Unclear text of WTO Agriculture Agreement

by Bhagirath Lal Das

NEW DELHI: The WTO and its annexed agreements have drafting deficiencies at several places, but those in the Agreement on Agriculture are particularly noticeable.

It is likely that these problems occurred mainly because of the hurry with which these texts were prepared and also due to the extreme sensitivity of the subject which prevented any editing of the language of the agreed formulations.

Drafting deficiencies

But an occasion will come, and should be made use of, during the review of the agreement in 1999 for correcting the mistakes and deficiencies and for bringing in more clarity.

Without being exhaustive, some examples of defective drafting in the agreement needing attention can be cited.

Art. 4 of the Agreement deals with market access.

The lack of clarity about the obligations in this paragraph has been well brought out by the recent report of the Banana Panel and the connected report of the Appellate Body in the WTO.

Whereas Art. 3 of the agreement lays down clear obligations in respect of the domestic support and export subsidy, the obligations relating to the market access are not clearly mentioned in Art. 4. This makes the pre-eminent position of the agreement, as stipulated in Art. 21, infructuous in respect of the market access commitment schedules.

During the negotiations, the normal understanding appeared to be that these commitments would be fully enforceable; but the vague wording of Art. 4 makes them conditional on their conformity with the general obligation under GATT 1994.

Art. 5 of the Agreement encompasses Special Safeguard Provisions.

Special safeguard is an important part of the agreement; but the language of Art. 5 covering it is extremely vague.

There is no clear stipulation anywhere that a Member can apply special safeguard provisions. Art. 5.1 says that "...any Member may take recourse to the provisions of paragraphs 4 and 5 below...".

But these two paragraphs do not define what the provisions are.

Paragraph 4 says that "any additional duty imposed under sub-paragraph 1(a) shall only be maintained until.....". There is a similar reference in paragraph 5 about sub-paragraph 1(b).

However, neither of these two sub-paragraphs specifically provide for permission to impose the additional duty; all that they do is to lay down certain pre-conditions for imposing such duty.

Hence, neither paragraph 1 nor paragraph 4 specifically empowers a Member to impose additional duty. These two provisions appear to create a circular confusion, each referring to the other, and neither of them having any clear provision granting the authority to impose the additional duty.

Annex 3 of the Agreement

Annex 3 of the Agreement deals with the calculation of Aggregate Measurement of Support (AMS).

Annex 3 is referred to in the definition in Article 1(a)(ii). It is meant to provide the basis of calculating the annual AMS.

Paragraph 5 onwards in this annex, however, gives the basis of calculation of the AMS for the base period. It is unnecessary and redundant, as the AMS for the base period is to be found in part IV of the Member's schedule, in accordance with the definition contained in Art. 1(a)(i).

It is likely that an earlier version of this annex, which was a part of the modalities for the calculation of the levels of commitments, has been allowed to be retained in the final version of the agreement by mistake.

There are also other minor drafting defects.

Art. 5.9, says that the provision of Art. 5 shall remain in force for the duration of the reform process as determined under Art. 20.

But Art. 20, however, does not determine any duration for the reform process. In fact "the duration of the reform process" has not been defined in the agreement. What has been defined is "the implementation period" of the agreement.

Art. 5.2, says: "Imports under current and minimum access commitments established as part of a concession referred to in paragraph 1 above shall be counted for the purpose of determining the volume of imports...".

But current and minimum access commitments have not been defined in the agreement, and as such, this provision becomes totally unclear.

These terms were perhaps there in some earlier version of the text, and the mistake lies in retaining them, even though these concepts formally ceased to be an explicit part of the market access commitments.

Import and consumption

Art. 5.4, gives the calculation for the trigger for special safeguards. Two parameters are relevant, viz., import and consumption.

The stipulation is that "... additional duty may be imposed in any year where the absolute volume of imports....exceeds ...", a certain specified level. But the period for which the volume of import is to be examined against this criterion is not quite clear.

Under Art. 13(b), some domestic support measures are "exempt from the imposition of countervailing duties unless a determination of injury or threat thereof is made...".

It appears redundant as countervailing duty cannot, in any case, be imposed without the determination of injury or its threat.

It has further been said that such measures are "exempt from action based on...., provided that such measures do not grant support to a specific commodity in excess of that decided during the 1992 marketing year;..".

The use of the word "decided" does not appear appropriate here; what is perhaps meant is the level of support prevalent in 1992.

Under Art. 13(c), some export subsidies are "exempt from actions based on .....Articles 3, 5 and 6 of the Subsidies Agreement."

The reference here is to the dispute settlement route for getting remedy; hence, the correct Articles to be mentioned here are 4 and 7 of the Agreement on Subsidies and Countervailing Measures.

During the review of the agreement in 1999, it may be appropriate to cor-rect these drafting deficiencies. (Third World Economics, 16-31 January 1998)

(The author is a former Ambassador and Permanent Representative of India to GATT. Later, he was Director of International Trade Programmes in UNCTAD.) The above article first appeared in the South-North Development Monitor (SUNS).