WORLD TRADE
ORGANIZATIONG/C/M/60
17 June 2002
(02-3345)
Council for Trade in Goods
MINUTES OF MEETING
Held in the Centre William Rappard on 2 and 7 May 2002
Chairperson:  Ambassador  Supperamaniam (Malaysia)
The meeting of the Council for Trade in Goods was convened by WTO/AIR/1781 and
Addendum 1.  Document G/C/W/371, contained the proposed agenda.  Discussion of Item 6 was
suspended and resumed on 7 May.
I. DOHA MINISTERIAL DECISION ON IMPLEMENTATION-RELATED
ISSUES AND CONCERNS:  REQUEST FOR THE CTG TO EXAMINE
PROPOSALS CONTAINED IN PARAGRAPHS 4.4 AND 4.5 RELATING TO
THE AGREEMENT ON TEXTILES AND CLOTHING (WT/ MIN(01)/17).....................2
II. REQUEST BY COSTA RICA;  INDIA;  INDONESIA;  PAKISTAN;  PERU
AND HONG KONG, CHINA:  CTG'S OVERSIGHT FUNCTION PURSUANT
TO ARTICLE IV OF THE AGREEMENT ESTABLISHING THE WTO –
TRANSPARENCY REGARDING NEW RESTRICTIONS ON TEXTILE AND
CLOTHING PRODUCTS COMMENTED ON BY THE TEXTILES
MONITORING BODY (G/C/W/260/REV.1) – A REPORT BY THE
CHAIRMAN....................................................................................................................... .......6
III. MAJOR REVIEW OF THE IMPLEMENTATION OF THE AGREEMENT ON
TEXTILES AND CLOTHING DURING THE SECOND STAGE OF THE
INTEGRATION PROCESS, PURSUANT TO  ARTICLE 8.11 OF  THE ATC .................8
IV. NOTIFICATION BY BANGLADESH UNDER SECTION C OF ARTICLE
XVIII OF THE GE NERAL AGREEMENT ON TARIFFS AND TRADE 1994
AND THE DECISION OF 28 NOVEMBER 1979 ON SAFEGUARD ACTIONFOR DEVELOPMENT PURPOSES (G/C/7, G/C/8 AND G/C/ 9) .....................................10
V. REVIEW OF THE OPERATION OF THE TRIMS AGREEMENT UNDER
ARTICLE 9 (G/C/W /307 AND ADD .1) ................................................................................11
VI. REPORT BY THE CHAIRMAN ON CONSULTATIONS ON
IMPLEMENTATION ISSUES RELATED TO TRIMS ....................................................17
VII. MARKET ACCESS MATTERS ...........................................................................................18
A. COMMITTEE ON MARK ET ACCESS ..................................................................................18
- PERIODIC REPORT OF TH E COMMITTEE (G/MA/114)...................................................18
B. INTRODUCTION OF  HARMONIZED SYSTEM 1996 CHANGES INTO WTO
SCHEDULES OF TARIFF CONCESSIONS  – REQUESTS FO R A WAIVER.....................19
C. TRANSPOSITION OF SCHEDULES INTO THE HARMONIZED SYSTEM –
REQUESTS FOR AN EXTENSI ON OF THE WAIVER........................................................19G/C/M/60
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D. INTRODUCTION OF HARMONIZED SYSTEM 2002 CHANGES INTO WTO
SCHEDULES OF CONCESSI ONS (G/C/W/367)...................................................................19
E. ZAMBIA – RENEGOTIATION  OF SCHEDU LE LXXVIII ..................................................20
- REQUEST FOR AN EXTENS ION OF THE WAIVER..........................................................20
VIII. OTHER BUSINESS............................................................................................................ ....20
The Chairman said in a fax of 30 April 2002 he had informed delegations of his intention to
amend the proposed agenda in order to take account of the waiver requests from Panama and Zambia,
which, as agreed in the Committee on Market Access had been forwarded to the Council for Trade in
Goods together with the accompanying waiver decisions for action at this meeting.  He proposed
under Rule 7 of the Rules of Procedure amending the agenda as follows:  regarding Item 7(b) –Introduction of Harmonized System 1996 changes into WTO schedules of tariff concessions –
Requests for a waiver – the following line be inserted after Norway:  "Panama – Schedule CXLI
(G/L/518, G/C/W/354 and Corr.1)";  and adding item 7(E):  Zambia - Renegotiation of Schedule
LXXVIII - Request for an extension of the waiver (G/L/537, G/C/W/370).
With respect to documentation that was circulated less than ten days in advance of the
meeting, he proposed that the CTG take action in respect of such documentation under Rule 26 of the
Rules of Procedure.  This concerned the documentation relating to Zambia's waiver request under new
agenda Item 7(E) as well as document G/C/W/369 (Secretariat bibliography concerning textiles and
clothing) which he suggested adding to the documents listed under Item 1 of the agenda.
The Council agreed to proceed on the basis of the proposed agenda as amended in the way
proposed.
I. DOHA MINISTERIAL DECISION ON IMPLEMENTATION-RELATED ISSUES
AND CONCERNS:  REQUEST FOR THE CTG TO EXAMINE PROPOSALS
CONTAINED IN PARAGRAPHS 4.4 AND 4.5 RELATING TO THE AGREEMENT
ON TEXTILES AND CLOTHING (WT/MIN(01)/17)
1.1 The Chairman recalled that this agenda item related to the mandate set out in the Doha
Ministerial Decision on Implementation-Related Issues and Concerns for the Council for Trade in
Goods to examine two proposals concerning the Agreement on Textiles and Clothing, in
paragraphs 4.4 and 4.5.  Under this mandate, the Council was requested to make recommendations to
the General Council by 31 July 2002, for appropriate action.  He said that, as decided at the last
meeting of the CTG, he had conducted informal consultations in order to prepare for the examination
of these proposals.  During these consultations, a Member had requested statistical data and otherinformation to be used as background for the discussion.  These data and information had been
prepared and were contained in documents G/ C/W/366 and 369.  In addition, a communication had
been provided by Hong Kong, China on behalf of the ITCB members that are also Members or
observers of the WTO and this was in document G/C/W/368.
1.2 Before beginning the initial discussions of the two proposals, the Chairman proposed a
programme of informal consultations, to follow the present meeting, in order to further examine these
issues as well as other topics related to the ATC.  He proposed a total of five one-day meetings in
May and June, with the specific dates to be decided in the light of the general WTO programme of
meetings.  They would be scheduled in the weeks of:  13 and 27 May and 3, 17 and 24 June andwould be open to Members indicating their interest in participating.G/C/M/60
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1.3 The representative of Hong Kong, China, speaking also on behalf of the 24 members of the
International Textiles and Clothing Bureau (ITCB) which are also Members or observers of the WTO,
referred first to their submission (G/C/W/368), as well as to a compilation of statistical data on
developments in trade in textiles and clothing since 1994, which had been a request by theUnited States (G/C/W/366).  He reserved his comments on the data in this latter document, but did
remind the Council that, as pointed out by the United States during the CTG's second major review of
ATC implementation, that although "it was clear that imports had increased in the US market, this
could never be a pretext for failing to fulfil lega l obligations" (G/C/M/56, paragraph 95).  Also on the
topic of statistics, he recalled that his delegation had requested data relating to textile and clothing
imports into the US, EU and Canada from unrestrained WTO Members.
1.4 He then introduced the paper prepared by the ITCB members and set out in G/C/W/368,
which was intended to facilitate the Council's examination of the two proposals referred by Ministers
to the CTG.  He stressed that the two proposals constituted key elements among the unfinished
business of implementation-related issues and concerns raised by many developing country Members.
Textiles and clothing was an important sector of trade for developing countries, both for exportearnings and employment.  Progressive implementation of the ATC had, therefore, been eagerly
anticipated as perhaps the main area in which developing countries could hope to benefit from the
Uruguay Round.  Regrettably, the actual experience of implementation had failed to live up to
expectations.  He recalled that members of the ITCB, together with other developing country
Members, had consistently raised their concerns with respect to the implementation of the ATC andhad made a compelling case that, for the reasons summarized in the paper, the balance of rights under
the Agreement had been seriously impaired.  These arguments had been made repeatedly and they
clearly established the merit of their case.  He emphasized that the two proposals referred by Ministers
to the CTG fell within the existing framework and provisions of the ATC;  their adoption would not
require any modification in the Agreement or in the domestic legislation of the restraining Members.
1.5 The representative of Hong Kong, China further stated that the proposal in paragraph 4.4 of
the Doha Decision on Implementation-Related Issues and Concerns, with respect to small suppliers
and least-developed country Members involved correcting erroneous implementation of the relevant
ATC provisions by two restraining Members.  The proposal in paragraph 4.5 of the Doha Decision
was aimed at redressing the imbalance in the implementation process.  Only a few quota restrictions
had been eliminated by the restraining Members even after the passage of seven and a half years ofthe transitional period.  Access opportunities for restrained Members had been impeded by new
restrictions in violation of the provisions of the ATC, unjustified anti-dumping actions on products
already under quota restriction, changes in rules of origin, and other Customs and administrative
formalities.  The adoption of the two proposals would be fully in accord with the Ministers'
determination to make positive efforts to enhance market access for developing country Members,and would reinforce their confidence in the multilateral trading system.
1.6 He concluded that the approval and implementation of the market-enhancing proposals under
examination would go some way towards redressing the balance of rights and obligations under the
ATC and would facilitate its faithful implementation.  The Council had been given a clear andunambiguous mandate by Ministers to complete its deliberations and to make recommendations to the
General Council by 31 July 2002.  It was clear from the Doha Decision that Ministers had not rejected
the two proposals, as they had some others.  The logical inference was that Ministers had expected
some progress to be made.  Nearly six months had elapsed since the Doha Conference and the
Council needed to proceed urgently.  He looked forward to the constructive engagement of the
restraining Members in line with the spirit of the Doha Declaration.
1.7 The representative of Thailand, speaking also on behalf of Indonesia, fully supported the
views of the members of the ITCB.  The two proposals handed down by the Doha MinisterialG/C/M/60
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Conference for examination by the CTG and recommendations to the General Council by
31 July 2002 for appropriate action were straightforward and there should be no difficulty for the
CTG to endorse them.  She stated that the developing country Members had made tremendous
sacrifices and concessions during the Uruguay Round, particularly in accepting commitments in new
areas like TRIPS and Services.  The main gain for these Members was the Agreement on Textiles andClothing.  The Agreement was currently in the eighth year of its implementation, but with little
meaningful progress being achieved towards the achievement of its main objectives.  In fact, a
number of measures adopted by the restraining Members during this period had acted to impede
developing countries' access possibilities, tilting the balance of advantages away from them.  These
measures had been referred to on a number of occasions.  Of particular concern, however, was the
removal of quota restrictions on some non-WTO members, while maintaining them on WTO
developing country Members.  This was an obv ious disregard of the MFN principle and was
inconsistent with the ATC.  As a result, the promised progressive liberalization had not yet
materialized.
1.8 She emphasized that in their Declaration in Doha, Ministers had stressed the importance of
enhancing market access for developing country Members, and the role this could play in thepromotion of their economic development.  The two proposals were designed to provide such
enhancement in access possibilities and, therefore, were fully in accord with the wishes of the
Ministers.  Their adoption did not require any change in the ATC or in the domestic legislation of the
restraining Members.  She, therefore, strongly urged the CTG to recommend to the General Council
that these two proposals be approved as soon as possible.
1.9 The representative of India noted that, with respect to the implementation-related issues and
concerns regarding the ATC, the Ministerial Conference at Doha, under paragraphs 4.4 and 4.5 of its
Decision on Implementation-Related Issues and Concerns had requested the CTC to examine two
proposals and to make recommendations to the General council by 31 July 2002 for appropriateaction.  In this regard, he supported the joint submission of the ITCB members (G/C/W/368) and
hoped that it would facilitate considerat ion of the two proposals by the Council.
He explained that the origin of the two proposals lay in the implementation-related concerns with
respect to the ATC which had been expressed by the ITCB members and other developing countries.
This background needed to be kept in mind while examining these proposals.  Trade in textiles and
clothing was extremely important for developing  and least developed country Members, both for
export earnings and employment generation.  India,  along with other developing countries, had been
raising the issue of the lack of meaningful integration by major restraining Members under the ATC.
The integration programmes implemented by the importing Members might have conformed to the
narrow technical and legal requirements of the Agreement but had not been in line with its objective
and purpose.  It was obvious that the major importing Members had continued to backload theintegration process and the bulk of integration would take place only in the final phase of transition
period.  This process of backloading had negated the central objective of the ATC which was aimed at
progressive elimination of quota restrictions and liberalization of trade.
1.10 With a view to addressing the issue of a lack of meaningful integration, certain proposals had
been developed by the General Council in the form of recommendations to Ministers in order to
advance decisions on the implementation concerns on  textiles, including the two that had now been
referred by the Ministerial Conference to the CTG for examination and recommendation for
appropriate action, by 31 July 2002.  India was of the view that the implementation of the
advancement of the growth-on-growth provision for Stage 3 to 1 January 2000 would go some way inrestoring the balance of rights and obligations due to developing country Members under the ATC.
The proposal with respect to small suppliers and least-developed Members was also in line with the
letter and spirit as well as purpose of the relevant provisions of the ATC (Articles 1.2 and 2.18).  He
urged the CTG to make recommendations to the General Council for adoption of these two proposals.G/C/M/60
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1.11 The representative of Bangladesh, reflecting the views of the least developed country
Members, stated that he fully supported the views of the ITCB members and encouraged the adoption
of the two proposals referred by the Doha Ministerial Conference to the CTG.  He considered that the
Doha Ministerial Conference, in approving the Decision on Implementation-Related Issues andConcerns, had taken significant decisions, among them the proposal in paragraph 4.4 of the paper,
with respect to the market access possibilities fo r the least developed countries, where the CTG had
been given a special mandate.  He also recalled that Ministers had made a solemn decision at the
conclusion of the Uruguay Round that the various agreements and instruments would be applied in a
manner supportive of the least developed countries.
1.12 He said that the ATC provisions, particularly its Preamble and Article 1.2, in favour of least
developed countries, had not been implemented by two restraining Members, despite the
unambiguous commitments.  His delegation had repeatedly drawn attention to these and to the need
for full and faithful implementation of their provisi ons.  It was with a sense of deep frustration that he
found their request continuously being disregarded, without valid reason;  this clearly negated the
purpose and objectives of the Uruguay Round Agreements.  He emphasized that the issue inconnection with paragraph 4.4 was to give full effect to the ATC provisions and to the Ministerial
Decision on Measures in Favour of the Least-Deve loped Countries, so that these were not rendered
completely redundant by lack of action on the part of a few Members.  He urged the CTG to take
immediate action and to recommend the approval of the two proposals by the General Council.
1.13 The representative of China shared the views expressed by the ITCB and recalled the
predictions made at the end of the Uruguay Round that one-third of the benefits to be realized from
the expansion of world income from the implemen tation of the Uruguay Round Agreements would be
attributed to liberalization in textiles and clothing trade under the ATC.  However, this had not been
the case in reality.  Restraining, importing Memb ers had just met the technical requirements of the
Agreement and had adopted other measures to upset the balance under the ATC, such as rules of
origin changes, unjustified anti-dumping measures and the adoption of new restrictions in violation of
the ATC.  Therefore, in order to maintain developi ng Members' confidence in the multilateral trading
system and to encourage them to take an active part in the on-going negotiations under the Doha
Agenda, it was very important to respond positively and within the time-frame set out in the Doha
Ministerial Decision to the proposals now under exam ination.  She urged the CTG to take immediate
action to adopt the proposals before it.
1.14 The representative of Guatemala expressed support for the ITCB submission and stressed the
importance of the proposals under examination.  As the proposals had come from the Ministerial
Conference at Doha, they should be accorded the high est priority in the Council's work.  Also, as they
had been raised in the earlier General Council discussions on implementation-related issues, theCouncil needed to take into account all of the argu ments which had been made in that process.  That
information would be very useful in taking decisions in the current examination.  These proposals
were of crucial importance for market access, for developing countries and for the least-developed
countries and would definitely increase the confidence that those Members should have in the
multilateral trade system.  He supported the Chairman's proposal for a series of informal sessions.
1.15 The representative of Pakistan recalled that it was nearly six months since the adoption of the
Doha Ministerial Declaration and the Decision on Implementation-Related Issues and Concerns on
20 November 2001 and this was the first time that the Council was looking at this particular Decision
of the Ministers.  He recalled that the Doha Ministerial Declaration had various deadlines and thedeadline for the CTG to make recommendations on the two proposals affecting the ATC was actually
very close, 31 July 2002.  He stressed that trade in textiles and clothing was of great importance for a
number of developing country Members.  For Pakistan, it represented a major portion of its exports
and was the largest sector in terms of employment opportunities.  Considering the fact that PakistanG/C/M/60
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had major concerns with the way in which the ATC was being implemented, they saw these two
proposals as a step in addressing some of the concerns and providing relief to the exporting country
Members, particularly the small suppliers.  This was of great importance since, over the last
seven years, only a few quotas had been eliminated.  Further, the developing country Members had
faced continued restrictions on their exports which had been compounded by unjustified anti-dumpingactions, new restrictions in violation of the provisions of the ATC and other administrative actions
including changes in rules of origin.
1.16 He said that the approval of the two proposals would be in line with the declared intention of
the Ministers at Doha "for promotion of economic development and alleviation of poverty" by
providing some improved market access to the exporting Members which were mostly developing or
least developed countries.  In the light of the Ministerial Declaration and the importance of this sector,Pakistan expected serious and meaningful engagement by the restraining Members for the CTG to be
able to forward positive recommendations of the General Council.
1.17 The representative of the United States recalled the mandate of the Council, that it examine
the two proposals and make recommendations to the General Council by 31 July for appropriate
action.  She further welcomed the Chairman's suggestion on how to proceed with the work.  She said
that the United States took this mandate seriously and had requested the Secretariat to compile and
circulate statistics and information that they believed was relevant to this task.  She looked forward to
participating in the meetings which had been scheduled to discuss the issues.
1.18 The spokesman for the European Union accepted the suggestion made by the Chairman
concerning the calendar of informal meetings for examination of the proposals.  Referring to the
presentation made by the ITCB members on the implementation of the ATC, he said that the
European Union had complied with all of its obligations under the ATC and the integration process
was fully on track.  He could see no areas requiring compensation or rebalancing.  He accepted thatthe advanced implementation of the growth-on-growth  provisions did not imply the amendment of the
ATC, but it did change the balance of rights and obligations for all Members beyond what had been
agreed in the ATC.  Therefore, the growth-on-growth proposals called for a new concession.
1.19 The representative of Canada confirmed that they would engage fully in the examination of
the two proposals, based on what had actually happened in the implementation of the ATC.  With
regards to the proposed programme of meetings, he said that it appeared to be acceptable, though thedetails remained to be worked out.
1.20 The Chairman confirmed that the request made by Hong Kong, China for statistical data was
being prepared by the Secretariat and it would be made available as soon as possible.
1.21 The Council took note of the statements made and accepted the Chairman's programme of
informal consultations.
II. REQUEST BY COSTA RICA;  INDIA;  INDONESIA;  PAKISTAN;  PERU AND
HONG KONG, CHINA:  CTG'S OVERSIGHT FUNCTION PURSUANT TOARTICLE IV OF THE AGREEMENT ESTABLISHING THE WTO –
TRANSPARENCY REGARDING NEW RESTRICTIONS ON TEXTILE AND
CLOTHING PRODUCTS COMMENTED ON BY THE TEXTILES MONITORING
BODY (G/C/W/260/REV.1) – A REPORT BY THE CHAIRMAN
2.1 The Chairman recalled that this agenda item concerned a matter brought before the CTG by
Hong Kong, China also on behalf of Costa Rica, India, Indonesia, Pakistan and Peru.  It related to the
CTG's oversight function of the Agreement on Textiles and Clothing and, in particular to a restraintG/C/M/60
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agreement between the US and Turkey on one clothing category.  This matter had also been discussed
in the Council's major review of the implementation of the ATC.  He noted that, at the last meeting of
the CTG, it had been decided that he would hold informal consultations to see how to proceed with
this matter.  This had been done.  He also informed the Council that this matter was under discussion
in the informal consultations being held in an effort to reach an agreed report on the major review ofthe ATC.  On the basis of these two sets of consultations, he asked if this matter could continue to be
dealt with in the consultations with a view to reaching an understanding on the report on the major
review, rather than as a separate agenda item.
2.2 The spokesman for Hong Kong, China recalled that the CTG had a self-standing review
function, independent of the periodic major reviews to oversee agreements in the area of trade in
goods, including the ATC.  It was his expectation that the further consideration to be given to themajor review of the ATC would be pursued as a separate track of consultations, rather than merging
this matter into a more general exercise.  There was a clear requirement for the CTG to oversee the
ATC and he urged that this matter be dealt as a matter of urgency.
2.3 The representative of the United States recalled that they had stated in the Council their
position that this proposal should be dealt with in the course of the major review of the ATC and she
felt that delegations had been working constructively to deal with this in the course of the major
review.  The US had consistently held this view with respect to where the matter should be addressed
and remained engaged and prepared to find a way to deal with this matter in the major review.
2.4 The representative of India said that all through the last year when a number of delegations
had raised this matter as a very serious concern, there had been no requirement in the consultations
that at some point in time, the consideration of this matter would be merged into the major review that
was also underway.  The legal underpinnings for taking this matter up as a separate issue had been
elaborated by Hong Kong, China and India fully endorsed the statement that had been made.  Heregretted the view expressed by the United States, that the proposal should be dealt with in the major
review and asked what were the legal provisions either under the WTO Agreement or the ATC which
required the Council to look at ATC's implementatio n issues only in the context of the major review.
India had been very constructive for a very long time in trying to see whether the discussions in the
major review could resolve the matter, but that process did not envisage that the issue rested squarely
in the major review itself.  He encouraged the Chairman to hold urgent consultations as a separate
item on this issue.
2.5 The representative of Pakistan stated that the CTG was mandated to conduct a review of this
matter.  Its mandate was to oversee the implementation of the ATC and the major review was only
one aspect of its oversight function.  Whenever a Member raised an issue or a concern as regards the
implementation of the ATC, it was the duty of the CTG to conduct a review of that particular concernraised by a Member.  In Pakistan's view it would be inappropriate for the CTG to subsume the
consideration of this particular concern into the major review.  He endorsed the statements made by
Hong Kong, China and India.  He recalled that it had been decided that the Chairman would conduct
further consultations and whatever transpired would be reported to the Council.
2.6 The representative of Turkey stated that this issue should be considered during the major
review of the implementation of the ATC according to Article 8.
2.7 The representative of the United States recalled that each time the Council had addressed this
particular agenda item there had been proposals that the Chairman should proceed with further
consultations.  On the question of the substance of what the Chairman should consult on, she did not
agree that there had been prior agreement in the meetings as to what would be discussed in the
consultations.  She expected that the Chairman would hold informal consultations, inform the
Members of the results of those consultations and then suggest what the next steps might be.  She didG/C/M/60
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not agree that this acceptance of further consultations amounted to the possibility of continuous
consultations.  She reiterated that the United States remained engaged in the second stage review of
the ATC and looked forward to constructive discussion of the same item in that process.
2.8 The representative of India, supported by Hong Kong, China , recalled that at the 22 march
meeting of the CTG it had already been agreed to hold informal consultations, and each time the
consultations were not concluded prior to the next meeting of a body, it did not automatically follow
that the request to hold consultations had to be reintroduced, as was being suggested by the US.  They
urged the Chairman to hold consultations expeditiously in accordance with the decision already taken
in the 22 March meeting.
2.9 The Chairman confirmed that it was his intention to carry out consultations with delegations
on this issue and in the meantime, he proposed to retain the item as an item for the agenda of the next
meeting.
2.10 The Council took note of the statements made.
III. MAJOR REVIEW OF THE IMPLEMENTATION OF THE AGREEMENT ON
TEXTILES AND CLOTHING DURING THE SECOND STAGE OF THE
INTEGRATION PROCESS, PURSUANT TO ARTICLE 8.11 OF THE ATC
3.1 The Chairman recalled that the major review of the implementation of the Agreement on
Textiles and Clothing and the preparation of the final report had been before the Council for some
time.  Determined efforts to arrive at consensus on the outcome of the review, along with appropriate
considerations and conclusions, had been made, but agreeing on a final report had proven to be
extremely difficult.  As decided at the last meeting, he had continued the process of informal
consultations and, from what he had perceived in these discussions, it was clear that there wereimportant gaps in the understandings of the participants which remained to be bridged.  He was
cautiously optimistic that positive results would be achieved as Members had indicated their
willingness to press on and make additional efforts to reach consensus.  Therefore, he intended to
continue holding informal consultations as part of the programme of meetings that he had explained
under Agenda item 1, with a view to seeking specif ic suggestions that Members would wish to have
reflected in the final report and he would be reporting to the Council on the outcome.
3.2 The representative of Hong Kong, China reca lled that the major review was, in fact, a
mandatory requirement under the ATC and the Council had been given the task not only of
conducting the review, but also, under Article 8.12 of the ATC, with taking decisions to ensure that
the balance of rights under the Agreement had not been impaired.  He further pointed out that the
ITCB members and observers of the WTO had made detailed submissions establishing that thebalance of rights and obligations embodied in the ATC had been seriously impaired to the
disadvantage of developing, exporting Members.  They had also submitted concrete proposals for
adoption by the CTG pursuant to its mandate to redress the imbalance.  These proposals could be
found in documents G/C/W/304 and G/C/W/ 309 of 26 September and 6 November 2001,
respectively.  It was a matter of great regret that the second major review had not yet been concludeddespite the determined efforts of Members.  He welcomed the Chairman's undertaking to pursue a
vigorous programme of consultations with a view to bringing this important unfinished business to
agreed conclusions and decisions.
3.3 The representative of India supported the views expressed by Hong Kong, China on the status
of the major review of the ATC.  He recalled that Article 8.12 of the Agreement required that in the
light of such review, "the Council for Trade in Goods shall by consensus take such decisions as it
deems appropriate to ensure that the balance of rights and obligations embodied in this Agreement isG/C/M/60
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not being impaired".  The ITCB members and other developing countries had objectively argued in
other meetings of the CTG as well as in informal consultations how the balance of rights and
obligations had been impaired.  A number of measures by the restraining Members such as anti-
dumping actions, changes in rules of origin and the elimination of quota restriction on certain non-
WTO members had impeded the attainment of the objective of the ATC.  Only a few quotas had beeneliminated by the restraining Members so far and the bulk of the quotas still remained in place.
Clearly the process of integration had not been mean ingful to developing, exporting Members.  India
was disappointed that it had not been possible to conclude this major review of the ATC as mandated
by the Agreement.  At the same time, he appreciated the commitment expressed by the Chairman to
hold and intensify the consultation process to conclude the review exercise at an early date with an
acceptable set of conclusions.
3.4 The representative of Pakistan expressed appreciation for the efforts made by the interim
CTG Chairman in trying to complete the major re view and looked forward to a series of intense
consultations under the current Chairman to complete it as soon as possible.  He said that the major
review was an obligation, a task assigned to the CTG with the goal of taking decisions.  It was
necessary to make an assessment and to take a decision that the balance of rights and obligations hadbeen impaired or not and that assessment had to be meaningful.  The need for a clear decision was
further underlined by the fact that the second major review was coming at a very crucial stage in the
implementation of the ATC.  The exporting Members had made a strong case indicating that the
balance of rights and obligations had been impaired.  The market access improvements which had
been made available by the restraining Members had not been meaningful and whatever meagremarket access had been provided had been further frustrated by repeated actions such as anti-
dumping, safeguard and other arrangements.  This had actually created a situation where the exporting
Members considered that the market access had not been meaningful and the balance of rights and
obligations had been impaired.  The second major re view, at this crucial stage, with two and a half
years remaining, should highlight these facts.  The CTG should not fail in its duty to at least say whatwas already clear from the case law on these actions.  He urged that the major review should be
completed as soon as possible through the series of consultations which the Chairman intended to
hold.
3.5 The spokesman for the European Union recalled that they had complied scrupulously with
their ATC obligations, as also shown by the economic data.  EU textile imports had been increasing
year after year.  Quotas were expanding at the rates provided in the ATC and some of them werebeing scrapped.  The EU did not apply any tariff peaks, so progressive liberalization was taking place
and the integration programme was fully on track.  He noted the comments on the balance of rights
and obligations and said that for the EU, the real question when it came to textiles was how to achieve
a better balance of trading conditions worldwide.  In many of the exporting Members, little effective
liberalization had taken place for EU exports and for trade among the exporting Members themselves.It was now time for this to be addressed;  therefore, he supported the Chairman's suggestion to pursue
consultations in a constructive spirit.
3.6 The representative of Hong Kong, China commented on the previous statement, noting that
over the last four or five years, the import share of the restrained Members in the EU had dropped
from just below 50 per cent to about 43 per cent.  So his question, as far as the EU was concerned,
was why were they keeping these restraints on a group of Members which were responsible for much
less than half of their imports?  Secondly, as regards the claim of little effective liberalization by
exporting Members, he said that the ATC was a Uruguay Round Agreement and the discussion was
about its implementation.  What the EU appeared to be referring to was improving market access to
developing countries for the future;  however, one should not confuse the delivery of a past obligation
with a future aspiration from a future negotiation.  These were two entirely separate matters.G/C/M/60
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3.7 The representative of the United States said that  they were ready to continue to engage in the
review and considered there had been some progress.  The US had implemented the integration
provisions of the ATC consistent with that Agreement and would continue to do so.
3.8 The representative of India concurred with the views expressed by Hong Kong, China about
the process of integration and as regards the market access issue.  The ATC gave certain rights and
obligations and provided for the lifting of restrictions on the exporting Members.  The ATC had to be
seen in the context of Uruguay Round commitments an d what the EU had referred to about the market
access was beyond the provisions contained in the ATC.
3.9 The representative of Canada underlined the fact that Canada had fully met its obligations
under the ATC.  He recalled the growth provisions in the ATC and what had happened to the quota
levels as a result of the application of these growth provisions, as compared to what might have
otherwise been the case.  More importantly, the economic facts spoke for themselves:  the import
share of developing countries in the Canadian market had gone up from just over 30 per cent to over
50 per cent.  That demonstrated that the Agreement was working;  that it was on track;  and that it was
providing the ten-year adjustment period for the domes tic industry in Canada to adjust to the removal
of the quotas on that date.  Canada remained fully committed to the removal of all remaining quotas
on 1 January 2005.  He looked forward to continuing the consultations on this matter.
3.10 The Chairman confirmed that he would proceed with the programme of meetings and invited
Members to provide their ideas on how to advance the consultations.  He was confident that they
could arrive at an outcome which could be acceptable to all parties concerned.
3.11 The Council took note of the statements made.
IV. NOTIFICATION BY BANGLADESH UNDE R SECTION C OF ARTICLE XVIII OF
THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994 AND THE
DECISION OF 28 NOVEMBER 1979 ON SAFEGUARD ACTION FOR
DEVELOPMENT PURPOSES (G/C/7, G/C/8 AND G/C/9)
4.1 The Chairman recalled that this item was take n up for the first time at the meeting in March.
It concerned a notification by Bangladesh under paragraph 14 of Article XVIII:C of GATT 1994,
contained in document G/C/7, concerning certain measures which Bangladesh proposed to take underArticle XVIII:C as interpreted by paragraph 1 of the Decision on Safeguard Action for Development
Purposes for the four products listed.  Subsequently, the United States and the EC sent requests for
consultations pursuant to paragraph 15 of Articl e XVIII:C, contained in doc uments G/C/8 and G/C/9
respectively.  He had reflected on this issue and had spoken with certain delegations and suggested a
procedure for initiating consultations on this issue.  It was understood that the procedure would bewithout prejudice to any future determination which Members might make as to the identification of
the relevant WTO body for handling Article XVIII:C issues.  Under paragraph 16 of Article XVIII:C,
a multilateral consultation process was foreseen whereby the notifying Member consults with
Members "as to the purpose of the proposed measure, as to alternative measures which may be
available under this Agreement, and as to the possible effects of the measure proposed on thecommercial and economic interests of other Members".  No doubt there were different options
available for carrying out such consultations but a practical way to proceed in this instance would be
to try today to agree that the CTG first request Bangladesh to consult with it in accordance with
paragraph 16;  second, that these consultations be informal in nature and open to all interested
delegations;  and third, to revert to the CTG at an appropriate time.  As always, within such a process,he expected that delegations might engage in bilateral consultations with Bangladesh and he
encouraged delegations to report back to the CTG in the context of the informal open-ended
consultations.G/C/M/60
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4.2 The representative of the United States agreed to go along with the Chairman's suggestion,
and reiterated that the US had requested consultations pursuant to paragraph 15 of Article XVIII.C.
The US was expecting to conduct consultations in accordance with all of Article VIII.C.  She took
note of the Chairman's specific reference to paragraph 16, as long as it was without prejudice to themanner in which her delegation had requested consultations under all of Article XVIII.C.
4.3 The representative of the European Union stated that his delegation had also requested
consultations with Bangladesh and stated it would engage in the exercise of bilateral consultation and
hand over to Bangladesh written questions.  The EU had nothing against the Chairman's suggested
procedure regarding an open and transparent process and would contribute to it.  Although it
recognised the difficult micro-economic situation and the specific circumstances that Bangladeshfound itself in, and in particular the difficulties the domestic industry had to face, the EU expressed
some concern about the invocation of Article XVIII.C for systemic reasons.  He stressed the
importance of clarifying the justifiability of the proposed measure.  The EU would be interested in
Bangladesh providing some additional information showing that the country indeed fulfilled the
criteria to invoke the restrictions under XVIII.C.  Perhaps, more importantly, alternative measurescould be considered, that is less restrictive tools available under the WTO could be applied, which the
EU would find preferable, to Article XVIII.C which was unclear in terms of procedural requirements.
4.4 The representative of India agreed to go along with the proposal that the Chairman had
outlined and attached importance to the Chairman's statement that the process suggested was without
prejudice to any determination that Members might make in the future for handling Article XVIII.C
issues.  The EC statement that procedural requirements were not clear evidently symbolised this.  On
the substantive aspects, India looked forward to  engaging with Bangladesh in bilaterals soon
hereafter, and would seek clarifications from Bangladesh which it would submit to them in the form
of questions.  India stated that it was sympathetic to the problems that necessitated Bangladesh toinvoke Article XVIII.C in lieu of Article XVIII.B for the products in question.
4.5 The representative of Canada agreed with the proposal made and said they would also seek
clarifications from Bangladesh.  The Chairman concluded that the consultation process could start on
the lines outlined.4.6 It was so agreed.
V. REVIEW OF THE OPERATION OF THE TRIMS AGREEMENT UNDER
ARTICLE 9 (G/C/W/307 AND ADD.1)
5.1 The Chairman said that the Council had initiated the review under Article 9 of the TRIMs
Agreement in October 1999.  Since then there had been an invitation outstanding to delegations to
present written submissions on this issue.  To date, none had been received.  At the last meeting
Members began a discussion of a background study produced jointly by the WTO and UNCTAD
secretariats on trade-related investment measures and other performance requirements.  Part 1 of the
study was contained in G/C/W307 and part 2 in Addendum 1.  He suggested that the CTG continue
the discussion of the study.
5.2 The representative of the United States stated that, as affirmed in the Monterrey Conference
held by the United Nations on financing for development, foreign direct investment was recognised as
playing a role in development.  The Secretariat report  underscored the fact that on neoclassicalassumptions of fair competition, the imposition of domestic content and export requirements on firms
damaged prospects for economic development of the country that adopted them.  She appreciated the
report's recognition that there was strong evidence that production and consumption decisions, andG/C/M/60
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also prices, could be distorted by trade-related investment measures.  With respect to the TRIMs
agreement, she reiterated that the agreement itse lf was reprieved from elements of the GATT with
which all members had previously agreed to comply.  The reprieve was temporary and it came in the
form of transition periods for governments to eliminate their existing TRIMs.  Given that some
countries had now had over 50 years in which to comply with their GATT obligations, it was
important not to further extend those types of measures.
5.3 She noted that some of the studies reviewed by the two Secretariats in preparation for the
report, primarily focused on the investing firm and on the impact that a TRIM had on choice of
location.  Such firms appeared not to consult with other suppliers in the region, or in the home country
to quantify the value of the unexported inputs that were blocked by a performance requirement, let
alone the impact that such requirements had on jobs or efficiencies.  Furthermore, the report discusseda few studies in paragraph 71 through 73 concerning trade effects.  The report also noted in paragraph
74 that there were grounds for believing that the methodology used in the study cited might have
biased the trade effects of performance requirements by failing to differentiate between the value,
volume and composition of trade flows.  There was also mention of a US International Trade
Commission study which was prepared some time ago.  In her view, the results of that study werehighly qualified because they relied on industry responses that were incomplete and subjective.  For
example, many industry representatives indicated that the effect of the measure on trade shifts could
not be isolated while others feared retaliation by the host government for participation in the survey.
In the last couple of years, her delegation had tried to deal with TRIMs' problems of companies; they
had been reticent to be as outspoken as they would normally be to USTR about the problems that theywere having.  That had not changed.  The report was also limited to trade effects on the US which was
not necessarily exactly like the markets in other countries.  Also she believed that the data in many
cases suffered from sampling flaws and was subjective in nature, it would be preferable perhaps in the
discussion to focus on recent case studies of industrial  sectors.  The reports had indicated that in many
of the situations cited it was difficult to determine whether some of the measures were still in placeand perhaps Members, as was the case in the last meeting, could aid in providing the Secretariat with
some information to that effect.
5.4 Regarding trade distortion, in order to offset th e trade distortions in the local market created
by performance requirements, countries generally needed to impose high tariffs on competing
products, otherwise imports would increase and undermine the effectiveness of the measure.  That in
itself was a trade-distorting effect.  There was also the recent case by the Pacific EconomicCooperation Committee clearly concluding that after decades of a managed auto policy, the
Philippines had failed to develop a successful auto industry, which was further evidence that TRIMs
did not achieve developmental objectives.  Throughout the report there were indications that there
were trade distortions as a result of local content requirements, e.g. in the case of import substitution,
limiting access to or demand for imports and creating prime facie  discrimination against imports in
favour of products of local origin or from local sources.  Local content requirements distorted trade
flows when an investor had to import more capital goods than initially intended in order to fulfil the
requirement, and when exports did not attain the level warranted by commercial considerations
because of higher costs and insufficient quality of production caused by using locally produced parts.
In her view the intent of the Article 9 review was not to decide whether or not measures disciplined bythe TRIMs agreement did or did not have harmful effects but rather it was to focus on whether the
agreement should be complemented by additional provisions on investment and competition.  If the
review was not proceeding in that direction, she was not sure what the value added would be from the
review process.
5.5 The representative of Pakistan agreed that the review which commenced in January 2000 had
up to now failed to pick up momentum.  The review had immense developmental dimensions and
impacts on developing countries and LDCs in particular, and his delegation appreciated that the joint
report provided a broad parameter in which discussions were taking place.  A start had been madeG/C/M/60
Page 13
with the report notwithstanding the fact that his delegation might not be in full agreement with what
had been stated.   The joint report was just one input to the Article 9 review while not comprehensive
or conclusive, it did provide a sense of direction to Members to proceed which was a positive input to
the process.  There was no denying the fact that many Members had made extensive use of TRIMs
measures in the past, some of them were still using them and had sought extensions on this account.On substance, the CTG was mandated to make proposals to the Ministerial Conference with reference
to amendments to the text of the agreement, and these proposals, needed to be well considered and
researched.  In this regard, his delegation believed that national experiences could be very helpful,
especially from developed countries Members who had used TRIMs extensively.  While his capital
was still in the process of examining the study, at this stage he was not in a position to make
substantive comments.  One thing that needs to be clarified was the TRIMs extension issue:  for his
delegation, that was a separate issue which had had a decision taken by the CTG and it was necessaryto be careful not to mix up the issue of extensions with the review.
5.6 The representative of Colombia stated that a study of the TRIMs agreement was of the
greatest importance and mentioned two additional elements to this study which should be considered
within the framework of the review.  First was the relation between the TRIMs agreement and theissues of investment and competition.  This link appeared clearly both in the preamble as well as in
Article 9 of the agreement. Taking into consideration six years of experience of the implementation of
the TRIMs agreement and in the current framework of the multilateral system, she felt that it was
essential to identify those elements which could contribute to facilitating investment and encouraging
free competition.  Second, she believed that there should also be an in-depth analysis of the possibleinter-relationships between this agreement and othe r multilateral agreements.  There were different
views as regards the direction which this review should take and there were differences of view as
regards the scope of Article 9 of the TRIMs.  The proposal made by Pakistan i.e. to look at national
experiences in this domain, was interesting.
5.7 The representative of the European Union welcomed the completion of the study and the
cooperation between the respective Secretariats.  As  regard the review of operation of the TRIMs
agreement under Article 9, he underlined that the proper forum for the issues of investment and
competition would be the respective working groups and the negotiations on competition and
investment set to start following the fifth Ministerial.
5.8 The representative of the United States said that in the Article 9 review, the Goods Council
should review the operation of this agreement and, as appropriate, propose to the Ministerial
conference amendments to this text and consider whether the agreement should be complemented
with provisions on investment and competition policy.  As Colombia had indicated, there were
differences of opinion as far as the scope of the review, but thus far she was not convinced that even
the analysis prepared in the UNCTAD jointly with  the WTO Secretariat, was necessarily providing
what could be considered to be relevant as far as the review was concerned.  It had only given a
snapshot of certain views of what appeared to be happening.
5.9 The representative of Mexico said his delegation supported what was said by the US.  He had
some preliminary comments on document G/C/W/307 and reserved the right to make more detailed
comments at a later stage. In Article 9 there was a reference to a review in order to ascertain whether
there was a link between investment policies and other issues.  Members were not clear on the
relationship between trade and investment.
5.10 The representative of India said that India did not share the opinion of the EC on the status of
the Singapore issues as alluded to by them.  Part I of the study clearly brought out that there was no
generally accepted definition of TRIMs.  Thus, in the context of the review of TRIMs agreement,
guidance for this lay in the history of negotiations for an understanding of what was meant by TRIMs.
During the Uruguay Round negotiations, the negotiating group was given a mandate to examine theG/C/M/60
Page 14
operation of GATT Aricles related to the trade restrictive and distorting effects of investment
measures, followed by negotiations to elaborate further provisions to avoid adverse effects on trade.
Part I of the study brought out that only certain BITs involving the US and Canada and the regional
cooperation arrangements in advanced stage of integration (e.g. EC) go beyond the TRIMs prohibited
by the TRIMs agreement.  Such arrangements were agreed to only in the context of regionalintegration efforts with substantial convergence of economic and political interests among
participating countries.  In the context of WTO, with membership at different stages of development,
the issue of outright prohibition of any TRIM for developing countries and LDC members needed
review.  In this context the implementation issues raised by developing countries seeking to allow
developing countries to maintain local content related TRIMs until they have reached a certain level
of development, became relevant.  The need for including both home country and host country
investment measures having effect on trade had been stressed by some of the studies surveyed by thejoint study (e.g. UNCTC, OECD Committee etc.).  In th is regard, the issue of investor's obligation had
also come up.  This was an important input for the review of the TRIMs agreement.  Part II of the
study surveyed performance requirements as a whole, as against TRIMs, which alone were relevant in
the context of the review of the TRIMs agreement.  As the study showed, none of the TRIMs related
to LDCs had been referred to in the study.  This was not by design, but because hardly any of themused TRIMs.  Only when countries reached a particular level of development did it become
meaningful to use TRIMs.  While some of the developed countries used TRIMs (now prohibited by
the TRIMs agreement) for a century or so the LDCs were yet to start using them.  The short transition
period of 5-7 years therefore did not reflect the development deficit of developing countries/LDCs of
today.  Suffice to say that LDCs and many low income countries had been denied the use of theirdevelopment policy tool even before certain sectors in their development process had reached the
threshold of benefiting from TRIMs.
5.11 In sub-section B of Section II, the study referred to TRIMs and other PRs applied in the
context of the regulation of FDI.  The relevance of this exercise in the context of TRIMs review wasnot clear.  The conclusions and findings brought together could be broadly summarised as follows:
(a)  each and every country, developed or newly industrialised, resorted to some form or other of PRs.
Many developed countries like UK, Canada and Japan used PRs for very long intervals and until very
recently;  (b)  theoretically, PRs might not help economic development, but this was when viewed in
the static sense.  From a dynamic perspective many studies had found that when PRs were put in place
along with certain complementary measures, and for specified periods of time, the impact on income,
output employment and technology was positive.  In general, the study was factual.  However, itwould have been more useful to have unearthed studies which would have gone deeper into the
positive role played by performance requirements such as local content requirements and trade
balancing requirements in the case of developed countries.  Five points were relevant in this regard.
5.12 First, para. 63 on impact of local content requirements was based on the assumption of perfect
competition, which hardly prevailed in real life situations.  For instance, local components required by
a multinational enterprise (MNE) may be of specifications and designs that were proprietary or
patented.  Hence, they would not be available in the host country unless the MNE licensed their
manufacture to some local vendor and passed on the designs and drawings.  Local content regulations
played a useful role in prompting the MNE to consider licensing the local manufacture of suchcomponents which it might not do otherwise because of such considerations.  Second, para. 67 on the
conflict arising from a MNE seeking to maximize the global profits rather than local profits of
individual subsidiaries forcing a subsidiary avoiding to exports was a real issue.  The evidence was
available from many countries where MNEs imposed export restrictions on their affiliates.  The
surveys of foreign affiliates operating in India conducted by the Reserve Bank of India had repeatedlyobserved high incidence of restrictive clauses imposed by MNEs on their local affiliates through
technology transfer agreements.  The Survey for the 1986-94 period found as many as 40 per cent of
technology transfer agreements contained export restrictions.  The bulk of these restrictions (62 per
cent) imposed by MNEs on their Indian affiliates prohibited their export to all the countries orG/C/M/60
Page 15
specified countries;  another 27 per cent required the affiliate to obtain their parent's permission for
exports.  It was clear that MNEs deliberately prevented their affiliates from exporting to protect
markets of their other affiliates, distorting trade patterns in that process.  Third, para. 68 on the
dynamic effects:  there was documented evidence on how Mexico, Brazil and Thailand had used
performance requirements successfully for "triggering a burst of export-focussed investments in theauto industry".  Furthermore, it had been argued that export performance requirements had prompted
MNEs to establish world scale plants incorporating best practice technology and had generated
significant knowledge spillovers for local firms.  Fourth , para. 70 suggested that systematic cross-
country evidence on the impact of performance requirements was not available.  However, a detailed
empirical analysis of US and Japanese FDI in a sample of 74 countries in seven broad branches of
manufacturing over 1982 to 1994 period found the local content regulations to be favouring the extent
of localization of MNE affiliates' production in the host countries.  Therefore, the study concludedthat local content regulations could be an important means of deepening the commitment of MNEs
entering an economy and for generating local value added, and hence, on employment and the related
spillovers of knowledge.  Another study using the same database covering US and Japanese FDI in a
sample of 74 countries in seven broad branches of manufacturing over 1982 to 1994 period found
export performance requirements to be effective in increasing the export-orientation of MNE affiliatesto third countries.    Fifth, analysing the impact  of performance requirements on technology transfer,
the joint study indicated that empirical evidence of the use of PRs was scant.  The empirical evidence
as regards impact of performance requirements on employment had been noted by the joint study to
be very thin.  At the same time it was noted that there was support for the proposition that local
content requirements had raised employment in the sectors in which they were applied.
5.13 In conclusion, therefore, the following questions  might need to be answered in this context:
First, while developed countries used TRIMs for periods ranging from 50 years to about a century,
was it appropriate and just to deny such flexibility to developing countries and LDCs of today?
Second, local content requirements were an essential ingredient in any industrialisation package.Efforts at sustainable industrialisation by developi ng countries would be thwarted in the absence of
efforts by investors to indigenize.  Besides, total dependence on imports for industrialization might
land developing countries in frequent BoP crises, thus derailing the very process of industrialization.
This being the case, what was the justification for prohibiting local content based TRIMs for low
income countries?  Third, what was the justification for prohibiting use of TRIMs outright rather than
being made actionable on a case-by-case basis, based on the actual economic effects of the measure
concerned, all the more so in the case of developing countries who had little or no opportunity tomaintain such measures in the past?  Fourth, a WTO Secretariat paper (WT/WGTI/W/56) on
performance requirements concluded that the mandatory performance requirements, advantage based
performance requirements and operational incentives were often substitutable instruments in terms of
their trade effects.
5.14 Performance requirements linked to investment was the subject of the joint study.  What
about competition policy provisions?  The UNCTC study, referred to in the joint study, referred also
to certain corporate practices in the context of trade-related investment measures, including:  market
allocation, collusive tendering, refusal to deal, exclusive dealing, tied sales, resale price maintenance,
price fixing, differential pricing and transfer pricing.  The mandate under Article 9 of the TRIMsagreement was to consider complementing the existing provisions of the TRIMs agreement with
investment policy and competition policy provisions.  TRIMs acted as antidotes to anti-competitive
practices by MNCs.  Efforts to concentrate attention, during the review, on investment measures to
the neglect of anti-competitive practices of MNCs, would only result in further disarming the
developing countries against MNC practices of anti-competitive nature having cross border effects.As globalisation gathered momentum, measures to contain such anti-competitive practices were
urgent and important.  In this regard India suggested that a study on the corporate practices by MNCs
in the past and their effects on development, growth and international trade, on the same line as theG/C/M/60
Page 16
joint study on TRIMs and performance requirements already undertaken by the WTO and the
UNCTAD Secretariats, might be undertaken in a time bound manner.
5.15 The representative of Argentina said, the fact that a number of Members had wanted to
request extensions related to their TRIMs policies shows that at least for those Members these policies
continued to be important and necessary and that they therefore fulfilled some function which was
important within the context of their economies.  Th e fact that the majority of those countries had
requested extensions for a lengthy period of time also showed the importance of a framework of
development as indicated by the representative of India.  In this respect, he wondered why some
Members selectively chose this item as if it was the only one which was trade-distorting.  He thought
there were other measures relating to investment which were just as distorting in terms of trade such
as those which were covered under TRIMs and these were not discussed at all.  The majority ofMembers too had requested extensions of TRIMs, had provided information, and made it available for
the public and all Members of the Organization relating to the importance that these measures had for
their national economies.  In the case of Argentina, he had to answer questions by other Members
interested in this question and had provided documentation which was extensive.  What had not been
achieved, was to have any information on the extent or the benefit of the TRIMs. For those countrieswhich were suffering from the effect of TRIMs there was documentation sufficiently available on the
table which could be analysed.  This has been done in the context of the requests for extensions.  He
requested the opinion of those who believed that this Agreement had been particularly beneficial to
them, in terms of being able to analyse in detail which sectors had benefitted by TRIMs.
5.16 The delegate of Colombia believed that the Ministerial Conference in Mexico during the
development round would give an opportunity to  consider the link between investment and
competition, established in the preamble of the TRIMs Agreement, in Article 9 as well as within the
history of the Uruguay Round.
5.17 The delegate of Malaysia said that the Arti cle 9 review had nothing to do with the TRIMs
extension that was granted to many developing countries, including Malaysia.   In the course of this
review the CTG should consider whether the Agreement should be complemented by provisions of
investment  and competition policy.   If it was deemed that there was a consensus that the experience
of developing countries showed that usage of TRIMs had indeed been helpful and contributed to
economic development, Members would appropriately review TRIMs Article 5.2.   They were willing
to undertake the study and the review in the CTG on the understanding that Members should not comewith any preconceived notions as to whether there should be a raising of the standard of the present
TRIMs Agreement or even lowering the standard.  In that regard, he suggested the proposal from the
delegate of Pakistan.
5.18 The representative of the Philippines said the review should not necessarily lead to
negotiations on investment and competition policy.  There was no precondition in Article 9 about this.
It could be argued that the TRIMs requirements in the Philippines had resulted in the non-
development of a  local automotive industry, although there were other factors that also contributed to
this.  He agreed with the analysis preferred by the Indian delegation that there was value added for
developing countries in the applicability of certain TRIMs and it was important to share nationalexperiences of Members to enlighten the work of the Council.
5.19 The representative of Chile said it was important to avoid duplication of work but  Members
should look at what was going on in the working groups on investment and competition policy. In the
review Members needed to see whether the application of TRIMs had been positive for themultilateral system. Regarding linkages with other WT O agreements he raised the issue of subsidies
and their trade distorting implications.G/C/M/60
Page 17
5.20 The representative of Thailand agreed with Malaysia and the Philippines that Thailand did not
want to see the review process under Article 9 linked to the TRIMs extensions under Article 5.3.  She
saw TRIMs as a useful mechanism to help achieve economic development objectives and assured the
Council of Thailand's commitment to eliminate necessary TRIMs by the end of 2003.  Regarding this
review process, the CTG should thoroughly examine all possible outcomes resulting from TRIMs.She, therefore, supported the proposal made by Pakistan on the exchange of national experiences with
the application of TRIMs.  Her delegation was in the process of examining the studies and would
come back with detailed comment in the next meeting.
5.21 The representative of Canada said, regarding the link that was being made between extensions
of TRIMs transition periods and possible positive effects of TRIMs, the extensions were provided on
the basis that some countries had particular difficulties in implementing the TRIMs agreement.
5.22 The representative of Argentina said that subsidy policies in agriculture had a diverting effect
on trade and also a distorting effect on the rural development and the distribution of investments in
developing countries where there were in principle no subsidies.
5.23 The Chairman said that there had been a useful exchange of views but he did not sense that
the CTG had yet a clear view of the direction that the review should take.  Members had heard a
number of proposals such as the need for Members to table their national experiences with the use of
TRIMs, and for the CTG to agree on a work programme for carrying out the Article 9 review before
the Ministerial Conference in Mexico.  He urged Members to reflect on these proposals and suggestedthat the review remain under active consideration by the CTG and that Members should submit
written comments and proposals on any matters that they consider to be relevant in assisting the CTG
to conduct the review.
5.24 The Council took note of the statements made.
VI. REPORT BY THE CHAIRMAN ON CONSULTATIONS ON IMPLEMENTATION
ISSUES RELATED TO TRIMS
6.1 The Chairman recalled the discussion at the CTG meeting of 22 March on how to handle the
outstanding implementation issues related to the TRIMs Agreement (tirets 37 through 40 of document
JOB(01)/152/Rev.1).  At that meeting different views were expressed as to the appropriate forum fortaking up the issues – whether the CTG or the TRIMs Committee.  Since that meeting, he had carried
out consultations and had the sense that on the one hand there was a strong preference among
delegations to discuss these issues in the TRIMs Committee but, on the other hand, there was also the
view that the CTG would be the appropriate forum.  He suspended the discussion and resumed it on 7
May.  He said that he had informal consultations on the issue and wished to propose that CTG takethe following decision:  "Members agree in accordance with Article 7.2 of the TRIMs Agreement, the
CTG will assign to the Committee on TRIMs the responsibility for conducting the work on the
outstanding implementation issues contained in tirets 37-40 of document JOB(01)152/Rev.1.  The
TRIMs committee shall report regularly on the progress of its work to the CTG, which will report to
the Trade Negotiating Committee in accordance with paragraph 12 of the Doha MinisterialDeclaration."
6.2 It was so agreed.G/C/M/60
Page 18
VII. MARKET ACCESS MATTERS
A. COMMITTEE ON MARKET ACCESS
- PERIODIC REPORT OF THE COMMITTEE (G/MA/114)
7.1 The Chairman requested the Chairperson of the Market Access Committee, Mrs. Berrig, to
introduce the Committee's periodic report, as contained in document G/MA/114.  She reported that in
accordance with the procedures adopted by the Market Access Committee regarding the submission
of factual information on requests for waivers and waiver extensions, the draft report to this Council
was circulated in document G/MA/SPEC/20 and was examined by the Committee on Market Access
at its meeting of 15 March 2002.  Following this meeting, the report was revised taking into account
the discussion that had taken place at that meeting and  was circulated as G/MA/114.  The report
reflected in Annexes I and II the reasons why certain Members whose waivers expired on30 April 2002 had to request a new waiver or a waiv er extension in connection with the introduction
of HS96 changes to their schedules of concessions or the transposition of their schedules into the
Harmonized System.  The Committee considered these requests and agreed to forward them to the
CTG for appropriate action.  The requests from Panama and Zambia for a waiver and a waiver
extension, respectively were not reflected in this document, but were considered by the Committee atits informal meeting of 26 April 2002. No objections were raised to those requests at that meeting nor
to a fax which he had sent to all Members on the same day concerning these requests. As a result,
these requests had been forwarded to this body for appropriate action.   Regarding agenda item 7(d)
(on the HS2002 draft waiver decision contained in document G/C/W/367), this draft waiver decision
was approved in the Committee on Market Access at its 15 March meeting and was forwarded alongwith the other draft waiver decisions to the CTG for appropriate action.  Through a letter dated 28
March 2002, Members were requested to indicate whether they wished to be covered by the waiver,
and Members having made such a request are listed in the Annex to the document.  This waiver
decision would be applicable only to those Members having submitted the required documentation by
30 April 2002.  The draft decision contained in document G/C/W/367 would be revised to reflect theupdated situation of Members having submitted the required documentation by the deadline.   So, in
addition to the Members already listed with an aste risk, the following Members will also be identified
with an asterisk in the revised document and thereby covered by the waiver.  The Members concerned
were:  Argentina, Bulgaria, Croatia, Czech Republic , Estonia, Hungary, Iceland, India, Korea, Latvia,
Lithuania, Mexico, Singapore, Slovak Republic, Slovenia and Switzerland.   Hong Kong, China, will
be included in the list with an asterisk.
7.2 The Council took note of the report.G/C/M/60
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B. INTRODUCTION OF  HARMONIZED SYSTEM 1996 CHANGES INTO WTO
SCHEDULES OF TARIFF CONCESSIONS – REQUESTS FOR A WAIVER
7.3 The Chairman said this item concerned requests for waivers in connection with the
introduction of HS96 changes into WTO Schedules.  The Market Access Committee agreed last year
that extensions of the waiver on a collective basis would no longer be granted.  However, this would
not preclude Members from requesting waivers on an individual basis.  Thirteen Members had
forwarded to the Secretariat requests for waivers in connection with the introduction of HS96 changes
to their schedules of accessions.  Pursuant to Article IX of the WTO Agreement, these requests for
waivers were before the Council for Trade in Goods for its consideration;  in each case, draft
decisions have been circulated in G/C/W documents to assist the Council in its consideration of these
requests.
7.4 There were no comments.  The Chairman proposed that the Council approve the waiver
requests for the 13 listed Members and recommended that the draft decisions contained in the cited
G/C/W/ documents be forwarded to the General Council for adoption.
7.5 It was so agreed.
C. TRANSPOSITION OF SCHEDULES  INTO THE HARMONIZED SYSTEM – REQUESTS
FOR AN EXTENSION OF THE WAIVER
7.6 The Chairman referred to the communications from Nicaragua and Sri Lanka, containing
requests for an extension of waivers which expired on 30 April 2002.  These requests for waiver
extensions had been made in the context of the transposition of Members' schedules into the
Harmonized System, and in accordance with paragraph 1 of the Understanding in respect of Waivers
of Obligations under GATT 1994.  Pursuant to Article IX of the WTO Agreement, these requests forwaivers were before the Council for Trade in Goods for its consideration.  Draft decisions had been
circulated to assist the Council in its consideration of these requests.
7.7 The request from Nicaragua had been circulated in document G/L/515 and a draft decision in
document G/C/W/351.  The request from Sri Lanka had been circulated in document G/L/516 and a
draft decision in document G/C/W/352.
7.8 The Council approved an extension of the waiver for Nicaragua and Sri Lanka until
31 October 2002 and recommended that the draft deci sions be forwarded to the General Council for
adoption.
D. INTRODUCTION OF HARMONIZED SYSTEM 2002 CHANGES INTO WTO
SCHEDULES OF CONCESSIONS (G/C/W/367)
7.9 The Chairman said this item referred to the draft decision on the introduction of Harmonized
System 2002 changes into WTO schedules of tariff concessions contained in document G/C/W/367
which had been forwarded by the Market Access Committee to the Council for appropriate action.One of the conditions specified in the draft decision , as already mentioned by the Chairperson of the
Market Access Committee, was that this waiver would cover only those Members that had submitted
the required documentation by 30 April 2002.  Hong Kong, China, had requested to be covered by
this waiver and submitted the required documentation on 30 April 2002.  In this connection, he
proposed that the draft decision contained in document G/C/W/367 be revised to reflect the updatedsituation of Members having submitted the required documentation by the deadline.G/C/M/60
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7.10 The CTG recommended that this draft decision, revised on the lines proposed, be forwarded
to the General Council for adoption as document G/C/W/367/Rev.1.
E. ZAMBIA – RENEGOTIATION OF SCHEDULE LXXVIII
- REQUEST FOR AN EXTENSION OF THE WAIVER
7.11 The Chairman referred to the request by Zambia circulated in document G/L/537 for an
extension of a waiver granted to it in connection with the renegotiation of its schedule and to a draft
decision in document G/C/W/370.
7.12 The Council approved an extension of the waiver for Zambia until 31  October 2002 and
recommended the draft decision contained in docu ment G/C/W/370 be forwarded to the General
Council for adoption.
VIII.  OTHER BUSINESS
8.1 The Chairman said that the CTG was scheduled to hold its next meeting on 23 and
24 May 2002.
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