WORLD TRADE
ORGANIZATIONG/AG/NG/W/66
29 November 2000
(00-5152)
Committee on Agriculture
Special SessionOriginal:  English
FOURTH SPECIAL SESSION OF THE COMMITTEE ON AGRICULTURE
15-17 NOVEMBER 2000
Statements by the European Communities
Non-Trade Concerns  (G/AG/NG/W/36)
(Papers on Rural Development and the Environment Situation of the Community)
The Commission of the European Community was an active partner in the Ullensvang
Conference.
The Community regards non-trade concerns as a key element in the Article 20 negotiations.  I
am here using key, in sense of an instrument for opening a door.  We do not regard it as a means of
locking the door on the other planks of the negotiation, market access, export competition, domestic
support and special and differential treatment but as suggesting a means by which a conclusion can be
reached on all elements and a conclusion which would be satisfactory for all members of the WTO.
For this reason we consider that it would be a ca rdinal error for any Member who is interested in
reaching a conclusion - and I assume it, this means all Members – to try to down play this element of
Article 20 or to suggest that it is only of secondary importance.
As regards the two specific papers submitted by the Commission I can be brief.
The paper on Rural Development  develops themes common to rural economies:
• In most of the world, especially in developing countries, farming is the fabric of rural
society and its main economic activity.  Social and political stability depend on thecontinued economic health of the farm sector;
• The farm sector can be an important source of support for rural employment,
ancillary businesses and, in peripheral areas, the economic and social infrastructure.
Our paper on Environmental non-trade concerns , focuses on the dependency of many rural
environments on farming. In order to preserve the farmed landscapes, biodiversity and historical
features, continued farming activity – often a specific activity which incurs cost to the farmer – is
needed.
What unites the two papers?First, Agriculture as an engine of rural development is irreplaceable in virtually all Members.
Second, in virtually every Member, agriculture shapes the environment.  This is not to say that trade
in agricultural products should be prevented.  But trade cannot take place in such a way as to destroy
these functions of agriculture.G/AG/NG/W/66
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Non-trade concerns – final statement by EU
We have had a wide ranging debate which has amply justified the judgement you made at our
last session, that the joint paper on non trade concerns could not be adequately dealt with between
5.15 and 6 o'clock.
It is clear from this debate that, just as there are a wide variety of non-trade concerns, there
are a wide variety of views on how, and to what extent, they should be taken into account.
But just because there is such a wide variety of view and concern, it is clear that this is an
issue which will not go away.
The object of our meetings is not just to debate.  It is part of a negotiation designed to produce
a result.  But all good negotiating theory teaches us that the most important place of a negotiation is
the one in which both - or in a multilateral context all - parties come to understand the key concerns of
others.  It is only by this process that the willingness and ability to find a mutually acceptable
conclusion can emerge.
For me, the most positive aspect of our debate is that I have sensed a growing understanding
that in every country there is a real concern from  the vitality of rural areas.  Some would like to
promote that vitality by obtaining better access to markets in other Member states;  others by rural
development policies; still others by showing the pace of globalization in food markets.  But, at least I
sense a growing understanding of this concern which we all share.  And this confirms that the basic
architecture of Article 20 is the correct one.
As that Article says, we acknowledge to share a long-term objective.  We have now to
consider what further commitments are needed to achieve this objective.  In doing so we have to takeinto account non-trade concerns, special and differential treatment for developing countries and - by
reference to the preamble to the Agreement - mark et access, export competition and internal support.
This is the pentagon which represents the fundamental geometry of our negotiation and of any
possible outcome which will command general support.
Once this is recognized, the stage will have been set for practical progress.
Export Subsidies and Food Dependency   (G/AG/NG/W/38)
The EU fully recognises that food security is an appropriate issue for our discussion and that
it must be addressed in our final decisions.  But we regret what we see as an exaggerated emphasis inthe paper of export subsidies.
The EU has stated that it is prepared to negotiate further reductions in its export refunds, if all
forms of export assistance are brought into the negotiation and are made subject to equivalent
discipline.
But this negotiation will not be facilitated if the effect and scope of the remaining possibilities
to grant classical export subsidies is exaggerated.
Since 1995 export refunds have been limited both in budget and in volume terms. These
limits have been progressively reduced.  The EU has therefore neither the means nor the wish to use
export refunds to expand market share or to undercut market prices.G/AG/NG/W/66
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One speaker drew attention to the fact that 90 per cent of export subsidies notified  to the
WTO were notified by the EU.  This is an important statistic.  What it shows is that the EU policy
instrument is transparent and fully notified.  But it says nothing about supported export competition
taken as well.  When the WTO Secretariat tried to assemble data on state-supported export credits,
they found this very difficult because this export subsidy is neither noticeable nor limited.  NoMember reported subsidies granted through tax advantages conditions on export but we now know as
a result of decision of the DSU that such tax advantage do constitute an export subsidy.  No Member
notified subsidies granted through differential pr icing of state-trading bodies.  One Member did
indicate that its food aid programme assisted exports - but only to its national legislatures not to the
WTO.
So further progress depends more on discipline on other measures than it does on further
reductions in the notified  form of export subsidies.
How this fits into the debate on food security?First, don't let's exaggerate.  World prices data shows no correlation with the existence or not
of subsidies notified to the WTO, look at the tren d of prices of product whose exports the EU does not
subsidise - for example cotton or soya or coffee.  They have shown sharp decreases.  We subsidise the
export of none of these products.  We are minor producers of the first and second and only an
importer of the third.
Second, food aid can contribute to food security, if  and only if, it is given to deal with food
emergency, not as a means of surplus disposal, or in a way which damages the agriculture of the
beneficial cost.
Third, food security in developing countries depends in part on agricultural development and
in part on raising income and eradication poverty.
Trade liberalization can be a powerful instrument to raise incomes.  The EU is in fact the
main export market for developing countries.  But trade liberalization doesn't only mean taking
advantage of increased opportunity to export.  It also means becoming involved in trade as an
importer, provided that trade liberalization takes place at a pace which is commensurate with the
ability of the economy to adapt.
Market Access (Cairns Group paper)   G/AG/NG/W/54
The Community in common with most Members,  is currently finalizing its comprehensive
proposal.  The proposal will address market access.
My first reaction to this Cairns proposal is therefore in the form of questions.
1. How does the suggestion of deep cuts fit in with the key instrument by Article 20, the
Preamble to the Agricultural Agreement and the genuine history of the GATT tariff
negotiations, which have always been for "progressive" adjustment?
2. How would a formula requiring deep cuts fit in with existing and proposed measures to help
developing countries and in particular the least developed countries to integrate themselvesinto the world market?
A general reduction of tariffs will only favour the most competitive and limit the scope for
special and differential treatment.G/AG/NG/W/66
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3. How do some of the signatories of the paper reconcile this proposal with their position in
relation to important existing tariff quotas?
I note that two Cairns members did not sign the proposal and I have no wish to ask
embarrassing questions as to why they did not.  But it is clear that a decision not to sign this paper is
not incompatible with continued membership of the Cairns Group.
Yet some of the signatories of the paper have expressed a key interest in the stable prices on
the Community market which is provided by perhaps the best known of our tariff quota.
What I am calling for is for realising that we can progress to the stage of our negotiation
where our various positions are sufficiently close for the outline of a mutually acceptable conclusion
to be discernible.
Domestic Support: Transition Economies   (G/AG/NG/W/56)
The paper has just been circulated and it will, of course, require careful study.
The EU recognise that transition economies face specific problems in the agricultural sector
and that they may have particular difficulties with regard to base periods.  We will, however, need tostudy the detail of the proposed measures before we can give a considered response.
US Proposal for Tariff Rate Quota Reform   (G/AG/NG/W/58)
• The EU itself feels the need for in-depth discussion of TRQ administration and
welcomes the US initiative in introducing this topic.
• The EC have consistently argued for transparent and non-discriminatory
administration of TRQs.  The EC have also  pointed out the need of legal certainty
with respect to the different types of TRQ administration.
• The EC also believes that in the negotiations Members should agree to improvements
to the TRQ system.
• There is value for all Members to improve the management of TRQs such that the
concessions already granted are fully realized.
• In particular, the EC also believe that rules on allocation should be clarified in order
to increase the reliability and the security of the management of TRQ.  Uncertainty on
the rules for allocating licences, particularly in cases where the in-quota tariff rate is
much lower than this out of quota rate, can itself lead to problems of quota fill.  This
reeming paradox can arise because very high levels of application creates practicaldifficulties.  For this reason, we believe that the first priority is clarification of rules
and that only when this had been done should the issue of in-quota tariff be
addressed.
Changes in Tariff Quota Admini stration   (G/AG/NG/S/20)
In commenting on the US paper, I said that we would welcome in-depth and practical work
on TRQ administration.G/AG/NG/W/66
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Yet, because we have never lain down clear enough rules, Members manage their TQs at their
risk and peril.  The licensing agreement gives some guidelines but it is stronger on what cannot be
done that it is on what can be done.  In this situation, rules of tariff quota administration may
increasingly depend on the outcome of dispute settlement cases.  This is not at all a satisfactory
prospect.
We are a member-driven organization and we believe in rules-based world trade.  When so
many Members face the problem of licence allocation in administrating the TRQs we should be
carefully clarifying the rules for doing so.
Special and Differential Treatment for Developing Countries   (G/AG/NG/W/55)
As I said on our earlier paper, the Community is in the process of finalizing its comprehensive
proposal.  For us Special and Differential Treatment is one of the essential fire points of the
negotiation.  Therefore our paper will certainly address it and I can already say that there are several
points in the paper which will find a positive echo in our proposal.  But in the meantime any detailedcomments I can make today on the details must necessarily be provisional.
On one point, however, I can be very clear.  We note that the paper underlines the need for
developing countries to benefit from preferential treatment under the GSP scheme.
The Community is and will remain an enthusiastic supporter of the GSP.
This is a very important point.  We believe that the overwhelming majority of developing
countries should benefit from a system of preferences with respect to market access to the developed
countries' markets.  The majority of the developing countries are not yet in a position to compete withthe high export performing countries, and therefore in the absence of tariff preferences they could
only lose the access they enjoy at present.
This, as some earlier speakers have remarked, raises also the issue of an appropriate definition
of developing countries, so as to target preferences to those who actually need them.
A final comment:
• On domestic support the EC recognise the need for providing appropriate flexibility in the
rules to meet developing countries needs, particularly regarding rural development, poverty
alleviation and food security.  However, the EC note that the paper departs from the Uruguay
Round reform process when addressing Green Box and Blue Box.  The key on the reform
process is to move support away from trade distorting policies.  Green Box policies are not, orminimally, trade distorting.  Blue Box effects have been shown to be much less trade
distorting.  Therefore the emphasis should be put in further reductions on the AMS, from the
bound commitments.
• We are however concerned with the Asean proposal to disaggregate the AMS commitments of
developed countries.
• I note that on export subsidies the ASEAN call for complete elimination of the subsidies by
developed countries whilst being lenient on all the other forms of export subsidization.
Unchecked abuse of food aid, and of subsidized export credits, can have similar or even worseeffects on their own markets as compared to export subsidies which are transparent and
capped.
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