Order Code RL33144
CRS Report for Congress
Received through the CRS Web
WTO Doha Round:
Agricultural Negotiating Proposals
November 9, 2005
Charles Hanrahan and Randy Schnepf
Senior Specialist and Specialist in Agricultural Policy
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

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WTO Doha Round: Agricultural Negotiating Proposals
Summary
The pace of negotiations in the Doha Round of multilateral trade negotiations
has quickened as the mid-December Hong Kong Ministerial Conference of the World
Trade Organization (WTO) approaches. At Hong Kong, WTO member countries
are expected to reach agreements on specific measures (known as modalities) to
expand global trade in agricultural and industrial products and services and set the
stage for intensive negotiations that would take place during 2006. Despite intense
negotiations, agreements on modalities, especially for agriculture, have eluded
negotiators.
The WTO is unique among the various fora of international trade negotiations
in that it brings together its entire 148-country membership to negotiate a common
set of rules to govern international trade in agricultural products, industrial goods,
and services. Agreement across such a large assemblage of participating nations and
range of issues contributes significantly to consistency and harmonization of trade
rules across countries. As to agriculture, because policy reform is addressed across
three broadly inclusive fronts — export competition, domestic support, and market
access — WTO negotiations provide a framework for give and take to help foster
mutual agreement. As a result, the Doha Round represents an unusual opportunity
for addressing most policy-induced distortions in international agricultural markets.
The ongoing trade negotiations have entered a critical stage reflecting their
convergence with two key U.S. policy events: the expiration in 2007 of both current
U.S. farm legislation and of Trade Promotion Authority (TPA). Under TPA, if the
Administration meets negotiating objectives established by Congress and satisfies
consultation and notification requirements, then Congress would consider
implementing legislation for a Doha Round agreement with limited debate, no
amendments, and a straight up-or-down vote. TPA is set to expire on July 1, 2007,
and, although Congress could extend the deadline, there is concern that such a vote
would be both rancorous and uncertain in outcome. Hence, the Administration and
trade proponents are feeling considerable pressure to conclude the Doha Round prior
to TPA expiry. In addition, current U.S. farm legislation (the 2002 farm bill) is set
to expire in 2007. Prior to its expiration, Congress and the Administration will
engage in a public policy debate about the goals of U.S. farm policy and the measures
best suited to achieve those goals. Many policymakers are concerned about
fashioning U.S. farm policy to be consistent with any new WTO trade agreement.
As a result, many, but not all, U.S. policy makers have a strong interest in achieving
a new trade agreement prior to the development of new U.S. farm policy.
This report provides background information on the WTO, the Doha Round, the
key negotiating groups, and a schedule of historical and upcoming events relevant to
the agricultural negotiations; reviews the agreements reached in the July 2004
framework and identifies issues that remain to be resolved by the Hong Kong
Ministerial in December; discusses and compares the major agricultural negotiating
proposals; and discusses the potential effects of an agricultural agreement on U.S.
farm policy. The report will be updated.

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Contents
Current Status of Agricultural Negotiations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
July 2004 Framework Agreement for Agriculture . . . . . . . . . . . . . . . . . . . . . . . . . 3
Role of Developing Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
U.S. Economic and Agricultural Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Role of Congress: Trade Promotion Authority and the Farm Bill . . . . . . . . . . . . 7
Schedule of Key Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Key Players in the WTO DDA Negotiations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Key Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
The Framework Agreement on Agriculture and Issues to be Resolved . . . . . . . . 12
I. Export Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
What Has Been Agreed to in the Framework . . . . . . . . . . . . . . . . . . . . . . . 12
Issues to Be Resolved Through Further Negotiation . . . . . . . . . . . . . . . . . . 12
II. Domestic Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
What Has Been Agreed to in the Framework . . . . . . . . . . . . . . . . . . . . . . . 13
Issues to Be Resolved Through Further Negotiation . . . . . . . . . . . . . . . . . . 14
III. Market Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
What Has Been Agreed to in the Framework . . . . . . . . . . . . . . . . . . . . . . . 14
Issues to Be Resolved Through Further Negotiation . . . . . . . . . . . . . . . . . . 15
Comparison of Major Agricultural Negotiating Proposals . . . . . . . . . . . . . . . . . 15
The U.S. Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
The EU Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
The G-20 Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
The G-10 Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Potential Effects on U.S. Farm Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Export Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Domestic Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Market Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Information Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
CRS Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Other Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

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List of Figures
Figure 1. WTO Export Subsidy Notifications, 1995-2001 . . . . . . . . . . . . . . . . . 25
Figure 2. U.S. GSM-102 Export Credit Guarantees, FY2004 . . . . . . . . . . . . . . 26
List of Tables
Table 1. WTO, Export Subsidy Notifications by Country, 1995-2001 . . . . . . . . 23
Table 2. U.S. Export Subsidies, Total versus Milk & Products, 1995-2002 . . . 24
Table 3. U.S. GSM-102 Export Credit Guarantees, by Commodity, FY2004 . . 26
Table 4. U.S. GSM-102 Export Credit Guarantees, by Major Region,
FY2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Table 5. U.S. Proposal for Reform of Trade-Distorting Domestic Subsidies . . . 28
Table 6. Comparison of Proposals for Domestic Policy Reform . . . . . . . . . . . . 29
Table 7. U.S. Domestic Spending Limits and Outlays: Current Status,
Framework Agreement, and U.S. Reform Proposal . . . . . . . . . . . . . . . . . . 30
Table 8. U.S. Domestic Support Outlays by AMS Category: Notification
Data (1995-2001) and Forecasts (2001-2005) . . . . . . . . . . . . . . . . . . . . . . . 31
Table 9. Doha Round Negotiations Market Access Proposals: G-10, G-20,
EU, and U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

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WTO Doha Round:
Agricultural Negotiating Proposals
Current Status of Agricultural Negotiations
On October 10, 2005, the United States offered a detailed proposal with specific
modalities (i.e., schedules, formulas, and other criteria for implementing tariff and
subsidy reduction rates and other aspects of the reform) for the adoption of new
disciplines on the three major agricultural reform pillars — export competition,
domestic support, and market access. The U.S. proposal appeared to break a
negotiations log-jam as it was followed closely in mid-October, by separate proposals
for agricultural modalities from three other major negotiating participants — the EU,
the G-20 developing countries, and the G-10, a group of mainly developed countries
that are net importers of agricultural products. (The proposals are discussed below.)
Chairmen of both House and Senate Agriculture Committees have expressed
their views on the kind of WTO agricultural agreement that would garner their
support.1 According to the chairmen, the four principles that should guide any WTO
agreement are:
! Substantial improvement in real market access.
! Greater harmonization in trade-distorting domestic support.
! Elimination of export subsidies; and
! Greater certainty and predictability regarding WTO litigation.
Negotiations on the agricultural modalities are continuing in preparation for the
next (and Sixth) WTO Ministerial Conference which will be held in Hong Kong
December 13-18, 2005. The success of the Hong Kong Ministerial hinges greatly on
the success of trade ministers to reach general agreement on the details of the major
modalities. However, wide differences exist, especially between the United States
and the EU, in the modalities proposed for market access, the most difficult issue
encountered by negotiators.
As a result, the negotiations appear to be reaching another impasse. The United
States, the G-20, and members of the CAIRNS group are calling for the EU to
improve and resubmit its present offer on market access as they claim it is not as
extensive as current reform proposals for domestic support and export competition,
and thus provides insufficient bargaining room. The EU (with at least partial backing
from the G-10 and India) claims that it is unable to improve its market access offer
1 Letter to the Honorable Rob Portman, U.S. Trade Representative, October 6, 2005, from
Senator Saxby Chambliss, Chairman of the Senate Committee on Agriculture, Nutrition and
Forestry, and Representative Bob Goodlatte, Chairman, House Committee on Agriculture.

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CRS-2
without some formal proposals from other countries on reform in the non-agricultural
trade sectors — primarily services and industrial goods.
If the impasse is surmounted and preliminary agreement is reached, then the
agricultural modalities would be on the agenda of the December Ministerial, and
negotiations could be completed during 2006, assuming agreements are reached in
other negotiating areas. However, because little movement appears likely under
present circumstances (i.e., limited time and internal EU-country disagreements over
the nature of the EU’s offer), news reports are surfacing about scaled-back ambitions
for the Hong Kong Ministerial.2 Director General Pascal Lamy has suggested the
possibility of scheduling two further ministerial meetings within a year after the
Hong Kong ministerial — one to approve modalties and one to finally conclude the
Doha Round.
Negotiating Mandate for Agriculture: the Doha
Declaration
At the World Trade Organization’s (WTO) Fourth Ministerial Conference in
Doha, Qatar, November 9-14, 2001, WTO member countries agreed to launch a new
round of multilateral trade negotiations (MTNs), including negotiations on
agricultural trade liberalization.3 This new round, because it emphasizes integrating
developing countries into the world trading system, is called the Doha Development
Agenda (DDA).
A first phase of agricultural trade negotiations had been underway since early
2000.4 The first phase produced proposals from WTO member countries for
agricultural trade liberalization, but no work program or timetable for completing
negotiations were developed. The new round incorporates agriculture into a
comprehensive framework that includes negotiations on industrial tariffs, services,
anti-dumping and countervailing duty measures (referred to as rules) dispute
settlement, and other trade issues.
The Doha Ministerial Declaration mandate for agriculture calls for
comprehensive negotiations aimed at substantial improvements in market access;
reductions of, with a view to phasing out, all forms of export subsidies; and
substantial reductions in trade-distorting domestic support. These topics — domestic
support, export subsidies, and market access — have become known as the three
pillars of the agricultural negotiations. The Declaration also provides that special and
2 Washington Trade Daily, “A Less Ambitious Hong Kong Conference,” Vol. 14, No. 222,
Nov. 9, 2005.
3 The Doha Ministerial Declaration launching the DDA negotiations is at [http://www.
wto.org/english/tratop_e/dda_e/dda_e.htm#dohadeclaration]. Paragraphs 13 and 14 of the
Doha declaration set out the agricultural negotiating mandate.
4 Article 20 of the 1994 Uruguay Round Agreement on Agriculture called for initiating
negotiations one year before the end of the URAA implementation period (the beginning of
2000). See the text of the URAA at [http://www.wto.org/english/docs_e/legal_e/14-ag.pdf]

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CRS-3
differential treatment for developing countries would be an integral part of all
elements of the negotiations. The Declaration took note of non-trade concerns
reflected in negotiating proposals of various member countries and confirmed that
they would be taken into account in the negotiations. March 31, 2003 was set as the
deadline for reaching agreement on “modalities” (targets, formulas, timetables, etc.)
for achieving the mandated objectives, but that deadline was missed. During the rest
of 2003, negotiations on modalities continued in preparation for the fifth WTO
Ministerial Conference held in Cancun, Mexico September 10-14, 2003.
While the United States and the EU reached agreement on a broad framework
for negotiating agricultural trade liberalization before the Cancun meeting, a group
of developing countries, the G-20 which includes Brazil, China, India, and South
Africa, among others, made a counter-proposal. The G-20 proposal emphasized
agricultural subsidy and tariff reduction for developed countries with fewer demands
on developing countries. The Chairman of the Cancun ministerial circulated a draft
declaration at the meeting that attempted to reconcile differences between developed
(especially the United States and the EU) and developing countries (especially the G-
20) on the agricultural issues. Neither the proposals made by the United States and
the EU and the G-20 nor the Chairman’s draft declaration proposed specific
modalities (formulas, targets, or timetables) for reducing tariffs and trade-distorting
support and for phasing out export subsidies.
The Cancun Ministerial Conference thus failed to reconcile differences on
agricultural issues as well as differences between developed and developing countries
over expanding the negotiating agenda to include such issues as competition and
investment policy. The Cancun Ministerial ended without an agreement on
modalities or a framework for continuing multilateral negotiations on agricultural
trade liberalization. The inconclusive end of the Cancun ministerial largely
eliminated the prospect that the DDA would conclude by its scheduled end date,
January 1, 2005.
July 2004 Framework Agreement for Agriculture
WTO member countries did, however, reach an agreement on July 31, 2004 on
a work program which includes a framework for negotiating the agricultural trade
issues in the Doha Round.5 The July 31 work program for completing the Doha
negotiations included an overall decision to complete the negotiations launched in
Doha, Qatar, in November 2001 with annexes that lay out negotiating frameworks
for agriculture and other DDA issues.6 The agricultural framework, part of a work
program for all the negotiating issues in the DDA (see below), set the stage for
negotiations to determine modalities, i.e., the specific targets, formulas, timetables,
etc., for curbing trade-distorting domestic support, reducing trade barriers and
5 See Agriculture in the WTO Doha Round: The Framework Agreement and Next Steps, CRS
Report RS21905, May 3, 2005.
6 The framework agreement known as the Doha Work Programme: Decision Adopted by the
General Council on August 1, 2004 is at [http://www.wto.org/english/tratop_e/
dda_e/ddadraft_31jul04_e.pdf].

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CRS-4
eliminating export subsidies. Negotiators set for themselves a deadline of July 2005
for completing a first draft of the agricultural modalities, a deadline that was
subsequently missed.
Other Negotiating Areas
Cotton. Although not mentioned specifically in the Doha round mandate,
cotton subsidies have become a key issue to resolve before DDA negotiations can be
successfully concluded.7 The framework expressly included cotton as an issue to be
addressed in the agricultural negotiations. Four cotton producing African countries
— Benin, Burkina Faso, Chad, and Mali — have proposed the complete elimination
of trade-distorting domestic support and export subsidies for cotton.8 The four
countries, sometimes referred to as the C-4, call for an end to cotton export subsidies
over three years, and the elimination of production-related domestic support over
four years, in each case from January 1, 2005. In addition, the proposal calls for
WTO members to establish a transitional financial compensation mechanism for
cotton-exporting developing countries affected by the subsidies. The issue of how
to handle the cotton issue is unresolved. In contrast to a stand-alone sectoral
initiative as proposed by the C-4, the United States has advocated dealing with cotton
issues as part of the comprehensive agricultural negotiations.9
Services. A critical element of the DDA round is the negotiation pertaining
to foreign trade in services.10 Trade in services has been covered under multilateral
rules only since 1995 with the entry into force of the General Agreement on Trade
in Services (GATS) and of the Uruguay Round Agreements creating the WTO. The
negotiations on services in the Doha Development Agenda (DDA) round have two
fundamental objectives. One objective is to reform the current GATS rules and
principles. The second objective is for each member country to liberalize or open
more of its service sectors to foreign competition. The WTO services negotiations
also began as part of the “built-in agenda” of the WTO and have been going on for
more than five years. However, as with the negotiations in agriculture and other area,
the services negotiations have proceeded slowly with missed deadlines and few
7 Statement by the Chairman of the General Council. Doha Development Agenda: Informal
Head s o f Delegation Meeting, December 9, 2003, available at
[http://www.wto.org/english/news_e/news03_e/stat_gc_chair_9dec03_e.htm].
8 The original proposal, WTO Negotiations on Agriculture, Poverty Reduction: Sectoral
Initiative in Favour of Cotton: Joint proposal by Benin, Burkina Faso, Chad, and Mali,
Committee on Agriculture, Special Session, TN/AG/GEN/4, May 16, 2003, was revised in
WTO, General Council, Poverty Reduction: Sectoral Initiative on Cotton: Wording of
Paragraph 27 of the Revised Draft Cancun Ministerial Text: Communication from Benin,
WT/GC/W/516, October 7, 2003. These documents can be retrieved from
[http://www.wto.org].
9 For details, see The African Cotton Initiative and WTO Agriculture Negotiations, CRS
Report RS21712..
10 See Trade in Services: The Doha Development Agenda Negotiations and U.S. Goals, CRS
Report RL33085.

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CRS-5
results. As indicated below, the EU has linked its offer on market access for
agricultural products to concessions on services by the advanced developing
countries such as G-20 members.
Non-Agricultural Market Access (NAMA). In the Doha Declaration, trade
ministers agreed to negotiations to reduce or eliminate tariffs on industrial or primary
products, with a focus on “tariff peaks, high tariffs, and tariff escalation.”11 Tariff
peaks are considered to be tariff rates greater than 15% and often protect sensitive
products from competition. Tariff escalation is the practice of increasing tariffs as
value is added to a commodity. The talks are also seeking to reduce the incidence of
non-tariff barriers, which include import licensing, quotas and other quantitative
import restrictions, conformity assessment procedures, and technical barriers to trade.
The sectoral elimination of tariffs for specific product groups such as lumber has also
been a focus of the negotiations. Negotiators accepted the concept of less than full
reciprocity in reductions for developing and least-developed countries.
Doha negotiators agreed to reach modalities for the reduction or elimination of
tariffs and non-tariff barriers by the end of May 2003. This deadline and subsequent
ones were not met. In the July 2004 Framework Agreement, negotiators adopted the
use of a non-linear tariff reduction formula (one that would reduce higher tariffs more
than lower ones), but in the meantime no agreement has been reached on a specific
formula or coefficients. The framework agreement also agreed that tariff reductions
would be calculated from bound, rather than the applied, tariff rates. Reductions in
unbound tariff lines would be calculated from twice the currently applied rate.
(Bound rates are the rates permitted, while applied rates are those actually used.
Applied rates are generally lower than bound rates.)
Rules. The Doha Declaration included an objective of “clarifying and
improving disciplines” under the WTO Agreements on Antidumping (AD) and on
Subsidies and Countervailing Measures (ASCM).12 The United States sought to keep
negotiations on trade remedies outside of the Doha Round, but found many WTO
partners insistent on including them for discussion. U.S. negotiators did manage to
insert language asserting that “...basic concepts, principles and effectiveness of these
Agreements and their instruments and objectives” would be preserved. However,
Congressional leaders were highly critical of this concession by U.S. trade
negotiators.13
The United States primarily has been on the defensive in the rules talks. Many
countries have attacked the use of antidumping actions by the United States and other
developed nations as disguised protectionism. However, many developing countries
are now using antidumping actions themselves, which may goad some countries to
reexamine the necessity for discipline. Most of the proposals on trade remedies focus
11 NAMA negotiations are discussed in World Trade Organization Negotiations: The Doha
Development Agenda, CRS Report RL32060 October 7, 2005
12 See CRS Report RL32810, WTO: Antidumping Issues in the Doha Development Agenda,
by Vivian C. Jones.
13 “Zoellick Stance on Trade Remedy in WTO Provokes Criticism.” Inside U.S. Trade.
November 13, 2001.

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CRS-6
on providing more specificity or restrictions to the AD/ASCM Agreements in terms
of definitions and procedures. However, no agreements have been reached, even on
what is to be negotiated.
Other Negotiating Issues . A number of other issues are on the agenda of
the Doha Round.14 These include a review of dispute settlement procedures, a
number of specific issues of interest to developing countries (for example, access to
patented medicines, implementation of existing WTO agreements, and changes in
special and differential treatment provisions), and trade facilitation (which refers
generally to harmonizing and streamlining customs procedures among WTO
members).
Role of Developing Countries
The active participation of developing countries in the Doha Round
distinguishes it from previous multilateral trade rounds held under the auspices of the
General Agreement on Tariffs and Trade (GATT), the predecessor of the WTO.
During the Uruguay Round, an agreement between the United States and the EU on
agricultural issues at Blair House in 1992 paved the way for a successful conclusion
of this last GATT round. However, a U.S.-EU joint proposal on agriculture during
the 2003 Cancun Ministerial meeting was greeted with strong opposition from a
group of developing countries.15 This group, led by Brazil, India, and China, known
as the G-20, has remained together since Cancun and is playing a key role in the
Doha agricultural negotiations. The G-20 was first among the major players in the
Doha Round to offer a proposal on agricultural modalities in advance of the Hong
Kong meeting, and its proposal has become a benchmark for evaluating other,
developed country proposals.
Not only the more advanced developing countries like the G-20 members, but
also the least developed countries (LDCs) are participating actively in the Doha
negotiations. The African cotton initiative mentioned above, first introduced during
the Cancun Ministerial, is an example of the LDCs attempting to use multilateral
trade negotiations to accomplish their policy objectives. The LDCs also were
instrumental in blocking an overall agreement at Cancun when they rejected an EU
proposal to enlarge the negotiating agenda to include discussion of the so-called
“Singapore issues” of trade facilitation, competition policy, investment, and
transparency in government procurement. Subsequent agreement to limit
negotiations of Singapore issues to just one — trade facilitation — was a victory for
the LDCs.
14 See CRS Report RL32060.
15 See CRS Report RL32053, Agriculture in the WTO, September 30, 2003.

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CRS-7
U.S. Economic and Agricultural Interests
According to several economic analyses, further liberalization of world trade
in the Doha Round would provide economic gains for developing and developed
countries alike.16 A World Bank study estimates that “a deal to lower global trade
barriers could add more than $500 billion a year to global incomes by 2015.” A
University of Michigan study estimates that world incomes would increase by $613
billion with reductions in world agricultural, industrial, and service barriers. Such
analyses illustrate the potential impacts of trade liberalization; real outcomes, though,
may not match the studies’ results if their assumptions are not matched by the actual
reductions in barriers in the negotiated agreements.
Much of U.S. agriculture would be expected to benefit from further multilateral
trade liberalization, but some U.S. products might face stiffer foreign competition at
home or in third-country markets. Benefits to U.S. agriculture could include
increased market access through tariff reduction or expanded market access quotas,
not only in developed but also in the fast-growing developing country markets.17
Competitive conditions for U.S. agricultural exports could improve with the
elimination of export subsidies, especially vis-a-vis the EU, which accounts for about
90% of the world’s agricultural export subsidies. U.S. agriculture could also benefit
from the elimination of trade-distorting practices of State Trading Enterprises, such
as the Canadian Wheat Board.
Agricultural trade liberalization also could impose adjustment burdens on some
agricultural sectors, including some commodity sectors in developed countries.18
Particularly vulnerable to increased import competition could be such products as
sugar, dairy, and livestock products. The designation of such commodities as
sensitive and therefore exempt from large tariff reductions, as provided in the
framework agreement, could mitigate adjustment effects that might ensue from
liberalization.
Role of Congress: Trade Promotion
Authority and the Farm Bill
If DDA negotiations do result in a trade agreement, then Congress would
presumably take up legislation to implement it under trade promotion authority
16 World Bank, Global Economic Prospects: Realizing the Development Promise of the
Doha Agenda, 2004 at [http://www.worldbank.org/prospects/gep2004/full.pdf.]; University
of Michigan, School of Public Policy, CGE Modeling and Analysis of Multilateral and
Regional Negot i at i ng Opt i ons, January 23, 2001 at [http://www.
spp.umich.edu/rsie/workingpapers/wp.html.
17 Robert L. Thompson, “The WTO Trade Negotiations: Why the Emphasis on
Development?,” Illinois Ag Policy Briefs, APB 05-01, October 2005.
18 Daryll E. Ray, “World Bank Study: Trade liberalization would shut down two-thirds of
EU’s grain and oilseed production,” AgDM Newsletter, January 2004, viewed at
[http://www.extension.iastate.edu/agdm/articles/others/RayJano4.htm].

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CRS-8
(TPA), or fast-track, procedures (Title XXI of P.L. 107-210). Under fast-track, if the
President meets the trade negotiating objectives established in the legislation and
satisfies consultation and notification requirements in P.L. 107-210, then Congress
would consider legislation to implement a trade agreement with limited debate, no
amendments, and with an up-or-down vote. TPA, however, covers trade agreements
signed by July 1, 2007, the effective deadline for U.S. participation in the DDA
round and for congressional consideration of implementing legislation. That time
frame also coincides with the expiration of the 2002 farm bill in 2007 (P.L. 107-171).
Farm bill changes may be needed to meet U.S. commitments in a final DDA
agreement on agriculture.

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CRS-9
Schedule of Key Events
Dates
Historical Events
1986-1994
Uruguay Round of multilateral trade negotiations.
1994
Uruguay Round culminated in the establishment of the World
Trade Organization (WTO). The Agreement on Agriculture
was one of 29 legal texts underwriting the WTO and its
administration of rules governing international trade.
Nov. 9-13, 2001
Current Doha Development Agenda (DDA) or Doha Round of
multilateral negotiations was initiated in Doha, Qatar.
July 31, 2004
WTO Doha Round negotiations produce an interim guideline
document, the Framework Agreement, to solidify existing
commitments and to guide negotiations of details for final
agricultural agreement.
Jan. 1, 2005
Current Doha Round of multilateral negotiations was scheduled
to end, but several 2003 and 2004 deadlines were missed. As
a result, DDA negotiations continue with no formal schedule,
but subject to several looming deadlines.
Summer 2005
USDA initiates farm bill listening sessions around the country.
Oct. 7-8, 2005
Informal FIPS meeting to solidify existing commitments for any
final agreement.
Oct. 10-14, 2005
Series of position papers released by major negotiations
participants including the U.S., EU, G-10, and G-20.
Oct. 27, 2005
The EU released an updated proposal in response to concerns
about the inadequacy of its first proposal’s market access
offerings.
Oct. 28, 2005
FIPS conference call to discuss EU updated offer in response to
U.S. and G-20 offers.
Dates
Upcoming Events
Dec. 13-18, 2005
WTO Hong Kong Ministerial.
July 1, 2007
U.S. Trade Promotion Authority expires.
Sept. 30, 2007
2002 farm bill expires.

---

CRS-10
Key Players in the WTO DDA Negotiations
Big Two
U.S. and EU
Big Three
U.S., EU, and Japan
New Quad
U.S., EU, India, and Brazil
FIPS
Five Interested Parties: U.S., EU, Brazil, India, and Australia
FIPS Plus
FIPS plus Argentina, Canada, Switz., Japan, China, and Malaysia
G-5
Group of Five: U.S., EU, Japan, India, and Brazil
G-10
Group of 10 developed, net importing countries that subsidize
domestic agriculture: Bulgaria, Iceland, Israel, Japan, South
Korea, Liechtenstein, Mauritius, Norway, Switzerland, and
Chinese Taipei
G-20
Group of some 20+ major developing countries whose members
vary but essentially includes Argentina, Bolivia, Brazil, Chile,
China, Colombia, Costa Rica, Cuba, Ecuador, Egypt, El Salvador,
Guatemala, India, Mexico, Nigeria, Pakistan, Paraguay, Peru,
Philippines, South Africa, Thailand, and Venezuela.
G-33
Group of 33 countries otherwise called the “friends of special
products” including China, Turkey, Indonesia, India, Pakistan,
plus some African, Caribbean, South American, and Asian
countries.
G-90
Group of Least-Developed Countries (LDCs).
Cairns Group Members are generally free-market oriented and supportive of
increased trade liberalization. Members include Argentina,
Australia, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica,
Guatemala, Indonesia, Malaysia, New Zealand, Paraguay,
Philippines, South Africa, Thailand, and Uruguay.
LDCs
The WTO recognizes as least-developed countries (LDCs) those
countries which have been designated as such by the United
Nations. There are currently 50 LDCs on the U.N. list, 32 of
which to date have become WTO members. A complete listing is
available at [http://www.wto.org/english/thewto_e/whatis_e/
tif_e/org7_e.htm]
Note: For more information, see the WTO trade negotiations background report,
WTO Agriculture Negotiations: The issues, and where we are now, “Key to Groups,”
December 1, 2004, p.83-84; available at [http://www.wto.org/english/tratop_e/
agric_e/ agnegs_bkgrnd_e.doc]

---

CRS-11
Key Terms
Key terms from the WTO Agreement on Agriculture and the proposed reforms
under the Doha Round of multilateral trade negotiations.19
1. The Agreement on Agriculture (AA)
Text of agricultural policy reform commitments agreed to under the
Uruguay Round (1986-1994) of WTO multilateral trade negotiations.
2. The Three Pillars of agricultural policy reform
a. Export competition
i. Export subsidies
ii. Export credit
iii. Food Aid
iv. State Trading Enterprises
b. Domestic Support
i. Aggregate Measure of Support (AMS): summary measure of a
country’s total level of trade-distorting domestic subsidies.
ii. Amber box: non-exempt trade-distorting subsidies; individual
members’ amber box bounds are listed in their country schedules.
iii. Blue box: production-limiting subsidies; unbound.
iv. De Minimis-non-product specific: bound <5% of total production.
value.
v. De Minimis-product specific: bound <5% of specific prod. value.
vi. Green Box: minimally distorting subsidies; unbound.
c. Market Access
i. Bound and Applied Tariffs
ii. Sensitive Products Treatment
iii. Tariff Rate Quotas (TRQs) administration
iv. Special Safeguard Mechanisms (SSMs)
3. Special and Differential Treatment (SDT) for developing countries
a. Smaller commitments and longer implementation periods
b. Other flexibilities and privileges
4. Least-Developing Countries
a. Free Round: no new commitments
5. WTO Framework Agreement (referred to as the “Framework”)
a. The Framework provided agreement on a general framework for reform
within each of the three main “pillars” of agricultural trade with details to
be worked out in subsequent negotiations.
b. The Framework touched on several “non-pillar” issues: including cotton
subsidies and geographical indications.
19 For detailed definitions see CRS Reports listed in References, below.

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CRS-12
The Framework Agreement on Agriculture and
Issues to be Resolved
I. Export Competition
General Comment. Although 36 WTO members are permitted to use export
subsidies as listed in their country schedules, only 24 countries have actually used
export subsidies; most countries with permissible export subsidies have used them
very sparingly. During the 1995-2001 period for which notification data is available,
the EU accounted for nearly 90% of all export subsidies used (Table 5).
What Has Been Agreed to in the Framework
Under the Framework, WTO members agreed to establish detailed modalities
ensuring the parallel elimination of all forms of export subsidies and disciplines on
all export measures with equivalent effect by a credible end date. The following will
be eliminated by the end date to be determined (TBD):
1. Export
subsidies.
2.
Export credits, export credit guarantees or insurance programs with repayment
periods beyond 180 days.
3. Terms and conditions — e.g., interest payments, minimum interest rates,
minimum premium requirements, and any other subsidy elements — relating to
export credits, export credit guarantees or insurance programs with repayment
periods of 180 days or less which are not in accordance with disciplines TBD.
4.
Trade distorting practices of exporting State Trading Enterprises (STEs)
including elimination of export subsidies they receive and government financing
and underwriting of losses.
5.
Provision of food aid not in conformity with disciplines TBD.
6.
Developing countries will benefit from longer implementation periods TBD for
eliminating all forms of export subsidies.
Issues to Be Resolved Through Further Negotiation
1.
Schedule for eliminating export subsidies.
2.
Nature of “parallel treatment” of export credit programs.
3.
Rules for exporting STEs.
4.
New disciplines for food aid to prevent commercial displacement.

---

CRS-13
5.
An assessment of whether and to what extend food aid should be provided in
grant form.
6.
A review of the role of international organizations in providing food aid.
II. Domestic Support
General Comment. Only 35 out of 148 members have notified use of trade-
distorting domestic subsidies in their country schedules. During the 1995-2001
period for which notification data is available, three countries — the EU, the United
States, and Japan — accounted for nearly 91% of all domestic subsidies used.20
What Has Been Agreed to in the Framework
1. General Concepts
a. Doha Ministerial Declaration calls for substantial reductions in trade-
distorting domestic support.
b. Special and Differential Treatment (SDT) remains an integral component
of domestic support: developing countries to be given smaller cuts with a
longer implementation period and continued access to AA, Article 6.2.
c. There will be a strong element of harmonization in the reductions made by
Developed Members. A tiered, progressive formula TBD will be used for
implementing all reductions.
2. Amber Box — Current bounds are detailed in country schedules.
a. Substantial reductions (TBD) from bound levels.
b. Limits (TBD) will be placed on supports for specific products in order to
avoid shifting support between different products.
3. De Minimis exemptions — The current bound for non-product-specific
support is 5% of the total value of agricultural production (TVP); for product-
specific support it is 5% of the value of production for each specific product.
Developing countries are bound at 10% for both measures.
a.Substantial reductions, TBD, that take into account SDT.
4. Blue Box — Currently unbounded; includes only production limiting direct
payments.
a. “Members recognize the role of the Blue Box in promoting agricultural
reforms.”
b. To be bound at no more than 5% of TVP during an historical period TBD.
c. Will be expanded to include direct payments that do not require production
under certain conditions (e.g., U.S. counter-cyclical payments (CCP)).
d.Criteria TBD will be added to ensure that blue box payments are less trade
distorting than AMS measures.
5. Overall Ceiling for Trade-Distorting Domestic Support — Currently
unbounded.
20 See Appendix Table 4, p. 29, of RL30612 as listed in Information Sources below.

---

CRS-14
a. Substantial reductions (TBD) including an initial 20% cut enacted in the
first year, with further cuts to be negotiated.
b. If the sum of bound ceilings for amber box, de minimis, and blue box is still
above the Overall Ceiling, then additional cuts in at least one of them must still
be made to comply with the Overall Ceiling commitment.
6. Green Box — Criteria will be reviewed and clarified to ensure that Green Box
measures have no, or at most minimal, trade-distorting effects on production.
Issues to Be Resolved Through Further Negotiation
1. Formula for reductions in bounds for Overall and Amber Box
-Levels and number of tiers.
-Rate and formula for within-tier cuts encompassing greater harmonization.
-Levels for individual commodity limits within the amber box.
2. Blue box disciplines
-formula for establishing bound levels as a share of production value.
-base period against which to measure bounds.
3. De Minimis disciplines
-formula for establishing bound levels as a share of production value.
-base period against which to measure bounds.
III. Market Access
General Comment. All countries have market access barriers, whereas only
some have export subsidies or Amber or Blue Box domestic support. Therefore, the
range of interest in market access reform is more complex.
What Has Been Agreed to in the Framework
1. All members must make substantial improvements in market access for all
products.
2. The Framework gives no tariff reduction formula, but provides direction —
a. Single approach: all members except LDCs must improve market
access.
b. Tiered and progressive: staggered tiers with larger within-tier cuts for
higher tiers.
c. Reductions from “bound” rate, not applied rate.
d. Special & Differential Treatment (SDT) available for developing
countries:
i. smaller formula commitments in tariff reductions,
ii. greater access to and treatment of sensitive products, and
iii. a longer implementation period.
e. Sensitive Products
i. Principle of substantial improvement in market access TBD.
ii. Appropriate number of permissible sensitive products TBD.

---

CRS-15
Issues to Be Resolved Through Further Negotiation
1. Harmonized tariff reduction scheme
a. Levels and number of tariff tiers or bands.
b. Rate and formula for within-tier tariff cuts encompassing greater
harmonization.
c. Tariff caps, i.e., a bound maximum tariff rate.
2. Parameters governing Sensitive Products
a. Limit on sensitive products (how many and what treatment?).
b. Tariff rate quota (TRQ) formula for linking quota to reduced tariff
achieved via:
(1) MFN-based tariff quota expansion required of all sensitive
products;
(2) within and over-quota tariff reductions.
c. Improved administration of TRQs.
d. Reducing or eliminating tariff escalation associated with increasing
stages of value-added products.
3. Exact nature of Special & Differential Treatment (SDT) for developing
countries.
a. Lesser commitments; longer implementation period; greater flexibility for
sensitive products
b. Special products (i.e., related to food or livelihood security, or rural
development) given additional flexibility.
c. Special Safeguard Mechanism (SSM) — to deal with surges in imports or
falling prices — are to be available for developing countries. Their status is
TBD with respect to developed countries.
d. Special treatment of agricultural product alternatives to illicit narcotic
crops.
e. Erosion of trade preferences when the WTO agreement supercedes
bilateral or regional trade agreements.
4. Treatment of Least-Developed Countries (LDCs): whether LDCs be given
a “free” round with no new market access commitments TBD.
5. Geographical Indications (GIs): will GIs be a part of any final agreement
and, if so, how will they be defined and implemented?
Comparison of Major Agricultural Negotiating
Proposals
Overview. The modalities proposals of the G-20, United States, EU, and the
G-10 address all three pillars — export competition, domestic support, and market
access — with varying degrees of specificity. Export competition negotiations were
facilitated by the EU’s July 2005 pledge to end export subsidies (conditioned on
parallel treatment of other forms of export subsidies). Market access has been the
most difficult issue, especially for the EU and the G-10, but also for the G-20. The
EU’s latest offer on market access (October 27, 2005) falls short of the “level of
ambition” of the G-20 proposal which proposes tariff cuts of 45%-75%.

---

CRS-16
The U.S. Proposal
Comment. The October 10, 2005, U.S. modalities proposal is credited with
unblocking stalled modalities negotiations. It addressed domestic support and market
access with specifics for the first time, and put the EU on the defensive especially on
market access. It proposes a 3-stage reform: five years of substantial reductions in
trade-distorting support and tariffs, followed by a five year pause; then 5 more years
to phase-in total elimination of all remaining trade-distorting domestic measures and
import tariffs.
Export Competition
! Eliminate all agricultural export subsidies.
! Establish disciplines for export credit guarantees, STEs, and food
aid.
Domestic Support
! Cut the U.S. amber box bound by 60% based on 1999-2001 period.
! Reduce the EU and Japanese amber box bounds by 83%.
! Reduce overall level of trade-distorting support by 75% for EU and
Japan, and by 53% for the United States.
! Cap blue box at 2.5% of value of production.
! Cut de minimis exemptions to 2.5% of value of production.
! Maintain green box criteria without caps.
! Establish a new peace clause to protect domestic supports against
WTO litigation.
Market Access
! Cut the highest tariffs by 90%; cut other tariffs in a range of 55% -
90%.
! Cap the maximum agricultural tariff at 75%.
! Limit sensitive products to 1% of tariff lines.
! Expand TRQs: i.e., larger quotas with lower tariffs.
! SDT for developing countries (TBD), but cap maximum developing
country agricultural tariff at 100%.
Conditions: U.S. domestic support commitments are conditioned on “ambitious”
market access proposals especially from the EU and the G-20.
The EU Proposal
Comment. Under pressure from France and 12 other EU countries (but not a
qualified majority) not to improve its offers, the EU made a new market access
proposal on October 27 and provided additional detail on its proposal for domestic
support, export competition, and Geographical Indications (GIs). The EU’s “level
of ambition” in market access does not reach that of the G-20 or the United States.
A major criticism of the EU’s agricultural proposal is that its market access offer
does not provide an inducement for developing countries like Brazil, Thailand, or
other G-20 members to make concessions in non-agricultural market access or

---

CRS-17
services. The United States and G-20 countries continue to pressure the EU to offer
further concessions on agricultural market access.
Export competition
! Eliminate all agricultural export subsidies, contingent on “parallel”
disciplines for export credits, food aid, and STEs by 2012.
! Establish a “short-term self-financing principle” for credits:
programs must demonstrate that they charge adequate premiums to
ensure self-financing.
! STEs: eliminate price-pooling, anti-trust immunity, direct and
indirect preferential financing, and preferential transport services;
and eliminate single-desk selling.
! Food Aid: phase out food aid that leads to commercial displacement
but maintain commitments to adequate food aid levels; move
gradually to untied and in-cash food aid; permit in-kind food aid
only in exceptional, emergency situations under agreed criteria.
Domestic Support
! Reduce the EU’s amber box ceiling by 70% (in line with the 2003
CAP Reform); reduce the U.S. amber box ceiling by 60%.
! Base amber box product-specific caps on the Uruguay Round
implementation period of 1986-88.
! Reduce the de minimis exemptions ceiling by 80% of the
Framework’s proposed 5% cap (i.e., establish a cap of 1% of the
value of total production).
! Blue box: freeze the existing price difference between linked price
support prices and limit the price gap to a percentage of the base
price difference.
! Reduce overall trade-distorting support in three bands: 70% (EU),
60% (U.S.), and 50% (rest-of-world).
! Maintain the green box without limits.
Market Access
! Reduce the highest tariffs by 60%; cut other tariffs in a range of 35%
- 60%.
! Reduce the number of sensitive products to 8% of tariff lines (given
the EU’s approximately 2,200 tariff lines this would result in about
176 protected tariff lines for the EU).
! Apply both tariff cuts and expanded TRQs to sensitive products.
! Cap the maximum agricultural tariff for developed countries at
100% (but with no cap for sensitive products).
Special Safeguard Mechanism (SSM)
! Keep the SSM available for both developed and developing
countries. Specifically, the EU wants SSM to be available for beef,
poultry, butter, fruits and vegetables, and sugar.
Geographical Indications (GIs)
! Extend protection available to wines and spirits under Article 23 of
TRIPS to all products, while leaving existing trademarks unaffected.

---

CRS-18
! Establish a multilateral system of notification and registration of
GIs, open to all products, with legal effect in all Member countries
not having lodged a reservation to the registration.
! Use of well-known GIs on a short list should be prohibited, again
subject to existing trademark rights.
Special & Differential Treatment (SDT) for developing countries
! Establish higher tariff bands, lower tariff cuts, and a maximum tariff
of 150% for developing countries.
! No tariff cuts for the 50 WTO-member LDCs.
Conditions
! NAMA: agreement before Hong Kong on a progressive formula that
cuts into applied tariffs for manufactured products.
! Services: agreement at Hong Kong to establish mandatory country
targets for services trade liberalization.
! Rules: Negotiate between now and the Hong Kong Ministerial
meeting, a list of issues to be resolved including antidumping.
! Development: prepare for Hong Kong a Trade Related Assistance
package for developing countries and extend tariff and quota free
access to all LDCs no later than the conclusion of the DDA.
The G-20 Proposal
Comment. The G-20 proposal on market access reflects differences between
Brazil, an agricultural exporter, and India, an agricultural importer.

Export Competition
! Eliminate all forms of export subsidies over five-year period.
! New food aid disciplines should not compromise emergency
humanitarian assistance.
Domestic Support
! Cut the bound for overall trade-distorting domestic support in three
bands: >$60 billion, 80%; $10-$60 billion, 75%; and $0-$10 billion,
70%.
! Cut the amber box ceiling in three bands: >$25 billion, 80%; $15-
$25 billion, 70%; and $0-$15 billion, $60%.
! Reduce de minimis exemption allowances so as to meet the cut in
the overall bound.
! Address the cotton issues no later than the Hong Kong Ministerial
meeting.
Market Access
! Cut developed country tariffs by 45%-75%; cut developing country
tariffs by 25%-40%.
! Cap the developed country maximum agricultural tariff at 100%,
developing country maximum tariff at 150%.
! Limit the number of sensitive products; compensate for designation
as sensitive with a combination of tariff cuts and expanded TRQs.

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CRS-19
! Maintain Special Safeguard Mechanism (SSM) for developing
countries; eliminate SSM for developed countries.
! Address issue of preference erosion for developing countries with
expanded access for LDCs and trade capacity building.
! Special & Differential Treatment (SDT): exempt LDCs from
reduction commitments.
The G-10 Proposal
Comment. The G-10 is a group of mainly developed, net-agricultural
importing countries led by Japan, Norway, and Switzerland. The G-10 has tabled
proposals on market access and domestic support, but not on export competition.
The G-10 takes a relatively “defensive” posture on market access that calls for lower
tariff reductions and a larger number of sensitive products than do other proposals.
Market access
! Reduce agricultural tariffs in a range from 27% to 45% for most
products.
! The number of sensitive products would be 10% of tariff lines with
linear cuts within tiers, 15% of tariff lines would have flexibility for
within-tier adjustments.
! There would be no cap on the highest agricultural tariff allowed.
Domestic Support
! Reduce the amber box ceiling by 80% for support >$25 billion; by
70% for support in the $15-$25 billion range; and by 60% for
support <$15 billion.
! Reduce the overall support ceiling by 80% for support >$60 billion;
75% for $10-$60 billion; and 70% for support <$10 billion.
! Blue box and de minimis spending are not addressed.
Potential Effects on U.S. Farm Policy
Export Competition
The United States uses export subsidies and export credit guarantees to support
its commodity exports, and is a major donor of international food aid. As a result,
changes in these programs will have some impacts on U.S. commodity markets and
trade policy.
1. Elimination of export subsidies
Although the United States has the second-largest level of permissible export
subsidies under current WTO limits (see Table 1), it uses only a very small share of
its allowable level (see Table 2). Milk and milk products are the principal
beneficiaries of U.S. export subsidies and would, therefore, be the principal losers if
export subsidies were to be eliminated. However, Figure 1 clearly demonstrates the

---

CRS-20
dominance of the EU in use of export subsidies, primarily for sugar, beef, and dairy
products.
2. Reform of agricultural export credit guarantees
The United States is the world’s leading user of export credit guarantees (Figure
2; Tables 3 and 4).21 Current reform proposals are likely to reduce the effectiveness
of export credit guarantees at facilitating U.S. commodity exports into price-
competitive markets.
3. Changes in food aid programs.
The United States is among the world’s leading food aid donors. Since most of
U.S. food aid is in the form of commodity donations rather than cash, U.S. food aid
donations will likely be reduced to the extent that reforms to food aid limit or restrict
the donation of actual commodities.22
Domestic Support
The United States together with the EU and Japan account for nearly 90% of all
agricultural domestic support subsidies.23 As a result, these three are most likely to
bear the brunt of the economic consequences associated with new disciplines on
domestic support. Tables 5-8 contain information on U.S. domestic support and the
various Doha Round proposals for reform.
4. Reductions to bound level of amber box spending
Under the U.S. proposal for reform of domestic support (Table 6), the U.S.
amber box ceiling would be lowered by 60% to approximately $7.6 billion. This
compares with current amber box spending in FY2005 of an estimated $12.7 billion
(Tables 7 and 8). As a result, U.S. domestic support programs would require some
redesign (with likely box shifting) to be able to meet such a lower ceiling. Although
there are many ways that such changes could be achieved, a likely candidate would
include shifting away from market-distorting programs such as loan deficiency
payments (LDP) or marketing loan gains (MLG) and towards greater use of green
box programs such as decoupled direct payments, conservations payments, or rural
infrastructure development.
5. Tightening of de minimis bounds
21 For more information, see USDA, Foreign Agricultural Service, Export Programs at
[http://www.fas.usda.gov/exportprograms.asp].
22 For more information, see CRS Issue Brief IB98006, Agricultural Export and Food Aid
Programs.
23 For more information, see CRS Report RL30612, Agriculture in the WTO: Member
Spending on Domestic Support.

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CRS-21
Under the U.S. proposal for reform of domestic support (Table 6), the de
minimis exemptions, both non-product specific and product specific) would be bound
at 2.5% of the value of relevant production (i.e., either aggregate or commodity
specific). For non-product specific de minimis, this would result in a ceiling of about
$5 billion (Table 7), compared with estimated exemptions of $6.2 billion in FY2005.
However, shifting the counter-cyclical payments (CCP) to the blue box (see below)
would bring spending under the de minimis exemptions back into line with their
proposed commitments.
6. Establishment of bound on blue box
Under both the framework agreement and the U.S. proposal for reform of
domestic support (Table 6), CCP would be eligible for the blue box. The U.S.
proposal also recommends establishing a blue box ceiling of 2.5% of the total value
of national agricultural production (TVP). For the United States, 2.5% of TVP would
be approximately $5 billion. The U.S. currently has no spending in the blue box,
however, CCP outlays are estimated at $4.1 billion in FY2005 (Table 8).
Market Access
The United States already has very low import tariffs relative to most other
nations. As a result, further reductions in tariff levels are unlikely to produce major
effects in terms of U.S. import. Dairy products and sugar are the principal U.S.
beneficiaries of agricultural tariff-rate quota (TRQ) protection. Both of these
products are likely to continue to receive protection as “sensitive” products. The
U.S. proposal does not provide any specificity regarding TRQs; however, the G-20
proposal recommended 6% of domestic consumption as the minimum access quota.
Australia recommended a higher level of 8-10% of domestic consumption. U.S.
sugar import quota levels appear to be well in excess of proposed mandatory access
levels. For example, in 2004, the U.S. sugar import quota averaged about 13% of
domestic consumption. As a result, the primary effects on sugar would likely be
from reductions to above-quota tariffs. Dairy import quotas as a share of domestic
consumption are more difficult to estimate because milk products vary greatly by
form, weight, and value. Little trade occurs in liquid milk form. Instead most trade
occurs as non-fat dried milk, butter, cheese, or specialty products, and significant
product differentiation occurs within each of these categories. As a result, the effects
on U.S. dairy import quotas are more difficult to predict.
Information Sources
CRS Reports
CRS Report RL32060: World Trade Organization Negotiations: The Doha
Development Agenda
CRS Report RS21905: Agriculture in the WTO Doha Round: The Framework
Agreement and Next Steps

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CRS-22
CRS Issue Brief IB98006: Agricultural Export and Food Aid Programs
CRS Report RS20858: Agricultural Export Subsidies, Export Credits, and the World
Trade Organization
CRS Report RL32916: Agriculture in the WTO: Policy Commitments Made Under
the Agreement on Agriculture
CRS Report RL30612: Agriculture in the WTO: Member Spending on Domestic
Support
CRS Report RS20840: Agriculture in the WTO: Limits on Domestic Support
CRS Report RS21569: Geographical Indications and WTO Negotiations
CRS Report RS21712: The African Cotton Initiative and WTO Agriculture
Negotiations
Other Sources
WTO, Agriculture Negotiations: Backgrounder: The Issues and Where We Are Now,
[http://www.wto.org/english/tratop_e/agric_e/negs_bkgrnd00_contents_e.htm].
WTO, Country Schedules of Member Commitments,
[http://www.wto.org/english/tratop_e/schedules_e/goods_schedules_e.htm].
Office of the U.S. Trade Representative (USTR), Online information on U.S. trade
negotiations and agreements; [http://www.ustr.gov/].
USDA, Foreign Agricultural Service, International Trade Policy (ITP) Division,
Online information on U.S. trade negotiations and agreements;
[http://www.fas.usda.gov/itp/policy/tradepolicy.asp].
USDA, Economic Research Service, World Trade Organization (WTO) Briefing
Room, [http://www.ers.usda.gov/briefing/WTO/].
European Commission, Agriculture, International Trade Relations,
[http://europa.eu.int/comm/agriculture/external/wto/index_en.htm].

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CRS-23
Table 1. WTO, Export Subsidy Notifications by Country, 1995-
2001
Average:
Country
1995
1996
1997
1998
1999
2000a
2001a 1995-2001
(U.S. $ million)
Permitted Export Subsidies
European Union
15,626 13,837 11,169 10,291
8,664
6,784
6,603
10,425
United States
1,168
1,053
939
824
709
594
594
840
Turkey
872
787
702
617
532
440
361
616
Poland
737
690
630
353
549
538
500
571
Switzerland
557
521
398
362
325
260
260
383
Czech Republic
241
218
168
161
134
112
115
164
Rep. South Africa
230
177
157
119
102
79
61
132
Hungary
159
124
94
78
64
50
50
89
Norway
148
133
106
89
74
55
55
94
Rest
of
World
2962 2,404 2,034 1,786 2,117 1,842 1,709



2,122
World Total
22,701 19,946 16,396 14,681 13,268 10,754 10,307
15,436
Notified Export Subsidies
European
Union
6,496 7,071 4,857 5,989 5,854 2,517 2,297



5,011
United States
26
121
112
147
80
15
55
79
Turkey
30 17 39 29 28 27

-

24
Poland
0
16
9
13
56
36
22
22
Switzerland
455
392
295
293
269
188
-
270
Czech
Republic
40 42 38 42 34 24

-

31
Rep. South Africa
40
40
18
3
5
3
-
16
Hungary
39
17
9
12
13
9
4
15
Norway
84
78
100
77
126
44
32
77
Rest
of
World



114 91 79 63 40 39 16 63
World
Total
7,324 7,886 5,555 6,668 6,504 2,903 2,425



5,609
Percent
Share of Total World Export Subsidy Notifications
European Union
89%
90%
87%
90%
90%
87%
95%
89%
United States
0%
2%
2%
2%
1%
1%
2%
1%
Turkey
0%
0%
1%
0%
0%
1%
0%
0%
Poland
0%
0%
0%
0%
1%
1%
1%
0%
Switzerland
6%
5%
5%
4%
4%
6%
0%
5%
Czech Republic
1%
1%
1%
1%
1%
1%
0%
1%
Rep. South Africa
1%
1%
0%
0%
0%
0%
0%
0%
Hungary
1%
0%
0%
0%
0%
0%
0%
0%
Norway
1%
1%
2%
1%
2%
2%
1%
1%

Rest of World
2%
1%
1%
1%
1%
1%
1%
1%
World Total
100%
100%
100%
100%
100%
100%
100%
100%
Source: USDA, Economic Research Service calculations from WTO export subsidy notifications.
a. Not all countries have notified as yet for this year.

---

CRS-24
Table 2. U.S. Export Subsidies, Total versus Milk & Products,
1995-2002
Value
World
Permitted
Used (Notified)
Unused
(U.S. $ million)
All Allowable Commodities
1995
1168
25.6
1,143
1996
1,053
121.5
932
1997
939
112.2
826
1998
824
146.7
677
1999
709
80.2
629
2000
594
15.3
579
2001
594
54.6
540
2002
594
31.5
563




Milk & Milk Products
1995
186
20
165
1996
172
121
50
1997
158
110
48
1998
144
145
-1
1999
130
79
52
2000
117
8
108
2001
117
55
62
2002
117
32
85




All Other Productsa
1995
983
5
977
1996
882
-
882
1997
781
2
779
1998
680
1
678
1999
579
2
577
2000
478
7
471
2001
478
-
478
2002
478
-
478




Source: U.S. notifications to the WTO.
a. Primarily poultry.

---

CRS-25
Figure 1. WTO Export Subsidy Notifications, 1995-2001
9
8
ROW
7
Switzerland
6
EU
n 5
illio
m
$ 4
3
2
1
0
1995
1996
1997
1998
1999
2000 1/
2001 1/
Source: USDA, Economic Research Service calculations from WTO export subsidy notifications.
1 Not all countries have notified as yet for this year.

---

CRS-26
Figure 2. U.S. GSM-102 Export Credit Guarantees, FY2004
Cotton 16.6%
Feed Grains 23.5%
Oilseeds 12.0%
Other 3.0%
Vegetable Oil 1.6%
Meat 7.1%
Wheat 23.4%
Rice 2.7%
Protein Meals 10.0%
Other includes animal fat, animal feed products, and other.
Table 3. U.S. GSM-102 Export Credit Guarantees, by Commodity,
FY2004
Commodity
U.S. $ million
Relative Share (%)
Feed Grains
$686.60
23.5%
Wheat
$685.90
23.4%
Cotton
$485.50
16.6%
Oilseeds
$352.30
12.0%
Protein Meals
$292.30
10.0%
Meat (mostly poultry)
$207.80
7.1%
Rice
$79.00
2.7%
Vegetable Oils
$48.20
1.6%
Others
$87.60
3.0%
Grand Total
$2,926.17
100.0%
Source: USDA, FAS, “Summary of FY 2004 Export Credit Guarantee Program Activity for GSM-
102,” as of close of business: 9/30/04-Final. Data are “Exporter Applications.” Available at
[http://www.fas.usda.gov/excredits/Monthly/ecg.html].

---

CRS-27
Table 4. U.S. GSM-102 Export Credit Guarantees, by Major Region,
FY2004
Country/Region
U.S. $ millions
Algeria
$25.10
Caribbean Region
$128.87
Central America Region
$274.00
China/Hong Kong
$68.25
India
$0.70
Indonesia
$149.60
Jordan
$8.40
Kazakhstan
$9.90
Korea
$445.80
Lebanon
$12.15
Mexico
$138.40
Romania
$4.44
Russia
$200.00
South America Region
$900.00
Southeast Asia Region
$151.70
Turkey
$399.30
Yemen
$8.70
Grand Total
$2,926.17
Source: USDA, FAS, “Summary of FY 2004 Export Credit Guarantee Program Activity for GSM-
102,” as of close of business: 9/30/04-Final. Available at [http://www.fas.usda.gov/
excredits/Monthly/ecg.html].

---

CRS-28
Table 5. U.S. Proposal for Reform of Trade-Distorting Domestic
Subsidies
Tiers
Countries
Cuts
($ Billions)
within each tier
(%)a
Amber Box
$25+
EU, Japan
83%
$12 - $25
U.S.
60%
$0 - $12
Other Developed
37%
Developing
Includes Brazil, China, India, and over 100
Not specified
other countries.
Total Overall Ceilingb
$60+
EU, Japan
75%
$10 - $60
U.S.
53%
$0 - $10
Other Developed
31%
Developing
Includes Brazil, China, India, and over 100
Not specified
other countries.
Source: assembled by CRS from various news releases of the USTR and World Trade Online.
a. Cuts are evaluated as a % of the total value of agricultural production.
b. Includes amber box, blue box, and de minimis support (non-product and product specific).

---

CRS-29
Table 6. Comparison of Proposals for Domestic Policy Reform
Developing
Highest Tier
2nd Tier
3rd Tier
LDCs
Countries
U.S.a
EU, Japan
U.S.
Other Developed
Amber Box Cuts
80%
60%
37%
n.s.
n.s.
De Minimis cuts
Bound at 2.5% of TVP
Bound at 2.5% of TVP
Bound at 2.5% of TVP
n.s.
n.s.
Blue Box Ceiling
Bound at 2.5% of TVP
Bound at 2.5% of TVP
Bound at 2.5% of TVP
n.s.
n.s.
Overall Ceiling Cuts
83%
53%
31%
n.s.
n.s.
G-20
EU, Japan
U.S.
Other Developed
Amber Box Cutsb
80%
70%
60%
n.s.
n.s.
Overall Ceiling Cutsb
80%
75%
—
n.s.
n.s.
EU
EU, Japan
U.S. (or Japan+)
Other Developed
Amber Box Cutsc
70%
60%
50%
n.s.
No cuts
Overall Ceiling Cuts
70%
60%
50%
n.s.
No cuts
De Minimis cuts
Bound at 1% of TVP
Bound at 1% of TVP
Bound at 1% of TVP
n.s.
No cuts
Blue Box Ceiling
Bound at 5% of TVP
Bound at 5% of TVP
Bound at 5% of TVP
n.s.
No cuts
G-10
EU, Japan ($25 +)
U.S. ($15 - $25)
Other Developed ($0 - $15)
Amber Box Cuts
80%
70%
60%
n.s.
n.s.
Source: assembled by CRS from various news releases of the USTR and World Trade Online.
a. The U.S. proposes different value ranges for amber box and overall ceilings (Table 2); however, the within-tier country composition remains unchanged under the different ranges:
1st tier: EU and Japan; 2nd tier: U.S.; 3rd tier: rest-of-world.
b. The G-20 is also calling for product-specific caps both in the overall AMS and the Blue Box.
c. The EU also proposes commodity-specific amber box spending limits.

---

CRS-30
Table 7. U.S. Domestic Spending Limits and Outlays:
Current Status, Framework Agreement, and U.S. Reform Proposal
Current Outlays
Current
Framework
U.S.
WTO Limits
Proposal
Proposal
1995-2001a
2005b
Category
US$
US$
US$
US$ Billion
Status
Status
Billion
Billion
Billion
Unbounded
20% initial cut; further cuts
Bound and subject to cuts that
Total Overall
(due to blue
implemented gradually. Final
vary based on level of
Ceiling
$16.3
$19.1
box)
—
total cut TBD
~$45.4
domestic support (Table 3).
~$23
20% initial cut; further cuts
Tiered; subject to substantial
Separate Bound
implemented gradually; with
cuts during 1st five years; stable
Amber box
for each
product-specific AMS caps
for 2nd five years; then
(Bound AMS)
$11.0
$12.7
country
$19.1
TBD.
$15.4c
eliminated in 3rd five-years.d
$7.6
Blue box
$ 1.0
$ 0.0
Unbounded
—
Bound TBD but < 5% of TVP
~$10
Bound at 2.5% of TVP
~$5
De Minimis:
Bound at 5% of
aggregate
$ 4.2
$ 6.2
TVP
~$10
Bound TBD but < 5% of TVP
~$10
Bound at 2.5% of TVP
~$5
De Minimis:
commodity
Bound at 5% of
Bound TBD but < 5% of
specific
$ 0.1
$ 0.1
SCVP
~$10
SCVP
~$10
Bound at 2.5% of SCVP
~$5
Green Box
$49.9
—
Unbounded
—
Unbounded
—
Unbounded
—
Source: assembled by CRS from news releases of various sources. For a detailed description of U.S. domestic spending by category for both commitments and actual outlay
notifications, see CRS Report RL30612, Agriculture in the WTO: Member Spending on Domestic Support.
a. Average for 1995-2001 period for which official WTO notification data is available.
b. Estimate for 2005 period based on CRS calculations from various USDA projections.
c. Reflects only the 20% initial cut.
d. The three five-year period phase out would apply to all trade-distorting domestic support and tariffs (including safeguard mechanisms).
Definitions:
AMS
= Aggregate Measure of (trade-distorting domestic) Support as defined in the Agreement on Agriculture.
TBD
= To Be Determined.
TVP
= Total Value of agricultural Production for all commodities.
SCVP
= Total Value of agricultural Production for a Specific Commodity.

---

CRS-31
Table 8. U.S. Domestic Support Outlays by AMS Category:
Notification Data (1995-2001) and Forecasts (2001-2005)
($ million)
Notification data

Forecast
AMS Spending Categories
1995
1996
1997
1998
1999
2000
2001
2002F
2003F
2004F
2005F
Product-Specific AMS Spending
1 Price
Supports
6,213
5,919 5,816
5,776
5,921 5,840 5,826

5,777 5,906
5,977 6,044

Dairy
4,693
4,674 4,455
4,332
4,437 4,377 4,483

4,667 4,756
4,817 4,844

Sugar
1,108 937 1,045
1,093
1,180 1,133 1,032

1,110 1,150
1,160 1,200

Peanuts
412
308 315
350
303 330 311

0
0 0 0
2 Non-exempt Direct Payments
88
7
578
4,437 10,403
10,567
8,435
2,705 4,708
1,819 6,442

LDP/MLG
0
0
164 3,818 7,895 7,006 6,203

1,656
774 416 3,664
Certificate-Exchange Gains
0
0
0
6
175
619
1,975
0
1,243
814
1,114

Cotton
Step-2
35 6 416
280
446 237 182

182 455
363 644

Other
53 0
(2)
333
1,887 2,706
74

867 2,236 226 1,020
3 Other Product-Specific Support
10
12
80
338
567
457
367
367
367
367
367
4 Product Specific Total (1+2+3)
6,311 5,937
6,475 10,550 16,891
16,865
14,628
8,849
10,982
8,164 12,854
5 Exclusion: Product Specific de minimis
99 61 244
166 29 63 217

126 126
126 126














6 Amber Box: non-exempt AMS (4 - 5)
6,212 5,876
6,231 10,384 16,862
16,802
14,411
8,723 10,856 8,038 12,728

Amber Box Ceiling
23,083
22,287 21,491
20,695
19,899 19,103 19,103

19,103 19,103
19,103 19,103





De Minimis Non-Product Specific Ceiling
9,505
10,285 10,194 9,544 9,237 9,476 9,925

9,750 10,830
12,060
11,980
7 Exclusion: Non-Product specific de minimis 1,543
1,113
568 4,584 7,406 7,278 6,828

2,535 4,432
3,254 6,232

---

CRS-32
Notification data

Forecast
AMS Spending Categories
1995
1996
1997
1998
1999
2000
2001
2002F
2003F
2004F
2005F
Crop market loss payments
0
0
0
2,811
5,468
5,463
4,640
200
0
0
0
Crop
insurance
906 633 120 747
1,514 1,396 1,770

1,560 1,560
1,560 1,560
Counter-cyclical payments
0
0
0
0
0
0
0
203 2,301 1,122 4,100
Other
637 481 448 1,026 424 419 418
572 572 572 572
8 Blue Box
7,000
0
0
0
0
0
0
0
0
0
0






9 Overall AMS Spending (5+6+7+8)
14,855 7,051
7,042 15,134 24,297
24,143
21,456
11,384 15,414
11,417 19,085





10 Green
Box
46,041
51,825 51,252
49,820
49,749 50,057 50,672


na
na
na
na
na = not available. Forecasts are CRS calculations based on USDA data from: FSA, Table 35 — CCC Net Outlays by Commodity & Function
[http://www.fsa.usda.gov/dam/bud/bud1.htm] and ERS farm income and costs briefing room, Table — Direct Government Payments, 2001-2005F,
[http://www.ers.usda.gov/Briefing/FarmIncome/Data/GP_T7.htm].

---

CRS-33
Table 9. Doha Round Negotiations Market Access Proposals: G-10, G-20, EU, and U.S.
Developed Countries
G-10
G-20
EU
United States a
Tiers % and Within-Tier Cuts
Tiers % Linear flexibility
Tiers %
Linear
Tiers %
Linear
Tiers %
Progressive
35%
1
0 # 20
27%
32% ± 7%
0 # 20
45%
0 # 30
0 # 20
55-65%
(20-45%)b
2
> 20 # 50
31%
36% ± 8%
> 20 # 50
55%
> 30 # 60
45%
> 20 # 40
65-75%
3
> 50 # 70
37%
42% ± 9%
> 50 # 70
65%
> 60 # 90
50%
> 40 # 60
75-85%
4
> 70
45%
50% ± 10%
> 70
75%
> 90
60%
> 60
85-90%
Tariff Cap %
No Cap
100%
100% (no cap for sens. prod.)
75%
Estimated Average Tariff Cut
25-30%
54%
46% (39%)c
75%
15% w/linear cuts;
1% of total tariff lines and
Sensitive Products
8% of tariff lined
1% of total tariff lines
10% w/flex cuts
subject to capping
Minimum access level =
Small TRQ expansion on small
Greater deviation from
Sensitive Products & TRQs
6% of annual domestic cons # of productsf
formula cut = Greater TRQ
in base period.e
Special Products
Not defined
Not defined
Not defined
Not defined
Special Safeguard Mechanism
Limited to developing
Available for all members for
(SSM)
countries
selected commodities
Extend TRIPS, Art.23 to all
Existing trademark laws
Geographical Indicators (GIs)
productsg
are sufficient.
Special & Differential
More flexibility on sensitive
2/3 treatment in tiers ;
Higher thresholds for top tiers;
Slightly smaller cuts and
Treatment (SDT):
products.
# 2/3 treatment in cuts
2/3 lower in cuts
longer phase-in periods
Developing Countries
Tiers %
Linear
flexibility
Tiers %
Linear
Tiers %
Linear
Tiers %
Progressive
1
0 # 30
27%
32% ± 7%
0 # 30
< 30%
0 # 30
25% (10-40%)b
0 # 20
TBD
2
> 30 # 70
31%
36% ± 8%
> 30 # 80
< 40%
> 30 # 80
30%
> 20 # 40
TBD
3
> 70 # 100 37%
42% ± 9%
> 80 # 130
< 50%
> 80 # 130
35%
> 40 # 60
TBD
4
> 100
45%
50% ± 10%
> 130
< 60%
> 130
40%
> 60
TBD
Tariff Cap %
No Cap
150%
150%
100%
Sensitive Products
Not defined
1.5% of total tariff lines
Not defined
Not defined
Same as EU plus exemption All developed countries should
Least-Developed Countries
Not defined
from tariff reduction
allow full duty-free access for
Not defined.
commitments.
EBA.

---

CRS-34
Source: assembled by CRS from USTR, EC, and World Trade Online news releases. Data are as of October 28, 2005.
a. The U.S. has proposed applying the set of tiered tariff cuts described below during the 1st five-year period of implementation; to be followed by a period of stability
during the next (2nd) five years; then totally eliminating tariffs during the 3rd five-year period. This same reduction-stability-elimination sequence would be
applied to trade-distorting domestic support as well (see Table 2).
b. The EU proposes additional FLEXIBILITY be given for tariff cuts within the lowest tier (0-30%) such that the tier’s overall average cut of 35% (25% for developing
countries) is still respected, but that within tier cuts may vary between 20% to 45% (10% to 40%).
c. The EU estimates the average tariff cut, according to its proposed tier/tariff reduction formula, would be 46% across all tariff lines. However, USTR suggests that
a more accurate estimate would be 39%. Since the average tariff cut across all tariff lines must also consider the level of protection provided by TRQs for
sensitive products, it would appear that the EU’s estimated average tariff cut of 46% grossly overstates the true average as it apparently ignores the large degree
of protection provided by allowing 8% of tariff lines to hide behind TRQs. (See next footnote.)
d. The EU has approximately 2,200 8-digit tariff lines. An 8% limit on sensitive products would imply a maximum of about 176 sensitive products to be subject to
TRQs with expanded market access. The EU currently has 300 to 400 tariff lines covered by TRQs under the Uruguay Round Agreement. The EU suggests
that such a large number of sensitive products is necessary to achieve both protection for its agricultural sector while allowing for substantial tariff cuts across
unprotected tariff line items. Furthermore, the EU states that its sensitive products, although numerous, would be structured to allow for “substantial increases
in market access that would nonetheless still be lower than that granted by the result of the full tariff cut.”
e. The G-20 proposes that no new tariff-rate quotas (apart from existing TRQs agreed to under the Uruguay Round’s Agreement on Agriculture) be created for products
designated as sensitive, and it calls for a maximum deviation from the tariff reduction formula of 30%. It said existing TRQs on developed country sensitive
products should at least be expanded so that a minimum access level is increased to a level equivalent to 6% of annual domestic consumption.
f. The EU proposal calls for the possibility of new TRQs. In addition it recommends a TRQ formula linking the quota increase to the level of tariff reduction, proposing
that the quota increase is:
[(Normal tariff cut) - (applied cut)] / [(import price) + (ad valorem for that tariff line)] * (0.8). At the same stage there should be a minimum tariff reduction
in each of the bands of 5%, 10%, 15%, and 20%, respectively.
g. EU proposes that GIs receive the same protection as a trade mark in line with protection currently available for wine and spirits under Article 23 of TRIPS
agreement. For products with existing trade mark protection that would otherwise be invalidated by GI protection elsewhere, Article 24 of TRIPS would be
adjusted such that existing trade marks would not be affected. The EU considers this a major concession.
Definitions:
EBA
=
Everything But Arms (i.e., all products except weaponry and munitions).
TBD
=
To Be Determined.
TRQ
=
Tariff Rate Quota. This involves a quota level (TBD) within which all imports enter duty-free or subject to a minimal tariff duty (TBD). All over-
quota imports are subject to a higher (often prohibitive) duty (TBD). Greater market access (or greater TRQ) is achieved by raising the quota level and reducing
the over-quota tariff rate.

---