exemption of LDCs from reduction commitments.  What is
missing is the explicit guarantee of duty-free and quota-free access to assure us that it will not at some
time in the near future disappear while some countries are still LDCs.
Strategic Products
We applaud the idea and hope to contribute to its further development for it to be of practical
value.  One preliminary comment is that the concept of strategic products as presented is static.  In
some developing countries especially LDCs strategic products are complex to determine and couldchange in a short time.  Therefore there should be in -built flexibility for countries to determine as well
as be able to add to the list during the implementation period.
We submit that the strategic products be exempted from reductions and this new provision
should be delinked form the new SSG for developing countries.TN/AG/R/7
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Non–trade concerns
The non-trade concerns that you mention in paragraph 25 of your paper are of great
importance to us and we look forward to the WTO membership ensuring, as you put it "that these
provisions are operationally effective and enable developing countries to effectively take account oftheir development needs, including food security, rural development and livelihood security
concerns."
Lastly, we believe that the reform of the Agreement on Agriculture (AoA) should be fair and
equitable and our interpretation of fair and equal treatment entails treating the unequal unequally.TN/AG/R/7
Page 99
Statement by Venezuela
First of all, I would like to thank you for preparing and ensuring that the first draft of
modalities was available for discussion this week.  Its structure will indicate to us the course to taketowards Cancún and beyond.
It was undoubtedly very difficult for you to draw up a document that reflects the highly
divergent positions and interests expressed in this Committee, which have served to increase our
understanding of how complex and sensitive this issue is for many Members.
We must nevertheless do our utmost to reach a consensus so that the outcome of these
agricultural negotiations responds to the Doha Mandate and, above all, produces equitable results that
specifically take into account special and differenti al treatment, thereby establishing that the Doha
Agenda really is an agenda for development.
We support your proposal to end export subsidies and to accord special and differential
treatment for certain products of strategic importance for our agricultural development.  In both of
these respects, there is a significant correlation between the Doha Mandate and your document.
However, Mr Chairman, even though your first draft is unquestionably a good starting point
for the preparation of negotiating modalities, we must take account of the fact that the document setsvery ambitious goals for the developing countries, specifically in terms of market access, while the
developed countries are given a great deal of flexibility in the other two pillars.  This is a waste of an
excellent opportunity to address the existing imbalances in this Agreement and to achieve the
interlinkage that we are hoping to secure in these negotiations.
We have analysed with care your innovative proposal for tariff reduction through the
introduction of different bands and tariff cuts.  In our opinion, it does not seem well balanced to
accord the same treatment to a 120 per cent and a 20 per cent tariff, and the proposed extent of the
tariff reduction appears highly ambitious for Venezuela and the other developing countries.
Therefore, it would be more appropriate for this tariff range to be divided into two parts, one
for tariffs between 120 and 60 per cent and the other for those between 60 and 20 per cent.  For thelatter group, the average reduction rate should be at least 20 per cent.   It is necessary to bear in mind,
that almost all our agricultural products fall into th is category, and that, as we have stated at previous
sessions, tariffs are the only means of developing agriculture in our countries.
However, our latest tariff reduction proposal to establish a maximum tariff of 50 per cent in
the first three years of implementation and an average reduction of 50 per cent from the fourth to the
sixth year for the developed countries, and a single average reduction of 25 per cent over ten years for
developing country Members, is, in our view, sufficiently balanced to address the huge differences
between developed and developing countries.  Moreover, it addresses one of our greatest problems:
tariff peaks.
As we have already mentioned, although we support the creation of a list of strategic products
for the developing countries, it is essential that such a list should not be restrictive but should be broad
in scope and flexible enough to include a considerable number of products.  Therefore, these products
should be listed under the four-digit headings;  in addition, each Member should have sufficientflexibility to apply its own criteria in selecting the products. The concept of strategic products has
been linked, in your text, to the safeguard mechanism for developing countries, which constitutes a
serious constraint in terms of preparing the list.TN/AG/R/7
Page 100
Furthermore, while your proposal on the special safeguard mechanism, appears, in our view,
to be acceptable, it is important to bear in mind that such a proposal should not be linked to tariff
reduction;  in addition, the points raised by developing countries in past sessions should be taken into
consideration and, most importantly, the proposal should be clearly defined before we prepare the
schedules that we have pledged to submit in Cancún.
Another aspect that needs to be taken into account is that the time-frames for developed
countries must be interlinked and proportionate to their level of development in all three pillars of
negotiation, particularly with regard to the elimination of export subsidies.  Such subsidies must end
in five years – and not in ten – for these countries,  thereby linking this pillar with the one on market
access.
Similarly, in the administration of tariff quotas, special and differential treatment should
provide enough flexibility for our countries, including in terms of absorption of domestic crops, and
should also open up opportunities for access to the tariff quotas of developed country Members.
However, your document does not appear to reflect these concerns.
In conclusion, we are of the view that taking  these points into account and incorporating them
into your document would result in a set of modalities that would effectively respond to the mandate
established by our Ministers and, in particular, take a balanced approach in addressing the disparities
between developing and developed countries in the agricultural sphere.TN/AG/R/7
Page 101
Annex 4
Statements by Members at the Formal Special Session of the Committee on Agriculture
held on 28 February 2003
Statement by Australia
As you had probably expected, we in the Committee have done little this week to make the
task of agreeing on modalities by the end of next month any easier.
We all understand that the onus is on us, as Members, to build the bridges, but it seems that in
the present climate this is not possible and that Members would rather delegate the heavy lifting to
you.
You put forward the first draft on time in accordance with the agreement we made last year.
The text reflected your judgement of what, on the basis of proposals made by delegations, would be
required to meet the mandate.
You have indicated your intention to re-draft the text in the light of the suggestions and
reactions which have been made this week.
You should take encouragement from the fact that, despite the multitude of advice received
from delegations, no-one has rejected the text as a basis for further work.
You should also take encouragement from the fact that whilst we have differing perspectives
on how it should be interpreted, no delegation has repudiated the mandate their Ministers agreed at
Doha.
We all know that that mandate called for a substantial improvement in market access, the
phasing out of export subsidies and substantial reduction in trade-distorting domestic support.
You should also take encouragement that all delegations are committed to the 31 March
deadline.  I think we all know the consequences of a failure to meet that deadline.
We look forward to seeing the revised draft next month.  We think that behind the strong
statements that have been made there have been some useful suggestions as to how it might be
improved.
The ideas that come to mind include:- the support for an earlier phase out of export subsidies along the lines proposed by
President Chirac;
- the strong support in this house for a more substantial reduction in trade-distorting
domestic support which will be critical if developing countries contribute to market
access;
- the support for a tiered approach to the reduction of domestic support, along similar
lines to those you have suggested for tariffs;
- the suggestion for a cap on all tariffs, one for all developing countries and another for
developed countries;TN/AG/R/7
Page 102
- the notion of raising the ambition in all three pillars but providing for a longer
implementation period;
- the adoption of criteria for sensitive products for developing countries.
However you redraft the paper, we in the Cairns Group urge you to remain fully faithful to the
Ministerial mandate.TN/AG/R/7
Page 103
Statement by Barbados
As we draw to the close of this Special Session, it is clear that we continue to have widely
divergent positions on how further agricultural reform should proceed. In seeking to bridge thesegaps, we feel that your second draft should focus on two elements  viz., the inter-linkages between the
three pillars of market access, export subsidies and domestic support, as well as the need to strike a
balance between the differing levels of ambition demonstrated thus far.  In so stating, we are in no
way seeking to go against the Doha mandate, indeed, Barbados remains committed to the process of
agricultural trade liberalization.  However, we stress, and it should not be forgotten, that the Doha
mandate, in addition to speaking of "substantial improvements in market access; reductions of …
export subsidies; and substantial reductions in trade-distorting support" also states that:
"… special and differential treatment for developing countries shall be an integral
part of all elements of the negotiations … so as to be operationally effective and to
enable developing countries to effectively take account of their development needs,
including food security and rural development."
We also wish to take this opportunity to reiterate the importance of non-trade concerns and
the need to ensure that they are adequately and ef fectively addressed within any elaborated rules and
disciplines.  We make this point from the perspective of a SIDS which is also a NFIDC and which has
a small, relatively uncompetitive agricultural sector, but one which nonetheless plays a critical role
within our economy over and above purely commercial considerations in terms of food security, ruraldevelopment/poverty alleviation and protection of  the environment.  Indeed, as my Ambassador
mentioned earlier this week, the only ambition that has motivated our responses thus far is that of self-
preservation.
It is also from this perspective that we look forward to seeing in your second draft enhanced
and improved provisions dealing with preferences, as well as drafting details in respect of
paragraph 56.  We also look forward to the elaboration of further details regarding strategic products,
which we find is a useful concept.
As an aside, I wanted to briefly pick up on a point raised by the distinguished Ambassador of
South Africa when speaking of the plight of preference-dependent countries.  My delegation
appreciates and fully supports his call for increased financial and technical assistance to thesecountries to help them diversify into other products.  However, I also hasten to caution that while
welcome, these measures cannot overcome the inherent constraints/vulnerabilities which countries
such as Barbados face in the area of agriculture, and which necessarily condition our responses within
the agriculture negotiations.
Finally, I wish to assure you of my delegati on's continued support during the upcoming weeks
as you work on a second draft of this paper.  We hope and trust that you will be able to incorporate
therein the views and comments we made during the course of the week.  I also request that the
statements we made during the informal sessions be included in the minutes of this meeting.TN/AG/R/7
Page 104
Statement by Poland
I thank you for your commendable intellectual efforts put into the modalities document and
for your stated intention.
It is most useful that this session takes up an overall political assessment of the present
situation.  My delegation believes that it would not be appropriate to regard this general debate as
something to be dispensed with as expeditiously as  possible in order to get to the "real stuff" of
negotiations.  Far from being a mere formality, this discussion is indeed very much at the core of the
negotiations, as it aims to assess the ground on which our interests and minds may meet.  
I concur with what is perhaps the major underlying idea behind the present draft modalities
paper, namely an effort to prod delegations towards a more focused thinking on the overall concept of
the negotiating space concerning agriculture.
However, like many others, I regret that the focus seems to be excessively biased towards one
particular orientation displayed in our work so far.
   
In my delegation's view, one of the benefits to be derived from the present draft modalities is
a clear feeling that we are not yet ready for the numbers game, least of all with the numbers that have
been proposed. 
Before going to numerical targets we still have to discuss some basics.The fundamental among them is to accept that a mode of coexistence will need to be found
for various models of agriculture, because they are rooted not only in rules of economics and trade,but also in national cultures and ways of life.
For this reason alone, Poland, a ranking European food producer, trader and net importer with
extensive agricultural interests, cannot accept an unbalanced approach to negotiating modalities, that
would imply virtual destruction of the European models of agriculture in a matter of years.
In particular, Poland objects to:- inadequate recognition of non-trade concerns;- lenient treatment of subsidized export credits as against excessively radical position
on other forms of export support;
- proposals to merge Amber and Blue Boxes under virtually the same category of
disciplines;
- proposed revision of the Agreement on Agriculture with a view to selection of a
reference period 1999-2001 for AMS compatibility assessment;
When attempting to combine ambition and real ism in search for a middle ground for new
proposals on modalities, we may need to base ourselves again on the imperfect but pragmatic pattern
established by the present Agreement on Agriculture. 
Such an approach would have at least one essential merit: it has proved workable as a
compromise arrangement and has been already factored into national policies and administrative
procedures.
 TN/AG/R/7
Page 105
Contrary to some views, remarkably substantial results can be achieved through
implementation of proposals already submitted in this Committee on the basis of the Uruguay Round
formula.  Import tariffs, export assistance and domestic support would all have been reduced in
developed countries by more than two thirds compared  to the situation back at the starting point of the
Uruguay Round implementation.  Such results may be indeed quite favorably compared with thehistoric record of GATT and WTO in liberalization of trade and its systemic rules outside agriculture.
Given the fact that very substantial trade and welfare benefits are expected also from non-
agricultural chapters of the Doha Round, now stalled by the deadlock on farm issues, such
liberalization prospects for agriculture should not be dismissed lightly.
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