RESTRICTEDWORLD TRADE
ORGANIZATIONG/C/M/35
30 July 1998
(98-3030)
Council for Trade in Goods
8 July 1998
MINUTES OF THE MEETING
Held in the Centre William Rappard
on 8 July 1998
Chairperson:  Mr. R. Saborío Soto
The meeting was convened by WTO/AIR/874.  The proposed agenda contained in
document G/C/W/117 was adopted, with the inclusion of item 4 under "Other business" and thewithdrawal of the item on "Trade Facilitation".
__________
Page
1. Continuation of the Harmonization Work Programme provided
for in Part IV of the Agreement on Rules of Origin
- Report by the Committee on Rules of Origin (G/RO/25)  .......................... 1
2. Notification by Colombia under Section C of Article XVIII
of the GATT 1994 (WT/COMTD/N/8 and Corr.1)
- Communication by the Unit ed States (G/L/248)................................................. 6
3. Free Trade Agreement between Turkey and Lithuania
- Notification by Turkey (WT/ REG61/N/1, WT/REG61/1) ........................ 8
4. Date of the ne xt meeting ........................................................................... 8
_______________
1. Continuation of the Harmonization Work Programme provided for in Part IV of the
Agreement on Rules of Origin
- Report by the Committee on Rules of Origin (G/RO/25)
1.1 The Chairman of the Committee on Rules of Origin (CRO), Mr. R. Wells, introducing the
report of the Committee on Rules of Origin (G/RO/25), stated that the Harmonization Work
Programme (HWP), in accordance with Article 9.2(a) of the Agreement on Rules of Origin, was
officially launched on 20 July 1995, and was scheduled for completion by 20 July 1998, as theAgreement envisaged that the HWP should be completed within three years of its initiation.  During
the last three years, the CRO and the Technical Committee on Rules of Origin (TCRO) had been
working very hard and substantial progress had been made as indicated in the Committee's report.
However, at its meeting of 29 May 1998, the Committee had concluded that, in light of the
complexity of issues and the remaining heavy workload, the HWP could not be finalized byG/C/M/35
Page 2
20 July 1998.  The Committee had also decided to make a report to this Council on this issue
explaining the situation and making recommendations and proposals on the continuation of the HWP.
In the report, Members committed themselves to make their best endeavours to complete the HWP by
November 1999.  In addition, the Committee recommended that:  the CRO, in cooperation with  the
TCRO, should continue the work identified in Articles 9.2(c) and 9.3 of the Agreement, in accordance
with the indicative future work programme set out paragraphs 5 and 6 of document G/RO/25;  the
Chairman of the TCRO would report to each meeting of the CRO on the progress achieved in the
Technical Committee;  the Technical Committee would submit the results of its work on overall
architecture to the CRO in January 1999.  It woul d submit the final result of its work to the
Committee by the end of May 1999 for final consideration by the Committee, and the latter would
report to the Council for Trade in Goods on the progress of work in February, June and October 1999.
In June 1999 the Committee would review the status of the HWP and make a recommendation on a
deadline for completing that work.
1.2 In brief, the recommendations included a fixed deadline for completion of the work of the
TCRO (May 1999), and a review of the status of the work by the CRO in June 1999 with a view to
setting a final deadline for completing the HWP.  The CRO had also proposed to work under a strict
discipline, with future work programmes for bo th the Committee and the Technical Committee. The
recommendations and proposals of the CRO were contained in paragraphs 4 to 6 of
document G/RO/25 for approval by the Council for Trade in Goods.
1.3 The representative of India stated that as mandated under Article 9.2(a) of the Agreement, the
work relating to the harmonization of rules of origin, to, inter alia , provide more certainty in the
conduct of world trade, was to have been completed within three years of initiation, i.e. by July 1998.
However, because of a variety of reasons, some of which had been brought out in the above-referred
communication, the work was yet to be completed.  While India agreed that the work was both
complex and time-consuming, India still felt that if a greater effort had been made and if more
cooperation forthcoming, Members would now perhaps be in a better position. It was also unfortunatethat the non-compliance of a mandated deadline came so soon after the Geneva Ministerial
Conference where Ministers had specifically reaf firmed their commitment to adhere to mandated
guidelines.
1.4 India's basic concern in the delay in the HWP stemmed from the fact that certain rules of
origin regimes which had been adopted by Members during this intervening period were
trade-distorting.  This was in spite of the fact that Article 2 of the Agreement set out the obligations of
Members in this period. This Article specifically provided that the rules of origin of Members during
this transition period should not be used as instruments to pursue trade objectives and that they should
not by themselves create restrictive, distorting or disruptive effects on international trade.  India had
hoped to see a change in these rules with the early completion of the HWP.
1.5 It was in view of these concerns that his delegation since the beginning of this year had been
striving, in cooperation with other Members having similar concerns, to ensure that this work was
completed by the mandated deadline.  However, when India realized that in spite of these best efforts
it was not to be, it had proposed a short and firm extension of the mandated deadline.  India had  felt
that if both the TCRO and the CRO continued with the momentum which had been generated duringthe last few months, the work could be definitely completed by the end of 1998.  India had also felt
that since the Agreement had mandated the completion of this work within a specific time-frame,  any
extension of this deadline should also be for a specific and firm period.  India had no hesitation in
adding that a very large percentage of Members, with whom the Chairman of the CRO had informal
consultations, had also similarly preferred the option of a firm deadline.
1.6 In spite of these concerns, India had agreed to an extension of the HWP based on a best
endeavour clause to ensure that this work would be completed by November 1999.  However, thisG/C/M/35
Page 3
was on the hope and understanding that Members would complete the work by November 1999 so
that no further extension would be required. Moreov er, India understood that the TCRO was to finally
complete its work by May 1999, and that residual issues, if any at that stage, would be transmitted to
the CRO.  He wished to reiterate that during this transition period Members had to adhere strictly to
Article 2 of the Agreement which  provided that Members should not adopt such rules of origin which
might by themselves restrict or distort trade.  This was extremely important from the perspective of adeveloping country, exports from many of which were currently being affected by such regimes.
1.7 Before he concluded,  he wished to state that India was pleased that the CRO had in the
period between September and December 1998 scheduled a consideration of the “Implications of the
implementation of the harmonized rules of origin on other WTO Agreements”.  This was an issue
which his delegation had been repeatedly pressing for.   The CRO had to seek clarity with regard to the
implications of the main harmonization proposals on the provisions of various WTO Agreements.However, this was a complex task and developing countries with limited resources might find it
difficult to address all these issues comprehensively.  India had accordingly proposed that the
Secretariat prepare an analysis paper on the impact of the main proposals of rules of origin in the
textile and clothing sector.  India was of the view th at such an analysis would help in bringing out the
implication of the harmonization proposals as they might affect market access, origin markingrequirements, anti-subsidy measures etc.  Such an an alysis would also be helpful in ensuring that the
rules of origin that the CRO was considering were neutral as far as their trade effect was concerned.
India and a number of developing countries had in this context already submitted papers which had
brought out the likely benefits of such an analysis paper by the Secretariat.
1.8 While most Members seemed to agree with this approach, some Members had been of the
view that this work would be better carried out by considering all sectors together.  India, however,
continued to feel that the textile sector was unique, especially since textile products involved
multi-country processing, fabrication and assembly depending upon the comparative advantage that
each country had.  This was also one sector that was subject to a large number of quantitativerestrictions and frequent application of anti-dumping measures.  These measures were already
affecting even the limited access available under MFA inherited bilateral quotas. It was in this context
that India had been pressing for technical assistance from the WTO Secretariat.  At no stage had India
sought any interpretation on the WTO Agreements from the Secretariat.  This was a right of the WTO
Members alone – a right which India has zealously guar ded.  He therefore wished to reiterate that the
Secretariat should prepare such an analysis paper since this would help future discussion of the CRO
in building up of a common view regarding the future disciplines and in reconciling some of the most
significant divergences in proposals for product-specific rules of origin.
1.9 His delegation had felt it important to highlight the concerns that it had in the delay in
finalizing the HWP.  He hoped that all Members, while agreeing to an extension of the time-frame,
would in the coming months demonstrate the n ecessary political will to conclude the HWP by
November 1999.
1.10 The representative of the United States stated that there was no doubt that the harmonization
work was important.  Since the beginning of this work three years ago, the United States had worked
very hard to ensure that adequate progress was being made, especially with regard to the conduct ofthe technical work being done at the World Custom s Organization (WCO).  Unfortunately, more time
was needed.   Under the terms of the Agreement, the technical aspects of the harmonization work
should have been completed last autumn.  A substantial amount of this important and often complex
technical work remained to be done. It was apparent from the experience of the past year that
completion of the technical work was important to ensure that effective deliberations at the WTOcould take place.  The United States supported the programme developed by the CRO for its future
harmonization work, because it specifically recognized the numerous elements that had to be
addressed in order to achieve completion of the work.  The deadlines the Committee had placed uponG/C/M/35
Page 4
itself for periodically reporting its progress to the Council would serve to maintain momentum, while
at the same time recognizing the complex challenges and practicalities involved.  The United States
would join other Members in working hard to ensure a successful harmonization effort.
1.11 The representative of Hong Kong, China stated that as one of the early proponents of the
Agreement on Rules of Origin, Hong Kong, China attached great importance to the completion of the
HWP.  This would require a massive effort by all Members, and close cooperation between the TCRO
and the CRO.  Hong Kong, China supported the pr oposed work programme put forward by the CRO.
It represented a fine balance between the need for a more definite time-frame and the need for a
quality product.  Hong Kong, China, hoped that the work programme would sustain the momentum of
the HWP.  This was important because there was still much to do in terms of product-specific rules,
overall architecture and section, chapter and residual rules.  Hong Kong, China urged all Members to
renew the commitment to complete the HWP according to the proposed work programme, to continueto exercise political will and more flexibility in consensus-building.  On its part, Hong Kong, China
would continue to accord high priority and to devote adequate resources for this important work.
1.12 The representative of New Zealand stated that his delegation was also one which was
disappointed by the lack of a firm deadline for completing the HWP.  Rules of origin was one of those
areas of the WTO where Members could truly make a concrete contribution to the overall objectives
of this organization of facilitating the expansion of trade and a more liberal trading environment.
New Zealand hoped that the best endeavours undert aking that Members were making would lead to
the completion of the work by the end of 1999.
1.13 The representative of Korea believed that Members' devotion to the harmonization work on
rules of origin had been demonstrated through their continuous support for clearer and more
predictable rules of origin, which were necessary in order to improve and facilitate international trade.
He also believed that such a goal should be achieved as soon as possible.  Therefore, despite
Members' inability to complete this work before the original deadline, the momentum should be keptgoing.  Although Korea shared the view that there was some degree of uncertainty in the future work,
it could be overcome with the setting of a reasonable time-limit and with a willingness to complete the
work in time.  For this reason, a firm deadline was preferred by his delegation.  In most cases the
time-limit had proven a driving force behind the prompt conclusion of work.  This was Korea’s basic
position on this issue.  However, in order to avoid a deadlock, Korea had willingly decided to goalong with the consensus.  The commitment to ma ke the best endeavour to complete the work by
November 1999 was not binding, but Korea hoped that the job would be accomplished as committed.
1.14 The representative of Pakistan noted with regret the extension of the deadline regarding
completion of the HWP as in the interim it meant that some developing countries would suffer
because of changes made in the rules of origin by some WTO Members.  In spite of that, and in a
spirit of compromise, Members had agreed to a new deadline which was on a best endeavours basis,and Pakistan's only hope was that the deadline would be adhered to.
1.15 The representative of Switzerland stated that rules of origin were an important element of
international trade.  Differences in these rules could impact on trade and distort trade flows.  In a
world of decreasing tariffs, the efforts made so far by the competent expert bodies in the WCO andWTO to harmonize these rules was all the more important.  Without harmonized, non-preferential
rules of origin, tariff liberalization would not yield the expected results in terms of increased trade and
welfare.  Furthermore, the worrying practice of using rules of origin as an instrument of protection
would still be tolerated.  Against this background, Switzerland saw the completion of the HWP as a
very important contribution to trade facilitation which should be a guiding principle of all workconducted in this organization.  Switzerland noted with satisfaction that despite the complexity of the
subject-matter, substantial progress had been made to reach this goal.  Nonetheless, Switzerland
regretted that the deadline fixed by Ministers could not be met because certain key policy issues couldG/C/M/35
Page 5
not be solved within that time-frame.  The report  of the CRO gave the assurance that this process
would continue, and that concrete results would be reached by the end of June 1999 with the best
endeavour commitment to complete the HWP by November 1999.  Switzerland would have preferred
an earlier date, and was of the opinion that an earlier date would still be possible.  Switzerland was
committed to finalizing these negotiations within the framework now proposed, and took this work
programme seriously.  Switzerland reaffirmed that an open-ended negotiating process was notacceptable, as it would not only hinder the removal of obstacles in international trade but also
undermine the credibility of the commitments undertaken by WTO Members regarding the
implementation of the Marrakesh Agreements as well as the commitments pledged in Singapore and
at the recent Ministerial Conference in Geneva.  In the view of his delegation, the commitment to
finalize the HWP should not only be a commitment on a date, but rather a commitment by all
Members to take the decisions which would permit a consensus being reached on substantive and
political issues which were still pending.  Should Members fail collectively to do so before the thirdsession of the Ministerial Conference, then Members would send a very negative signal in the context
of the preparation of further liberalization within the WTO framework including negotiations which
also required consensus.
1.16 The representative of Norway wished to emphasize the importance his delegation attached to
the successful completion of the HWP.  In this respect it was with regret that Norway noted that the
CRO and the TCRO had not been able to meet the deadlines specified in Article 9.2(a) of the
Agreement due to the unforeseen complexity of the issues.  He stressed the continued commitment of
his delegation to work with other Members towards the completion of the HWP by the next
Ministerial Conference.
1.17 The representative of Colombia stated that his delegation felt frustrated that Members were
unable to meet the deadline for the completion of the HWP.  This was a particularly sensitive matter
for countries with few resources. Since the beginning of the work a great deal of time and resources
had been invested in this task, and any extension brought with it additional costs, and disturbed thenormal course of activities to which such countries would otherwise have dedicated themselves.  If
the objectives had not been achieved on a technical level, on a political level Members witnessed a
blockage in progress due to a lack of flexibility and an unwillingness to come to a compromise.
Therefore Colombia made an appeal that in a matter of such importance to trade, Members be more
flexible and pragmatic.
1.18 The representative of Canada noted that his delegation was the first to raise the issue of
whether or not Members could realistically meet the deadline already set out and ensure a high quality
product.  What his delegation had meant by a high quality product were harmonized rules of origin
that were also transparent, predictable and neutral.  Rules which facilitated trade and reduced the
burden on traders and also reduced the burden and the discretion of customs officials. In the
discussion that followed thereafter with regard to the work programme itself, Canada had expressed aview that it did not believe that at this point in ti me it would be responsible, realistic or prudent to set
a definite deadline for the CRO.  The reason was very simple. There was a lot of work that still
needed to be done by the TCRO.  Until all that work was completed Members were not in a position
to make a decision or recommendation on a firm deadline.  However, in the consensus that emerged
such a deadline was set for the TCRO.  Its work w ould be submitted by June 1999 whether or not it
was complete and this in turn would enable Members to make a recommendation on a realistic
deadline for the CRO.
1.19 Canada was committed to the best endeavour clause and to working with all Members in the
work programme in both the CRO and the TCRO as set out in the report of the Committee.  This wasgoing to require an effort by everyone.  It was going to require flexibility and it was going to require
Members, as best they could, to make contributions  not just to advance their own positions but also to
contribute to the entire process of the negotiations.  These contributions would include taking on theG/C/M/35
Page 6
rôle on occasions of rapporteurs, if further plurilaterals were held, and submitting papers which went
beyond those areas that they were distinctly interested in to take on general matters.  So the political
commitment by all needed to go beyond simply seeking a deadline, but also to contributing to the
process as Members moved towards completing the work.
1.20 The representative of Mauritius noted that the harmonization work on rules of origin was
extremely complex and time-consuming, and very often went beyond the reach of many developing
countries.  Therefore, he was pleased to see that technical assistance in this area had become
accessible to all Members.  During the discussion on the HWP, his delegation had been given to
understand that even a few developed countries had sought assistance from the WTO Secretariat and
the WCO.   He hoped that all Members would wo rk towards achieving the much desired results.
1.21 The representative of Cuba stated that his delegation could accept the new work programme
in a spirit of compromise but regretted that the initial time-table was not respected as the current
situation was prejudicial to the export interest of developing countries. Cuba also supported the
proposal made by India requesting the Secretariat to carry out a technical analysis of the impact of
rules of origin and other disciplines such as subsidies, countervailing and antidumping duties in the
textile and clothing sector.
1.22 The representative of Argentina  stated that his delegation felt  frustrated that Members were
unable to meet the mandated deadline but was pleased with the commitment to make best endeavours
to conclude the work during the course of the next year.  At the same time his delegation was satisfied
at having set a deadline for the work of the TCRO.  This was very important in order to ensure thatwork on harmonization of rules of origin was successfully concluded. He agreed with those
delegations which felt more comfortable with setting a firm deadline for the completion of the
harmonization work.
1.23 The Council took note of the statements, approved
 the proposals and recommendations
contained in the report of the Committee on Rules of Origin in document G/RO/25, and forwarded
them to the General Council for adoption.
2. Notification by Colombia under Section C of Article XVIII of the GATT 1994
(WT/COMTD/N/8 and Corr.1)
- Communication by the United States (G/L/248)
2.1 The representative of the United States stated that Colombia had recently notified the WTO
that it intended to invoke Article XVIII: C for the purpose of imposing quantitative restrictions on
imports of salt.  This notification was circulated on 30 April 1998. Article XVIII:C allowed that,
subject to a number of conditions and in limited circumstances, certain WTO Members might need to
take exceptional measures that would otherwise not be compatible with WTO obligations to promotethe establishment of a particular industry.   Article XXVIII, paragraph 13 laid out two fundamental
conditions that had to be satisfied before exceptional measures could be taken:  first the objective of
the action had to be to raise the general standard of living of its people; and second no measure
consistent with other WTO provisions was practicable to achieve that objective.  While her delegation
supported economic development, it was vital that the requirements of this exceptional provision beadhered to.
2.2 With respect to the measure notified by Colombia, the United States, on 29 May 1998, had
asked this Council to schedule multilateral consultations in accordance with Article XVIII, paragraph
16.  The United States had also requested bilateral consultations with Colombia in accordance withArticle XVIII, paragraph 18.  Her delegation renewed those requests.  To facilitate her delegation's
understanding of this measure and its application under Article XVIII, Section C,  it was interested inG/C/M/35
Page 7
exploring several questions and was prepared to do this first bilaterally before taking it up again in the
Council.
2.3 The representative of Colombia drew the Council's attention to the fact that the notification
was submitted to the Committee on Trade and Development and that it would be appropriate for any
explanations or answers to questions raised by WTO Members to be given in that forum.  Herecognized the right of Members to request that a to pic of interest to them be included in the agenda
of the Council, but it seemed rather unusual for a no tification to be examined in the first instance by a
body other than that which would normally be competent.
2.4 Colombia's review of the problems relating to the production and marketing of salt showed
that they were closely connected with the conditions of survival and development of a substantial
proportion of the indigenous population in a corner of Colombia's territory known as Guajira, wherethe land and the sea blend together and where the only possible productive activity is the manual
extraction of salt.  The rapid growth of imports of mechanically produced salt at prices much lower
than the local cost of production had confronted the indigenous community with a difficult situation
and the prospect of losing its source of income, with unfortunate social consequences, due to the
threat to the economic activity that underpinned their whole way of life as described by the legendarysaying according to which:  "Maleiwa (the Wayúu God of creation) created the sea and the land and
when the sea went into the land salt was formed, and He gave us Wayúu the job of harvesting it".
2.5 Before adopting the Article XVIII:C mechanism, the Colombian Government had carefully
examined all the other possibilities of solving the problem provided for by the GATT/WTO, butfound none of them suitable. Given the nature of the case, which was of more than purely commercial
significance and concerned the survival of Colombia's  indigenous population, as well as the fact that it
clearly satisfied the criteria of Article XVIII:C, the Government had drawn up a temporary import
restriction measure which, as the figures showed, would not lead to any injury.
2.6 As for the United States' call for consultations, he pointed out that to request consultations it
was necessary to be a substantial supplier (10 per cent of imports in the last three years), which was
not the case for the United States.  However, Colombia was ready to provide further details and
explanations to anyone who asked for them, either bilaterally or within the framework of the Council
on Trade and Development.
2.7 The representative of Australia stated that Australia did not have a direct commercial interest
in this issue, however, it did have a systemic interest in the use of Article XVIII:C, a WTO provision
that in recent years had been rarely if ever invoked.  His delegation would welcome the opportunity to
discuss its systemic concerns bilaterally with Colombia or multilaterally. Australia had read the
Colombian notification carefully, and  appreciated the development concerns. However, it did seem
from a preliminary examination that there would be other WTO measures that could be used to meetthe concerns of the Colombian Government.
2.8 The representative of the European Communities stated that his delegation understood and
respected the important social considerations which was underlying this notification by Colombia.
Equally his delegation did have an interest in this question, and he supported the request made by theUnited States that Colombia should consult with the Council or in other ways individually as
appropriate with Council Members.
2.9 The representative of Japan stated that his delegation had a certain understanding about the
use of Article XVIII, especially Section C and requested the Colombian delegation to elaborate the
relationship between the planned measure and the raising of general living standards.  This was
Japan's first concern.G/C/M/35
Page 8
2.10 The representative of Cuba noted that the delegation of Colombia had raised a procedural
issue.  So before going into the substance of the issue and before requesting Colombia to fulfill its
consultation obligation, Members should determine whether the Council was the competent body or
whether the matter should be taken up in the Committee on Trade and Development where the
notification was submitted.
2.11 The Chairman proposed that for the present the Council take note of the statements.  He noted
that Colombia had indicated that it would be prepared to provide additional information on the
planned measure, and further noted that nothing prevented a delegation from requesting that an item
be inscribed in the agenda of a Council meeting.
2.12 The Council took note of the statements.
3. Free Trade Agreement between Turkey and Lithuania
- Notification by Turkey (WT/REG61/N/1 and WT/REG61/1)
3.1 The Chairman drew attention to the notification by Turkey circulated in document
WT/REG61/N/1.  The text of the Agreement ha d been circulated in document WT/REG61/1.
3.2 The representative of New Zealand, stating that his comment applied to many such
notifications made to the Council, said that the notification did not give much of a picture of what the
Free Trade Agreement actually amounted to.  It was a notification of the text, but did not give any
commentary on the nature of the Agreement and its coverage.  It might be useful for notifying
Members to reflect on the degree of further information that might be included in a notification.
Clearly those Members could not put all the details which would be contained in annexes or protocols
of the Agreement.  But it would be useful for other Members to see in a notification somecommentary on the nature of the Agreement, the extent to which certain areas of trade were covered
or not covered by the Agreement etc.
3.3 The Chairman proposed that the Council take note of the statement, and that the Committee
on Regional Trade Agreements carry out the examination of the Agreement in accordance with the
following terms of reference:
"to examine, in light of the relevant provi sions of the GATT 1994, the Free Trade Agreement
between Turkey and Lithuania and to submit a report to the Council for Trade in Goods".
3.4 It was understood that the understanding read out by the Chairman of the Council for Trade in
Goods under item 7 of the Agenda of the meeting of  the Council on 20 February 1995, as contained in
document WT/REG3/1, would apply mutatis mutandis  to the examination.  It was also understood
that, during the examination, due account would be taken of the intrinsic differences between customsunions and free-trade areas.
3.5 The Council so agreed.
4. Date of the next meeting
4.1 The Council took note that the next meeting was scheduled for 1 October 1998, and that the
agenda would close by close-of-business 17 September 1998.
__________