. /.WORLD TRADE
ORGANIZATIONWT/GC/W/363
12 October 1999
(99-4314)
General Council Original:  English
PREPARATIONS FOR THE 1999 MINISTERIAL CONFERENCE
Proposals Regarding Article XVIII:A and C of the General Agreement
on Tariffs and Trade 1994 in Terms of Paragraph 9(a)(i) of
the Geneva Ministerial Declaration
Communication from India
The following communication, dated 4 October 1999, has been received from the Permanent
Mission of India.
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Issue
1. Article XVIII on Governmental Assistance to  Economic Development recognizes that the
attainment of the objectives of the GATT will be facilitated by the progressive development of the
economies of developing country Members, particularly those the economies of which can only
support low standards of living and are in the early stages of development.  It recognizes that it may
be necessary and justifiable for such Members to take protective or other measures affecting imports
in order to implement programmes and policies of economic development designed to raise the
general standard of living.  It was accordingly agreed that additional facilities should be provided tothem to enable them, inter alia , to “maintain sufficient flexibility in their tariff structure to be
able to grant the tariff protection required for the establishment of a particular industry." 
1
2. Sections A and C of Article XVIII lay out special procedures to deal, respectively, with
modification or withdrawal of concessions included in such Member’s Schedule, and those cases
where there may be circumstances where no measure consistent with the provisions of the WTOAgreement is practicable, to permit such Member to promote the establishment of a particular
industry with a view to raising the general standard of living of its people
3. These provisions are intended to recognize that it would be more difficult for Members with
limited resources at their disposal or depending on primary production to rely exclusively on
measures consistent with the WTO Agreement in order to solve the problems that may arise from theimplementation of their programmes of economic development.
4. Accordingly, a Member coming within the scope of paragraph 4(a) of Article XVIII
proposing to modify or withdraw a concession incl uded in the appropriate Schedule shall enter into
                                                     
1 According to Note Ad Article XVIII, the reference to the establishment of particular industries shall
apply not only to the establishment of a new industry, but also to the establishment of a new branch ofproduction in an existing industry and to the substantial transformation of an existing industry, and to thesubstantial expansion of an existing industry supplying a relatively small proportion of the domestic demand.  It
shall also cover the reconstruction of an industry destroyed or substantially damaged as a result of hostilities or
natural disasters.WT/GC/W/363
Page 2
negotiations with any Member with whom such concession was initially negotiated and with any
other Member determined to have a substantial interest therein.  In case agreement is not reached
within sixty days after notification provided under Section A:7(a) or Section C:14 as the case may be,
the Member can, apply to the WTO Members, acting jointly, for approval of it proposed modification
or withdrawal of concession or its specific measure affecting imports. As a result of theirconsultations, as laid out in paragraph 7(b) or 16 of Article XVIII, as relevant, the WTO Members,
acting jointly, under specified circumstances could release the concerned Member from its obligations
under the relevant provisions of the WTO Agreement to the extent necessary to apply that measure.
5. The key issue is that while the WTO Members, acting jointly, can concur in the measure,
even if no agreement is reached within 60 days of the notification of the proposed measure, in order to
adequately safeguard the interests of other relevant Members, the Member concerned may be required
to make additional concession during such time as the deviation from other provisions would remainin force or to face temporary suspension by these other Members of a concession substantially
equivalent to the impairment due to the introduction of the measure in question.
6. The ability of a Member in the process of development of its economy to offer additional
concession or to face temporary suspension of a concession substantially equivalent to the impairment
is limited. Furthermore, it is important that developing country Members are actually enabled toextend governmental assistance to domestic industry beyond the earliest stages of manufacturing and
to nourish more advanced competitive industry. However, the compensation requirements are so
onerous, and the threat of suspension of concessions so real, that these provisions have had little or no
practical effect in promoting particular industries w ith a view to raising the general standard of living
of the people in developing countries. Accordingly, few Members have had recourse to ArticleXVIII:A or C.  The 1999 Trade and Development Report of the UNCTAD observes “such
examination is particularly desirable in respect of Article XVIII, sections A and C, of GATT 1994,
where the compensation requirements are so onerous that they are likely to nullify the very intent of
the article, which is to allow developing countries to promote new industries.”
Proposal
7. In order to ensure that a developing country Member is enabled to grant tariff protection and
to take specific measures affecting imports aimed at promoting the establishment of a particular
industry under Article XVIII:A or C, it is proposed th at for the purposes of paragraph 7(b) and 18(b)
of Article XVIII, as the case may be, it shall be sufficient for WTO Members, acting jointly, to concur
in the proposed measure if they are satisfied that all reasonable efforts have been made by the
concerned Member to reach an agreement with any relevant Members.
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