REVIEW OF THE OPERATION OF THE BALI DECISION on TRQ administration

Report by the chairperson to the General Council

1.1.  At the Ninth Session of the Ministerial Conference in December 2013 at Bali, Ministers adopted the Decision on "Understanding of Tariff Rate Quota Administration Provisions of Agricultural Products, as defined in Article 2 of the Agreement on Agriculture" (WT/MIN(13)/39) (hereinafter referred to as the "Decision"). The Decision also required a review of its operation commencing no later than end-2017 with a view to improving the rate of TRQ utilization. The future operation of paragraph 4 of the Underfill Mechanism in Annex A of the Decision was specifically mandated to be taken up under the Review as per paragraphs 13-14 of the Decision.

1.2.  The Review was concluded when the General Council, at its meeting on 9‑10 December 2019, approved the recommendations by the Committee on Agriculture (CoA) contained in Annex 2 to G/AG/29. However, there was no substantive agreement on the issue of the future operation of paragraph 4 of the Underfill Mechanism during the 2017-19 review exercise. Instead, as per paragraph 1 of the approved recommendations in Annex 2 to G/AG/29, Members agreed to defer the timeline for a decision on paragraph 4 of the Underfill Mechanism by two years, i.e. to end-2021.

1.3.  The recommendations also allude to a potential fragmentation of the Decision by offering the right to select Members, listed in Annex B of the Decision, to discontinue the application of paragraph 4, should there be no agreement among Members on the future operation of this paragraph. Avoidance of a carve out for certain Members, which the lack of an agreement on the future operation of paragraph 4 within the agreed deadline could potentially trigger, remained an important motivation for several Members to find an agreeable solution on this paragraph in the post-2019 CoA discussions on this matter.

1.4.  In these discussions, Members examined in detail as to how current paragraph 4 would operate in practice during the final stage of the Underfill Mechanism. It was noted that the importing Member in the final stage of the Underfill Mechanism under current paragraph 4 is obliged to change the TRQ administration method to either first-come first-served at customs (FCFS) or an automatic unconditional license on demand system - with the option to be chosen based on consultations with the concerned exporting Member(s). The selected administration method would then be maintained for a minimum of two years after which, and provided timely fill rates were notified for those two years, the matter would be "closed" and marked accordingly on the Secretariat Tracking Register.

1.5.  Developing importing Members in the final stage of the Underfill Mechanism, under the latter part of current paragraph 4, may choose an alternative TRQ administration method or maintain the current method. The choice of an alternative TRQ administration method would need to be notified to the CoA within the operation of the Underfill Mechanism. The method selected would be maintained for a minimum of two years and the matter would be "closed" provided the fill rate had increased by two-thirds of the annual increments described in paragraph 3(b) of the Underfill Mechanism.

1.6.  Based on these discussions, Members achieved a better appreciation of the main sticking point identified in relation to the future operation of paragraph 4 of the Underfill Mechanism, where a developing importing Member does not achieve the required increase in the fill rate while either retaining the current TRQ administration method or using an alternative administration method.