RESTRICTEDWORLD TRADE
ORGANIZATIONG/C/M/41
22 November 1999
(99-5059)
Council for Trade in Goods
MINUTES OF THE MEETING
Held in the Centre William Rappard
on 15 October 1999
Chairperson: Ambassador R. Farrell
The meeting of the Council for Trade in Goods  was convened by WTO/AIR/1189. The
proposed agenda contained in do cument G/C/W/164 was adopted.
_______________
1. Status of Notifications under the Provisions  of the Agreements in Annex 1A of the
WTO Agreement (G/L/223/Rev.3) ......................................................................................2
2. Trade Facilitation  – Status Report on work carried out under Paragraph 21 of the
Singapore Ministeria l Declaration ......................................................................................2
3. Understanding on the Inte rpretation of Article XVII of GATT 1994 - Adoption of
an illustrative list of relationships between governments and state trading
enterprises and the kinds of activities en gaged in by these enterprises (G/STR/4).........3
4. Regional Trade Agreements.................................................................................................3
5. Market Access Matters........................................................................................................ .4
A. C OMMITTEE ON MARKET ACCESS   - PERIODIC REPORT OF THE COMMITTEE .......................4
B. H ARMONIZED SYSTEM – REQUESTS FOR EXTENSIONS OF WAIVERS ......................................5
C. Z AMBIA – RENEGOTIATION OF SCHEDULE LXXVIII  -  R EQUEST FOR AN EXTENSION OF
THE WAIVER ............................................................................................................................5
D. D ECISION ON THE INTRODUCTION OF THE HARMONIZED SYSTEM CHANGES IN WTO
SCHEDULES OF TARIFF CONCESSIONS ON 1 JANUARY 1996 -  E XTENSION OF THE
TIME -LIMIT ..............................................................................................................................5
6. TRIMs Agreement -  Request by the Philippines for extension of the transition
period pursuant to Article 5.3..............................................................................................6
7. Review of the Operation of the TRIMs Agreement.........................................................10
8. Consideration of Annual Reports of Subsidiary Bodies of the Council for Trade in
Goods.......................................................................................................................... ..........11
9. Adoption of the Annual Report of the Council for Trade in Goods to the General
Council ........................................................................................................................ .........12G/C/M/41
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1. Status of Notifications under the Provisions of the Agreements in Annex 1A of the WTO
Agreement (G/L/223/Rev.3)
1.1 The Chairman recalled that the Council adopted, at its meeting of 15 October 1996, a
recommendation by the Working Party on Notification Obligations and Procedures to maintain on an
ongoing basis the comprehensive listing of notification obligations under the provisions of the
Agreements in Annex 1A of the WTO Agreemen t and the compliance therewith.  The sixth update
was contained in document G/L/223/Rev.3, which included all notifications made up to and on
30 June 1999.
1.2 The representative of  India noted that the document that had been issued by the Secretariat
contained information with respect to notifications made under the Decision on Notification
Procedures for Quantitative Restrictions and that it had been tabulated in the last column with
reference to the requirements of document G/L/59.  In  the interest of obtaining full transparency, she
requested to seek confirmation from the EC and US delegations whether they maintained any
quantitative restrictions on textiles and clothing products other than those notified to the TMB. She
appreciated that the EC and US delegations were not able to give clarification at the meeting andrequested them to give a written response instead.
1.3 The representative of Slovenia raised the same matter.  He said that his delegation had not
provided this notification because it was unclear whether it should have been notified again under the
Textile Agreement.  Slovenia did not maintain any other QRs but it was still not clear if thenotification should be repeated in this case or should be just made by  giving reference to that
notification.  If this was the case then their delegation would provide such a notification in a very
short time.  The Secretariat representative noted this document was a compilation of notifications,
including notifications that were made under other agreements (to the relevant Divisions of theSecretariat)  and thereby collecting the information in one document.  Therefore, there were nospecific or separate additional notifications to be made to the Market Access Division under the
various obligations that existed.
1.4 The Council took note of the statements made, and the information contained in document
G/L/223/Rev.3.
2. Trade Facilitation  – Status Report on work carried out under Paragraph 21 of the
Singapore Ministerial Declaration
2.1 The Chairman recalled that at the last meeting of the CTG on 2 July 1999, a draft status report
of the Council for Trade in Goods on work carried out on trade facilitation under paragraph 21 of the
Singapore Ministerial Declaration – contained in document G/C/W/156 – had been presented for
adoption.  Two delegations were not able to support a consensus on the adoption of that text at thatmeeting and it was agreed that the Council would continue work towards the adoption of the draft
status report.  The Chairman suspended the formal  meeting of the Council in order to allow for an
informal exchange regarding the adoption of the dr aft status report (G/C/W/156) on the basis of his
proposed  changes to paragraphs 56-58.  He said that the adoption of the report, as specifically
indicated in paragraph 12 of the draft status report, would be without prejudice to decisions by theCTG on the question of future work on trade facilitation.  Being simply a status report which provided
background information and which did not contain any recommendations to the General Council, it
would not in any way prejudge positions taken by Members in the General Council on preparations
for the Seattle Ministerial Conference. Followin g the informal discussion, he resumed the formal
meeting of the CTG and proposed adoption of the draft status report, contained in documentG/C/W/156 with the agreed changes to paragraphs 56-58.G/C/M/41
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It was so agreed.
3. Understanding on the Interp retation of Article XVII of GATT 1994 - Adoption of an
illustrative list of relationships between gov ernments and state trading enterprises and the kinds
of activities engaged in by  these enterprises (G/STR/4)
3.1 The Chairman said that paragraph 5 of the Understanding on the Interpretation of
Article XVII of GATT 1994 mandated the Working Pa rty on State Trading Enterprises to develop an
illustrative list showing the kinds of relationships between governments and state trading enterprises,
and the kinds of activities engaged in by these enterprises, which may be relevant for the purposes of
Article XVII.  The Working Party on State Trading Enterprises had developed such a list – based on
Article XVII notifications made since 1980 – which was approved at the Working Party's meeting of
27 July 1999 and circulated as document G/STR/4 on 30 July 1999.  Members could find theIllustrative List useful in guiding their notification decisions and in conjunction with the new
questionnaire approved by the Working Party and adopted by the Council in April 1998.  He proposed
that the Council adopt the text of the Illustrative List contained in document G/STR/4.
It was so agreed.
4. Regional Trade Agreements
4.1 The Chairman drew Members' attention to the agreements listed under this item that had been
notified under Article XXIV.  The texts of the agreements had been circulated in the documents listed.
He said that he would follow the approach used at the  last meeting of the CTG in July with a view tostreamlining work  without encroaching on opportuni ties for delegations to make comments as they
wished.  He therefore  proposed to ask for comments on the agreements and then ask  Members  to
adopt the terms of reference for all agreements at once rather than for each one.   Before he invited
delegations to take the floor,  he informed th e Council that following consultations with the EFTA
states, he would postpone consideration of item 4C  - the interim agreement between the EFTA statesand the PLO - to a future meeting of the Council.  He then proceeded in the order in which the
agreements were  listed with the exception of item 4C:
A. FREE TRADE AGREEMENT BETWEEN ISRAEL AND POLAND
- NOTIFICATION FROM THE PARTIES TO THE AGREEMENT
(WT/REG65/N/1 AND WT/REG65/1)
B. AGREEMENT BETWEEN POLAND AND THE GOVERNMENT OF DENMARK
AND THE HOME GOVERNMENT OF THE FAROE ISLANDS
- NOTIFICATION FROM THE PARTIES TO THE AGREEMENT
(WT/REG78/N/1 AND WT/REG78/1)
D. FREE TRADE AGREEMENT BETWEEN POLAND AND LATVIA
- NOTIFICATION FROM THE PARTIES TO THE AGREEMENT
(WT/REG80/N/1 AND WT/REG80/1)
E. FREE TRADE AGREEMENT BETWEEN THE KYRGYZ REPUBLIC AND
KAZAKHSTAN
- NOTIFICATION FROM THE KYRGYZ REPUBLIC (WT/REG81/N/1
AND WT/REG81/1)
F. FREE TRADE AGREEMENT BETWEEN AZERBAIJAN, ARMENIA, BELARUS,
GEORGIA, MOLDOVA, KAZAKHSTAN, THE RUSSIAN FEDERATION,
UKRAINE,UZBEKISTAN, TAJIKISTAN AND THE KYRGYZ REPUBLICG/C/M/41
Page 4
- NOTIFICATION FROM THE KYRGYZ REPUBLIC (WT/REG82/N/1
AND WT/REG82/1)
4.2 As there were no comments, he proposed th at the Committee on Regional Trade Agreements
carry out the examination of the above listed agreements in accordance with the following terms ofreference:
"to examine, in light of the relevant provisions of the GATT 1994,  the Free Trade
Agreements  - Free Trade Agreement Between Israel and Poland; Agreement between
Poland and the Government of Denmark and the Home Government of the Faroe
Islands; Free Trade Agreement between Poland and Latvia; Free Trade Agreement
between the Kyrgyz Republic and Kazakhstan; Free Trade Agreement betweenAzerbaijan, Armenia, Belarus, Georgi a, Moldova, Kazakhstan, the Russian
Federation, Ukraine, Uzbekistan, Tajikistan and the Kyrgyz Republic - and to submit
a report to the Council for Trade in Goods".  It is understood that the understanding
read out by the Chairman of the CTG under item 7 of the agenda of the meeting of
the CTG on 20 February 1995, as contained in document WT/REG3/1, will applymutatis mutandis  to the examination of the agreements.  It is also understood that,
during the examination, due account will be taken of the intrinsic differences between
customs unions and free-trade areas.
4.3 The Council  so agreed.
5. Market Access Matters
A. COMMITTEE ON MARKET ACCESS   - PERIODIC REPORT OF THE COMMITTEE
5.1 The Chairman of the Committee on Market Access introduced the report contained in
document G/MA/71.  He said that in accordance with the agreed procedures of the Committee on
Market Access regarding the transmission of factual data related to requests for extension of waivers,
a draft report had been  circulated in document G/MA/SPEC/12 and was examined by the Market
Access Committee at its meeting of 5 October 1999.  Following that meeting, the report was revised
taking into account the discussions that took place at that meeting and issued as document G/MA/71.
The report summarized the activities of the Committee since its last report to the Council, made in
June 1999 and reflected in Annexes I and II the reasons why certain Members whose waivers expired
on 31 October 1999 had requested a further extension of their waivers.  This was mainly to concludeongoing consultations or to finalize the preparation of the required documentation.  The report also
gave a summary of the activities carried out in the context of the modalities and operation of the
Integrated Data Base (IDB) and indicated that as of 27 September 1999, sixty-five Members and three
acceding countries had provided IDB submissions.  At the meeting on 5 October, the Secretariat had
also provided a report on the status of proces sing of IDB submissions, the status of software
development and the technical assistance activities that have been carried out thus far.  Additionally,
at the June meeting of the Committee, Singapore on behalf of the APEC Market Access Group
(MAG) had submitted for Members' consideration a request for an APEC internet mirror site of the
Integrated Database.  At the meeting of 5 October,  Singapore, on behalf of the APEC MAG, informed
the Committee that the MAG had decided that there was no need anymore to request this mirror siteof the IDB.  Finally, the Committee noted the status of submissions of HS96 documentation based on
document G/MA/TAR/2/Rev.20 and the status of notifications of quantitative restrictions based on
document G/MA/NTM/QR/1/Add.6.  The Committee took note of the report presented by the
Secretariat on the progress of work on the Consolidated Loose-Leaf Schedules Database Project.  The
Committee also adopted its annual report for 1999.  The CTG took note of the report.G/C/M/41
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B. HARMONIZED SYSTEM – REQUESTS FOR EXTENSIONS OF WAIVERS
5.2 The Chairman drew attention to the co mmunications from Bangladesh, Nicaragua and
Sri Lanka containing requests for an extension of waivers which were going to expire on
31 October 1999.  These requests for waiver extensions had been made in the context of the
transposition of these Members' schedules into  the Harmonized System, and in accordance with
paragraph 1 of the Understanding in respect of Waivers of Obligations under the General Agreement
on Tariffs and Trade 1994.  Pursuant to Article IX of the WTO Agreement, these requests for waivers
were before the CTG for its consideration;  draft decisions had been circulated to assist the Council in
its consideration of these requests.
(i) Bangladesh
5.3 The request from Bangladesh had been circulated in document G/L/324 and a draft decision
in document G/C/W/162.  The Council agreed to approve an extension of the waiver for Bangladesh
until 30 April 2000, and recommended that the draft decision contained in document G/C/W/162 beforwarded to the General Council for adoption.
(ii) Nicaragua
5.4 The request from Nicaragua had been circulated in document G/L/320 and a draft decision in
document G/C/W/160.  The Council agreed to approve an extension of the waiver for Nicaragua until
30 April 2000, and recommended that the draft decision contained in document G/C/W/160 beforwarded to the General Council for adoption.
(iii) Sri Lanka
5.5 The request from Sri Lanka had been circulated in document G/L/321 and a draft decision in
document G/C/W/161.  The Council agreed to approve an extension of the waiver for Sri Lanka until
30 April 2000, and recommended that the draft decision contained in document G/C/W/161 be
forwarded to the General Council for adoption.
C. Z
AMBIA – RENEGOTIATION OF SCHEDULE LXXVIII  -  R EQUEST FOR AN EXTENSION OF THE
WAIVER
5.6 The Chairman said that the request by Zambia had been circulated in document G/L/329 for
an extension of a waiver granted to it in connection with the renegotiation of its schedule, together
with a draft decision in document G/C/W/163.  The Council agreed to approve an extension of the
waiver for Zambia until 30 April 2000, and recommended that the draft decision contained in
document G/C/W/163 be forwarded to the General Council for adoption.
D. DECISION ON THE INTRODUCTION OF THE HARMONIZED SYSTEM CHANGES IN WTO
SCHEDULES OF TARIFF CONCESSIONS ON 1 JANUARY 1996 -  E XTENSION OF THE TIME -LIMIT
5.7 The Chairman said that the General Council had adopted successive decisions, thereby
suspending the application of the provisions of  Article II of GATT 1994 until 31 October 1999, for
the purpose of enabling Members to implement the recommended amendments of 1996 to the
Harmonized System nomenclature.  He drew the Council's attention to the draft decision, contained in
document G/MA/W/21/Rev.1, which proposed to extend this time-limit until 30 April 2000.  The
annex to this draft decision listed Members who had requested this extension or who had requested tobe covered by the decision.  The purpose was to give Members more time to proceed with
consultations or possible Article XXVIII negotiations.  He informed Members that since the
document was issued, Bolivia had requested to be included in this list.G/C/M/41
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5.8 The representative of Japan welcomed that several Members had recently terminated their
verification process.  This had been achieved through the dedicated efforts made be each Member
concerned and Japan highly commended these efforts.  Although there had been some significant
progress in the verification process, the problem still existed.  It was regrettable that Members wereagain brought to discuss the extension of HS96 waivers in the Council meeting.  The matter had been
discussed for five years already.   The year 1999 was drawing to a close  and it was regrettable that
the CTG was still unable to finalize the 1996 HS problems.  The WTO was said to be a ruled-based as
well as being a Member-driven Organization.  It was clear that tariff schedules as a whole made up
one of the basic legal documents of the WTO and that it was only the Members themselves who could
solve this problem.  It was a matter of the credibility of the WTO.  Japan had repeatedly expressed its
serious concern on this issue and  believed that all other Members understood and shared this concern.His delegation could, this time, go along with the proposal of an extension of the waivers for another
six months, in the sincere hope that   this extension would be the last one.
5.9 The Council took note of the statement made and agreed to approve the extension of the
waivers until 30 April 2000, and recommended that the draft decision granting an extension of these
waivers, contained in document G/MA/W/21/Rev.1, which would be revised to include Bolivia in the
annexed list,  be transmitted to the General Council for adoption.
6. TRIMs Agreement -  Request by the Philippines for extension of the transition period
pursuant to Article 5.3
6.1 The Chairman said that in document G/L/325 the Philippines had circulated a request for the
extension of the transition period for some of its TRIMs notified under Article 5.1 of the TRIMs
Agreement.  He recalled that Article 5.3 of that Agreement stated:   "On request, the Council for
Trade in Goods may extend the transition period for the elimination of TRIMs notified under
paragraph 1 for a developing country Member, including a least-developed country Member, whichdemonstrates particular difficulties in implementing the provisions of this Agreement.  In considering
such a request, the Council for Trade in Goods shall take into account the individual development,
financial and trade needs of the Member in question."
6.2 In introducing the request, the representative of the Philippines said that his Government
pursuant to Article 5:3 of the Agreement on TRIMs  requested  an extension of the transition period
referred to in Article 5.2 for the Motor Vehicle Development Programmes which were notified under
Article 5.1 of the same agreement.  The Philippines requested an extension of the transition perioduntil 31 December 2004.  He was aware that this request came at a time when related issues were
currently being discussed in the preparatory process for Seattle.  The Council should  consider this
request on the basis of its merits, de-linked from the dynamics of the preparatory process.  The motor
vehicle industry of the Philippines would have partic ular difficulties in phasing out the TRIMs at this
point in time.  These difficulties were not a result of a lack of commitment on the part of thePhilippines in respect of their rights and obligations under the WTO.  They were simply due to the
economic vagaries that came to bear heavily on the Philippine economy in 1997 and 1998 and whose
effects continued to linger with almost devastating effects.  The Philippines exerted all possible efforts
to adjust structurally to its obligations under TRIMs.  As one of the significant reforms in the motor
vehicle industry, import and investment restrictions were relaxed beginning in 1990.  As a result,more foreign participants entered the industry.  By October 1995, imports of completely built-up units
(or CBUs) were allowed.  At the same time, the Philippines implemented a highly accelerated phase
of tariff liberalization for the motor vehicle industry. The tariff for CBUs was greatly reduced.  Today,
the tariff stood at 40% for passenger cars.  With Executive Order No. 264 of 1995,  tariffs were cut on
buses and vans from a peak of 45% to 25%.  Today, tariffs on completely knocked down units (orCKDs) of passenger cars, commercial vehicles a nd motorcycles were anywhere from 3% to 10%.
Many would consider this trade regime an open one in the Asian  part of the world.  Because of theseG/C/M/41
Page 7
measures imports of CBU, semi-knocked down units (or SKDs) and CKDs had grown from
$375 million in 1990, to $1.03 billion in 1995.  But the Asian financial crisis had exacted its costs.
The motor vehicle and parts market of the Philippines had contracted significantly.  From a domestic
market of a little over 350,000 units of motor vehicl es in 1996, the market had shrunk to just around
153,896 units, or by more than half.  On account of pervasive weakness in demand, imports amountedto only $245 million as of July this year.  This situation was heavily compounded by, ironically, the
liberalization of the industry which had collided with the financial crisis.  With many players in
assembly operations, including new ones, economies of scale among the original equipment
manufacturers (or OEMs), for example, had been adversely affected.  Compounded by the 40%
depreciation of the Philippine Peso, import costs had increased significantly.  Even the Philippine
export level, which had already reached $1 billion in 1997, was severely affected primarily because its
main markets were also seriously affected by the cr isis.  Today, capacity utilization in the Philippine
motor vehicle industry was down to just 40%.  Also , the government could not help but be seriously
concerned about the human dimension.  The parts manufacturing sector, which consisted of 256
companies, had a workforce of 44,715 people before the crisis.   Directly because of the crisis, 4,754
workers had already been laid off.  His authorities dreaded to anticipate that another 10,000, by early
next year, would be retrenched essentially on account of the obligations under the TRIMs Agreement,unless of course, by a miraculous feat, the low capacity utilization rate in the industry would quickly
reverse itself.  This had to be assessed in light of the diminished capability of government to provide
adequate social safety nets, as the effects of the crisis had not been confined to this industry alone.  He
could not over-emphasize the grave social, economic , and even political consequences this problem
would wreak on his country.  The Philippines purs ued with vigour and confidence further structural
adjustment measures, including of course in the trade regime and the softer side of trade policy, that
is, in the area of human resource development.  This played an important role in any quest for higher
competitiveness.   This involved programs on capab ility enhancement, skills training, and information
development coupled with efforts to attract technological improvements that effectively
complemented market opening measures.  The Philippines also aimed to complete a motor vehicleinspection system that, in due course, would allow liberalization to extend even into the used vehicle
industry.  The problem was timing, and he believed that the solution was also one of timing.  He had
faith that the Council would collectively pay due attention to opinions often articulated in the WTO
about looking after the interests of workers, and operationalizing WTO provisions to fully address the
unique trade, financial and development needs of developing countries.  The Philippines assured the
Council that it stood ready to engage – fully – in consultations with Members, with a view to
concluding such consultations before the expiry of the transition period.
6.3 The representative of  Malaysia, speaking on behalf of the delegations of Brunei Darussalam,
Indonesia, Singapore, Myanmar and Malaysia, supported the request submitted by the Philippines for
an extension of the transition period of the notified TRIMs for a period of 5 years.  This request had
been made by the Philippines on the basis of its development, financial and trade needs and reflectedan urgent need for an extension.  Members would note that the request had been made
notwithstanding the serious efforts made by the Philippines to phase out the notified TRIMs.  He
urged his colleagues to grant this request.
6.4 The representative of the European Community  had taken note of the Philippines request as
well as the explanations given. It was with an open mind that his delegation  would consider the
request, pursuant to procedures which the TRIMs Committee had yet to establish.  He said that his
delegation was open to any suggestions or ideas regarding the most appropriate methodology for such
an assessment, stressing the fact that transparency vis-à-vis  Members was of special importance.
Lastly, he stressed, as had others before him,  that in the present circumstances the Philippines would
be in violation of their commitments as of 1 January 2000.  It was therefore important for the Councilto be able to take an expeditious decision on this matter.G/C/M/41
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6.5 The representative of the United States said that his  authorities would study the statement
made by the Philippines.  He stated that the United States had been asking for information concerning
Members' plans for implementation of the TRIMs Agreement for almost two years and that, as had
been indicated in recent months in the TRIMs Committee, time was running out. His delegation
would give prompt and thorough  consideration to this request made by the Philippines on an
individual basis.  Regarding the most appropriate approach to handle such requests, there were a
variety of models within the WTO with differing degrees of formality.  At this point in time  it was
important to bear in mind both time and resource constraints.  Preparations for Seattle meant that
resources would be very scarce for a time-consuming, formal process and establishing the process
itself could easily become an exercise that postponed attention to the real problem at hand.  From the
point of view of Members requesting additional time to come into compliance, delays in the
resolution of the problem until after the deadline would come into effect would place them in asensitive legal position.  He suggested that the Philippines engage in informal consultations with
interested Members rather than start a formal process by the TRIMs Committee or the CTG.
Members seeking an extension could invite interested delegations,  as the Philippines had just done, to
meet with them.  The requesting party would have th e opportunity to explain their situation to those
interested parties.  This informal group could enter into an immediate exchange of information andnegotiation at a pace appropriate to the needs of the Members concerned with a view to resolving the
issue as expeditiously as possible.  The solution would then be presented to the CTG for approval.  He
hoped that an informal exchange, limited to interested Members, would promote a frank exchange of
information and streamline the negotiation while not tying up the entire TRIMs Committee or the
CTG.   To  conclude, his delegation was not in a position to agree to the Philippine request but lookedforward to discussing it with that delegation and other interested Members in the near future.
6.6 The representative of Switzerland said his authorities were studying the Philippines' request.
His delegation could join in the informal procedures suggested by the United States but nevertheless
wanted to indicate that it had problems with the time-period of the waiver requested, particularly as a
five year period of extension would place the Philippines in a better position than least developedcountries (LDCs).
6.7 The representative of Hong Kong, China  said that as a general principal he believed that each
application made under Article 5.3 should be considered on its own merits and handled in a
transparent manner.  In the interest of consistency across cases, he suggested that whatever
generalized criteria were drawn up by the Council to facilitate examination of the Philippines' request,
their application should be carried out in a non-discriminatory and transparent manner.
6.8 The representative of  Japan said his delegation had repeatedly expressed the view in the
TRIMs Committee that the timely elimination of TRIMs was essential and a core factor of the
Agreement.  On the other hand, the article in question stated that those countries who demonstrated
particular difficulties in the elimination of the TRIMs could appeal to the CTG for extension of the
transition period.  The Philippines was the first country which had explicitly made a request.  Therequest followed exactly what was required in Article 5.3 of the Agreement. The Philippines had
explained that they had faced serious economic difficulties in the aftermath of the Asian economic
crisis, a situation with which he sympathised.  However, the sector for the Philippines had requested
an extension was  a sector in which Japan had a great interest and it was therefore necessary  to look
closely at the request. As had been stated by the representatives of the US, the EC and Switzerland,his delegation also wished to consult on this matter with the Philippines expeditiously as the time-
limit was approaching.
6.9 The representative of  Malaysia , in response to the delegation of Switzerland, wondered how
LDCs had come into this question. It was stipulated clearly in Article 5.3 that any consideration of an
extension request should be based on the merits of the applicant's trade, financial and developmentG/C/M/41
Page 9
needs. The question of the transition period for LDCs should not have any bearing on requests by
developing countries and he  hoped the Swiss delegation would rethink its position on this question.
6.10 The representative of Canada thought it important that the elimination of TRIMs happened in
a timely fashion.  That said, Article 5.3 did  provide for the request of extensions and he  thanked the
Philippines for its request and for its transparency in that process.  As others had stated before him,
his delegation was willing to enter into informal co nsultations to explore the Philippines' request for
an extension of the transition period.  It should be clear that this willingness to enter into these
discussions was without prejudice to Canada's  position within those discussions.
6.11 The representative of Mexico stated that the Philippines request was under study in capital
and his authorities looked at it with a great deal of sympathy.  Mexico had a substantial interest in that
the Philippines notified in due time and in the proper form because Mexico would also be requiring anextension of the original time-period stipulated in the TRIMs Agreement.  His authorities had not
made such a request because,  as had been explained in the relevant body, they hoped that they would
not have to do so as they trusted that a solution could be found in Seattle.  Mexico had tabled a
proposal under the preparatory work for the Minist erial Meeting with this in mind.  Commenting on
other delegations' views, the representative of Mexico  pointed out that he disagreed with the view that
after 31 December 1999 Members who had requested the extension of the original period would be in
violation of the TRIMs Agreement.  He maintained that there would be a legal vacuum because it was
not clear who would be at fault if the CTG did not respond to a request.  Would the Council be at fault
because it had not responded in one way or another to the request made by a Member or would the
Member concerned be at fault even if it had submitted the request before the end of the originalperiod.  This was another reason why it would be better to solve this issue at Seattle.  Secondly, he
said that the country requesting an extension  was free to hold as many informal,  bilateral
consultations as it wanted.  While every delegation was free to participate, this was not an obligation.
If, however, the CTG decided to hold informal consultations mandated by the Members to examine
how such requests should be dealt with in the light of Article 5.3 of the TRIMs Agreement, then therewas an institutional obligation for the consultations to be open-ended.   The representative of Korea
said that his delegation  intended to participate in formal or informal consultations on this matter inthe future.
6.12 The representative of India stated that she had conveyed the request to her capital and was
awaiting  instructions. India  had emphasized on numerous occasions that it was important for
Members to assess whether the TRIMs Agreement had helped build up strong developing countryenterprises that were able to compete in the world markets for all goods and services.  India had
much sympathy for the request of the Philippines.   She addressed two systemic concerns: first, she
agreed fully with the statement of Malaysia as regards transition periods under TRIMs for developing
countries in comparison to least developed countrie s;  secondly as regards the US idea that the
informal consultations that it had proposed to the Philippines should limited to a few delegations, herdelegation believed that in the absence of well-established track records on granting extensions, it was
even more important that the consultations were held in a fully open and transparent manner.
6.13 The representative of Argentina said that like other delegations his authorities were looking at
the request with sympathy.  He thought that an extension for developing countries should be virtually
automatic and he would cooperate with the delegate of the Philippines to find a solution.  Hisdelegation also did not understand what had been said by Switzerland concerning the difference
between developing countries and least developed countries as far as transition periods were
concerned.  The question of the extension of the transition period for TRIMs was also being discussed
in other fora in the WTO, including the General Council  as part of the preparatory process of Seattle
and he endorsed in this respect the statement of the Mexican delegation.  As India had said,consultations should be open to all Members and should be transparent.G/C/M/41
Page 10
6.14 The representative of the United States  reiterated his position that if TRIMs, which had been
notified by 31 March 1995, had not been eliminated by 1 January 2000, countries which continued to
use those TRIMs would be in violation of the Agreement.  His delegation was firmly opposed to any
suggestion of a blanket extension of the transition period.  The Council was discussing individual
extensions and in this regard the Philippines had taken the proper course.
6.15 The representative of Brazil said his authorities were evaluating the option of requesting an
extension.  The Brazilian position concerning this issue was well known: that there should be a level
playing field among developing countries in what concerning TRIMs.
6.16 The Chairman said that it was important to give proper attention to the request from the
Philippines delegation and to take note of the statements made on the subject.  He proposed two
elements in order to proceed:   it would be constructive for the Philippines to enter into a dialogue
with other interested delegations, to exchange info rmation and perhaps even negotiate with some with
a view to assisting in the presentation of a solution for approval by the CTG.  At the same time the
CTG had a responsibility to carry out consultations; he therefore  asked for a mandate from the
Council to hold informal consultations on this request at an appropriate time.  In summary he
proposed that the Council take note of the comments made, that it welcome any informal
consultations that the Philippines might wish to engage in  and finally that it mandate  the Chair toarrange informal consultations at an appropriate time on this request.
6.17 The representative of the Philippines agreed to the modalities that  had been proposed and
invited delegations to get in touch with his delegation.  As concerned the legal obligations of the
Philippines posed by the 31 December 1999 deadline he hoped that the Council could  come to an
early conclusion on this request preferably before 31 December.
6.18 The Chairman enquired whether his suggested approach  was agreeable to the Council.
It was so agreed.
7. Review of the Operation of the TRIMs Agreement
7.1 In quoting from Article 9 of the TRIMs agreemen t, the Chairman said that:  "Not later than
five years after the date of entry into force of  the WTO Agreement, the Council for Trade in Goods
shall review the operation of this Agreement and, as appropriate, propose to the Ministerial
Conference amendments to its text.  In the course of this review, the Council for Trade in Goods shall
consider whether the Agreement should be complemented with provisions on investment policy and
competition policy."  He understood that in previous informal discussions in the TRIMs Committeethe view had been expressed that, in order to meet the deadline stipulated in Article 9, this review
should be launched before the end of 1999.  He recalled that at the last meeting of the Council he had
indicated that this matter would be placed on the agenda of this meeting.
7.2 The representative of the European Community  felt it was necessary to take into account
recent developments in the General Council  discussions on the TRIMs Agreement and suggested
awaiting the results of the Seattle Ministerial meeting in this regard.   The representative of
Hong Kong, China said he welcomed all options and deliberations on the question of how to proceed
in this question, keeping in mind how the benefits of foreign and direct investment could be enhancedfor developing country Members.  On the other hand with the increasing globalization of productionand growth in the share of intra-firm trade, it was necessary to address the implications of the
interaction between trade and investment, includin g a review of other elements which could affect
such interaction such as investment incentives, export requirements and restrictions on FDI etc.  Apart
from the TRIMs review there existed  other possible multinational rules -  for example the GATS -
where further investment liberalization could  be pursued.G/C/M/41
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7.3 The representative of Japan recalled that the review was to cover both the operation of the
Agreement as it stood as well as consideration of whether provisions on investment and competition
policy should be incorporated. These issues pertaining to the TRIMs Agreement review process were
related to the Seattle Ministerial process and he agreed with the view stated by the EC.
7.4 The representative of  Mexico  agreed  that both preparations for the Ministerial Conference
and the process imposed upon Members by Article 9 had to be taken into account.  He suggested that
a useful  way to proceed would be to start the review process at this meeting and then the  Chairman
could hold informal consultations with Members no earlier than the 3 December 1999 which should
allow Members time to clear up any uncertainties.
7.5 The representative of the Philippines agreed with Japan and Mexico.  The representative of
Canada suggested that  a good starting-point would be  to simply conduct a factual review at this stage
leading to a factual report. As regards the other issues under discussion, he concurred that they should
be left to the future.  The representative of the United States  also favoured an approach of waiting to
see what happened in Seattle. The representative of  Switzerland had previously expressed support for
the review of the operation of the TRIMS Agreement starting before the end of 1999 and endorsed theapproach that was emerging.  The representative of Brazil  sought clarification as to how the process
would work in practice.
7.6 The Chairman noted that through the meeting the CTG had met its  responsibility of formally
launching the review before the end of the year.  He said that all comments were noted and
observations that had been made including those about related events and circumstances and he
proposed that in the light of the observations  the CTG should revert to the matter at its first meeting
the  year 2000.   It was so agreed.
8. Consideration of Annual Reports of Subsidiary Bodies of the Council for Trade in
Goods
8.1 The Chairman said that pursuant to the "Procedures for an annual overview of WTO
Activities and for reporting under the WTO" (WT/L/105) which were adopted by the General Council
on 15 November 1995, all bodies constituted under agreements in Annex 1A of the WTO Agreement
are required to submit annually a factual report to the Council for Trade in Goods, and the Council
was to take note of these reports
8.2 The Council agreed to take note of the following reports (without discussion):  Committee on
Agriculture (contained in document G/L/322); Committee on Customs Valuation (G/L/323);
Committee on Market Access (G/L/331); Committee on Rules of Origin (G/L/326); Committee on
Sanitary and Phytosanitary Measures (G/L/315);  Committee on Technical Barriers to Trade
(G/L/327);  Independent Entity of the Preshipment Inspection Agreement (G/L/330); Committee onTrade-Related Investment Measures (G/L/319);  Committee of Participants on the Expansion of Trade
in Information Technology Products (G/L/332).   In the following cases the Council took note of
draft or interim reports: Committee on Import Licensing  (G/LIC/W/12);  Working Party on State
Trading Enterprises  (G/STR/W/36);  Committee on  Anti-Dumping Practices(informal document
with job No. 5970); Committee on Safeguards (job No. 5969); Committee on Subsidies andCountervailing Measures  (job No.  5972).
8.3 The Council also agreed to take note of the re port of the Textiles Monitoring Body (G/L/318).
The representative of India  noted that the report contained a reference to the TMB's consideration of
a new restriction by the US against certain imports from Turkey.  She said that the issue was
considered on a number of occasions and that there had been a delay in notifying this restriction.
While her delegation welcomed the decision of the TMB to take up this matter and review it as a
positive development, she hoped that the examination of the measure could be expedited.G/C/M/41
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9. Adoption of the Annual Report of the Co uncil for Trade in Goods to the General
Council
9.1 The Chairman drew the Council's attention to the draft report of this Council circulated in
document G/C/W/159.  He recalled that in accordance with the "Procedures for an annual overview of
WTO Activities and for Reporting under the WTO" (WT/L/105) which was adopted by the GeneralCouncil on 15 November 1995, it was agreed that "The respective sectoral Councils should report in
November each year to the General Council on the activities in the Council as well as in the
subsidiary bodies" and that the reports of the sectoral Councils should be "factual in nature, containing
an indication of actions and decisions taken, with cross references to reports of subordinate bodies and
could follow the model of the GATT 1947 Council report to the CONTRACTING PARTIES".  The
draft report before Members covered the period starting from 1 December 1998 to 15 October 1999.
9.2 The Council agreed to adopt the report subject to the updating to take account of the Council's
work at the ongoing meeting.
9.3 Under Other Business  the Chairman   drew the Council's  atte ntion the "Understanding on the
Interpretation of Article XXVIII of the GATT 1994" which stated in paragraph 1 that, "For the
purposes of modification or withdrawal of a concession, the Member which has the highest ratio of
exports affected by the concession (i.e. exports of the product to the market of the Member modifying
or withdrawing the concession) to its total exports shall be deemed to have a principal supplying
interest if it does not already have an initial negotiating right or a principal supplying interest as
provided for in paragraph 1 of Article XXVIII".   It further stated that, "this paragraph will bereviewed by the Council for Trade in  Goods five years from the date of entry into force of the WTO
Agreement (i.e. in the year 2000) with a view to deciding whether this criterion has worked
satisfactorily in securing a redistribution of negotiating rights in favour of small and medium-sized
exporting Members.  If this is not the case, consideration will be given to possible improvements,
including, in the light of the availability of adequate data, the adoption of a criterion based on the ratioof exports affected by the concession to exports to all markets of the product in question".    In order
to ensure that the CTG meet its responsibility and in itiate the review that is called for, it was the
Chairman's intention to place this matter on the ag enda of the first meeting of the CTG in the year
2000.  He invited delegations to communicate to him or the Secretariat any suggestions they might
have in this regard.
9.4 Second, the calendar of meetings for next year was  in the process of being drawn up. It was
too early to propose a precise date but, depending on the way the agenda evolved, he was considering
either late January or March 2000 for the next mee ting of the CTG.  A more precise suggestion would
be made in due time.
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