Agreement Establishing the World Trade Organization
International Dairy Agreement
The Parties to this Agreement,
the importance of milk and dairy products to the economy of many countries1 in terms of production, trade and consumption;
Recognizing the need, in the mutual interests of producers and consumers, and of exporters and importers, to avoid surpluses and shortages, and to maintain prices at an equitable level;
Noting the diversity and interdependence of dairy products;
Noting the situation in the dairy products market, which is characterized by very wide fluctuations and the proliferation of export and import measures;
Considering that improved cooperation in the dairy products sector contributes to the attainment of the objectives of expansion and liberalization of world trade, and the implementation of the principles and objectives
concerning developing countries agreed upon in the Tokyo Declaration of Ministers dated 14 September 1973;
Determined to respect the principles and objectives of the General Agreement on Tariffs and Trade 19942 and, in carrying out the aims of this Agreement, effectively to implement the principles and objectives agreed upon in the said Tokyo Declaration;
Hereby agree as follows:
Article I: Objectives
The objectives of this Agreement shall be, in accordance with the principles and objectives agreed upon in the Tokyo Declaration of Ministers dated 14 September 1973,
- to achieve the expansion and ever greater liberalization of world trade in dairy products under market conditions as stable as possible, on the basis of mutual benefit to exporting and importing countries;
- to further the economic and social development of developing countries.
Article II: Product Coverage
1. This Agreement applies to the dairy products sector. For the purpose of this Agreement, the term "dairy products" is deemed to include the following
products, as defined in the Harmonized Commodity Description and Coding System ("Harmonized System") established by the Customs Cooperation Council3:
|HS Code|| |
| 04.01.10-30 ||Milk and cream, not concentrated nor containing added sugar or other sweetening matter|
|04.02.10-99|| Milk and cream, concentrated or containing added sugar or other sweetening matter|
|04.03.10-90|| Buttermilk, curdled milk and cream, yogurt, kephir and other fermented or acidified milk and cream, whether or not concentrated or containing added sugar or other sweetening matter or flavoured or containing added fruit or cocoa|
|04.04.10-90|| Whey, whether or not concentrated or containing added sugar or other sweetening matter; products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter, not elsewhere specified or included|
|04.05.00 ||Butter and other fats
and oils derived from milk|
|04.06.10-90|| Cheese and curd|
| 35.01.10|| Casein|
2. The International Dairy Council, established under paragraph 1(a) of Article VII (hereinafter referred to as "the Council"), may decide that the Agreement
is to apply to other products in which dairy products referred
to in paragraph 1 have been incorporated, if it deems their inclusion necessary for the implementation of the objectives and provisions of this Agreement.
Article III: Information and Market Monitoring
1. Each Party shall provide regularly and promptly to the Council the information required to permit the Council to monitor and assess the overall situation of the world market for dairy products and the world market situation for each individual dairy product.
2. Developing country Parties shall furnish the information available to them. In order that these Parties may improve their data collection mechanisms, developed Parties, and any developing Parties able to do so, shall consider sympathetically any request to them for technical assistance.
3. The information that the Parties undertake to provide pursuant to paragraph 1, according to the modalities that the Council shall establish, shall include data on past performance, current situation and outlook regarding production, consumption, prices, stocks and trade, including transactions other than normal commercial transactions, in respect of the products referred to in Article II, and any other information deemed necessary by the Council. Parties shall also provide information on their domestic policies and trade measures, and on their bilateral, plurilateral or multilateral commitments, in the dairy sector and shall make known, as early as possible, any changes in such policies and measures that are likely to affect international trade in dairy products. The provisions of this paragraph shall not require any Party to disclose confidential information which would impede law enforcement or otherwise be contrary to the public interest or would prejudice the legitimate commercial interests
of particular enterprises, public or private.
4. The Secretariat of the World Trade Organization (hereinafter referred to as "the Secretariat"), shall draw up, and keep up to date, an inventory of all measures affecting trade in dairy products, including commitments resulting from bilateral, plurilateral and multilateral negotiations.
Article IV: Functions of the International Dairy Council and Cooperation between the
1. The Council shall meet in order to:
2. If after an evaluation of the world market situation and outlook, referred to in paragraph 1(a), the Council finds that a serious market disequilibrium, or threat of such a disequilibrium, which affects or may affect international trade, is developing for dairy products in general or for one or more products, the Council will proceed to identify, taking particular account of the situation of developing countries, possible solutions for consideration by governments.
3. Depending on whether the Council considers that the situation defined in paragraph 2 is temporary or more durable, the measures referred to in paragraph 2 could
include short-, medium- or long-term measures to contribute to
improve the overall situation of the world market.
4. When considering measures that could be taken pursuant to paragraphs 2 and 3, due account shall be taken of the special and more favourable treatment to be provided for developing countries, where this is feasible and appropriate.
5. Any Party may raise before the Council any matter4 affecting this Agreement, inter alia, for the same purposes provided for in paragraph 2. Each Party shall promptly afford adequate opportunity for consultation regarding such matter affecting this Agreement.
6. If the matter affects the application of the specific provisions of the Annex, any Party which considers that its trade interests are being seriously threatened and which is unable to reach a mutually satisfactory solution with the other Party or Parties concerned may request the Chairman of the Committee established under paragraph 2(a) of Article VII,
to convene a special meeting of the Committee on an urgent basis so as to determine as rapidly as possible, and within four working days if requested, any measures which may be required to meet the situation. If a satisfactory solution cannot be reached, the Council shall, at the request of the Chairman of the Committee, meet within a period of not more than fifteen days to consider the matter with a view to facilitating a satisfactory solution.
Article V: Food Aid and Transactions other than Normal CommercialTransactions
1. The Parties agree:
(a) In cooperation with FAO and other interested organizations, to foster recognition of the value of dairy products in improving nutritional levels and of ways and means through which they may be made available for the benefit of developing countries.
(b) In accordance with the objectives of this Agreement, to furnish, within the limits of their possibilities, dairy products by way of food aid. Parties should notify the Council in advance each year, as far as practicable, of the scale, quantities and destinations of their proposed contributions of such food aid. Parties should also give, if possible, prior notification to the Council of any proposed amendments to the notified food-aid
contributions. It is understood that contributions could be made
bilaterally or through joint projects or through multilateral
programmes, particularly the World Food Programme.
(c) Recognizing the desirability of harmonizing their efforts in this field, as well as the need to avoid harmful interference with normal patterns of production, consumption and international trade, to exchange views in the Council on their arrangements for the supply and requirements of dairy products as food aid or on concessional terms.
2. Donated exports, exports destined for relief purposes or welfare purposes, and other transactions which are not normal commercial transactions shall be effected in accordance with Article 10 of the Agreement on Agriculture. The Council shall cooperate closely with the FAO Consultative SubCommittee on Surplus Disposal.
3. The Council shall, in accordance with conditions and modalities that it will establish, upon request, discuss and consult on all transactions other than normal commercial
transactions and other than those covered by the Agreement on Subsidies and Countervailing Measures.
Article VI: Annex
Without prejudice to the provisions of Articles I to V, the products listed below shall be subject to the provisions of the Annex:
- Milk powder and cream powder, excluding whey powder
- Milk fat
- Certain cheeses
Article VII: Administration
1. International Dairy Council
(a) An International Dairy Council shall be established within the framework of the World Trade Organization (hereinafter referred to as the "WTO"). The Council shall comprise representatives of all Parties to the Agreement and shall carry out all the functions which are necessary to implement the provisions of the Agreement. The Council shall be serviced by the Secretariat. The Council shall establish its own rules of procedure. The Council may, as appropriate, establish subsidiary working groups or other bodies.
(b) Regular and special meetings
The Council shall normally meet as appropriate, but not less than twice each year. The Chairman may call a special meeting of the Council either on his own initiative, at the request of the Committee established under paragraph 2(a),
or at the request of a Party to this Agreement.
The Council shall reach its decisions by consensus. The Council shall be deemed to have decided on a matter submitted for its consideration if no member of the Council formally objects to the acceptance of a proposal.
(d) Cooperation with other organizations
The Council shall make whatever arrangements are appropriate for consultation or cooperation with intergovernmental and non-governmental organizations.
(e) Admission of observers
(i) The Council may invite any non-Party government to be represented at any meeting as an observer and may determine rules on the rights and obligations of observers, in particular with respect to the provision of information.
(ii) The Council may also invite any of the organizations referred to in paragraph 1(d) to attend any meeting as an observer.
2. Committee on Certain Milk Products
(a) The Council shall establish a Committee on Certain Milk Products (hereinafter referred to as "the Committee") to carry out all the functions which
are necessary to implement the provisions of the Annex. This
Committee shall comprise representatives of all Parties. The
Committee shall be serviced by the Secretariat. It shall report
to the Council on the exercise of its functions.
(b) Examination of the market situation
The Council shall make the necessary arrangements, determining the modalities for the information to be furnished under Article III, so that the Committee may keep under constant review the situation in and the evolution of the
international market for the products covered by the Annex, and the conditions under which the provisions of the Annex are applied by Parties, taking into account the evolution of prices in international trade in each of the other dairy products having implications for the trade in products covered by the Annex.
(c) Regular and special meetings
The Committee shall normally meet once each quarter. However, the Chairman of the Committee may call a special meeting of the Committee on his own initiative or at the request of any Party.
The Committee shall reach its decisions by consensus. The Committee shall be deemed to have decided on a matter submitted for its consideration if no member of the Committee formally objects to the acceptance of a proposal.
Article VIII: Final Provisions
(a) This Agreement is open for acceptance, by signature or otherwise, by any State or separate customs territory possessing full autonomy in the conduct of its external commercial relations and of the other matters provided
for in the Agreement Establishing the WTO (hereinafter referred
to as the "WTO Agreement"), and by the European Communities.
(b) Any government5 accepting
this Agreement may at the time of its acceptance make a reservation with regard to the application of the Annex with respect to any product(s) specified therein. Reservations may not be entered in respect of any of the provisions of the Annex without the consent of the other Parties.
(c) Acceptance of this Agreement shall carry denunciation of the International Dairy Arrangement done at Geneva on 12 April 1979, which entered into force on 1 January 1980,
for Parties having accepted that Arrangement. Such denunciation shall take effect on the date of entry into force of this Agreement for that Party.
2. Entry into force
(a) This Agreement shall enter into force, for those Parties having accepted it, on the date of entry into force of the WTO Agreement. For Parties accepting this Agreement after that date, it shall be effective from the date of their acceptance.
(b) The validity of contracts entered into before the date of entry into force of this Agreement shall not be affected by this Agreement.
This Agreement shall remain in force for three years. The duration of this Agreement shall be extended for further periods of three years at a time, unless the Council, at least eighty days prior to each date of expiry, decides otherwise.
Except where provision for modification is made elsewhere in this Agreement, the Council may recommend an amendment to the provisions of this Agreement. The proposed amendment shall enter into force upon acceptance by all Parties.
5.Relationship between the Agreement and the Annex and Attachments
The following shall be deemed to be an integral part of this Agreement, subject to the provisions of paragraph 1(b):
- the Annex mentioned in Article VI;
- the lists of reference points mentioned in Article 2 of the Annex and contained in Attachment A;
- the schedules of price differentials according to milk fat content mentioned in paragraph 4 of Article 3 of the Annex and contained in Attachment B;
- the register of processes and control measures referred to in paragraph 5 of Article 3 of the Annex and contained in Attachment C.
6. Relationship between the Agreement and Other Agreements
Nothing in this Agreement shall affect the rights and obligations of Parties under the General Agreement on Tariffs and Trade and the WTO Agreement.6
(a) Any Party may withdraw from this Agreement. Such withdrawal shall take effect upon the expiration of 60 days from the date on which written notice of withdrawal is received by the Director-General of the WTO.
(b) Subject to such conditions as may be agreed upon by the Parties, any Party may withdraw its acceptance of the application of the provisions of the Annex with respect to any product(s) specified therein. Such withdrawal shall take effect upon the expiration of 60 days from the date on which written notice of withdrawal is received by the Director-General of the WTO.
Until the entry into force of the WTO Agreement, the text of this Agreement shall be deposited with the Director-General to the CONTRACTING PARTIES to GATT who shall promptly furnish a certified copy thereof and a notification of each acceptance thereof to each Party. The texts of this Agreement
in the English, French and Spanish languages shall all be equally
authentic. This Agreement, and any amendments thereto, shall,
upon the entry into force of the WTO Agreement, be deposited with the Director-General of the WTO.
This Agreement shall be registered in accordance with the provisions of Article 102 of the Charter of the United Nations.
Done at Marrakesh this fifteenth day of April nineteen hundred and ninety-four.
ANNEX ON CERTAIN MILK PRODUCTS
Article 1: Product Coverage
1. This Annex applies to:
(a) milk powder and cream powder falling under HS heading Nos. 04.02.10-99 and 04.03.10-90;
(b) milk fat falling under HS heading No. 04.05.00, having a milk fat content equal to or greater than 50 per cent by weight; and
(c) cheeses falling under HS heading No. 04.06.10-90, having a fat content in dry matter, by weight, equal to or more than 45 per cent and a dry matter content, by weight, equal to or more than 50 per cent.
Field of application
2. For each Party, this Annex is applicable to exports of the products specified in paragraph 1 manufactured or repacked inside its own customs territory.
Article 2: Pilot Products
The minimum export prices established under Article 3 shall be established with respect to the pilot products of the following specifications:
(a) Designation: Skimmed milk powder
- Milk fat content: less than or equal to 1.5 per cent by weight
- Water content: less than or equal to 5 per cent by weight
(b) Designation: Whole milk powder
- Milk fat content: 26 per cent by weight
- Water content: less than or equal to 5 per cent by weight
(c) Designation: Buttermilk powder7
- Milk fat content: less than or equal to 11 per cent by weight
- Water content: less than or equal to 5 per cent by weight
(d) Designation: Anhydrous milk fat
- Milk fat content: 99.5 per cent by weight
(e) Designation: Butter
- Milk fat content: 80 per cent by weight
(f) Designation: Cheese
In packages normally used in the trade, of a net content by weight of not less than 25 kgs. or 50 lbs., except for cheese, of 20 kgs. or 40 lbs., respectively, as appropriate.
Terms of sale:
F.o.b. from the exporting Party or free-at-frontier exporting Party.
By derogation from this provision, reference points for the Parties listed in Attachment A may be as provided therein.
Prompt payment against documents.
Article 3: Minimum Prices Level and observance of minimum
1. Each Party shall take the steps necessary to ensure that the export prices of the products defined in Article 2 shall not be less than the minimum prices applicable under this Annex. If the products are exported in the form of goods in which they have been incorporated, Parties shall take the steps necessary to avoid circumvention of the price provisions of this Annex.
(a) The minimum price levels set out in this Article take account, in particular, of the current market situation, dairy prices in producing Parties, the need to ensure an appropriate relationship between the minimum prices established in the Annex, the need to ensure equitable prices to consumers, and the desirability of maintaining a minimum return to the most efficient producers in order to ensure stability of supply over the longer term.
(b) The minimum prices provided for in paragraph 1 applicable at the date of entry into force of this Agreement are fixed at:
(i) US$1,200 per metric ton for the skimmed milk powder defined in Article 2(a);
(ii) US$1,250 per metric ton for the whole milk powder defined in Article 2(b);
(iii) US$1,200 per metric ton for the buttermilk powder defined in Article 2(c);
(iv) US$1,625 per metric ton for the anhydrous milk fat defined in Article 2(d);
(v) US$1,350 per metric ton for the butter defined in Article 2(e);
(vi) US$1,500 per metric ton for the cheese defined in Article 2(f).
(a) The levels of the minimum prices specified in this Article may be modified by the Committee, taking into account, on the one hand, the results of the operation
of the Annex and, on the other hand, the evolution of the situation of the international market.
(b) The levels of the minimum prices specified in this Article shall be subject to review at least once a year by the Committee. In undertaking this review the Committee shall take account in particular, to the extent relevant and necessary, of costs faced by producers, other relevant
economic factors of the world market, the need to maintain a long-term minimum return to the most economic producers, the need to maintain stability of supply and to ensure acceptable prices to consumers, and the current market situation and shall have regard to the desirability of improving the relationship between the levels of the minimum prices set out in paragraph 2(b) and the dairy support levels in the major producing Parties.
Adjustment of minimum prices
4. If the products actually exported differ from the pilot products in respect of the fat content, packaging or terms of sale, the minimum prices shall be adjusted so as to protect the minimum prices established in this Annex for the products specified in Article 2 of this Annex, according to the following provisions:
Milk fat content:
Milk powders. If the milk fat content of the milk powders falling under Article 1(a), excluding buttermilk powder8, differs from the milk fat content of the pilot products as specified in Article 2(a) and Article 2(b), then for each full percentage point of milk fat as from 2 per cent, the minimum price shall be adjusted in proportion to the difference between the minimum prices in force for the pilot products as specified in Article 2(a) and Article 2(b).9
Milk fats. If the milk fat content of the milk fat falling under Article 1(b) differs from the milk fat content of the pilot products as specified in Article 2(d) or Article 2(e) then, if the milk fat content is equal to or greater than 82 per cent or less than 80 per cent, the minimum price of this product shall be, for each full percentage point by which the milk fat content is more than or less than 80 per cent, increased or reduced in proportion to the difference between the minimum prices in force for the pilot products as specified in Article 2(d) or Article 2(e), respectively.
If the products are offered otherwise than in packages normally used in the trade, of a net content by weight of not less than 25 kgs. or 50 lbs., or for cheese, of not less than 20 kgs. or 40 lbs., respectively, as appropriate, the minimum prices shall be adjusted so as to reflect the difference in the cost of packaging relative to the cost of the type of package specified above.
Terms of sale:
If sold on terms other than f.o.b. from the exporting Party or freeatfrontier exporting Party10, the minimum prices shall be calculated on the basis of the minimum f.o.b. prices specified in paragraph 2(b), plus the real and justified costs of the services provided; if the terms of the sale include credit, this shall be charged for at the prevailing commercial rates in the exporting Party concerned.
Exports and imports of skimmed milk powder and buttermilk powder for purposes of animal feed
5. By derogation from the provisions of paragraphs 1 to 4, a Party may, under the conditions defined below, export or import, as the case may be, skimmed milk powder and buttermilk powder for purposes of animal feed at prices below
the minimum prices provided for in this Annex for these products.
A Party may make use of this possibility only to the extent that
it ensures that the products exported or imported are subjected
to the processes and control measures which will be applied in
the country of export or destination so as to ensure that the
skimmed milk powder and buttermilk powder thus exported or imported are used exclusively for animal feed. These processes and control measures shall have been approved by the Committee and recorded in a register established by it.11 A Party wishing to make use of the provisions of this paragraph shall give advance notification of its intention to do so to the Committee which shall meet, at the request of any Party, to examine the market situation. The Parties shall furnish the necessary information concerning their transactions in respect of skimmed milk powder and buttermilk powder for purposes of animal feed, so that the Committee may follow developments in this sector and periodically make forecasts concerning the evolution of this trade.
Special conditions of sales
6. Parties undertake, within the limit of their institutional possibilities, to ensure that practices such as those referred to in Article 4 do not have the effect of directly or indirectly bringing the export prices of the products subject to the minimum price provisions below the agreed minimum prices.
Transactions other than normal commercial transactions
7. The provisions of paragraphs 1 to 6 shall not be regarded as applying to donated exports or to exports destined for relief purposes or food-related development purposes or welfare purposes, provided these have been notified to the Council as provided for in Article V of the Agreement.
Article 4: Provision of Information
In cases where prices in international trade of the products covered by Article 1 are approaching the minimum prices mentioned in paragraph 2(b) of Article 3, and without prejudice to the provisions of Article III of the Agreement, Parties shall notify to the Committee all the relevant
elements for evaluating their own market situation and, in particular, credit or loan practices, twinning with other products, barter or three-sided transactions, refunds or rebates, exclusivity contracts, packaging costs and details of the packaging, so that the Committee can make a verification.
Article 5: Obligations of Exporting Parties
Exporting Parties agree to use their best endeavours, in accordance with their institutional possibilities, to supply on a priority basis the normal commercial requirements of developing importing Parties, especially those used for foodrelated development purposes and welfare purposes.
Article 6: Cooperation of Importing Parties
1. Parties which import products covered by Article 1 undertake in particular:
(a) to cooperate in implementing the minimum price objective of this Annex and to ensure, as far as possible, that the products covered by Article 1 are not imported at less than the appropriate customs valuation equivalent to the prescribed minimum prices;
(b) without prejudice to the provisions of Article III of the Agreement and Article 4 of this Annex, to supply information concerning imports of products covered by Article 1 from non-Parties;
(c) to consider sympathetically proposals for appropriate remedial action if imports at prices inconsistent with the minimum prices threaten the operation of this Annex.
2. Paragraph 1 shall not apply to imports of skimmed milk powder and buttermilk powder for purposes of animal feed, provided that such imports are subject to the measures and procedures provided for in paragraph 5 of Article 3.
Article 7: Derogations
1. Upon request by a Party, the Committee shall have the authority to grant derogations from the provisions of paragraphs 1 to 5 of Article 3 in order to remedy difficulties which observance of minimum prices could cause
certain Parties. The Committee shall take a decision on such
a request within three months from the date of the request.
2. The provisions of paragraphs 1 to 4 of Article 3 shall not apply to exports, in exceptional
circumstances, of small quantities of natural unprocessed cheese
which would be below normal export quality as a result of deterioration or production faults. Parties exporting such cheese shall notify the Secretariat in advance of their intention to do so. Parties shall also notify the Committee quarterly of all sales of cheese effected under this provision, specifying in respect of each transaction the quantities, prices and destinations involved.
Article 8: Emergency Action
Any Party which considers that its interests are seriously endangered by a country not bound by this Annex can request the Chairman of the Committee to convene
an emergency meeting of the Committee within two working days to determine and decide whether measures would be required to meet the situation. If such a meeting cannot be arranged within the two working days and the commercial interests of the Party concerned are likely to be materially prejudiced, that Party may take unilateral action to safeguard its position, on the condition that any other Parties likely to be affected are immediately notified. The Chairman of the Committee shall also be formally advised immediately of the full circumstances of the case and shall call a special meeting of the Committee at the earliest possible moment.
Continue with Annex 4(c): International Dairy Agreement
1 In this Agreement and in the Annex thereto, the term "country" is deemed to include the European Communities as well as any separate customs territory Member of the World Trade Organization.
2 This provision shall apply only among Parties that are Members of the World Trade Organization.
3 For those Parties which have not yet implemented the Harmonized System, the following Customs Co-operation Council Nomenclature applies with respect to Article II of this Agreement and Article 1 of the Annex:
|Milk and cream, fresh, not concentrated or sweetened
|Milk and cream, preserved, concentrated or sweetened
|Cheese and curd
4 It is confirmed that the term "matter" in this paragraph includes any matter which is covered by Multilateral Trade Agreements annexed to the Agreement Establishing the World Trade Organization, in particular those bearing on export and import measures.
5 For the purpose of this Agreement, the term "government" is deemed to include the competent authorities of the European Communities.
6 This provision shall apply only among Parties that are Members of the WTO or GATT.
7 Derived from the manufacture of butter and anhydrous milk fat.
8 As defined in Article 2(c) of this Annex.
9 See Attachment B , "Schedule of Price Differentials According to Milk Fat Content".
10 See Article 2 of this Annex.
11 See Attachment C, "Register of Processes and Control Measures". It is understood that exporters would be permitted to ship skimmed milk powder and buttermilk powder for animal feed purposes in an unaltered state to importers which have had their processes and control measures inserted in the Register. In this case, exporters shall so inform the Committee.