Introduction to the Agreement on Agriculture 

MODULE

3

ESTIMATED TIME: 5 hours 

OBJECTIVES OF MODULE 3

Introduce the Agreement on Agriculture and explain what is agricultural trade;

outline agricultural trade policies under the GATT (prior to the WTO);

explain the Uruguay Round agriculture negotiations.

Explain the structure of the Agreement on Agriculture;

describe the product coverage under the Agreement on Agriculture;

explain the disciplines and commitments in the Agreement on Agriculture;

outline Implementation under the Agreement on Agriculture;

describe the role of the Committee on Agriculture.

Explain the relationship of the Agreement on Agriculture to other WTO Agreements.

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I. INTRODUCTION 

In Module 1, we reviewed the WTO, its structure and organization as well as the multilateral trading system.

Rules were explained generally with a special emphasis in goods in order to prepare for studying the

Agreement on Agriculture.

This Module and the others that follow look at the specific rules governing trade in agricultural products, a

subset of goods. At the end of this Module you should be able to explain:

agricultural trade and multilateral trade policies prior to the WTO and the Uruguay Round agriculture

negotiations;

the Agreement on Agriculture that came out of the Uruguay Round – its structure, product coverage,

disciplines and commitments, implementation;

the relationship of the Agreement on Agriculture to other WTO Agreements; and

the role of the Committee on Agriculture.

I.A. AGRICULTURAL TRADE 

The importance of agriculture and agricultural trade cannot be overemphasized. Trade in agricultural products,

for example, aids global food security by ensuring that temporary or protracted food deficits arising from

adverse climatic and other conditions can be met from world markets.

In addition, in many countries, agricultural trade is an important part of overall economic activity. It generates

income and wealth, creates jobs, plays a major role in domestic agricultural production and export activities,

and generates revenue and foreign exchange for governments.

I.B. AGRICULTURE TRADE RULES UNDER THE GATT 

International trade in agriculture products had been subject to the rules of the multilateral trading system

since the entry into force of the GATT back in 1947. However, there were several important differences with

respect to the rules that applied to agricultural primary products as opposed to industrial products.

Furthermore, there were exemptions and exceptions for agriculture trade and for subsidies to producers of

agriculture products.

For example, the GATT 1947 allowed Contracting Parties to use some non-tariff measures such as subsidies

and import quotas. In addition, many of the Contracting Parties operated so-called "grey area" measures that

were not clearly covered by the rules or commitments but were of dubious legality nonetheless.

GATT 1947 also permitted, at least to some extent, the use of (1) non-tariff barriers to imports, such as

quantitative restrictions, (2) subsidies to agricultural producers, and (3) export subsidies for primary products.

However, there were conditions attached to these flexibilities that often turned out to be quite strict.

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I.B.1. IMPORT RESTRICTIONS 

Article XI.2(c) of the GATT 1947 permitted the use of quantitative import restrictions on imports of agricultural

products. But there were a lot of conditions attached as the import restriction had to be part of a national

supply management scheme which imports could undermine. In addition, the exception in Article XI.2(c) was

conditional on Contracting Parties maintaining a minimum proportion of imports relative to domestic

production. Thus, quantitative import restrictions on imports of agriculture goods were permitted but subject to

a list of conditions.

Article XI.2(c) was the subject of a lot of litigation in the GATT. For agriculture, the most important of the

cases was Japan – Restrictions on Certain Agriculture Products.1 The Panel effectively showed that the

requirements under Article XI.2(c) were quite strict and confirmed the view of some other Members that had

sought waivers for sensitive products. The US obtained such a waiver in 1955 for some cotton products, some

dairy products, peanuts, syrup and sugar.2 This waiver remained in place until the Uruguay Round was

completed and the provisions of the WTO Agreement on Agriculture applied to agricultural products.

Switzerland, on the other hand, negotiated an exemption for the agriculture sector in its protocol of accession

to the GATT.3

TIP

What is a protocol of accession?

States and Customs territories, which became Contracting Parties of the GATT between 1948 and

31 December 1994 had to negotiate the conditions of their accession to the GATT 1994. These conditions

and commitments are in protocols of accession, which form an integral part of the GATT 1994. Similarly,

WTO Members that joined the organization after its establishment have protocols of accession (see

Article XII of the WTO Agreement).

In addition, across the GATT only about one-third of agriculture products had bound tariff rates. Furthermore,

many Members used various measures to support exports of agricultural products, to subsidise domestic

production and to restrict imports using high tariffs or non-tariff measures.

Notwithstanding the conditions attached to import restrictions under Article XI of GATT, many non-tariff

barriers were applied to imports without any effective limits on domestic production and without maintaining

minimum import access. In some cases, this was achieved by the use of measures not specifically provided for

under Article XI (the General Elimination of Quantitative Restrictions).

1 L/6253 adopted on 2 February 1988, BISD/35S/163

2 BISD/3S/32; March 1955; United States – Import restrictions on agricultural products

3 In the WTO, the India – Quantitative Restrictions on Imports of Agricultural, Textile and Industrial Products

("India – Quantitative Restrictions"), was litigated based on Article XI of the GATT 1994. See the Panel Report,

WT/DS90/R, adopted 22 September 1999, as upheld by the Appellate Body Report, WT/DS90/AB/R,

paragraph 5.128

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In other cases, restrictions were kept pursuant to exceptions and country-specific derogations (such as,

grandfather clauses, waivers and protocols of accession). In yet other cases, non-tariff import restrictions were

maintained without any apparent justification. Major agricultural products such as cereals, meat, dairy

products, sugar and a range of fruits and vegetables faced barriers to trade on a scale uncommon in other

merchandise sectors.

TIP

You have seen waivers in Module 1 and protocol of accession before- what is this reference to "grandfather

clause"?

Under a grandfather clause, a rule needs to be applied only to the extent that it is not inconsistent with

legislation in effect before the accession to the GATT (for grandfather clause applying to the GATT) or the

creation of the WTO for post-Uruguay Round Agreements.

I.B.2. DOMESTIC SUPPORT 

The rules on subsidies to farmers were not clear under the GATT, where Article III.8(b) stated that subsidies to

producers were not prohibited by the national treatment obligation. In addition, it was not even clear whether

or not price support measures were subsidies.

However, the value of tariff concessions affected by these subsidies was protected by Article XXIII which states

that concessions cannot be nullified or impaired, even by measures that comply with the GATT (that is, by

non-violation nullification or impairment).

The use of Article XXIII in the case EC – Payments and Subsidies Paid to Processors and Producers of Oilseeds

and Related Animal Feed4, brought by the US against the EU, highlighted the importance of non-violation

nullification or impairment. The EU had bound tariffs on oilseeds at zero and subsequently introduced a subsidy

that was paid to processors on condition that they bought EU produced oilseeds. The subsidy was later

changed to payments to producers based on the area of oilseeds planted and harvested.

The US claimed, and the Panel agreed, that the subsidy scheme nullified or impaired the benefits it had

expected from the zero tariff binding. The case was taken during the Uruguay Round and the results of the

dispute were incorporated into the EU's Schedule as limitations on the area of oilseeds planted and some

market access concessions to the US and some other countries.

However, disputes under Article XXIII would only be possible in cases where a bound tariff existed at a level

that would normally permit trade. If there was no bound tariff, or if it was bound at a level that would

effectively prevent any meaningful trade, then a domestic subsidy would be unlikely to nullify or impair the

value of a benefit under the GATT.

4 L/6627 Adopted on 25 January 1990, BISD/37S/86; July 1991 and BISD/39S/91; September 1993;

EC - Payments and subsidies paid to processors and producers of oilseeds and related animal feed

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I.B.3. EXPORT SUBSIDIES 

On export subsidies, while the GATT 1947 prohibited export subsidies on industrial products, Article XVI:3

allowed Members to use them on primary products, provided they were not used to gain more than "an

equitable share of world trade". This provision referred to primary products and was taken to include primary

agricultural products.

The lack of legal precision meant some Members used export subsidies to dispose of excess production on the

world market. This had the effect of depressing world market prices and inducing other countries to do the

same.

This provision was adjudicated upon in the case EC – Refunds on Exports of Sugar5 brought by Australia

in 1980 against the EU. The Panel found that it could not rule on whether the export refund system used by the

EU had led to it having more than an equitable share of world trade. However, the Panel ruled that the system

had depressed world prices and had caused serious prejudice to Australia and that the uncertainty the system

brought to the market had led to a threat of injury. However, the Panel was not able to quantify the value of

the prejudice.

I.C. URUGUAY ROUND AGRICULTURE NEGOTIATIONS 

I.C.1. HISTORICAL BACKGROUND 

In part, the insulation of domestic markets by GATT Contracting Parties was the result of measures that were

originally introduced during the collapse of commodity prices that led to the 1930's Depression. High tariffs in

some countries led to retaliation by others that also increased tariffs or reduced the value of their currencies in

order to increase the cost of imports and reduce the cost of exports. The result was a cycle of ever more

restrictive measures. World trade fell sharply and the recovery was interrupted by Second World War.

In the aftermath of the Second World War many governments were concerned with getting agriculture

production and productivity back to pre-war levels with stable food prices for consumers and producers and

national food security. Therefore, many countries adopted land reform measures and supported agriculture

through market price support systems. That is, governments set target prices; if the domestic price rose above

these target prices imports were allowed in; if the domestic price fell below the target price export subsidies

were used to reduce domestic supply or the state bought and stored the product.

However, domestic pressures often meant that the target prices were always high which encouraged increased

production. At the same time productivity increased rapidly. The results were almost permanent surpluses,

which in turn led to huge government stocks and increasing use of export subsidies to dispose of these

surpluses on world markets. The impact on the world market and on those countries that did grant support and

protection was depressed prices and competition from - and between - subsidised exporters and producers.

5 BISD/26S/290-319, March 1980, European Communities – Refunds on Exports of Sugar

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While high-income countries were encouraging high-cost over-production of agriculture products many

less-well-off countries were doing the opposite. With overvalued exchange rates and low food-price policies

that were meant to favour urban consumers, farmers in developing countries had little incentive to increase

production.

In the early 1970s, commodity prices were high and the main subsidisers, the EU and the US, were able to

increase production and to limit, or even reduce, subsidies as international demand and fear of food shortages

pushed up prices. However, demand fell in the early eighties due to recession and high interest rates. As a

result, prices declined and government stocks increased. The growing competition for world market share

resulted in worsening trade relations between the EU and the US.

Meanwhile increasing domestic production and increasing stockpiles had to be disposed of using export

subsidies. In 1983, the US started to use export subsidies for wheat flour to enter markets in North Africa and

in 1985 the Export Enhancement Program expanded export subsidies to other products. Other countries also

increased supports to their producers and sought to protect their export markets through subsidies.

Simultaneously, numerous commentators from independent economists to inter-governmental organisations

began to take a more active interest in agricultural policies.6 There were studies on the level of support and

effects on other countries. Some commentators criticised agriculture policies for their inefficiency and failure to

achieve objectives. They showed that subsidies did relatively little to support smaller agricultural producers

with most of the money going to a few large farmers or to the processing industries.

One of the most influential organisations was the Organisation for Economic Co-operation and Development

(OECD). In a report on "National Policies and Agricultural Trade" (1987), the OECD presented the results of its

research into agriculture policies in Australia, Austria, Canada, the EU, New Zealand, Japan and the United

States. Using a methodology that all OECD member countries had accepted, the report showed support levels

in each country. The report also showed that, if supports for agricultural products were reduced, production

would fall and prices would rise. It also showed that the policies of individual countries did affect the world

market. Market access barriers reduced export opportunities, market-price supports reduced domestic demand

while increasing supply and export subsidies were needed to dispose of the high priced surplus production. For

those that did not provide support, this meant fewer export opportunities and more competition and lower

prices in the world market.

The Cairns Group of exporters of agricultural products, formed in 1986, added to the pressure for reform. This

group was determined to bring agriculture effectively into the GATT framework of multilateral trading rules and

they were prepared to prevent any consensus on general liberalisation of trade unless they achieved this aim.

The Cairns Group was formed in 1986 in the town of Cairns in Australia. It was then made up of 14 countries:

Argentina, Australia, Brazil, Canada, Chile, Colombia, Fiji, Hungary, Indonesia, Malaysia, New Zealand, the

Philippines, Thailand and Uruguay. The Group is now made up of Argentina, Australia, Bolivia, Brazil, Canada,

Chile, Colombia, Costa Rica, Guatemala, Indonesia, Malaysia, New Zealand, Pakistan, Paraguay, Peru,

the Philippines, South Africa, Thailand and Uruguay.

6 Johnson, D. Gale; World Agriculture in Disarray, Second Edition; for the Trade Policy Research Centre,

Macmillan, 1991

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I.C.2. AGRICULTURE IN THE GATT 

The exceptions and exemptions for agriculture within the GATT contributed to the widespread use of high levels

of support and protection for agriculture in most wealthy countries. At the same time, low food-price policies

and over-valued exchange rates made the impact on low-income countries even worse. Not only did they have

to compete with subsidised production and exports in wealthier countries but their own governments often

applied export taxes or enforced low procurement prices. The combination of these policies meant agricultural

trade was highly distorted.

However, the legal position was not as lax as some Contracting Parties believed. GATT panels, such as the

EC - Oilseeds case and the Japan – Import Restrictions case, showed that the exceptions in the rules had

conditions attached. At the same time academic work had begun to show the impact of subsidies and

protection on economic growth and welfare. Politically, the climate was changing as well and the Cairns Group

was formed to make sure agriculture was put on the agenda of trade negotiations and that it stayed on the

agenda until a satisfactory result was achieved.

TIP

What is "distortion"?

The WTO Dictionary of Trade Policy Terms defines distortion as "a measure, policy or practice that shifts

the market price of a product above or below what it would be if the product were traded in a competitive

market. Measures causing distortions include subsidies, import restrictions and restrictive business

practices". In the context of agricultural trade this would mean that producers', companies', importers' and

exporters' decisions are influenced by factors other than competitive market conditions.

In the lead-up to the Uruguay Round, it became increasingly evident that the causes of disarray in world

agriculture went beyond import access problems which had been the traditional focus of GATT negotiations.

Disciplines were needed on all policies that were causing trade-distortion, on all measures affecting agriculture

trade, including domestic agricultural policies and the subsidization of agricultural exports, as well as rules on

sanitary and phytosanitary measures.

The Contracting Parties of the GATT decided to launch a new multilateral round of negotiations with a view to

agree on further liberalization of international trade and that agriculture would be part of these negotiations.

The Ministerial Declaration launched the negotiations in Punta del Este, Uruguay, on 20 September 1986 and

committed the Contracting Parties of the GATT to negotiations on agriculture, giving a clear direction for those

negotiations. The Uruguay Round was successfully concluded in Marrakesh in 1994.

I.C.3. OUTCOME 

The Uruguay Round produced numerous changes in the trade rules for trade in agricultural products. Many old

rules were clarified, new areas brought within the rules, a new system for settling disputes was agreed, and

the first multilateral Agreements on Agriculture and on Sanitary and Phytosanitary Measures were concluded.

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The WTO Agreement on Agriculture, together with individual countries' commitments to reduce export

subsidies, domestic support and import duties on agricultural products were a significant first step towards

reforming agricultural trade. For the first time, the Agreement on Agriculture required WTO Members to limit

the amount of agricultural export subsidies and trade-distorting domestic support they provide and to bind

tariffs on practically all agricultural products.

The reform programme seeks to strike a balance between agricultural trade liberalization and governments'

rights to pursue legitimate agricultural policy goals, including non-trade concerns.

The outcome of the agriculture negotiations in the Uruguay round can be divided in four main parts:

(1) the WTO's Agreement on Agriculture - itself;

(2) the Schedules which list each Members commitments on market access, domestic support and export

subsidies;

(3) the Agreement on Sanitary and Phytosanitary Measures; and

(4) the Ministerial Decision On Measures Concerning the Possible Negative Effects of the Reform

Programme on Least-Developed and Net Food-Importing Developing Countries.

Members that acceded to the WTO after the conclusion of the Uruguay Round may have specific rules

applicable to them which can be found either in their protocols of accession or their Schedules of

Commitments.

The Agreement on Agriculture came into force on 1 January 1995. It has:

A framework for future long-term reform of agricultural trade and domestic policies;

Strengthened rules governing agricultural trade for increased market orientation in agricultural trade

and will lead to improved predictability and stability for importing and exporting countries;

Provisions that, encourage the use of less trade-distorting domestic support policies to maintain the

rural economy, and allow actions to be taken to ease adjustment burden;

Provisions that allow some flexibility in the implementation of commitments.

However, as you will see below, the Agreement on Agriculture is a result of numerous compromises and like

any product of negotiations the basic principles have a number of exceptions and, in some cases, the wording

is subject to different interpretations.7 There are also many other non-agriculture specific achievements in the

WTO that have influenced the multilateral rules governing agriculture, such as, the strengthened dispute

settlement system.

7 For a more detailed description of the history of agriculture in the GATT see Josling, Tangermann and Warley;

1996, "Agriculture in the GATT"; MacMillan Press Ltd (UK) or St Martin's Press Inc (USA)

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EXERCISES:

1. What are some of the measures that GATT 1947 allowed countries to use in agricultural exports that they

could not use on industrial products?

2. What are some of the exceptions and country-specific derogations that allowed Contracting Parties to

apply non-tariff border restrictions to agriculture imports under the GATT 1947?

3. What are some of the import restrictions that GATT Contracting Parties faced on their agriculture exports?

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II. THE AGREEMENT ON AGRICULTURE 

II.A. INTRODUCTION 

The Agreement on Agriculture establishes a number of generally applicable rules, primarily in the areas of

market access, domestic support and export competition (normally referred to as the "three pillars"). These

rules are backed up by each Members' specific commitments on tariffs, domestic support and export subsidies,

which are contained in the Schedules and constitute an integral part of the GATT 1994.

Many other WTO Agreements complement the Agreement on Agriculture. According to Article 21, the

GATT 1994 and all WTO agreements on trade in goods in Annex 1 apply to agriculture. However, in cases of

conflict, the rules in the Agreement on Agriculture prevail (Article 21.1).

There is also a Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on

Least-developed and Net Food-importing Developing Countries, which also formed part of the overall outcome

of the agriculture negotiations.

II.B. AGREEMENT ON AGRICULTUREʹS STRUCTURE 

This section of the Module looks at the Agreement on Agriculture, its objectives, its three pillars, as well as

institutional provisions, such as, the "peace clause" and the "built-in agenda".

The Agreement on Agriculture is divided in thirteen parts (composed of 21 articles) and it has 5 annexes.

Figure 1: Structure of the Agreement on Agriculture

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II.B.1. THE PREAMBLE 

The objective that led to the Agreement on Agriculture is contained in the second paragraph of the Preamble:

Recalling that their long-term objective as agreed at the Mid-Term Review of the Uruguay Round "is to

establish a fair and market-oriented agricultural trading system and that a reform process should be initiated

through the negotiation of commitments on support and protection and through the establishment of

strengthened and more operationally effective GATT rules and disciplines";...

The Preamble also refers to non-trade concerns, including food security and the need to protect the

environment, and provides special and differential treatment for developing countries, including an

improvement in the opportunities and terms of access for agricultural products of particular export interest to

these Members. See paragraphs 5 and 6:

Having agreed that in implementing their commitments on market access, developed country Members

would take fully into account the particular needs and conditions of developing country Members by

providing for a greater improvement of opportunities and terms of access for agricultural products of

particular interest to these Members, including the fullest liberalization of trade in tropical agricultural

products as agreed at the Mid-Term Review, and for products of particular importance to the diversification

of production from the growing of illicit narcotic crops;...

Noting that commitments under the reform programme should be made in an equitable way among all

Members, having regard to non-trade concerns, including food security and the need to protect the

environment; having regard to the agreement that special and differential treatment for developing countries

is an integral element of the negotiations, and taking into account the possible negative effects of the

implementation of the reform programme on least-developed and net food-importing developing countries;...

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II.B.2. PRODUCT COVERAGE 

The Agreement on Agriculture applies to agricultural products as defined in Article 2 and Annex 1 of the

Agreement on Agriculture. This definition of agricultural products is based on the 1992 Harmonised System

(HS92), as established and regulated under the World Customs Organization.

Annex 1 defines agricultural products as those within Chapters 1 to 24 of the Harmonized System (excluding

fish and fish products). Hence, the definition does not apply to fish, fish products, nor does it apply to forestry

products. It covers all agricultural food and beverage products, agricultural fibres and skins including, for

example:

basic agricultural products such as wheat, milk and live animals, as well as products derived there from,

such as, bread, butter and meat;

processed agricultural products, for example, chocolate and sausages;

trade in wines, spirits, and tobacco products;

fibres, such as, cotton, wool and silk; and

raw animal skins destined for leather production.

II.B.3. DISCIPLINES AND COMMITMENTS 

The Agreement on Agriculture includes binding commitments to reduce support and protection in the areas of

domestic support, export competition and market access.

a. MARKET ACCESS – ARTICLE 4 

Article 4 of the Agreement on Agriculture is the legal basis for market access. However, all the details are

found in Members' Schedules. Article 4 makes these Schedules legally binding, but does not provide an

exemption from any other obligation in the GATT 1994.

Prior to the Uruguay Round, market access for many agricultural products was restricted by variable import

duties and non-tariff measures, such as quantitative restrictions or import prohibitions. Further, there were

many country specific exemptions for agriculture, acquired through accession negotiations, waivers, or

renegotiations.

WTO Members agreed to use the process called "tariffication" to convert all non-tariff measures as they existed

during the 1986-88 base period (whether they were in compliance with the GATT or country-specific

exemptions) into tariff equivalents. As a result of the Uruguay Round, WTO Members can only use ordinary

customs duties to restrict imports of agriculture goods with very few exemptions.

Tariffs (both those resulting from the "tariffication" process and existing tariffs on agricultural products) were

reduced by an average 36% in the case of developed countries and 24% in the case of developing countries,

with a minimum reduction of 15% for developed and 10% for developing countries. Reductions were

undertaken over a period six years in the case of developed countries and over ten years in the case of

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developing countries. However, many developing countries were not required to undertake tariffication or

reductions in tariffs and all least-developed countries were exempted from tariff reductions.

In many cases, tariffs were so high or the import restrictions so severe that very little, if any, imports actually

got into the applying country. In other cases, the quantitative restriction applied allowed only limited amounts.

In such situations the tariff that resulted from tariffication would have been too high to permit trade.

Therefore, WTO Members also committed to maintain current market access opportunities and/or to create

new minimum market access opportunities. These access opportunities took the form of low tariffs at limited

quantities, called tariff rate quota (TRQ), of at least 3% of domestic consumption by 1995 rising to 5% in 2000

(the implementation period). These commitments are also set out in the Schedule of Commitments.

At present, many countries have bound their tariffs at relatively high rates but , in many cases, the applied

tariff rates are lower than the bound tariff. The provisions on market access as well as the safeguard provisions

(explained directly below) are explained further in Module 4 entitled "Market Access in the Agreement on

Agriculture".

b. SAFEGUARD PROVISIONS – ARTICLE 5 

Due to tariffication, tariff bindings and reductions, as well as the creation of tariff quotas there were fears that

tariff-only protection could lead to import surges or low priced imports. As part of the tariffication process

Article 5 was created. The provisions of Article 5 permit Members to impose a special safeguard duty on

products that had been subject to tariffication and that have the symbol "SSG" in the Schedule.

The "special safeguard" provision permits the imposition of a temporary additional duty on imports of these

products when:

(a) the price of the product falls below a threshold level (price trigger); or

(b) the quantity of imports exceeds a certain volume (volume trigger).

The rules are explained in detail in Module 4.

EXERCISES:

4. Outline the current market access rules for agriculture.

5. In what document can one find the tariff binding, minimum/current access commitments (TRQs), special

safeguard, and special treatment exemptions of WTO Members? What type of commitments are they?

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c. DOMESTIC SUPPORT COMMITMENTS & DISCIPLINES – ARTICLE 3, 6 AND 7 

Many countries support farming in different ways. Some guarantee a minimum level of income, for example,

through market price support to farmers or similar methods, some provide input subsidies, many provide

veterinary and plant health services, etc.

The main complaint about policies which support domestic prices or directly subsidize production, is that they

encourage over-production and distort the market either by increasing exports or reducing imports.

On the other hand, there are many forms of support that do not directly influence production. The Agreement

on Agriculture distinguishes between support programmes that stimulate production directly, and those that

are considered to have at most a minimal direct effect on production or trade.

In recognition of the different impacts different policies have on production and trade there are different boxes

for the different types of export subsidies: "Green Box", the "Amber Box" and a "Blue Box".

Members can freely use domestic support measures with no more than minimal impact on trade or production-

Such measure are placed in a "Green Box" and include subsidies for government services, and programmes

such as direct payments to farmers that are decoupled from production as well as direct payments under

environmental and regional assistance programmes.

In addition to the Green Box policies, Members do not have to reduce:

(1) their subsidies on direct payments to farmers under production limiting programmes ("Blue Box"

measures);

(2) certain government assistance programmes to encourage agriculture and rural development in

developing country Members (as listed in Article 6.2 of the Agreement on Agriculture); and

(3) other trade-distorting support maintained within the "de minimis" levels.

Domestic support measures that cannot be included in the above-mentioned exempt categories must be

accommodated within the ceilings set by the "Total Aggregate Measurement of Support" (AMS) or "Current

Total Aggregate Measurement of Support" which are expressed in terms of Annual and Final Bound

Commitment Levels.

In the Uruguay Round, WTO Members agreed to make the following reductions in the Base Total AMS (an

average during the base period of 1986-88):

developed country Members agreed to reduce the Base Total AMS by 20% over 6 years starting

in 1995;

developing country Members agreed to make 13.3% cuts over 10 years; and

least-developed countries were not required to make any cuts.

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15

Note

In all cases where base periods, reductions and implementation periods are mentioned the actual periods

and reductions may differ and you may have to verify the exact details by referring to the Schedule of

Commitments or, in the case of recently acceded Members to the protocol of accession.

The disciplines and commitments on domestic support are found in Articles 3, 6 and 7 as well as Annexes 2, 3,

and 4 of the Agreement on Agriculture and, where relevant, in Section I of Part IV of a Member's Schedule.

The Uruguay Round also introduced a clearer and more comprehensive regime governing domestic subsidies in

general in the Agreement of Subsidies and Countervailing measures ("SCM Agreement"), which also applies to

agricultural products. However, as you will see below, WTO Members agreed on a "peace clause" (which has

already expired) to reduce the likelihood of challenge to these and some other forms of agricultural subsidies.

The rules on domestic support are explained in details in Module 4.

d. EXPORT COMPETITION (ARTICLES 3, 8-11)

As you saw previously, GATT Article XVI:3 permitted the use of export subsidies for agriculture primary

products.

The Agreement on Agriculture does not prohibit the use of export subsidies, provided that Members remain

within their commitments, as set out in their Schedules, and subject to a c set of rules. Members that grant

export subsidies also agreed to reduce the amount spenditure and the quantities exported with subsidies.

Currently, only 16 Members (with the European Union counting as one) have the right to subsidise exports,

their reduction commitments are based on exports subsidies granted during the 1986-90 base period.

Additionally, there is a time-limited exception in Article 9.4 of the Agreement on Agriculture, according to

which developing countries, during the implementation period, shall not be prohibited from taking recourse to

certain transport and marketing subsidies, provided these are not applied in a manner that would circumvent

reduction commitments. Except as provided for in the Agreement on Agriculture for certain WTO Members to

apply export subsidies, there is no distinction between agricultural and non-agricultural products and therefore,

export subsidies are prohibited in both cases.

Developed-country Members were required to reduce the value of export subsidies by 36% compared to the

1986-90 base period, over the six-year implementation period, and the quantity of subsidised exports by 21%.

For developing countries, the reductions were two-thirds those of developed countries over a ten-year period.

The Agreement on Agriculture also sets out criteria for food aid donations and refers to export credits.

The disciplines and commitments on export subsidies are found in Articles 3, 8, 9, 10, and 11 as well as in

Member's Schedule.

The rules on export competition are explained in detail in Module 5.

The table below summarizes the numerical targets for cutting subsidies and protection.

Developed countries 6 years: 1995–2000

Developing countries 10 years: 1995–2004

Tariffs

average cut for all agricultural products –36% –24%

minimum cut per product –15% –10%

Domestic support

cuts in total ("AMS") support for the sector –20% –13%

Exports

value of subsidies (outlays) –36% –24%

subsidized quantities –21% –14%

Table 1: The reductions in agricultural subsidies and protection agreed in the Uruguay Round

Notes: Least-developed countries do not have to reduce tariffs or subsidies. The base level for tariff cuts

was the bound rate before 1 January 1995; or, for unbound tariffs, the actual rate charged in

September 1986 (when the Uruguay Round began).

Only the figures for cutting export subsidies appear in the Agreement on Agriculture. The other figures

were targets used to calculate countries' legally binding "schedules" of commitments. Each country's

specific commitments vary according to the outcome of negotiations. As a result of those negotiations,

several developing countries chose to set fixed bound tariff ceilings that do not decline over the years.

EXERCISES:

6. What are the two forms of measures included in the reduction of export subsidies in the Agreement on

Agriculture?

16

II.B.4. OTHER COMMITMENTS 

Although market access, domestic support and export competition are often called the "three pillars" of the

Agreement on Agriculture, other provisions are equally important and form an integral part of it. These include

the provisions relating to special and differential treatment for developing countries, the Peace Clause and the

commitment to enter negotiations on continuing reform. Also related to the Agreement on Agriculture, is the

Decision on the Possible Negative Effects of the Reform Programme on Least-Developed and Net-Food

Importing Developing Countries.

a. DISCIPLINES ON EXPORT PROHIBITIONS & RESTRICTIONS – ARTICLE 12 

Article 12 of the Agreement on Agriculture requires WTO Members that introduce new export prohibition or

restrictions on foodstuffs to do so in accordance with Article XI:2(a) of the GATT 1994. It also requires the

Member introducing the restriction or prohibition to take account of the effect such a restriction will have on

other Members' food security, to notify the measure and, if asked, to consult with any Member that has a

substantial interest as an importer.

b. DUE RESTRAINT – ARTICLE 13 

To protect agricultural subsidies from challenge under GATT 1994 and the SCM Agreement, Article 13 of the

Agreement on Agriculture introduced a "Peace Clause". Article 13 provided limited protection for agricultural

subsidies granted in accordance with the Agreement on Agriculture from being challenged under specific

provisions of the GATT or the SCM Agreement for a period of 9 years. The Peace Clause expired at the end

of 2003. Hence the SCM Agreement now applies to subsidies for agricultural products, subject to Article 21 of

the Agreement on Agriculture.

The Peace Clause was the subject of dispute in the United States — Subsidies on Upland Cotton (DS267) case.

In that case, the Panel held that as long as countries do not respect their obligations with regard to the

Agreement on Agriculture, the Peace Clause affords them no protection.

EXERCISES:

7. What are some of the requirements of the Agreement on Agriculture on WTO Members instituting new

export prohibition or restrictions on foodstuffs?

8. Where is the peace clause found and what was its purpose?

17

c. SPECIAL AND DIFFERENTIAL TREATMENT – ARTICLE 15 

Article 15 of the Agreement on Agriculture recognizes the importance of differential and more favourable

treatment for developing country Members. In particular, it provides a legal basis for many special and

differential treatment provisions that are found in Schedules but are not expressed in the Agreement on

Agriculture itself, such as lower levels of tariff reductions. It also expressly states that developing countries can

have 10 years for implementation and that the least-developed countries do not need to undertake reductions.

Special and Differential Treatment measures in the Agreement on Agriculture took the form of:

1. Lower reduction rates to be applied to trade-distorting domestic support (covered by Total Aggregate

Measurement of Support), tariffs and export subsidies, equivalent to two-thirds of the levels required

for developed countries in each of these three areas. No reductions were required for least developed

countries.8

2. Developing countries were granted a longer period (10 years, 1995-2004) to implement various

reduction provisions, compared to six years for the developed countries.9

3. Provisions that contain additional benefits for least-developed countries.10

The specific rules on market access, domestic support commitments, export subsidy commitments and the

fewer notification obligations as well as the technical assistance are explained in further modules.

d. LEAST‐DEVELOPED AND NET FOOD‐IMPORTING DEVELOPING COUNTRIES – ARTICLE 16 

Article 16 provides a legal basis for the Marrakesh Decision on Measures Concerning the Possible Negative

Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries and the

follow-up work of the Committee on Agriculture.

e. REVIEW OF IMPLEMENTATION ‐ ARTICLES 17 AND 18 

Article 17 of the Agreement on Agriculture established a Committee on Agriculture. The Committee meets

about four times a year in Geneva and regular reports are made to the Council for Trade in Goods on its work.

8 Agreement on Agriculture: Articles 6.2, 6.4, 9.2(b)(iv), 9.4, 12.2, 15.1, Annex 2, paragraph 3, and

footnotes 5 and 6, Annex 5

9 Examples: Agreement on Agriculture: Article 15.2

10 Agreement on Agriculture: Articles 16.1 and 16.2

18

The Committee:

1. Oversees and monitors the implementation of the Agreement on Agriculture and Members'

commitments. Members can raise questions about the implementation of the Agreement on

Agriculture by other Members in the Committee;

2. Provides a forum for Members to discuss matters related to agriculture trade and to consult on

matters relating to the implementation of commitments, including rules-based commitments.

This review work by the Committee is based on notification Members make on their commitments.

There is also a provision in Article 18.6 that allows Members to raise any matter relevant to the

implementation of the commitments under the Agreement on Agriculture. Of course, raising questions

in the Committee does not prevent any WTO Member from seeking formal dispute settlement at any

time; and

3. Monitors the follow-up to the Decision on Measures Concerning the Possible Negative Effects of the

Reform Programme on Least-Developed and Net Food-Importing Developing Countries, as well as,

developments in the trade of agricultural products.

The negotiations pursuant to Article 20 of the Agreement on Agriculture (discussed below) and the Doha

Ministerial Declaration of November 2001, take place in "Special Sessions" of the Agriculture Committee.

f. CONSULTATION AND DISPUTE SETTLEMENT – ARTICLE 19 

While the Agreement on Agriculture has its own institutional mechanism to review and follow-up its

implementation, it is subject to the integrated dispute settlement system of the WTO. In the case of disputes

involving provisions of the Agreement on Agriculture, the general WTO dispute settlement procedures apply.

g. CONTINUATION OF THE REFORM PROCESS – ARTICLE 20 

The Agreement on Agriculture set up a framework of rules and started reductions in protection and

trade-distorting support. But this was only the first phase of the reform of trade in agricultural products.

Article 20 of the Agreement on Agriculture committed Members to start negotiations on continuing the reform

in 2000. The negotiations actually started in March 2000 and are still continuing as part of the Doha

Development Agenda

To assist the negotiations, the WTO Secretariat has produced a number of background papers at the request of

Members. Most of these can be found in the G/AG/NG/S and TN/AG/S series of official documents. In addition,

the Secretariat is also responsible for maintaining the WTO website which includes a comprehensive section on

the negotiations.11

11 See http://www.wto.org/english/tratop_e/agric_e/negoti_e.htm

19

h. FINAL PROVISIONS ‐ ARTICLE 21 

Article 21 stipulates that "the provisions of GATT 1994 and other Multilateral Trade Agreements in Annex 1A to

the WTO Agreement shall apply subject to the provisions" of this agreement.

In other words, in the event of conflict between the Agreement on Agriculture and another WTO Agreement,

the Agreement on Agriculture takes precedence.

This provision was reaffirmed in the United States — Subsidies on Upland Cotton (DS267) discussed above.

EXERCISES:

9. What is the role of the Committee on Agriculture?

10. What are some of the special and differential treatment provisions for developing countries found the

Agreement on Agriculture?

20

III. RELATIONSHIP OF THE AGREEMENT ON AGRICULTURE TO OTHER WTO AGREEMENTS 

III.A. INTRODUCTION 

In some areas, the Agreement on Agriculture does not have specific rules. In these cases, either the

GATT 1994 or one of the other WTO Agreements apply (see Article 21 above). For example, the administration

of tariff quotas is governed by Article XIII of the GATT 1994 and the Agreement on Import Licensing

Procedures.

In fact, of the many disputes involving agricultural products, which have come before the WTO the majority,

have involved other WTO agreements, for example:

the cases taken on alcohol against Japan12, Korea13 and Chile14 have all involved the principle of

national treatment;

the EC – Bananas15 case involved Article XIII of GATT, the Import Licensing Agreement and the General

Agreement on Trade in Services; and

the safeguards on milk powder case against Korea16 was a complaint under the Agreement on Subsidies

and Countervailing Measures, etc.

Although other Agreements may apply to trade in agricultural products, under Article 21 of the Agreement on

Agriculture, if conflict arises between the rules of the Agreement on Agriculture and any other WTO provision,

the Agreement on Agriculture prevails.

12 Japan – Taxes on Alcoholic Beverages, Panel Report WT/DS8/R, WT/DS10/R, WT/DS/11R, 11 July 1996.

Appellate Body Report WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, 4 October 1996.

13 Korea – Taxes on Alcoholic Beverages, Panel Report WT/DS75/R, WT/DS/84/R, 17 September 1998.

Appellate Body Report WT/DS75/AB/R, WT/DS84/AB/R, 18 January 1999.

14 Chile – Taxes on Alcoholic Beverages, Panel Report WT/DS87/R, WT/DS110/R, 15 June 1999.

15 European Communities – Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/R/ECU,

GTM, HND, MEX, USA, 22 May 1997, WT/DS27/AB/R 9 September 1997.

16 Korea – Definitive Safeguard Measure on Imports of Certain Dairy Products, WT/DS98/R 21 June 1999 and

Corr.1 22 July 1999, WT/DS98/AB/R, 14 December 1999.

21

III.A.1. THE GATT 1994 

Article 21 of the Agreement on Agriculture states explicitly that the GATT 1994 applies to agriculture.

Agricultural products are "goods" for the purposes of the GATT 1994. Some of the most relevant provisions to

agriculture are: the country schedules established within the GATT 1994 Article II, the principles of the

GATT 1994 of: Most-Favoured-Nation Treatment of Article I and National Treatment; the General Elimination of

Quantitative Restrictions of Article XI; the Non-discriminatory, Administration of Quantitative Restrictions of

Article XIII and General Exceptions of Article XX.

III.A.2. THE AGREEMENT ON IMPORT LICENSING PROCEDURES 

Agricultural trade is sometimes administered through licences, both for import and export purposes. The key

provisions regulating import licensing are to be found in the Agreement on Import Licensing Procedures.

The EC – Poultry and EC - Bananas cases included the Agreement on Import Licensing Procedures.17

In that case of EC – Poultry Brazil complained about the allocation of an EU tariff-rate quota for frozen poultry

meat and the use by the EU of a special safeguard measure under the Agreement on Agriculture.

The dispute involved the interpretation of the EU's tariff schedule and its relationship with a separate bilateral

agreement between the EU and Brazil, which provided for a global annual duty-free tariff-rate quota for frozen

poultry meat. Brazil argued that, as a result of the agreement, the tariff-rate quota should be allocated

exclusively to Brazil and not shared on an MFN basis with other WTO Members.

The WTO Appellate Body found that the bilateral agreement was not part of WTO law and therefore could not

be applied directly as law in WTO dispute resolution. Instead, the Appellate Body interpreted the relevant EU

tariff schedule. As the EU was bound by its tariff schedule which provided for MFN non-discriminatory

treatment, Brazil could not seek preferential treatment on the basis of tariff concessions negotiated bilaterally.

The Appellate Body further found that the EU's administration of this tariff quota did not violate the WTO

Import Licensing Agreement.

On the Agreement on Import Licensing Procedures, the Appellate Body made several findings and reiterated

that:

(1) The preamble to the Licensing Agreement stresses that the Agreement aims at ensuring that import

licensing procedures "are not utilized in a manner contrary to the principles and obligations of

GATT 1994" and are "implemented in a transparent and predictable manner".

17 European Communities – Measures Affecting the Importation of Certain Poultry Products ("EC – Poultry"),

WT/DS69/R and WT/DS69/AB/R. WT/DS69/R, adopted 12 March 1998 and WT/DS69/AB/R, adopted

13 July 1999

22

(2) Articles 1.2 and 3.2 make it clear that the Licensing Agreement is also concerned with, among other

things, preventing trade distortions that may be caused by licensing procedures. It follows that

wherever an import licensing regime is applied, these requirements must be observed. The

requirement to prevent trade distortion found in Articles 1.2 and 3.2 of the Licensing Agreement refers

to any trade distortion that may be caused by the introduction or operation of licensing procedures,

and is not necessarily limited to that part of trade to which the licensing procedures themselves apply.

There may be situations where the operation of licensing procedures, in fact, have restrictive or

distortive effects on that part of trade that is not strictly subject to those procedures.18

The Agreement on Import Licensing Procedures also featured in the EC – Bananas19 dispute - a case with a

long and complex history, involving both GATT and WTO dispute settlement.

In April 1996, Ecuador, Guatemala, Honduras, Mexico and the United States requested the establishment of a

panel to examine the EU regime for the importation, sale and distribution of bananas established by Council

Regulation 404/93.20

The WTO Panel ruled that the EU bananas import regime violated WTO obligations under the GATT, the GATS

and the Agreement on Import Licensing Procedures. In relation to the Agreement on Import Licensing

Procedures the Panel in EC – Bananas III found that this Agreement applies to licensing procedures for tariff

quotas. The Appellate Body upheld this finding as well as the Panel's finding that both Article 1.3 of the

Licensing Agreement and Article X:3(a) of the GATT 1994 apply to the EU import licensing procedures.

18 Appellate Body Report, EC – Poultry, paragraph 121

19 GATT Panel Report, EEC - Members States Import Regimes for Bananas ("EC – Bananas I"), DS32/R,

adopted on 19 May 1993; GATT Panel Report, EEC – Import Regime for Bananas ("EC – Bananas II"), DS38/R,

adopted on 11 February 1994; Panel Report, European Communities - Regime for the Importation, Sale and

Distribution of Bananas ("EC – Bananas III"), WT/DS27/R/ECU, adopted 25 September 1997, as modified by

the Appellate Body Report, WT/DS27/AB/R; European Communities - Regime for the Importation, Sale and

Distribution of Bananas ("Recourse to Article 21.5 by Ecuador"), ("EC - Bananas (21.5)"), WT/DS27/RW/ECU,

adopted 12 April 1999, European Communities - Regime for the Importation, Sale and Distribution of Bananas

("Recourse to Article 21.5 by European Union"), ("EC - Bananas (21.5)"), WT/DS27/RW/EEC, adopted 12 April

1999, Decision by the Arbitrators ("Recourse to Arbitration by the EU under Article 22.6"), WT/DS27/ARB,

adopted 9 April 1999, Decision by the Arbitrators ("Recourse to Arbitration by the EU under Article 22.6"),

WT/DS27/ARB/ECU, adopted 24 March 2000.

20 Council Regulation 404/93 on the common organization of the market in bananas. OJ L 47,

25 February 1993, pp. 1-11

23

TIP

If you want to know more about the above cases or to read the cases in full, see:

http://www.wto.org/english/tratop_e/dispu_e/find_dispu_cases_e.htm

http://www.wto.org/english/res_e/booksp_e/dispu_summary06_e.pdf

See also the WTO Analytical Index at:

http://www.wto.org/english/res_e/booksp_e/analytic_index_e/agriculture_e.htm

III.A.3. AGREEMENT ON SANITARY & PHYTOSANITARY MEASURES AND THE AGREEMENT ON TECHNICAL BARRIERS TO TRADE 

The SPS Agreement applies to measures that affect agriculture products. Article 14 of the Agreement on

Agriculture provides that "Members agree to give effect to the Agreement on the Application of Sanitary and

Phytosanitary Measures".

Sanitary (human and animal health) and phytosanitary (plant health) measures apply to domestically produced

food or local animal and plant diseases, as well as to products coming from other countries.

Countries may require that both domestically produced and imported goods should satisfy certain minimum

levels of quality, health and safety standards. These standards are particularly important with respect to

agricultural, food and health products. Food standards may facilitate trade by alleviating consumer fears about

imported products. But they can also act as trade barriers when different standards exist in different countries.

Clearer rules for sanitary and phytosanitary measures were also considered to be required, both in their own

right and to prevent circumvention of stricter rules on import access through unjustified, protectionist use of

food safety as well as animal and plant health measures. Hence, this agreement was negotiated in conjunction

with the Agreement on Agriculture in the Uruguay Round.

The TBT Agreement is also relevant to agricultural trade. It covers all products, including industrial and

agricultural products. The TBT, SPS and the Agreement on Agriculture are closely related. For example, the

TBT Agreement governs the packaging as well as the minimum size of a fruit, the SPS Agreement the use of

anti-pest spray, while the Agreement on Agriculture governs trade in the fruit itself (tariffs and other

measures).

24

Numerous disputes concerning agricultural products and the SPS and TBT Agreement have been referred to the

WTO. Three of the major WTO disputes are described below:

(1) The Australia - Salmon21 dispute concerned an import prohibition on uncooked salmon from certain parts

of the northern Pacific Ocean. In 1975, Australia imposed an import restriction which provided that fresh

chilled and frozen salmon could only be imported to Australia if it had first been heat-treated.

In 1995, Canada requested consultations over the matter and argued that the import restriction was a

violation of Australia's obligations under both the GATT 1994 and the SPS Agreement and that the

measure nullified or impaired benefits that Canada had bargained for in the Uruguay Round.

First, the Panel then the Appellate found Australia to be in violation of Article 5.5 of the Agreement. The

Appellate Body concluded that the Australian import restriction was, in reality, a disguised restriction on

trade and therefore a violation of Article 5.5 of the SPS Agreement. They found that:

1. Australia limited its import ban to salmon, while at the same time tolerating imports of herring used as

bait, and live ornamental finfish, both of which posed an equal or greater risk of spreading disease to

the very domestic stocks that the salmon ban ostensibly protected; and

2. the absence of any controls on the internal movement of the salmon products when compared with

the import prohibition on ocean-caught Pacific salmon.

(2) The Japan – Agricultural Products II22 case concerned the standards for different varieties of fruits. The

US argued that a Japanese import restriction on certain types of fresh fruit was in violation of the SPS

Agreement, especially Articles 2.2 and 5.6. The measures in dispute generally prohibited any imports of

fresh apricots, cherries, plums, pears, quince, peaches, apples and walnuts originating from the

continental US because they were potential hosts for the coddling moth. This moth, although common in

the US, is a pest of "quarantine-level" significance for Japan. The Japanese import restriction contained an

exemption from the import ban on a variety-by-variety basis. This exemption provided that the efficiency

of quarantine treatment for each variety of these agricultural products had to be tested before these

products could be imported into Japan. These tests could take up to two years.

The Panel first found that Japan had violated Article 7 of the SPS Agreement by failing to publish its

testing requirements. The Japanese Government had simply "made available" the testing guidelines, while

Article 7 and Annex B oblige WTO Members to "publish promptly" all SPS measures.

In February 1999, the WTO Appellate Body essentially upheld the Panel's findings. The Appellate Body

concluded that the Japanese requirement of testing for some of the products was not based on science. It

was therefore found to be in violation of the SPS Agreement. For apricots, pears, plums and quince the

Appellate Body found that Japan had failed to conduct a proper risk assessment and, therefore, was in

violation of Article 5.1 of the SPS Agreement.

21 Australia – Measures Affecting Importation of Salmon ("Australian – Salmon"), WT/DS18/R, adopted

12 June 1998, WT/DS18/AB/R, adopted 20 October 1998

22 Japan – Measures Affecting Agricultural Products ("Japan – Agricultural Products II"), WT/DS76/R, adopted

27 October 1998, WT/DS76/AB/R, adopted 22 February 1999

25

(3) The EC – Hormones23 dispute concerned certain EU measures that banned the sale of beef derived from

cattle that had been given growth hormones. The US and Canada contested the ban, arguing that it

violated the SPS Agreement.

The EU measures banning hormone treated beef were found to be in violation of the SPS Agreement,

because these measures were not based on a risk assessment as required by Article 5.1 of the

SPS Agreement. It was also found that the precautionary principle, although represented in Article 5.7 of

the SPS Agreement, did not override any stated obligations, especially not Articles 5.1 and 5.2.

These Panel's findings were upheld by the Appellate Body. The Panel found and the Appellate Body upheld

the determination that the EU had failed to conduct a risk assessment that satisfied its obligations under

Article 5 of the SPS Agreement.

The Appellate Body further stated that the EU by maintaining, without justification under Article 3.3 of the

SPS Agreement, SPS measures which were not based on existing international standards, acted

inconsistently with Article 3.1 of the SPS Agreement. Finally, both the Panel and the Appellate Body found

that the EU measures were inconsistent with Article 5.5, which strives to avoid arbitrary or unjustifiable

distinctions in the levels of sanitary protection set by Members, when such distinctions can inhibit

international trade.

TIP

If you want to know more about the above cases or to read the cases in full, see:

http://www.wto.org/english/tratop_e/dispu_e/find_dispu_cases_e.htm

http://www.wto.org/english/res_e/booksp_e/dispu_summary06_e.pdf

See also the WTO Analytical Index at:

http://www.wto.org/english/res_e/booksp_e/analytic_index_e/agriculture_e.htm

III.A.4. DUMPING & ANTI‐DUMPING MEASURES IN AGRICULTURE 

GATT 1994 allows WTO Members to impose anti-dumping duties, provided that such imports are causing, or

threatening to cause injury to a domestic industry. Special procedures must be followed by national authorities

in deciding whether to impose such measures.

There is nothing in the Agreement on Agriculture which exempts agricultural products from the application of

the Article VI of the GATT 1994 and the Anti-dumping Agreement. Furthermore, Article 21 of the Agreement on

Agriculture explicitly states that the provisions of GATT 1994 and of other agreements in Annex 1A to the

WTO Agreement apply to agriculture, therefore including the Anti-dumping Agreement.

23 EC – Measures Concerning Meat and Meat Products ("EC – Hormones"), WT/DS26/R/USA, adopted

18 August 1997, WT/DS48/AB/R, adopted 16 January 1998

26

III.A.5. AGREEMENT ON SUBSIDIES AND COUNTERVAILING MEASURES (SCM AGREEMENT) 

The SCM Agreement applies to agricultural goods as well as industrial products, except when the subsidies

conform to the Agreement on Agriculture. Article 13 of the Agreement on Agriculture (the "Peace Clause")

established that, until the end of 2003, there should be some protection from challenge and action under the

SCM Agreement for agricultural subsidies that complied with a Member's commitments.

However, as explained above, under the heading "Due Restraint", since the end of 2003, the SCM Agreement

applies to subsidies for agricultural products, as set forth in its Article 21. The provisions of the SCM Agreement

firmly state that its provisions apply, subject to the Agreement on Agriculture.

See the peace clause above, for more details.

III.A.6. THE AGREEMENT ON SAFEGUARDS 

WTO Members may restrict imports of a product temporarily if its domestic industry is injured or threatened

with injury caused by a surge in imports. "Safeguard measures" may result in the imposition of quantitative

import restrictions or in a tariff increase above bound rates.

The provisions on safeguard measures under Article XIX of the GATT 1994, entitled "Emergency Action on

Imports of Particular Products" is now complement by the WTO Agreement on Safeguards, which established

specific rules for the application of safeguard measures.

The GATT 1994 Article XIX:2 allows provisional measures to be imposed in critical circumstances where delay

would cause damage that would be difficult to repair. Such measures may take the form of tariff increases

only, and may be kept in place for a maximum of 200 days. In addition, the period of application of any

provisional measure must be included in the total period of application of a safeguard measure.

If the safeguard measure is the introduction of a quantitative restriction, that quota comes in effect subject to

the provisions of the GATT 1994 Article XIII On the administration and allocation of quotas.

GATT 1994 Article XIX safeguard measures apply to all products subject to the GATT 1994 including all

agricultural and food products. In fact, there have been numerous cases concerning agriculture that has been

referred to the WTO dispute settlement regarding safeguards measures.

The Korea – Dairy case24 (WT/DS98) arose out of the imposition by the Republic of Korea of definitive

safeguard measures in the form of a quantitative restriction on imports of dairy products. The EU challenged

the safeguard measures before the WTO under the GATT 1994 Article XIX:1(a) and Articles 2.1, 4.2(a), 4.2(b),

5.1 and 12(1) to (3) of the Agreement on Safeguards.

24 Korea – Definitive Safeguard Measure on Imports of Certain Dairy Products ("Korea – Dairy"), WT/DS98/R,

adopted 21 June 1999, WT/DS98/AB/R, adopted 14 December 1999

27

The Panel found and the Appellate Body upheld that the definitive safeguard measure was imposed

inconsistently with the provisions of Article 4.2(a) of the Agreement on Safeguards. The Appellate Body also

upheld the Panel's finding that the first sentence of Article 5.1 of the Agreement on Safeguards imposes an

obligation on a Member applying a safeguard measure to ensure that the measure applied is not more

restrictive than necessary to prevent or remedy serious injury and to facilitate adjustment.

The US – Wheat Gluten case25 arose from of the imposition by the United States of definitive safeguard

measures on imports of wheat gluten, in the form of a quantitative restriction. The safeguard measure

excluded imports from Canada due to its partnership status under NAFTA. The EU challenged the safeguard

measures before the WTO under the GATT 1994 Article XIX, and Articles 2, 4.2, 8 and 12 of the Agreement on

Safeguards.

The United States was found to be in violation of Article 4.2 of the Agreement on Safeguards, because its

authorities failed to take into account certain "relevant factors" in their investigation. The Appellate Body

specified that national authorities conducting safeguard investigations were obliged to consider all

relevant factors, regardless of whether they had been clearly raised by the parties to the dispute. The

Appellate Body also found that the United States, having included Canada in its safeguard investigation,

could not exclude Canada from its safeguard measure, requiring correspondence between the

investigation and the measures applied.

In the US – Lamb (WT/DS177 and WT/DS178)26 dispute, Australia and New Zealand challenged the

United States safeguard measure, in the form of a tariff rate quota, on imports of fresh, chilled and frozen

lamb meat under the GATT 1994 Article XIX, and Article 4 of the Agreement on Safeguards.

The Panel and the Appellate Body confirmed the requirement, under Article XIX:1(a) of the GATT 1994, for a

finding of causation by "unforeseen developments". The Panel found and the Appellate Body upheld the finding

that the United States had acted inconsistently with Article 2.1, 4.2(a) and 4.2(c) of the Agreement on

Safeguards and with Article XIX:1(a) of the GATT 1994 by failing to demonstrate as a matter of fact the

existence of "unforeseen developments".

TIP

If you want to know more about the above cases or to read the cases in full, see:

http://www.wto.org/english/tratop_e/dispu_e/find_dispu_cases_e.htm

http://www.wto.org/english/res_e/booksp_e/dispu_summary06_e.pdf

See also the WTO Analytical Index at:

http://www.wto.org/english/res_e/booksp_e/analytic_index_e/agriculture_e.htm

25 United States – Definitive Safeguard Measures on Imports of Wheat Gluten from the EC ("US –Wheat

Gluten"), WT/DS166/R, adopted 31 July 2000, WT/DS166/AB/R, adopted 22 December 2000

26 US – Safeguard Measures on Imports of Fresh, Chilled, or Frozen Lamb Meat from New Zealand and

Australia ("US – Lamb"), WT/DS177/R and WT/DS178/R, adopted 21 December 2000, WT/DS177/AB/R and

WT/DS178/AB/R, adopted 1 May 2001

28

III.A.7. TRIPS & AGRICULTURE 

Some elements of the TRIPs Agreement relating to agriculture include:

geographical indications "GIs" (Articles 22-24);

patent protection of agricultural chemical products (Articles 70.8 and 70.9);

plant variety protection (Article 27.3(b)).

a. GEOGRAPHICAL INDICATIONS 

Article 22.1 of the TRIPs Agreement defines geographical indications (GIs) as:

"… indications which identify a good as originating in the territory of a Member, or a region or locality in that

territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its

geographical origin."

GIs may be used for a wide variety of agricultural products. However, GIs also protect non-agricultural

products such as the production process or manufacturing skills associated with an area.

The TRIPS Agreement requires that all WTO Members protect GIs. WTO Members must provide the legal

means for interested parties to prevent:

a) "the use of any means in the designation or presentation of a good, that indicates or suggests that the

good in question originates in a geographical area, other than the true place of origin in a manner

which misleads the public as to the geographical origin of the good;

b) any use which constitute an act of unfair competition within the meaning of Article 10bis of the Paris

Convention (1967)."

Geographical indications for wines and spirits have additional protection compared to that provided in Article 22

for all products.

For wines and spirits, WTO Members have to provide higher levels of protection, i.e. even where there is no

danger of the public being misled and the GI is accompanied by expressions such as "imitation" of the GI

(Article 23).

Under Article 23.1, the use of a geographical indication identifying a wine or spirit not originating in the place

indicated by the geographical indication is prohibited, even where the true origin of the wine or spirit is

indicated or the geographical indication is used in a translation or accompanied by expressions such as "kind",

"type", "style", "imitation" or the like.

29

b. PATENT PROTECTION OF AGRICULTURAL CHEMICAL PRODUCTS (ARTICLES 70.8 AND 70.9) 

WTO Members must provide patent protection for any invention, whether a product (such as a medicine) or a

process (such as a method of producing the chemical ingredients for a medicine), except when an exception

applies (Article 27.1).

A patent is a set of exclusive rights granted by a state to a patentee (the inventor or assignee) for a fixed

period of time in exchange for the regulated, public disclosure of certain details of a device, method, process or

composition of the invention, which is new, involves an inventive step and is capable of industrial application.

The exclusive right granted to a patentee in most countries is the right to prevent or exclude others from

making, using, selling, offering to sell or importing the claimed invention. Such protection is not new, since

patents were already protected by the Paris Convention of 1883.

Article 2.1 of the TRIPS Agreement incorporates the provision of the Paris Convention. It obliges WTO Members

to comply with Articles 1 through 12 and 19 of the latest act of the Paris Convention (1967). This also applies

to WTO Members that are not parties to the Paris Union, such as Macao and Hong Kong and the EU (as they

are not states).

c. PLANT VARIETY PROTECTION (ARTICLE 27.3(B)) 

WTO Members must protect new varieties of plants developed by plant breeders though patents, or by an

effective sui generis system, or by any combination thereof. However, Members can exclude plants and

animals and essentially biological processes for the production of plants or animals. (Article 27.3(b))

Article 27.3(b):

3. Members may also exclude from patentability:

(b) plants and animals other than microorganisms, and essentially biological processes for the production of

plants or animals other than non-biological and microbiological processes. However, Members shall provide

for the protection of plant varieties either by patents or by an effective sui generis system or by any

combination thereof. The provisions of this subparagraph shall be reviewed four years after the date of entry

into force of the WTO Agreement.

III.A.8. GATS AND AGRICULTURE 

As you have seen before, both the rules on goods (in GATT 1994) and those on intellectual property (in the

TRIPS Agreement) apply to agriculture. What about those on services?

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This was the issue in a case concerning agricultural products - the EC - Bananas III case.27 The European

Union had a licensing system for the allocation of the right to import bananas within a TRQ. This system was

challenged in the WTO.

The Panel found that there is no legal basis for an a priori exclusion of measures within the EU banana import

licensing regime from the scope of the GATS.28

This was confirmed by the Appellate body. The EU argued that the GATS did not apply to the EU import

licensing procedures because they were "not measures 'affecting trade in services' within the meaning of

Article I:1 of the GATS".29

The Appellate Body, however, noted that:

"(…) Article I:1 of the GATS provides that "[t]his Agreement applies to measures by Members affecting

trade in services". In our view, the use of the term "affecting" reflects the intent of the drafters to give a

broad reach to the GATS. The ordinary meaning of the word "affecting" implies a measure that has "an

effect on", which indicates a broad scope of application. This interpretation is further reinforced by the

conclusions of previous panels that the term "affecting" in the context of Article III of the GATT is wider

in scope than such terms as "regulating" or "governing". (…) Article I:3(b) of the GATS provides that

"'services' includes any service in any sector except services supplied in the exercise of governmental

authority" (emphasis added), and that Article XXVIII(b) of the GATS provides that the "'supply of a

service' includes the production, distribution, marketing, sale and delivery of a service". There is nothing

at all in these provisions to suggest a limited scope of application for the GATS. We also agree that

Article XXVIII(c) of the GATS does not narrow "the meaning of the term 'affecting' to 'in respect of'".30

The Appellate Body also agreed with the Panel and confirmed that that the GATS and the GATT 1994 are not

mutually exclusive agreements. They held that the EU banana import licensing procedures were subject to both

the GATT 1994 and the GATS, and that the GATT 1994 and the GATS may overlap in application to a particular

measure. In particular, the Appellate Body noted:

"... Certain measures could be found to fall exclusively within the scope of the GATT 1994, when they

affect trade in goods as goods. Certain measures could be found to fall exclusively within the scope of

the GATS, when they affect the supply of services as services. There is yet a third category of measures

that could be found to fall within the scope of both the GATT 1994 and the GATS. These are measures

that involve a service relating to a particular good or a service supplied in conjunction with a particular

27 EC – Regime for the Importation, Sale, and Distribution of Bananas ("EC – Bananas III") WT/DS27/R/ECU,

WT/DS27/R/MEX, WT/DS27/R/USA, adopted 22 May 1997, WT/DS27/AB/R, adopted 9 September 1997

28 Panel Report, European Communities – Regime for the Importation, Sale, and Distribution of Bananas –

Complaint by Ecuador ("EC – Bananas III (Ecuador)"), WT/DS27/R/ECU, adopted 25 September 1997, as

modified by the Appellate Body Report, paragraph 7.286

29 Appellate Body Report, European Communities – Regime for the Importation, Sale, and Distribution of

Bananas ("EC – Bananas III"), WT/DS27/AB/R, adopted 25 September 1997, paragraph 218

30 Appellate Body Report, EC – Bananas III, paragraph 220

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good. In all such cases in this third category, the measure in question could be scrutinized under both

the GATT 1994 and the GATS. However, while the same measure could be scrutinized under both

agreements, the specific aspects of that measure examined under each agreement could be different.

Under the GATT 1994, the focus is on how the measure affects the goods involved. Under the GATS, the

focus is on how the measure affects the supply of the service or the service suppliers involved. Whether

a certain measure affecting the supply of a service related to a particular good is scrutinized under the

GATT 1994 or the GATS, or both, is a matter that can only be determined on a case-by-case basis."31

TIP

If you want to know more about the above cases or to read the cases in full, see:

http://www.wto.org/english/tratop_e/dispu_e/find_dispu_cases_e.htm

http://www.wto.org/english/res_e/booksp_e/dispu_summary06_e.pdf

See also the WTO Analytical Index at:

http://www.wto.org/english/res_e/booksp_e/analytic_index_e/agriculture_e.htm

EXERCISES:

11. Besides the Agreement on Agriculture what are some of the WTO Agreements that related to Agriculture

as listed in Annex 1A?

31 Appellate Body Report, EC – Bananas III, paragraph 221

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IV. SUMMARY 

The results of the Uruguay Round provide a framework for the long-term reform of agricultural trade and

domestic policies. The Agreement on Agriculture reflects the compromises made to satisfy the multiple

negotiating interests in the Uruguay Round.

The new Agreement, created a definition of agricultural products, and converted all non-tariff barriers into

ordinary customs duties. The new rules and commitments apply to market access, domestic support and

export competition. It includes provisions that limit the use of distorting domestic support policies, export

subsidies and subjected these limits to reductions.

The Agreement on Agriculture does allow governments to support their rural economies, but preferably

through policies that cause a minimal or none distortion to trade. It also allows some flexibility in the way

commitments are implemented.

Developing countries do not have to cut their subsidies or lower their tariffs as much as developed

countries, and they are given extra time to complete their obligations. Least-developed countries do not

have any reduction commitments. Special provisions deal with the interests of countries that rely on

imports for their food supplies, and the concerns of least-developed economies.

The Agreement on Agriculture also includes a "Peace Clause" which was designed to reduce the likelihood

of disputes or challenges on agricultural subsidies over a period of nine years. This provision expired at the

end of 2003.

The Agreement on Agriculture includes a commitment to continue the reform through new negotiations.

These were launched in 2000 and continue as part of the Doha Development Agenda.

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PROPOSED ANSWERS:

1. Export subsidies on agricultural primary products provided that agricultural export subsidies were not

used to capture more than an "equitable share" of world exports of the product concerned (Article XVI:3

of GATT).

2. (i) Waivers;

(ii) Protocol of accession; and

(iii) Article XI.2(c).

3. (i) import bans;

(ii) quotas setting the maximum level of imports;

(iii) variable import levies;

(iv) minimum import prices; and

(v) non-tariff measures imposed by state trading enterprises.

4. All agricultural NTBs have been abolished and replaced by tariffs.

Tariffs are bound and subject to reduction. They are not to be increased in the future.

There are avenues for the maintenance of current access opportunities and the establishment of minimum

access tariff quotas (at reduced-tariff rates) where current access is less than 3% of domestic

consumption. These minimum access tariff quotas were to be expanded to 5% over the implementation

period.

A special safeguard was introduced which can be used on products that were tariffied and which have the

letters SSG in the Schedule.

5. These are market access commitments found in the Schedule of Tariff Concession.

6. (1) reduction of the amount of money spent on export subsidies; and

(2) reduction of the quantity of export benefiting from such subsidies.

7. They are to:

(1) do so in accordance with Article XI:2(a) of the GATT 1994;

(2) give due consideration to the effects of such restrictions on importing Members' food security;

(3) if requested, to consult with any other Member having a substantial interest as an importer

This rule applies to developing countries only in so far as they are net exporters of the foodstuff in

questions.

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8. The peace clause is found in Article 13 of the Agreement on Agriculture. It expired on 31 December 2003.

It gave some protection to agricultural subsidies provided in accordance with the Agreement on

Agriculture from being challenged under specific provisions of the GATT or the SCM Agreement for a

period of 9 years.

9. Oversees the implementation of the Agreement on Agriculture;

Provides a forum for Members to discuss matters related to agriculture trade and to consult on matters

relating to the implementation of commitments, including rule-based commitments;

Reviews notifications. At the Committee meetings, Members pose questions to Members who make

notifications. Under Article 18.6 of the Agreement on Agriculture other matters related to the reform

programme can be raised, and under Article 18.7 counter-notifications can be made when one Member

has information which suggests that another Member should have notified a particular measure or action

to the Committee; and

Monitors the follow-up to the Decision on Measures Concerning the Possible Negative Effects of the

Reform Programme on Least-Developed and Net Food-Importing Developing Countries, as well as,

developments in the trade of agricultural products.

10. 1. Differential and more favourable treatment for developing country Members is an integral part of the

negotiation.

2. Lower reduction rates to be applied to fixed base period values of trade-distorting domestic supports

(covered by Total Aggregate Measurement of Support), tariffs and export subsidies - which was

two-thirds for the developing countries of the levels required for the developed countries in each of

these three areas. Least developed countries were not required to make reductions.

3. Longer implementation period - developing countries are given a longer period (10 years, 1995-2004)

to implement various reduction provisions, compared to six years for the developed countries.

4. Waiver of tariffication - the elimination of non-tariff barriers, by converting quotas and other

quantitative import restrictions to tariffs.

11. General Agreement on Tariffs and Trade (GATT 1994);

Agreement on Sanitary and Phytosanitary Measures;

Agreement on Textiles and Clothing (terminated on 1/1 2005);

Agreement on Technical Barriers to Trade;

Agreement on Trade Related Investment Measures;

Agreement on Anti-dumping;

Agreement on Customs Valuation;

Agreement on Preshipment Inspection;

Agreement on Rules of Origin;

Agreement on Import Licensing;

Agreement on Subsidies and Countervailing Measures; and

Agreement on Safeguards.

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