I. INTRODUCTION 1. The Argentine Republic thanks the Panel for the opportunity to present its views as a third party to these proceedings and, in pursuant to its Submission dated 15 July381, will comment on the claims contained in the First Written Submission of the United States, dated 11 July.
2. In this connection, Argentina will comment more particularly on:
(a) The US interpretation of the provisions of the Peace Clause, particularly in Article 13(b)(ii);
(b) the US interpretations regarding Annex 2 of the Agreement on Agriculture and, lastly;
(c) the US interpretation whereby Article 10.2 of the Agreement on Agriculture excludes export credit guarantees from the general export subsidy disciplines in the Agreement on Agriculture and the Agreement on Subsidies and Countervailing Measures.
II. UNITED STATES CLAIMS (a) Interpretation of the Peace Clause
3. Argentina will discuss what it regards as a mistaken US interpretation of the terms of the Peace Clause, particularly in Article 13(b) of the Agreement on Agriculture382, whereby it draws the conclusion – equally mistaken – that its domestic support measures are exempt from the measures based on Article XVI.I of the GATT 1994 or Articles 5 and 6 of the Agreement on Subsidies (ASCM).
(i) Grant support to a specific commodity
4. First, the United States mistakenly interprets the phrase "grant support to a specific commodity".
5. In paragraph 71 of its Submission, the United States says that counter-cyclical payments and crop insurance payments do not constitute "support to a specific commodity" because they are not linked to specific commodity but are based on historical acreage and payment yields.383 6. The United States contends that "support to a specific commodity", in Article 13(b)(ii), means "product-specific support". Its argument is thus based on trying to incorporate the phrase "product-specific support" into Article 13(b)(ii) when the phrase is not to be found in the wording of the article.384 7. If the negotiators had meant to say that "product-specific support" was exempt, they would have introduced that phrase into the wording of the article, but they did not do so.385 Hence, AA Article 13(b)(ii) refers to a Member's non-Green Box domestic support measures, including domestic support measures granted only to individual specific products and also those relating to several specific products.
8. In other words, "support to a specific commodity", in Article 13(b)(ii), includes any non Green Box domestic support measure providing identifiable support to an individual commodity, regardless of whether the measure can provide support to a larger number of commodities.386
9. In its argument, the US ignores the most relevant context of Article 13(b)(ii), namely the chapeau, which refers not to "product-specific support" but to "domestic support measures" in general. This means that the measures which, under Article 13(b)(ii) are relevant in determining whether a Member has granted support to a specific commodity in excess of that decided during the 1992 marketing year necessarily includes non-product-specific domestic support.
10. The US interpretation would mean no claim could be made against any Amber Box domestic support measure granted to more than one commodity. The US argument would thus allow Members to make enormous increases in domestic support to a relatively small number of commodities (such as the ten crops covered by the counter-cyclical payments programme), something which is inconsistent with the object and purpose of the AA, namely, cutting down the level of domestic support, as is apparent from the Preamble.387 11. Argentina considers that "support to a specific commodity", in Article 13(b)(ii), indicates that, in calculating the domestic support granted by a Member, the support must relate to a particular or precise commodity, regardless of whether the support is product-specific or specific to more than one product.388 12. Contrary to the US suggestion, the phrase "support to a specific commodity" does not mean "support exclusively or only" to a specific commodity. The fact that, through the same domestic support measures, the United States grants support to different products does not cancel out the fact that part of the support is granted to one specific product.
(ii) Support "decided during the 1992 marketing year" 13. After analysing the phrase "that decided during the 1992 marketing year", the United States reaches the conclusion that the phrase does not relate to support actually provided to a specific product during that year389, but to support determined during the 1992 marketing year and that it consisted in "deciding" or "determining" a level of income support for cotton producers of US$0.72 per pound.
14. With this interpretation, the United States can get around the need to respond to Brazil's contention390 - supported by Argentina391 - that the US budgetary outlays on domestic support for the cotton sector for the 1999, 2000, 2001 and 2002 marketing years were far in excess of the US$1,994 million granted in 1992.
15. Argentina considers that, under Article 13(b)(ii), the word "decided" means a decision to make payments. The US argument ignores the fact that the text first uses the term "grant support" with reference to the support granted or provided to a specific commodity during the period of implementation (1995-2003). The phrase "grant support", however, is necessarily tied in with the support "decided during the 1992 marketing year"; otherwise, there would be no basis for comparison if one case involved the support granted and the other involved only the support scheduled.
16. In this connection, Argentina contends that the word "decided", in Article 13(b)(ii), should not be interpreted in such a way that the per pound guaranteed price for commodity producers (scheduled support) is the factor to be taken into consideration in determining the amount of support granted. If the criterion advanced by the United States were accepted, it would mean that an unlimited amount of domestic support could be granted to each product provided the total AMS is not exceeded.
17. In other words, the comparison required in Article 13(b)(ii) necessarily entails comparing the same type of support in each of the periods in question (period of implementation versus 1992 marketing year), in other words "comparing the comparable". The "support granted" in each marketing year during the period of implementation must necessarily be tied in with the budgetary outlays in those years.
18. In this respect, the definition of "granted" formulated by the Appellate Body in the "Brazil Aircraft" case is relevant, namely that it is "something actually provided" and, thus, "to determine the amount of export subsidies "granted" in a particular year, we believe that the actualamounts provided by a government, and not just those authorized or appropriated in its budget for that year, is the proper measure … Therefore, … we believe that the proper reference is to actual expenditures by a government …".
19. Similarly, Argentina considers that, under AA Article 13(b)(ii), the definition of the term "support granted" must refer to a government's actual expenditures and not to a scheduled level of costs or a rate of support per unit of production.
20. Accordingly, Argentina takes the view that the support "decided during the 1992 marketing year" refers to payments actually made during that marketing year.
(iii) The time dimension of Peace Clause protection 21. In contrast to the US interpretation, Argentina contends that the domestic support measures granted in any of the marketing years in the period from 1995 to 2003 are relevant in determining compliance with Article 13(b)(ii). In this connection, we consider that any injurious effects of the subsidies are extended time-wise.
22. An interpretation like the one postulated by the United States would seriously restrict the possibility of questioning whether such subsidies are consistent with ASCM Articles 5 and 6, while effects causing injury, nullification or impairment or serious prejudice can be linked to domestic support measures granted in previous marketing years.
(b) Annex II of the Agreement on Agriculture
(i) Interpretation of paragraph 1 23. The United States claims that its direct payments programme is in conformity with AA Annex II392 and, therefore, is exempt from measures under the protection afforded by Article 13(a). In reaching this conclusion, however, the United States makes a mistaken interpretation of paragraph 1 of AA Annex II.
24. The United States maintains that the structure of this provision, where the second sentence starts with the word "Accordingly", suggests that measures that conform to the two basic criteria set out in paragraph 1(a) and (b), plus the policy-specific criteria and conditions set out in the subsequent paragraphs of Annex II are designed to meet the "fundamental requirement that they have no, or at most minimal, trade-distorting effects or effects on production"393.
25. Argentina considers this interpretation to be erroneous, since the text of the first sentence establishes a clear obligation that the domestic support measures to be exempted from the reduction commitments "… shall meet the fundamental requirement that they have no … trade-distorting effect or effects on production …".In Argentina's opinion, the language of this first sentence establishes a general requirement governing the application of all Green Box measures.
26. The structure of paragraph 1 of AA Annex 2 thus creates four types of obligation:
(i) The fundamental requirement of no, or at least minimal, trade-distorting effects or effects on production;
(ii) the support given in a government-financed programme does not entail transfers from consumers;
(iii) the support does not have the effect of providing producers with price support; and
(iv) the policy-specific criteria and conditions set out in paragraphs 2 to 13 of Annex 2 are also taken into account.
27. In this connection, Argentina believes that Green Box measures must respect the guiding principle of avoiding trade-distorting or production effects or at most minimal effects. A measure that meets the two basic criteria set out in paragraph 1(a) and (b), plus the policy-specific criteria and conditions set out in the subsequent paragraphs of Annex 2 could also be at variance with the general principle. The opposite interpretation would render meaningless the first sentence of paragraph 1 of Annex 2, which the text describes as a "fundamental requirement".
28. Therefore, it is Argentina's view that, however much the United States claims that its direct payments programme conforms to the requirement established in the second sentence of paragraph 1 of Annex 2394, since it does not meet the fundamental requirement established in the first sentence it cannot be viewed as a Green Box programme.
29. In this respect, Argentina concurs with Australia and New Zealand that the first sentence of Annex 2 paragraph 1, imposes a stringent standard by requiring that the measures to be exempted from reduction commitments must, as a primary or essential condition, not artificially alter trade or production.395 30. Consequently, if a domestic support measure leads to a higher level of production of trade in a particular product or group of products, the measure does not meet the standard established in Annex 2, Article 1.
31. It should be emphasized that the US has in no sense answered the statements by Brazil in paragraphs 183 to 191 of its Submission concerning the trade-distorting and production effects of the direct payments programme, according to studies made by the US Department of Agriculture's own economists.
32. In other words, because the direct payments programme does have trade-distorting and production effects, it cannot be included among the domestic support measures exempted from reduction commitments.
(ii) Interpretation of paragraph 6(b) 33. The United States maintains that the Production Flexibility Contract Payments (PFC) and Direct Payments programmes are not tied in with production and, therefore, are not Green Box domestic support.
34. Argentina considers that the alleged "flexibility" of producers to plant different crops is in fact seriously restrictive. The amount of payments made depends on the type of production. Indeed, particular crops (fruits, vegetables, etc.) are excluded from these programmes. The effect of this is to channel production to the remaining crops, which do benefit from the programmes. This shows that the amount of the payments made is linked to the type of product sown, as Argentina pointed out in its Third Party Submission396 and, therefore, the payments are not in conformity with AA Annex 2 paragraph 6(b).
(c) Article 10.2 of the Agreement on Agriculture does not exclude export credit guarantees from the general export subsidy disciplines of the Agreement on Agriculture and the Agreement on Subsidies.
35. The United States asserts that the text of Article 10.2 of the Agreement on Agriculture permits Members to continue export credit guarantee programmes unaffected by export subsidy disciplines,397 since the text reflects the fact of that, during the Uruguay Round, Members came to no agreement on the substantive disciplines applicable. In other words, the United States contends that the actual text of Article 10.2 of the Agreement on Agriculture indicates that the export credit guarantee programmes are not subject in any way to the Agreement's export subsidy disciplines.398 36. In this regard, Argentina would point out that the fact that WTO Members are negotiating disciplines in order to implement Article 10.2 does not in any way support the US reading to the effect that Article 10.2 excludes export credit guarantees from the general disciplines on export subsidies.399 A commitment "to work towards the development" of specific international disciplines on the granting export credits, export guarantees or insurance programmes is not the same as excluding them from the general disciplines on export subsidies. If that had been the intention, then the negotiators would have expressly said so.
37. Contrary to the US contention, Argentina does not find any indication of this type in the wording of Article 10.2. The fact that the negotiators did not include an express reference to the effect that export credit guarantees are not included in the definition of export subsidies or are not subject to the disciplines established in AA Articles 3.3, 8 or 10.1 means that such disciplines apply to export credit support measures.
38. In other words, in conformity with the wording of AA Article 10.2, export credit guarantees are not exempt from the general disciplines of the Agreement on Agriculture, and where the measures are not in conformity with that Agreement, from the disciplines of the Agreement on Subsidies.
39. This interpretation is reinforced by the immediate context and the object and purpose of AA Article 10.2. Paragraph 2 forms part of Article 10, which is entitled "Prevention of Circumvention of Export Subsidy Commitments". Paragraph 1 of Article 10 establishes that export subsidies not listed in paragraph 1 of Article 9 "… shall not be applied in a manner which results in … circumvention of export subsidy commitments …".This provision imposes disciplines on export credit guarantees, just as it imposes disciplines on the whole universe of export subsidies not covered by Article 9.1.
40. In turn, the object and purpose of AA Article 10 is to prevent any form of circumvention of export subsidy commitments.400 Consequently, the US interpretation of Article 10.2 is completely at variance on the context of the provision and the object and purpose of AA Article 10, since it contributes to circumvention of the export subsidy commitment by excluding an entire category of export subsidies from the general disciplines.
41. Lastly, contrary to what the US maintains,4011 the fact that an export subsidy is not included in AA Article 9.1 does not mean that it is not an export subsidy, for Article 9.1 is not an exhaustive list, as is evidenced by the wording of Article 10.1.4022 Nor does it mean that such an export subsidy is not subject to the export subsidy disciplines of the Agreement on Agriculture.
42. Argentina agrees with the European Committees4033 that Article 10.2 makes it clear export credit guarantees are not one of the types of export subsidy listed in Article 9.1 and, in that connection, Article 10.1 establishes that non-listed export subsidy must not be applied in a manner which results in circumvention of export subsidy commitments.
43. Hence, as the European Communities contend, wherever export credit guarantees are export subsidies not listed in Article 9.1, those guarantees could be applied in a manner which would result in circumvention of commitments and, therefore, would be prohibited under Article 10.1.
III. CONCLUSION 44. In accordance with the foregoing, Argentina considers that the United States has mistakenly interpreted the provisions of the Peace Clause, in particular in Article 13(b)(ii), has failed to bear the burden of proving that the domestic support measures it granted to cotton during the 1999, 2000, 2001 and 2002 marketing years were not in excess of the support "decided during the 1992 marketing year".
45. Second, Argentina considers that the US interpretations regarding Annex 2 of the Agreement on Agriculture are mistaken and that, therefore, the Direct Payments and PFC programmes do not fall under the protection of Article 13(a) of the Agreement on Agriculture for Green Box measures.
46. Third, Argentina considers that the United States export credit guarantee schemes (GSM 102, 103 and SGCP) constitute export subsidies subject to the general export subsidy disciplines of the Agreement on Agriculture (Articles 3.3, 8 and 10.1) and the Agreement on Subsidies and Countervailing Measures (Article 3.1(a) and 3.2).
ORAL STATEMENT BY AUSTRALIA
24 July 2003
Mr Chairman, Members of the Panel,
1. I appreciate this further opportunity to present Australia’s views on matters at issue in this dispute.
2. In this statement, I will provide some elaboration of Australia’s views on the meaning of Article 13(b)(ii) of the Agreement on Agriculture. I will also address some of the matters raised in the First Written Submission of the United States and in the First Third Party Submission of the European Communities.
Mr Chairman, Members of the Panel,
3. I will begin with matters relating to the meaning of Article 13(b)(ii) of the Agreement on Agriculture.
4. As Australia noted in its Written Submission404, the word “decided” appears twice in the operative provisions of the Agreement on Agriculture – in subparagraphs (ii) and (iii) of Article 13(b). Further, the immediate context for the word “decided” is exactly the same in each case: “provided that such measures do not grant support to a specific commodity in excess of that decided during the 1992 marketing year”. Yet Article 13(b)(iii) deals with a completely different type of action: one based on non-violation or impairment under GATT Article XXIII:1(b).
5. Thus, Australia believes that it will be necessary for the Panel to consider two key threshold questions.
6. Firstly, is the meaning of the phrase “provided that such measures do not grant support to a specific commodity in excess of that decided during the 1992 marketing year” the same in each of Article 13(b)(ii) and (iii)?
7. Australia recalls that the phrase, as well as draft text for what became Article 13, first appeared in the “Blair House Accord”. Also included in the Accord were provisions concerning the EEC – Oilseeds dispute.405
8. In Australia’s view, that dispute is crucially relevant to the interpretation of Article 13(b)(ii) and (iii).
9. Australia recalls that it clearly understood in the resumed Uruguay Round agriculture negotiations in 1993 that the words “decided during the 1992 marketing year” had been chosen to incorporate into the text of Article 13(b)(ii) and (iii) the sense of expectations of “conditions of price competition” as this had been interpreted and applied in the EEC – Oilseeds dispute.
10. The panel in EEC – Oilseeds described the purpose of GATT Article XXIII:1(b) in the following terms:
… The panel noted that these provisions, as conceived by the drafters and applied by the contracting parties, serve mainly to protect the value of tariff concessions.[…] The idea underlying them is that the improved competitive opportunities that can legitimately be expected from a tariff concession can be frustrated not only by measures proscribed by the General Agreement but also by measures consistent with that Agreement. …406
11. That Panel went on to say:
… The Panel considered that the main value of a tariff concession is that it provides an assurance of better market access through improved price competition. Contracting parties negotiate tariff concessions primarily to obtain that advantage. They must therefore be assumed to base their tariff negotiations on the expectation that the price effect of the tariff concessions will not be systematically offset. …407
12. In any case, having regard to the customary principles of interpretation, Australia considers that the phrase “provided that such measures do not grant support to a specific commodity in excess of that decided during the 1992 marketing year” must have the same meaning in both Article 13(b)(ii) and (iii).
13. Thus, there is a second threshold question that the Panel needs to consider. That question is: could conditions of price competition for the purposes of a non-violation nullification or impairment claim be assessed solely on the basis of budgetary outlay figures, as argued by Brazil, or on the basis of a rate of payment, as argued by the United States? In Australia’s view, both factors put forward by Brazil and the United States would properly form a part of that assessment, but not the whole.
Mr Chairman, Members of the Panel,
14. I would now like to comment on some matters raised in the First Written Submission of the United States.
15. Firstly, Australia disagrees with the United States’ approach to interpreting the “peace clause” and the meaning of “exempt from action based on”.408 16. If the United States’ interpretation is correct and the WTO Agreement negotiators intended the interpretation offered by the United States, surely the negotiators would have included provisions clarifying how such situations should be resolved? At the very least, surely Article 13 of the Agreement on Agriculture would have been listed in the Special or Additional Rules and Procedures Contained in the Covered Agreements at Appendix 2 to the Dispute Settlement Understanding? Yet the negotiators did neither of these things.
17. The United States argues as well that its interpretation is supported by the fact that the peace clause applies “[n]otwithstanding the provisions of GATT 1994 and the Agreement on Subsidies and Countervailing Measures”.409 However, the United States ignores that, for its argument to be valid, the peace clause would also have to apply “notwithstanding the provisions of the Dispute Settlement Understanding”.
18. The United States argues too that Brazil is in error by asserting that the peace clause itself “provides no positive obligations”.410 In Australia’s view, however, this argument confuses obligations and conditions: the United States is equating a binding requirement to act in a certain way with a prerequisite for the availability of a right or privilege. Article 13 of the Agreement on Agriculture does not of itself establish any binding requirements with which WTO Members are required to comply.
19. That confusion between rights and obligations continues when the United States argues that “Brazil’s approach would produce bizarre results”.411 Indeed, the United States’ arguments could be considered to confirm the nature of Article 13 as an affirmative defence. Had Brazil alleged a breach of the United States’ obligations under Article 6, Brazil would have had the initial burden of making a prima facie case of inconsistency. Article 13, however, is a right or privilege available to the United States, provided that its measures fully conform to the relevant conditions. Thus, it is for the United States to demonstrate that it is entitled to invoke that right or privilege.
20. Secondly, the United States argues that “support to a specific commodity” is equivalent to “product-specific support”.412
21. The United States asserts that the definition of Aggregate Measurement of Support – or AMS – at Article 1(a), and Article 6 concerning Domestic Support Commitments, provide relevant context. The United States asserts that because the calculation of AMS, and exemptions from Current Total AMS, differentiate between product specific and non-product specific domestic support, “support” in the context of Article 13(b)(ii) and (iii) means product-specific AMS.
22. Australia does not agree. AMS is defined by Article 1(a) to mean “the annual level of support … provided for an agricultural product in favour of the producers of the basic agricultural product”. However, Article 13(b)(ii) and (iii) refer to “support to a specific commodity”.
23. Had the negotiators intended that “support to a specific commodity” in the context of Article 13(b)(ii) and (iii) mean product-specific AMS only, they would have said so in the text. They did not. Further, the United States’ argument ignores that a Member’s reduction commitments include both product specific and non-product specific domestic support measures unless they are exempt from inclusion.
24. Thus, in Australia’s view, “support to a specific commodity” means: all non-“green box” support that benefits a specific commodity, whether that support be through product specific, or non-product specific, programmes. Indeed, Australia believes that “support to a specific commodity” in the context of Article 13(b)(ii) and (iii) can include forms of support additional to those captured in an AMS calculation.
25. It follows, of course, that Australia considers – in the context of this dispute – that the portions of the direct payment and counter-cyclical payment programmes that benefit upland cotton should be included in the calculation of “support to a specific commodity” within the meaning of Article 13(b)(ii). Moreover, Australia notes that the counter-cyclical payment programme provides a target price of 72.4 cents per pound for upland cotton,413 and that entitlements to “Step 2” payments and some other domestic support programmes are additional to the target price, as they were to the 1992 target price of 72.9 cents per pound.
26. Thirdly, the United States argues that direct payments under the 2002 Farm Act meet the criteria of Annex 2 Decoupled Income Support payments. Australia has already addressed the issue of planting restrictions on fruit and vegetables and wild rice in its Written Submission.
27. The United States argues that “eligibility for direct payments is defined by clearly defined criteria … in a defined and fixed base period” and that “payment yields and base acres are defined in the 2002 Act and fixed for the duration of the legislation”.414 The United States’ interpretation means that a WTO Member could re-define and re-fix a base period every time it introduced new domestic support legislation. This cannot be a correct interpretation of the provisions of paragraph 6 of Annex 2 to the Agreement on Agriculture.
28. Fourthly, the United States argues that “a Member may choose to provide ‘amber box’ support in any … manner so long as that Member’s Current Total AMS does not exceed … [its] commitment level”.415
29. Australia disagrees. The United States’ argument ignores that Article 13(b)(ii) does not exempt non-“green box” domestic support measures from actions based on Article 3 of the SCM Agreement. It also ignores the provisions of Article 21.1 of the Agreement on Agriculture. In an analogous situation in the EC – Bananas dispute, the Appellate Body said: “… the provisions of the GATT 1994 … apply … except to the extent that the Agreement on Agriculture contains specific provisions dealing specifically with the same matter”.416 The Appellate Body went on to say in that dispute:
… [T]he negotiators of the Agreement on Agriculture did not hesitate to specify … limitations elsewhere in that agreement; had they intended to do so with respect to Article XIII of the GATT 1994, they could, and presumably would, have done so. …417
30. The Appellate Body’s statement is equally applicable in the context of this dispute. Had the negotiators of the Agreement on Agriculture intended that non-“green box” domestic support measures be “exempt from actions based on” Article 3 of the SCM Agreement, they would have said so. The negotiators did expressly exempt export subsidies from actions based on SCM Article 3 to the extent that such export subsidies conformed fully to the provisions of Part V of the Agreement on Agriculture. In Australia’s view, therefore, the omission from Article 13(b)(ii) of the Agreement on Agriculture of an express exemption from actions based on SCM Article 3 for local content subsidies has meaning.
31. Fifthly, the United States has requested that the Panel issue a preliminary ruling that Production Flexibility Contract and Market Loss Assistance payments are not within the Panel’s terms of reference because these programmes have expired. The fact that a measure has expired cannot be sufficient to remove it from the Panel’s purview. If the Panel were to grant the United States’ request solely on that basis, it would mean that any Member could authorise WTO-inconsistent domestic support programmes through short-lived measures and avoid the consequences of such actions.
Mr Chairman, Members of the Panel,
32. The final matter on which I will comment today concerns the Third Party Submission of the European Communities and its arguments in relation to the interpretation of the first sentence of paragraph 1 of Annex 2 to the Agreement on Agriculture. The European Communities argues that the first sentence “simply signals the objective of Annex 2” and does not set out an independent obligation.418
33. That argument ignores the plain meaning of the text and renders the first sentence of paragraph 1 inutile, which of course a treaty interpreter may not do. If an exemption from reduction commitments is being claimed for any domestic support measures, the first sentence says they “shall meet the fundamental requirement that they have no, or at most minimal, trade-distorting effects or effects on production”. As explained in Australia’s written submission,419 a fundamental requirement is a primary or essential condition. To interpret a “fundamental requirement” other than as a separate and independent obligation would be contrary to the plain meaning of the words and thus to the normal rules of treaty interpretation. The use of the words “shall meet” establishes an express obligation to comply with the specified condition that such measures not, or only minimally, bias or unnaturally alter trade or production.420 34. The European Communities argues that the word “accordingly” at the beginning of the second sentence of paragraph 1 links the ‘fundamental requirement’ in the first sentence with the ‘basic criteria’ in the second sentence” and thus makes clear that the fundamental requirement is complied with if the basic criteria in the second sentence and the policy-specific criteria set out in paragraphs 2 to 13 are met.421
35. However, the meanings for “accordingly” cited by the European Communities – “in accordance with the logical premises” and “correspondingly” – do not compel the interpretation it has offered. Moreover, there are other, equally valid meanings of the word “accordingly”, provided by the same dictionary, such as “harmoniously” and “agreeably”.422
36. It is possible to interpret the whole of paragraph 1 to Annex 2 so as to give effect to all of its provisions:
domestic support measures for which exemption from the reduction commitments is claimed shall not, or shall only minimally, distort trade or production; and
to the extent that measures of the type described in paragraphs 2 to 13 of the Annex are consistent and harmonious with that fundamental requirement and conform to the basic and policy-specific criteria as set out in the second sentence, they are exempt from reduction commitments.
37. Thus, notwithstanding that they may meet the basic and policy-specific criteria set out in paragraphs 1 and 6 of the Annex, a Member may not claim Decoupled Income Support payments as “green box” where those payments do not meet the fundamental requirement that they shall not, or shall only minimally, distort trade or production. Such could be the case, for example, where the level of Decoupled Income Support payments are sufficient to affect directly producer decisions concerning the allocation of economic resources to production of a particular commodity.
Mr Chairman, Members of the Panel,
38. Should you have questions on any matters concerning Australia’s Written Submission and Oral Statement, I would be pleased to take these on notice and arrange for written answers to be provided.
Thank you, Mr Chairman, Members of the Panel.