WTO Members reach consensus on the final decision on Bali tariff rate quota underfill mechanism

WTO members reached an important agreement on 31 March which will help address continued “underfill” of tariff rate quotas (TRQs) on agricultural imports. The decision by the General Council marks the end of long discussions on unfinished business related to the 2013 Understanding on Tariff Rate Quota Administration, also known as the Bali TRQ Decision, which was adopted at the WTO’s 9th Ministerial Conference in Bali, Indonesia.

The chair of the General Council, Ambassador Didier Chambovey of Switzerland, welcomed the achievement: “I would like to congratulate all members for their pragmatism and constructive spirit, which facilitated arriving at the solution. This is the spirit that will characterize our work, and I’m grateful to all for this positive action.”

The chair of the Committee on Agriculture, Mr Marcos Da Rosa Uranga (Uruguay), also hailed the far-reaching impact of the hard-won success after all WTO members reached consensus on a deal at the Committee on Agriculture meeting on 29 March. This agreement “not only contributes to the fulfilment of a longstanding ministerial mandate in paragraphs 13-15 of the Bali TRQ Decision but also instils confidence in the capacity of members to collectively agree on decisions by consensus,” he said.

Tariff rate quotas (TRQs) allow imports of certain agricultural goods to be imported at lower duties up to a specified amount, with increased duties applied to amounts over the limit. The mechanism was agreed as a means of allowing exporters some access to other countries’ markets when the normal tariffs on imports are high. The 2013 Understanding seeks to address cases where importing members’ quotas are persistently underfilled.

In view of high agricultural tariffs, TRQs remain an important medium to access agricultural markets, with more than 1200 TRQs forming part of market access commitments in the WTO schedules of 41 members.

However, members’ average fill rate of all WTO TRQs during 2014-2019 stood at 53%. Based on the Secretariat study of September 2020, close to 200 TRQs, with fill rate below 65%, could have theoretically been subject to the Bali TRQ Decision underfill mechanism in the year 2018.

Matters related to TRQ administration and underfill have been routinely forming an important part of the Committee’s Q&A-based discussions. By strengthening the TRQ underfill mechanism, this agreement provides members with an additional tool to deal with specific concerns related to governmental administration mechanisms diluting market access under TRQ commitments.

The “unfinished business” addressed by the General Council decision concerned future operation of paragraph 4 of the Bali TRQ Decision on the underfill mechanism, setting out importing members’ obligations in the “final” stage of the mechanism for ensuring prompt and unencumbered access for exporting members to underfilled quotas.

WTO members were able to reach an agreement on several elements on transparency and notification practices to improve the utilization of tariff quotas during a 2017-19 review of the implementation of the Bali TRQ decision. However, they could not agree on how the final stage of the underfill mechanism should work.

Members achieved a breakthrough at a reconvened 100th meeting of the Committee on Agriculture on 29 March, removing all remaining obstacles to a deal on the underfill mechanism. The draft deal was transmitted to the General Council (G/AG/32/Add.1) for its consideration and approval.