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Abstract

Governments intervene in the agricultural sector for a number of reasons, including the desire to provide adequate food for the population, to achieve self-sufficiency and to promote rural welfare. Concerns of this sort are not present in any other trade sector. Although at least in theory the GATT covered trade in agricultural products, the Contracting Parties were unwilling to subject their domestic agricultural policies to the same disciplines as industrial products. As a result, distortions, in the form of high tariff and non-tariff barriers, characterized the international market for agricultural goods. In addition, many developed countries, in particular the United States and the European Community (“EC”),1 have given huge amounts of support to their farmers, and surplus production generated by this support has been disposed of on the international market with the help of subsidies.

Although the reference to the European Community is only legally correct since the Treaty of Maastricht (1993), it is used throughout this chapter for the sake of convenience.

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  42. Id, at 319.

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  83. Id., at ¶ 92.

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  89. Id. at ¶ 117.

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  90. Report of the WTO Panel, Canada-Measures Affecting the Importation of Milk and the Exportation of Dairy Products-Second Recourse to Article 21.5 of the DSU by New Zealand and the United States, WT/DS103/RW2, WT/DS113/RW2 (2002), ¶ 5.89.

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  91. Id. at ¶ 5.134.

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  92. Report of the Appellate Body, United States-Tax Treatment of “Foreign Sales Corporations”, WT/DS108/AB/R (2000).

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  93. Id, ¶¶ 131–132.

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  94. Supra, n. 117, ¶ 150.

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  95. Under United States law, for example, a countervailing duty investigation must be initiated upon the filing of a petition in proper form, and the government has no discretion to exercise “due restraint”. The due restraint provision may simply mean that Members agree not to self-initiate investigations as opposed to initiating upon a petition filed on behalf of a domestic industry. If so, it is a fairly meaningless concession because it is extremely rare for governments to self-initiate countervailing duty investigations. The United States has only self-initiated one countervailing duty investigation, Certain Softwood Lumber From Canada, 57 Fed. Reg. 22570 (1992). A GATT Panel held that the initiation was not inconsistent with Article 2 of the Tokyo Round Agreement on Interpretation and Application of Articles VI, XVI, and XXIII of the General Agreement on Tariffs and Trade. Report of the GATT panel (adopted) United States—Measures Affecting Imports of Softwood Lumber From Canada, BISD 40th Supp. 358 (1994).

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  96. See also WT/DS167/1, United States-Countervailing Duty Investigation with Respect to Live Cattle From Canada, a Canadian request for consultations concerning the initiation of a countervailing duty investigation by the United States, made on 22 December 1998, with respect to live cattle from Canada. Canada contended that initiation of the investigation was inconsistent with U.S. obligations under Article 13 of the Agreement on Agriculture, as well as obligations under the Agreement on Subsidies and Countervailing Measures. The matter was dropped after the investigation resulted in a negative determination.

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  97. For further discussion, see Didier Chambovey, How the Expiry of the Peace Clause (Article 13 of the WTO Agreement on Agriculture) Might Alter Disciplines on Agricultural Subsidies in the WTO Framework, 36 J. WORLD TRADE 305 (2002).

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  98. The decision is reproduced in The Legal Texts: Theresults of Theuruguayround Ofmultilateral Trade Negotiations (1999) at 392.

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  99. On the issue of trade performance of developing countries, see WTO Secretariat Study, G/AG/NG/S/6 and Rev.1—Agricultural Trade Performance of Developing Countries 1990–1999.

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  100. G/AG/NG/W/15, U.S. Proposal for Comprehensive Long-Term Agricultural Trade Reform. See also, G/AG/NG/W/32, Statement by the United States to the Second Special Session of the Committee on Agriculture.

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  102. The Cairns group now includes Argentina, Australia, Bolivia, Chile, Colombia, Costa Rica, Guatemala, Indonesia, Malaysia, New Zealand, Paraguay, the Philippines, South Africa, Thailand and Uruguay. See G/AG/NG/W/54, Cairns Group Negotiating Proposal—Market Access, and statement by Australia on the proposal, G/AG/NG/W/60, in which it is noted that the average tariff on agricultural products is more than eight times higher than the average tariff on industrial products. See also, e.g., G/AG/NG/W/12, WTO Negotiations on Agriculture Market Access—A Negotiating Proposal by Canada, and a statement by Canada in support of the Cairns Group proposal, G/AG/NG/W/23.

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  104. Id, para. 9. Other Members support this approach, see G/AG/NG/W/98, Korea—Proposal for WTO Negotiations on Agriculture, ¶ 3 and G/AG/NG/W/101, Norway—WTO Agriculture Negotiations, ¶ 12.

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  108. Supra note 142, ¶ 10.

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  109. Japan, supra note 140, ¶¶ 17–22 and Korea, supra note 141, ¶¶ 20–23. This approach is supported by a number of European countries, see for example, G/AG/NG/W/103, Proposal by Poland, which suggests that every Member should have the right to introduce and maintain Blue Box payments.

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  110. See G/AG/11 in which the Committee on Agriculture discusses the implementation of Article 10.2. See also OECD Agricultural Policies in OECD Countries (2001) in which the OECD reports that U.S. export credits in 1998 totalled $3.93 billion at the end of 1998. The equivalent figure for the EC was $1.25 billion.

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  111. EC Comprehensive Negotiating Proposal, supra note 142, ¶ 1.

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  112. See Bridges Monthly May 2004 No. 5, p. 7 and June 2004 No 6, p. 2, available at www.ictsd.org.

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  113. The Farm Security and Rural Investment Act 2002, signed on 13 May, 2002.

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  114. For details of the outcome of the review, see Regulation 1782/2003 (2003), OJ270/1. It is worth compating the outcome with the Commission Communication that launched the mid-term review, COM (2002) 394 Mid-Term Review of the Common Agricultural Policy.

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McMahon, J.A. (2005). The Agreement on Agriculture. In: Macrory, P.F.J., Appleton, A.E., Plummer, M.G. (eds) The World Trade Organization: Legal, Economic and Political Analysis. Springer, Boston, MA. https://doi.org/10.1007/0-387-22688-5_6

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