RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/M/24
26 April 2000
(00-1684)
Committee on Subsidies
and Countervailing Measures
MINUTES OF THE REGULAR MEETING
HELD ON 1-2 NOVEMBER 1999
Chairman:  Mr. Jan Söderberg (Sweden)
1. The Committee on Subsidies and Countervailing Measures ("the Committee") held a Regular
Meeting on 1-2 November 1999.
2. The Committee adopted the following agenda:
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A. NATIONAL LEG ISLATI ON.....................................................................................................3
(i) Review of notifications of new or amended legislation
or regulations not previously reviewed by the Committee
(a) DOMINICA - G/ADP/N/1/DMA/1-G/SCM/N/1/DMA/1
(b) GHANA - G/ADP/N/1/GHA/1-G/SCM/N/1/GHA/1
(c) INDONESIA - G/ADP/N/1/IDN/2/SUPPL.1-G/SCM/N/1/IDN/2/SUPPL.1
(d) JAMAICA - G/ADP/N/1/JAM/2-G/SCM/N/1/JAM/2
(e) LATVIA - G/ADP/N/1/LVA/1-G/SCM/N/1/LVA/1
(f) TRINIDAD & TOBAGO - G/ADP/N/1/TTO/1/SUPPL.1-G/SCM/N/1/TTO/1/SUPPL.1(g) UNITED STATES - /ADP/N/1/USA/1/SUPPL.4-G/SCM/N/1/USA/1/SUPPL.4
(h) UNITED STATES - G/ADP/N/1/USA/1/SUPPL.5-G/SCM/N/1/USA/1/SUPPL.5
(ii) Continuing review of prev iously reviewed notifications
(a) ARGENTINA - G/ADP/N/1/ARG/1/SUPPL.2-G/SCM/N/1/ARG/1/SUPPL.2
B. SUBSIDIES – 1999 UPDATING NOTIF ICATIONS (G/SCM/N/48/) .....................................3
- ARGENTINA - G/SCM/N/48/ARG
- GAMBIA - G/SCM/N/38/GMB-G/SCM/N/48/GMB- GUATEMALA - G/SCM/N/48/GTM
- HONG KONG, CHINA - G/SCM/N/48/HKG
- ICELAND - G/SCM/N/48/ISL
- JAPAN - G/SCM/N/48/JPN
- KOREA - G/SCM/N/48/KOR- LIECHTENSTEIN - G/SCM/N/48/LIE
- NAMIBIA - G/SCM/N/3/NAM-G/SCM/N/16/NAM-
G/SCM/N/25/NAM-G/SCM/N/38/NAM- G/SCM/N/48/NAM
- SINGAPORE - G/SCM/N/48/SGP
- SWITZERLAND - G/SCM/N/48/CHEG/SCM/M/24
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C. SUBSIDIES – 1997 UPDATING NOTIF ICATIONS (G/SCM/N/16/) .....................................4
- CYPRUS - G/SCM/N/25/CYP
- NAMIBIA - G/SCM/N/3/NAM- G/SCM/N/16/NAM-
G/SCM/N/25/NAM-G/SCM/N/38/NAM-G/SCM/N/48/NAM
D. SUBSIDIES – 1996 UPDATING NOTIF ICATIONS (G/SCM/N/25/) .....................................4
- NAMIBIA - G/SCM/N/3/NAM- G/SCM/N/16/NAM-
G/SCM/N/25/NAM- G/SCM/N/38/NAM- G/SCM/N/48/NAM
E. SUBSIDIES – 1995 NEW AND FULL NOT IFICATIONS (G /SCM/N/3/)..............................4
- NAMIBIA - G/SCM/N/3/NAM-G/SCM/N/16/NAM-
G/SCM/N/25/NAM-G/SCM/N/38/NAM-G/SCM/N/48/NAM
F. SUPPLEMENTAL REPORT OF THE INFORMAL GROUP OF EXPERTS ON
CALCULATION ISSUES RELATED TO ANNEX IV
(G/SCM/W/415/REV.2/SUPPL.1) .............................................................................................4
G. REVIEW OF THE OPERATION OF ARTICLES 6.1, 8 AND 9..............................................5
H. SEMI-ANNUAL REPORTS OF COUNTERVAILING DUTY ACTIONS
(G/SCM/N/52/ADD .1 AND ADDE NDA) ...............................................................................10
I. REPORTS OF PRELIMINARY AND FINAL ACTIONS (G/SCM/N/51 AND 53-54).........10
J. REVIEW OF THE OPERAT ION OF ARTI CLE 27.6.............................................................10
K. COMPLIANCE WITH ARTICLE 25 NOTIFICATION REQUIREMENTS –
REQUEST BY THE EC ...........................................................................................................11
L. FREQUENCY OF ARTICLE 25 SUBSIDY NOTIF ICATIONS ............................................13
M. OTHER BU SINESS ............................................................................................................... ..16
(i) Canada – Countervailing Duty Investigation of Hot-rolled
Carbon Steel Plate (Requests by  Indonesia and Thailand) ............................................16
(ii) European Community – Countervailing Duty Investigation of
Polyethylene Teraphthalate (PET ) (Request by Thailand) .............................................18
(iii) Chairman's Report to the Ch airman of the Goods Council.............................................18
N. ANNUAL REPORT TO THE COUNC IL FOR TRADE IN GOODS.....................................24
O. DATE OF NEXT RE GULAR MEETING ...............................................................................24G/SCM/M/24
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A. NATIONAL LEGISLATION
3. The Chairman noted that, the review of countervailing duty legislations and/or regulations,
would be in accordance with the procedures adopted by the Committee at its special meeting in
April 1996 (G/SCM/W/293).  All of the notificatio ns subject to review, and questions posed with
respect to the review, had also been on the agenda of the Committee on Anti-Dumping Practices, butnot all had been considered at that meeting.  Spec ifically, the questions pertaining to the notification
of Trinidad and Tobago had not been addressed at the Anti-dumping Committee meeting, as was the
case for certain questions posed to the United States by Mexico, Argentina and Brazil.
4. The questions concerning the legislative notification of Trinidad and Tobago can be found in
the following document:
G/ADP/Q1/TTO/1-G/SCM/Q1/TTO/1 (submitted by the United States).
No replies have yet been received from Trinidad and Tobago.
5. The questions regarding the legislative notification of the United States notification can be
found in the following document:
G/ADP/Q1/USA/13-G/SCM/Q1/USA/13 (Submitted by Mexico Ques.  1-4)
G/ADP/Q1/USA/14-G/SCM/Q1/USA/14 (Submitted by Argentina Ques.  1-7)
G/ADP/Q1/USA/18-G/SCM/Q1/USA/18 (Submitted by Brazil)
6. Answers to these questions can be found in the following document:
G/ADP/Q1/USA/19-G/SCM/Q1/USA/19 (Answe rs to Mexico, Argentina and Brazil)
7. The Chairman noted that Brazil had submitted questions concerning the EC's previously
reviewed notification, but that these questions had not  been received in time to be considered for the
meeting.  They would be placed on the agenda for the Committee's Spring 2000 regular meeting.
8. The Chairman reminded the Committee that to place any other previously-reviewed
legislative notifications on the agenda of the Spring 2000 regular meeting, written questions should be
submitted no later than 24 March 2000.  Answers to all such questions would be due no later than 21
April 2000.
9. The Committee took note of all statements made.
B. SUBSIDIES – 1999 UPDATING NOTIFICATIONS
10. The Chairman noted that the 1999 updating notification from Gambia also covered its 1998
new and full notification, and would be reviewed at the special meeting to be held immediately after
the regular meeting.  The Chairman suggested that that notification therefore not be discussed at this
meeting and further suggested that the Committ ee discuss the remaining few multiple-symbolled
updating notifications only once, in the review of notifications covering the most recent periodaddressed by such notifications.  The 1999 updating notifications of Argentina;  Guatemala;
Hong Kong, China;  Iceland;  Japan;  Korea;  Liechtenstein;  Namibia;  Singapore and Switzerland
therefore were subject to review under this item.G/SCM/M/24
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11. No questions or comments were raised in respect of any of these notifications.
C. SUBSIDIES – 1997 UPDATING NOTIFICATIONS
12. No questions or comments were raised in respect of the notification of Cyprus, the only
notification subject to review under this agenda item.
D. SUBSIDIES – 1996 UPDATING NOTIFICATIONS; AND
E. SUBSIDIES – 1995 NEW AND FULL NOTIFICATIONS
13. No notifications were subject to review under these agenda items, as the notification of
Namibia had already been considered under a previous agenda item.
F. SUPPLEMENTAL REPORT OF THE INFORMAL GROUP OF EXPERTS ON
CALCULATION ISSUES RELATED TO ANNEX IV
14. The Chairman recalled that at its regular meeting in June 1995, the Committee had decided to
establish an Informal Group of Experts to examine matters which were not specified in Annex IV tothe Agreement or which needed further clarification for the purposes of paragraph 1(a) of Article 6,
and to report to the Committee such recommendations as the Group considered could assist the
Committee in the development of an understanding among Members, as necessary, regarding such
matters.  At the Committee’s regular meeting in April 1998, the Committee had discussed and taken
note of the report of the Informal Group of Expert s (G/SCM/W/415/Rev.2).  At the same meeting, the
Committee had requested the Informal Group to continue  to meet to try to resolve issues that it had
not at that time resolved.  The Informal Group had continued to meet since then, and had circulated a
supplemental report to the Committee (G/SCM/W/415/R ev.2/Suppl.1).  As indicated in the report, the
Group believed that it had, with the submission of this report, completed its mandate.
15. The delegate of the European Communities stated that as the Informal Group's original report
itself had been taken note of by the Committee, the supplemental report should be handled in the same
way.
16. The delegate of the United States had no concerns or objections with the conclusions or the
recommendations offered by the Informal Group, but in light of the status accorded to the previous
part of the Group's work, the United States believed that the same status should be given to thesupplemental report.
17. The delegate of Philippines thanked the Group, and noted that the document under
consideration was a supplement to the previous report, which had simply been taken note of, without
any assumptions whatsoever concerning its use in the future.
18. The Chairman suggested that the Committee take note of the report and of all of the
statements made.  The Chairman thanked all of the members of the Informal Group of Experts on
behalf of the Committee for their hard work over the preceding four years concerning calculationissues related to Annex IV of the Agreement.  The two reports produced by the Group addressed and
elaborated on a wide range of complex issues, and would be of benefit to all Members when they
considered matters related to Article 6.1(a) of the Agreement.
19. The Committee took note of the supplemental report and all statements made.G/SCM/M/24
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G. REVIEW OF THE OPERATION OF ARTICLES 6.1, 8 AND 6.19
20. The Chairman recalled that Article 31 of the Agreement entitled “Provisional Application”,
states that the provisions of paragraph 1 of Article 6 and the provisions of Article 8 and Article 9 shall
apply for a period of five years, beginning with the date of entry into force of the WTO Agreement,
and that not later than 180 days before the end of that period, the Committee shall review theoperation of those provisions, with a view to dete rmining whether to extend their application, either
"as presently drafted or in a modified form, for a further period.” Over the preceding several months,
the Committee had held a series of informal consultations concerning the Article 31 review, most
recently on 7 October 1999.  The Chairman reminded Members that views continued to diverge
considerably over whether the provisions should be extended, either in their current form or with
some modification.  If there was no consensus to extend them, the provisions of Articles 6.1, 8 and 9
would lapse on 31 December 1999.
21. The delegate of Brazil stated that his delegation had proposed in the context of the Seattle
preparations that Members agree to renegotiate Article 8 during the new round, to include subsidies
which were of interest to developing countries.  Brazil would not favour the extension of the
provisions unless they were changed to accommodate the concerns of the developing countries in
terms of Article 8.  In the context of Seattle, Brazil might be able to contemplate an extension of theprovisions linked to negotiations to address developing country concerns.
22. The delegate of the Dominican Republic could not agree to an extension of Articles 6.1, 8 and
9 with a decision that thereafter things could be negotiated in the context of a wider program of
negotiations on subsidies as described in Paragraph 40 of the draft Seattle Ministerial Declaration..
There would be serious difficulties with this approach, which was set forth in paragraph 78 of thedraft Declaration.  Articles 6.1, 8 and 9 were among the most flagrant examples of imbalance in the
WTO Agreements.  A significant group of developing countries had submitted proposals to address
some implementation problems concerning subsidies, as contained in paragraphs 21(b) and 22(b) of
the draft Declaration.  Only if there were agreement on those proposals could the Dominican Republic
foresee having any flexibility concerning the extension of Articles 6.1, 8 and 9.
23. The delegate of Poland was very concerned about the impact on the rights of countries in
transition if the Articles in question were not extended.  In particular, this raised the issue of the
necessary amendments to Article 29 of the Agreement,  given that that Article referred to Article 6.
Poland favoured an extension of Article 8 and supported any other Members who were of this
opinion.
24. The delegate of Switzerland stated that there was still a lack of experience in dealing with the
three categories of subsidies, especially with non-actionable subsidies.  The process of setting up the
notification system had taken longer than expecte d, and Switzerland believed it would be premature to
already start changing the framework of the Agreement.  Before changing it, Members needed a
period during which the notification procedure was functioning in a satisfactory way.  There had not
been many notifications of subsidies explicitly referring to Article 8.  In Switzerland's view
delegations should seriously consider what sense it made to completely change the structure of anAgreement which had not really been tested.  By dropping the three Articles (6.1, 8 and 9) there
would be three major consequences: First, a loss of the balanced structure reached in earlier
negotiations by creating the categories of prohibited, of actionable and of non-actionable subsidies, an
approach which seemed quite logical.  Second, a loss of predictability, by eliminating the only
operational provision, the one setting the 5 per cent-threshold.  There was a risk of an increased racefor subsidies, from which maybe some pressure groups, but certainly no country as a whole, could
gain an advantage.  Third, by eliminating th e possibility of subsidizing adaptation to new
environmental laws, WTO would give a rather negative and wrong signal to the public.  It was
probably not so much the more advanced countries, which often had quite strict environmental lawsG/SCM/M/24
Page 6
already in place, but rather those countries which would sooner or later also need to address
environmental problems by introducing new laws and could in the future take advantage of provisions
for such non-actionable subsidies.  It would be short-sighted to eliminate this possibility by not
extending Article 31.  Switzerland supported an extension of the whole set of rules as it was, for
instance for four or five years.  After this period, the relevant Articles should be seriously reviewed.It appeared rather difficult to reach a consensus in the Committee.  Since there was a clear lack of
experience with the instruments in question, it seemed to be a matter of political decision, rather than
of technical consideration by the Committee.  It might therefore be more appropriate to search for a
solution in other fora of the WTO.
25. The delegate of Canada stated that Articles 6.1, 8, and 9 were essential to the traffic light
framework of the Agreement.  With respect to Article 6.1, Canada, as a largely export-driven
economy with a relatively small domestic market, was more likely to experience the negative effectsof subsidy practices through a displacement of its exports than the negative effects caused by
subsidized imports into its home market.  A legal presumption of serious prejudice contained in 6.1
was important as a remedy and a discipline.  Canada anticipated that other Members with high export
dependency would agree.   The loss of Article 8 would mean no green light category in the Agreement
other than that on general availability.  The loss of that provision would be viewed as a regressivestep, and would reduce the ability of the Agreement to address environmental concerns.  Canada
agreed that there were practical issues that warranted clarification respecting the operation of
Annex VII of the Agreement.  With respect to development issues, Canada believed that these were
matters for negotiation.  Canada had tabled a paper indicating its support for comprehensive subsidy
negotiations aimed at building on the existing traffic light framework.  Canada supported extendingArticles 6.1, 8 and 9 for an additional period of time in order to preserve the structure of the
Agreement and as a basis for new negotiations.
26. The delegate of Australia stated that Australia opposed the extension of Articles 6.1, 8 and 9.
Australia had reservations about the appropriateness of Article 6.1(a) as a treaty commitment.
Australia's experience in the area had highlighted the problems involved in programme design wherethis is an objective, even where subsidies were being paid ex post facto .  The work of the Informal
Export Group had highlighted the extreme problems in respect of ex ante  subsidies.  Some
recommendations allowed for subsidy calculations based on events after granting.  While many of
these issues might be tolerable for countervail purposes, they were not for treaty purposes, especially
given the problems in removing adverse affects, for example, withdrawal of subsidies under Article 7.
The purpose of the Article 31 review was to see whether extension or modification should be made in
the light of experience and reflection on how the provisions should be operated.  Practical experiencehad highlighted the problems involved.  The Informal Experts Group also had highlighted the tension
between the countervailing duty approach and the trade policy approach to these issues.  No Member
could have any confidence about how a panel would perform calculations on the level of a subsidy.
There was in addition the problem of how a governme nt could know what the level of sales would be
in the future for an individual company.  Even the issue of what was meant by the level of sales raised
some interesting and complex issues.  While Article 6.1(a) was not a violation issue, it represented a
form of commitment that the government must  meet to minimize its jeopardy under the SCM
Agreement.  However, this was almost impossible.  Of course, governments could limit themselves to
ex post  bounty payments on production but even this would give rise to some calculation issues and it
did not seem to be the intent of the SCM Agreement to require Members to limit themselves in thatway.  Australia had reservations about when the review needed to be concluded by.  Moreover, it
remained unclear what the treaty nature of any Committee decision on this issue would be.  If legally,
an extension constituted an amendment to the treaty, then domestic constitutional procedures would
preclude Australia from going along with a cons ensus without due domestic processes being followed
first.G/SCM/M/24
Page 7
27. The delegate of Chile stated that Chile could support an extension, without prejudice to what
might be agreed in the next round of negotiations.
28. The delegate of Honduras noted that paragraph 78 of the draft Ministerial Declaration referred
to the extension of Articles 6.1, 8 and 9 as an item for immediate decision, and recalled as well that
paragraphs 21 and 22 on implementation in that draft.  Honduras could consider paragraph 78, butonly after a complete agreement to the implementation paragraphs 21 and 22.
29. The delegate of Malaysia stated that Malaysia could not support an extension as intimated in
Paragraph 78 of the draft Ministerial text, until and unless the concerns of developing countries under
the Subsidies Agreement were met.  Malaysia su ggested that the Committee let the Articles lapse,
wait for the outcome and developments at Seattle, and then perhaps restore Articles 6.1, 8 and 9.  If an
extension was decided at that time, these Articles in that context could be extended, but only on the
condition that the concerns of developing countries were also taken into consideration for the sameperiod of time.  Malaysia could never agree to the language in paragraph 78, which suggested that the
Committee go for the extension first and then take care of the concerns of the developing countries
after Seattle.
30. The delegate of Philippines stated that Article 8 catered specifically to developed countries.
31. The delegate of Pakistan stated that Pakistan was not in favor of an extension unless
developing country concerns were taken into account and Article 8 amended to include subsidies that
suited the needs of the developing countries.  Article 8 only included subsidies of interest to
developed countries.  This disturbed the balance of the Agreement.  Subsidies which could be
essential to achieve legitimate developmental goals of the developing countries were currently
regarded as actionable.  Unless there was an agreement to expand Article 8 to include subsidies fordeveloping countries, Pakistan could not agree to an extension of the Articles.  Pakistan supported
Malaysia concerning the draft Ministerial text.
32. The delegate of Mexico stated that to preserve the integrity of the Agreement, Mexico was in
favor of the extension of the Articles under discussion as they were currently drafted, but for a
definite time-period, not to exceed the next round of negotiations.  This did not prejudge any positionthat might be adopted by Mexico concerning the agenda of the new round of negotiations, or with
respect to proposals for preferential treatment in those negotiations.  Mexico was open to debating
these subjects, but in another forum.
33. The delegate of the United States stated that the United States had always had mixed views on
the provisions.  The United States was in a position to join a concensus to continue the provisions for
another limited period of time, as there was little experience in using them, they played some role in
balancing the Agreement and offered something of value to all Members.  It was not only developedcountries who could benefit from green light subsidies or Article 6.1, as presumably all Members had
for example regional development programmes, and the rules in the Agreement were not limited to
one class of countries.  It was apparent, however, that there was not a consensus, and in the light of
this the US was not prepared to discuss other issues that might have their own validity but were for
another forum to consider.  The US could not speculate as to whether any new round would include arenegotiation of the SCM Agreement.  There was no universality of view in the Committee at that
moment, and the US was happy to live with that result.
34. The delegate of Korea stated that the Articles should be extended because of the lack of
experience in using them, as cited by other delegations.
35. New Zealand had made little or no use of the subsidies and provisions under consideration in
the Article 31 review, and continued to question their utility for Members.  New Zealand did notG/SCM/M/24
Page 8
support extension of the provisions and would favour their ceasing to exist at the end of the year,
unconditionally.
36. The delegate of India stated that any extension of these Articles in their present form would
be unacceptable, even for a limited time.  One possibility was the lapse of these Articles, which would
be fine from India's standpoint.  The second alternative would be an extension with simultaneousagreement to expand Article 8.1 to include subsidies covered by Article 3.1 when such subsidies were
provided by developing country Members.  This would mean that subsidie s that otherwise would be
prohibited for developing countries would become non-actionable.
37. The Czech Republic favoured extension for a limited time, until the end of the new round.
38. In the view of Turkey it was important to maintain the general balance of the Agreement.
Turkey therefore supported an extension.
39. The European Communities preferred to continue the provisions for a limited time.  If the
dark amber subsidy (Article 6.1) and the green light provisions (Article 8) were discontinued,
important parts of the structure of the Agreement would be removed from the Agreement as it was
currently framed.  Any change in these Articles should be made in a renegotiation of the Agreement.
Allowing them to lapse and then starting from scratch would not be a good idea.  Thus, these
provisions should continue in force and be up for discussion in the new round.
40. The delegate of Hong Kong, China stated that Hong Kong, China was comfortable with a
limited extension to allow time for consideration of the developing countries' concerns.  The issue
under discussion seemed to be related to discussions in the General Council and it was not clear what
the relationship was between the two discussions.
41. The Chairman stated that all Members were Members of the different for a and bodies of the
organization, and that sometimes there were interlinkages.  This Committee had its mandate and
needed to operate in accordance with that.
42. Israel believed that the application of Article 8 with regard to non-actionable subsidies should
have been extended in its current form until that Article could be modified within the framework of
the new negotiations to start in Seattle.  The criteria presently set forth in Article 8.2 imposedunreasonable conditions which were difficult to meet, particularly for smaller economies.  This might
have explain the comments made by certain other Members stating that there had been insufficient
experience with the those provisions.  Nonetheless, Israel felt that an extension of the concept of non-
actionable (green light) subsidies was an essential element in pursuing the goals underpinning the
principles of the WTO.  It was important that green light subsidies be recognized as playing an
important role in the economic development of all countries, inter alia , by promoting employment
and encouraging sustainable development.  It was Is rael's view that if the extension were not agreed
to, it would be almost impossible to resurrect the key concept of non-actionability.
43. The delegate of Poland stated that in Poland's view, there were two equally justifiable
interpretations of Article 31, the first being that the question before the Committee was whether or not
to extend Article 6.1, 8 and 9 and the second that the issue was not whether or not to extend, but the
form of the extension (i.e., whether to extend as presently drafted or in modified form).  Polandsought Members views on these two interpretations.
44. The delegate of Thailand disagreed with Poland 's interpretation.  In Thailand's view, "whether
to extend their application" was the question, i.e., extension of the provisions, whether or not
modified.  Regarding the lack of experience, Thailand thought that this reflected either that the
provisions were useless or that they were not sufficient for Members to have used them.  If theG/SCM/M/24
Page 9
former, they should be dropped.  If the latter, they should be adjusted such that developing country
Members could benefit as well.  Unless developing countries' concerns could be addressed, there was
no use in preserving the provisions for all Members.  Members had ample time to consider the
provisions, and those Members that wanted them extended had to consider the need for modifications
to make them balanced.
45. The delegate of Brazil stated that the provisions were valid for five years only.  If there were
no agreement to extend them, then they would disappear.  The last part of the second sentence in
Article 31, which had been referred to by Poland, could not be dissociated from the first part.  If these
provisions lapsed, however, this would not mean that the exemption provided for countries in
transition in Article 29.2(a) would also lapse. For developing countries, it was not easy to use
subsidies under the provisions due to resource constr aints.  Article 8.2(b) required non-specificity and
this made it too expensive to implement.  Brazil was not looking for a complete redrafting ofparagraphs 8 and 9, but saw room in them for improvement, if not in the new round, then in due time.
If there was no agreement, then the provisions would lapse.  Brazil could not agree to close the review
of the provisions at this meeting but thought that the Committee should wait until the Ministerial
Declaration was adopted at Seattle.  Perhaps the Committee could hold an extraordinary meeting after
that.
46. The delegate of the Philippines agreed with Brazil's interpretation of the second sentence of
Article 31.  In his view as well, if Article 6.1 la psed, Poland should not worry about its benefit under
Article 29.2 lapsing at the same time.  The rights under that Article would be preserved.  Concerning
the question of extension, the Philippines was not saying no, but rather was saying to proponents of
extension "help us to help you".
47. The Chairman noted that it seemed that the Committee still had not reached consensus with
respect to any extension of the provisions under review.  The Chairman urged Members to discuss this
matter bilaterally, to see if there remained the pos sibility that such a consensus could be reached.
Depending on developments in the coming weeks, the Chairman might call further informal
consultations and/or special meetings of the Committee.
48. The delegate of Thailand asked what would happen to the three provisions if the review was
not closed at the meeting or by 31 December 1999, i.e., if the review continued beyond 31 December
1999.
49. The Chairman stated that the date of the end of the review was 31 December 1999.  If there
was no consensus to extend the provisions at that time, then the provisions would lapse.  There
remained time to resolve these issues, depending on developments elsewhere.
50. The delegate of Malaysia stated that Malaysia  would endeavour to participate in any further
consultations, but that delegations continued to talk past one another.  As long as this remained the
case, there was no need for further consultations.
51. The delegate of Brazil stated that unless a formal decision of the Committee were taken to
extend the provisions between this meeting and 31 December 1999, then the provisions were over.
52. The Chairman indicated his willingness to convene a special formal meeting after Seattle, if
the situation was propitious for decision on an extension of the provisions in existing or modified
form.  He would stay in contact with delegations to that effect.
53. The Committee took note of all statements made.G/SCM/M/24
Page 10
H. SEMI-ANNUAL REPORTS OF COUNTERVAILING DUTY ACTIONS
54. A request for semi-annual reports for the first half of 1999, to be submitted by
31 August 1999, had been circulated to the Committee in document G/SCM/N/52, dated 25 June
1999.  Since then, seven Members – Canada, Egypt, European Communities, Peru, South Africa,
United States, and Venezuela – had submitted semi-annual reports.  Four other Members – Argentina,Australia, Mexico, and New Zealand – had reported having taken no action during the period, but had
reported definitive measures and/or undertakings in force.  These reports had been circulated and were
available in the document package.  Also in the document package was document
G/SCM/N/52/Add.1 which showed the status of semi -annual reports.  Since that document had been
circulated, the semi-annual report of the United States had been received, as had communications
from the Domincan Republic and Indonesia.
55. The delegate of Egypt noted that Egypt already had notified the 2 July 1999 termination of
the countervailing duty investigation on white sugar imported from France, Spain, Italy and the rest of
the EC.  There had been no proven evidence of material injury affecting the complaining national
industry resulting from any subsidy practices.
56. The delegate of the United States apologised for the lateness of the US report.
57. The Chairman stated that it was extremely unfortunate that, as indicated in
G/SCM/N/52/Add.1, a majority of WTO Members had not yet submitted a semi-annual report of
countervailing actions.  While many of those Members had not used countervailing measures, a
number had notified countervailing legislations and/or in the past had taken countervailing action.
Members that had not taken action were to have notified the Committee to that effect.  Such a
notification could be in the form of a simple one-sentence letter stating that the Member had taken noaction during the relevant period and that it maintained no definitive countervailing duties or
undertakings in force as of the end of the period.  Where no notification was received from Members,
there was a tremendous loss of the transparency that was central to the proper functioning of the
system.  The Chairman strongly encouraged Members who had not yet done so, to submit a
notification promptly.
58. The Committee took note of the statements made.
I. REPORTS OF PRELIMINARY AND FINAL ACTIONS
59. The Chairman stated that lists of the notifications of preliminary and final countervailing
actions had been circulated to the Committee in documents G/SCM/N/51, 53 and 54.  Since the last
regular meeting of the Committee, the European Communities and the United States had notified
taking actions.
60. No questions or comments were raised concerning these documents.
J. REVIEW OF ARTICLE 27.6
61. The Chairman stated that Article 27.6 contained a provision for determining whether a
developing country Member had reached export competitiveness in a product.  Article 27.6 also
provided that the Committee should review the operation of this provision five years from the date of
entry into force of the WTO Agreement.  This wa s the last regular meeting of the Committee before
the end of that five-year period.  The Chairman noted that the Committee had had no experience to
date with the operation of the mechanism for dete rmining export competitiveness in a product, as
there had been no notification from any Member that it had reached export competitiveness as
defined, nor had any Member requested that the Secretariat perform a calculation to determineG/SCM/M/24
Page 11
whether another Member had reached export competitiveness.  Nevertheless, the Agreement required
the Committee to conduct a review of this provision.  The Chairman invited delegations to comment
concerning the operation of Article 27.6 of the Agreement.
62. The delegate of the European Communities noted that a number of countries had requested
that the provisions of Article 27.6 be reviewed in the context of the possible new round.  The EC
agreed that there was some need to review this provision, because Members had had no experience
with its application.  In the view of  the EC this was a result of the current drafting of the provisions.
In order to make them more meaningful, the definition of a product in Article 27.6 should be
examined.  This was described as a section he ading of the Harmonized System nomenclature, an
enormously broad definition.  In the view of the EC, no resort had been made to this provision during
the first five years that it was in force because of this.  This was something that should be addressed in
any discussions of this provision in the new round should that take place.
63. The delegate of Canada echoed the concerns of the European Communities regarding
Article 27.6.  Canada had in certain cases reviewed  the possible application of that provision and
found that the HS section heading was very broad, especially when dealing with manufactured
products.  For Canada, it was not clear that this was an accurate measurement of competitiveness in a
product.  Canada supported a comprehensive negoti ation in the new round and would favour taking
up this issue in that context.
64. The delegate of the United States noted as well the lack of experience in using this provision.
Down the road, if this provision were not included in the new round, there might be some scope for
the Committee to continue looking at this question.  The EC and Canada had mentioned the scope of
the HS heading as one issue.  Obviously, the part of the paragraph referring to the Secretariatperforming a calculation was expressed in a rather open-ended way, and at some point this might
benefit from further discussion, although this did not necessarily mean amending provisions of the
Agreement.  The United States concurred with the observation that it was difficult to reach any
definitive judgements about the operation of the provision given that there was no real experience in
using it.
65. The delegate of India stated that the provision was introduced to benefit developing countries
and there had been no notification in a sense of a request to the Secretariat to see if this condition had
been fulfilled or not.  India had no experience in using this  provision.  This matter was of interest,
and there had been specific proposals made in this respect in the Seattle Ministerial process.
66. The Chairman thanked delegations for the comments.  The Chairman believed that the
discussion had been very useful and that the review should remain on the agenda of future meetings.
67. The Committee took note of the statements made.
K. COMPLIANCE WITH ARTICLE 25 NOTIFICATION OBLIGATIONS – REQUEST BY
THE EUROPEAN COMMUNITIES
68. The delegate of the European Communities noted the EC's deep concern over the level of
compliance of Members in providing new and full notifications of subsidies under Article 25.2 of the
Agreement.  The EC already had raised this issue a number of times and was concerned that there hadbeen no improvement in the situation. Rather, the performance in respect of notifications had
deteriorated.  In the first round of new and full notifications, due on 30 June 1995, 70 Members had
made such notifications.  In the second round of new and full notifications, due 30 June 1998, there
had been on 37 notifications.  Thus, 81 Members had made no notifications.  Although the EC
accepted that there were a certain number of least developed countries that had real difficulty inmaking notifications and that probably they did not have resources to provide subsidies anyway, theG/SCM/M/24
Page 12
notification question was not an issue that necessari ly divided the developing and developed world, as
the list showed that many developing countries had made their notifications, while some developed
countries had not made any notifications.  This poor compliance created an imbalance of
transparency, since Members that could not be bothered to make their notifications still had access to
all of the data in those of other Members, while Members could not review the subsidy programmesof non-notifiers or put questions to them.  The special meetings had become much less useful than
they were intended to be because only a small number of Members were subject to review.  The
question was what to do about it.  In the view of the EC, all notification obligations under the
Agreement were linked.  Members could not pick and choose which notifications they liked and those
they could not be bothered to make.  One Member which had not submitted new and full notifications
had put questions on the EC's countervailing legislation.  The EC did not consider these questions to
be a priority as long as this Member had not made its new and full notification. The EC felt that it wasimportant to reduce the burden of notifications and had made a proposal to that effect which was to be
discussed under the next agenda item.  But regardless of the frequency of notifications, there was a
basic level of transparency required, particularly of the Members who were more developed and
active in the Committee.  This was needed to keep the whole procedure from falling into disrepute.
The EC sought the views of Members as to why some of them had not notified and what steps couldbe taken to improve the situation.
69. The delegate of Brazil agreed with the EC with regarding transparency.  Brazil had not yet
submitted its new and full notification for 1998, and stated that certain delegations could not notify, in
light of the administrative procedures inside their own governments.  Brazil was comfortable asking
questions for the sake of transparency concerning notifications that had been presented by otherMembers, and would welcome questions when it submitted its notifications.  Whether those Members
receiving questions from Brazil placed those question on the top of the agenda or not, was up to those
Members.  The situation in this Committee was the same as in other Committees, particularly
Agriculture.  Very important Members of this organization had been late for almost two years in
submitting notifications on agricultural subsidies.  Brazil underlined that every Member should takeinto account the need for transparency in all areas covered by the organization.
70. The delegate of Egypt stated that the compliance regarding new and full subsidy notifications
had proved to be low and that compliance on the updating notifications was even lower.  As a
developing country lacking human and financial resources, Egypt found it burdensome to collect data
to update its notifications.
71. The delegate of Australia informed the Committee that its update was in hand.  Australia was
still trying to obtain sub-national information to make a more complete notification.
72. The delegate of the United States noted that none of the Members had a perfect track record,
and asked other delegations to consider the benefits of notification, particularly when they began to
consider alternative methods to meeting the obligation.  The benefits were transparency, and an
understanding of the reason for subsidy disciplines.
73. The delegate of Malaysia indicated that Malaysia had not made its new and full notification,
but not for lack of effort.  Inter-agency consultations were ongoing in Malaysia on the subject.  Thus
it was not, as the EC had implied, that some delegations were not bothering to notify.  Developing
countries often could not submit on time, as they were faced with particular difficulties and with the
fact that there were many different notifications to make.  Malaysia agreed with Brazil that
proponents of transparency should practice it in every forum, not just in this Committee.
74. The delegate of the European Communities stated that the EC did not underestimate the
problems that the notification requirements could cause to Members.  The EC understood that certain
developing countries would need some time to make their notifications.  The concern that the EC hadG/SCM/M/24
Page 13
was that this should not be portrayed as a developing versus developed country issue.  Indeed, a
number of developing countries had submitted very good notifications.  The Secretariat had
conducted technical assistance to help developing countries in this regard.  So this was not uniquely a
developing country issue.  When the Committee decided in April 1998 on the procedure to review
new and full notifications, Members knew that there would be only three special meetings for thatreview.  Now, although the Committee was about to hold the third of those meetings, only 37
notifications had been received.
75. The Chairman noted that there were very serious compliance problems with respect to
subsidy notifications, which had significant repercussions for the proper functioning of the
Agreement.  The Chairman urged all Members to redouble their efforts to rectify this situation.
76. The Committee took note of all statements made.
L. FREQUENCY OF ARTICLE 25 SUBSIDY  NOTIFICATIONS
77. The Chairman recalled that at informal consultations on 21 June 1999, the Committee had
continued its discussion of the proposal by the EC concerning the frequency of notifications under
Article 25 of the Agreement (G/SCM/W/421), i.e., that  new and full notifications be made every two
years and that updating notifications be abolished.  During the 21 June discussion, the Committee had
asked the Secretariat to prepare a factual report on compliance with the annual notificationobligations, which report had been circulated in document G/SCM/23.  As the explanatory note in that
document indicated, compliance with both the obligation to provide a new and full notification
triennially, and the obligation to provide an an nual update in the intervening years, had been
consistently poor, in terms of both raw numbers and timeliness.  It also was clear that compliance on
updates was worse than for new and full notifications.  Updates were both fewer in number andgenerally less timely, covering multiple notification periods in a single document.
78. The delegate of the European Communities stated that the purpose of its proposal concerning
the frequency of notifications was to make the notification process more efficient and fair.  Biennial
notifications would allow Members the opportunity to review the notifications in the intervening year,
rather than concentrating on producing their own updates.  Getting rid of the requirement to updatewould give Members more time to concentrate on the review process.  Updating notifications were
becoming an irrelevance.   The EC approach would reduce the burden on Members by eliminating the
update and making the new and full notification biennial.  This would not sacrifice any transparency.
The proposal seemed to have gathered considerable support in the Committee.
79. The delegate of Egypt believed that there was a rationale behind the EC's proposal, yet
believed that such a proposal should not treat all countries on an equal footing.  If the proposal was
for a new and full notification every two years and the abolition of the updating notifications, thenspecial and differential treatment of at least three years should be accorded to developing and least
developed countries, with updates abolished.
80. The delegate of Poland supported the EC's proposal, although Poland had doubts that the
proposal would have any impact on the behaviour of late notifiers.  The proposal did not seem to
address the root cause of Members' negligence.  For this reason the Committee should look to lessformal measures to cope with the problem.
81. The delegate of the United States supported the EC's proposal, not just to lighten the
notification burden, but to increase transparency.  The proposal would allow one year for the
preparation of notifications and another year for their consideration, which would improve both
processes.  The US asked the Egyptian and Polish delegates for further details concerning theirrespective proposals.G/SCM/M/24
Page 14
82. The delegate of Egypt had originally asked the Secretariat to prepare the factual background
note concerning compliance with the annual notification obligations under Article 25 of the
Agreement, to provide a useful basis for judging the EC's proposal.  It was clear from the start that
developed countries were the most compliant and it was obvious that they had more resources.  There
was a rationale for the EC proposal, but Egypt proposed that developed countries should make anotification every two years and developing countries every three years, in light of their difficulties.
83. The delegate of Poland echoed the views expressed by the delegate of the EC who was aware
that for late notifiers, especially developed countries, it did not matter whether they operated on an
annual or biennial basis, if the root cause was something other than technical.  If it was a technical
problem, then the EC proposal was perfect, but it seemed that some developed country Members did
not consider it important to notify on time.  The meetings should and did serve as self-discipline for
all Members.  If self-discipline did not work, then the Committee should resort to more formalmeasures.
84. The delegate of Malaysia stated that the EC proposal was attractive but that it should have an
element of special and differential treatment as well.  The Egyptian proposal also was attractive.
Another idea would be for developing countries to make a new and full notification every two years,
with updates, while developing countries should have to notify once in three or four years, with noupdates.
85. The delegate of Canada raised questions about what the next steps were.  Canada wanted to
focus on the new and full notifications.  Canada had problems itself and had been late with its 1998
notification.  Canada was unsure of how to react to Egypt's proposal and not sure how to proceed.
86. The delegate of Thailand stated that compilin g information for notifications was extremely
difficult.  Thailand was one of the developing countries that had complied with the notification under
Article 25, except for the latest update.  There was a difference in the available resources (financial
and manpower) for making the notifications.  Due to transparency concerns, Thailand could not agree
to abolish updating notifications.  Updating was much easier than the new and full notifications, and
manageable if one tried.
87. The delegate of Egypt wanted to clarify what appeared to be a misunderstanding with
Malaysia regarding Egypt's proposal.  Egypt agreed th at there should be a full notification every two
years for developed countries, plus updates, and for developing countries, a full notification every
three years with no update.
88. The delegate of Mexico thanked the EC for the proposal.  The degree of compliance on new
and full notifications had been rather low, as had been the case for updating notifications.  The
developing countries had problems complying with  these requirements.  This was probably due to
lack of financial resources and technical difficulties.  On the other hand, the delay in these
notifications raised the question of the frequency with which they were supposed to be submitted,
given that the present system was not effective.  Mexico favoured facilitating notifications to increase
compliance with regard to developing countries.  Mexico believed that annual updating notifications
should be eliminated.  Mexico preferred a three-year notification period for developing countries.
89. The delegate of the European Communities stated that the EC proposal was not as
complicated as it had become.  If there were different timing for new and full notifications by
different groups of Members, that would lead to difficulties in the review of notifications.  The review
was as important as the notification itself.  The EC could envision that notifications might be less
frequent for certain developing countries, but with in a strict framework, such as that Annex VII
countries could benefit from such differential treatment.  If a solution were developed that was more
complicated and onerous than the current system and made the situation worse, this would not helpG/SCM/M/24
Page 15
anyone.  The EC's proposal was aimed at simplifying the notification process and reducing the burden
on all Members.  The suggestion by Malaysia and Egypt that the developed countries make a full
notification every two years and an update in betw een would add to the burden of the developed
countries, which the EC would not support.
90. The delegate of the United States did not agree that developed countries should provide
annual updates.  An annual update was no different from a new and full notification, in terms of work
and burden.   It required the same amount of time and resources to produce both.  The United States
agreed with the EC that the direction in which the discussion of the proposal seemed to be headed was
not profitable for the Committee.  The United States was open-minded about particular problems that
some developing countries might face.  The EC's suggestion to look to Annex VII as a basis for
addressing this was something worth considering, although it might pose the problem of deciding
which countries were developing countries, an is sue that the Uruguay Round had been unsuccessful in
resolving.  Also it might pose logistical problems concerning who was to report what and when.
Preparation of notifications might provide the only  chance for national governments to get in touch
with other levels of government for something othe r than dispute settlement.  The WTO rules applied
to all levels of government, so this exercise w ould eventually educate the officials at those levels
about their WTO obligations.  Thus, over time, the notifications should provide a tool forgovernments to fully understand the rules and obligations of the WTO.
91. The delegate of Brazil agreed that the issue should not be of developed versus developing
countries.  The process had to do with the ability of administrations to coordinate the effort of several
agencies at different levels of governments.  Brazil had difficulty doing this.  Many times Brazil had
notified programmes that other governments did not.  The problem of notifications had to do withability, not willingness.  In the long run the process should become easier as Members gained practice
in notifying.  Concerning the proposals for differences in timing of notifications, and concerns that
this would pose logistical problems, in practice such  differences in timing already existed.  Brazil's
preliminary view was that developed countries should notify fully every two years and developing
countries every three years, with updating notifications abolished for all countries.  This wouldimprove the situation for everyone.  Brazil did not yet have a final position, but saw the EC's proposal
as beneficial.  Brazil did not favour limiting to Annex VII countries the longer interval for
notification.  This should apply to all developing countries.
92. The delegate of India stated that the EC's proposal was constructive.  India agreed with
Poland that the problems of notification should be looked into.  The issue was complex and needed to
be discussed further.  The crux of the problem was reducing the burden without sacrificing
transparency.  Most subsidization was done by developed countries, meaning that updatingnotifications from them might remain necessary.  On the other hand, among the developing countries
that had notified, 12 of 35 had made nil notifications.  This showed that although this was not really a
developed versus developing country issue per se , due to the nature of the subsidization this element
was built in and could not be ignored.  The EC suggestion was useful, and should continue to be
examined.
93. The delegate of Malaysia stated that the most important issue was transparency.
Transparency through notifications by all developing countries was important as these countries all
were competitors.  It was important to maintain balance between transparency and the practical
difficulties faced.  Some of the agencies that were contacted to provide information for notifications
did not even know what the Uruguay Round Agreemen ts were or what a subsidy was.  Flexibility
only for Annex VII countries was not a good idea.  Al l developing countries must be given flexibility
if any was given, as the question was not GDP per capita but resources and level of understanding.
94. The delegate of Thailand was concerned about the frequency of new and full notifications for
the developed, developing and least developed countr ies.  Updates between notifications needed to beG/SCM/M/24
Page 16
addressed as well.  Thailand did not necessarily agree with the United States on the equal burden on
different groups of Members.  Informal consultations  could be held in order to determine the answers
to the questions that had been discussed.  Some solutions could be found to alleviate the difficulties
that the developing countries faced, so as to increase the number of full and updating notifications by
developing countries, and thus improve compliance with the Agreement.
95. The delegate of the European Communities expressed the EC's appreciation for the comments
and suggestions.  Concerning the EC's experience with updates, these could be as burdensome as the
new and full notifications, but very little notice was taken of them by Members.  The burden was too
much in relation to the notice taken.  Members should put some priority on notifying, for the benefit
of transparency.  Members' suggestions had been extremely constructive, and the EC looked forward
to further discussion of this issue.
96. The Committee took note of all statements made.
M. OTHER BUSINESS
(i) Canada – Countervailing duty Investigation of Hot-Rolled Carbon Steel Plate
(requested by Indonesia and Thailand)
97. The delegate of Indonesia stated, first, that the allegation of subsidies in this investigation was
entirely contained in a non-confidential petition submitted by the US industry to the US Government
in a proceeding covering a similar product earlier in the year, which proceeding was still ongoing.
Although the Canadian authority suggested in the notice of initiation that additional evidence of
subsidies was available to the authority, there was no non-confidential summary or explanation
thereof to substantiate this, as required by Article 12.3 of the Agreement.  Indonesia considered thatreliance on a complaint submitted by a petitioning industry in the US was unacceptable and should in
no circumstances be considered to be properly documented as concluded by Revenue Canada.  Article
12.2 of the Agreement requires Canadian petitioners, not the US industry, to prepare the evidence.  As
the complaint on subsidies was limited to non-confidential allegations, the Indonesian Ministry
considered that Revenue Canada was not in a position to exercise the responsibility incumbent oninvestigating authorities flowing from Article 11.3 of the Agreement.  Indonesia was seeking
guidance.  To date, the investigating authority in Indonesia had rejected a number of subsidy
complaints because of lack of evidence provided by the industry concerned.  If the Committee
considered the Canadian approach to be reasonable, Indonesia would have no choice but to initiate
subsidy proceedings based on the non-confidential complaints of other Members.  The Indonesian
government considered this precedent extremely dangerous, as it would substantially dilute the
Agreement in terms of the need for substantial evidence to support allegations, and bring about asubstantial increase in the number of proceedings.  It was in the overall interest of Members to
address the issue urgently.
98. The delegate of Thailand stated that Thailand had serious concerns over these investigations
of hot-rolled carbon steel sheets from Thailand as well as Indonesia and India.  The application for
initiation of the proceeding should not even have b een considered by the investigating authorities, let
alone accepted.  Upon receiving the information from Canada, the Royal Thai government had
discovered that the information used in the application was based on an application by the US
industry to the United States Department of Commerce on cold-rolled steel sheets, the CVD portion
of which had been rejected because the evidence provided therein was insufficient.  Thailand
requested that the Canadian investigating authoritie s reconsider their initiation and promptly terminate
the investigation.  Thailand wished to raise an alarm that countervailing measures were being
extensively abused as trade barriers.  This investigation represented a severe case of abuse where
information on other products used by another investigating authority was used without due
discretion.  This communication, in addition to that already dispatched to Revenue Canada,G/SCM/M/24
Page 17
culminated in Thailand's request that the Canadian  investigating authority immediately terminate its
countervailing duty investigation on hot-rolled carbon steel plates.
99. The delegate of India stated that this was a matter of due process and procedure.  India had an
interest in the matter and associated itself with the comments made by the two previous speakers.
100. The delegate of Canada stated that Revenue Canada had received a complaint from its
Canadian producers of hot-rolled carbon steel plate alleging material injury caused by the importation
of subsidized goods from Indonesia, Thailand a nd India.  On 17 September, Revenue Canada had
advised the Canadian complainants and the governments of the named countries that the complaint
was properly documented, and invited them to exercise their rights under Article 13 for consultations.
The parties also had been provided with the non-confidential version of the complaint.  Based on the
evaluation of information provided in the complaint,  as well as other information available to the
Canadian Government, the authorities had been satisfied that the complaint met the requirements ofthe Agreement, as there was sufficient evidence concerning subsidies and injury to warrant the
initiation of the investigation.  Concerning the complaint that the petitioners became aware of the
subsidies through the US investigation, this was not the issue.  The issue was the programmes, and the
authories were willing to take on all board all evidence.
(ii) European Community – Countervailing Duty Investigation of Polyethylene
Teraphthalate (PET) (Request by Thailand)
101. The delegate of Thailand referred to the re cent increase in the number of countervail
proceedings initiated by the European Union, and the recent note verbale  indicating the possible
initiation of the case on PET from Thailand.  While Thailand acknowledged the right of the EC toinitiate countervailing measures, complaints should be well documented and based on well-
substantiated evidence, in accordance with Article 11.2 of the Agreement.  Thailand was concerned
that numerous complaints submitted by the EC domestic industry to request countervailing duty
investigations were almost identical in scope and terminology, the main differences being the subject
goods and the injury allegations.  In this respect, it appeared that the EC industry was simply using the
text of earlier complaints to initiate proceedings, and this was being accepted by the investigating
authorities concerned.  There also appeared to be a lack of evidence on the supposed linkage of the
alleged subsidies to the exporting interests concerned.  In the most recent case of PET, the majority of
Thai exporters mentioned by the complaint had already ceased production, a fact which was
commonly known to industry circles in Thailand an d/or specialized international press. In the
calculation of the alleged subsidies the complaint referred to "some 20 per cent".  The loose
terminology used also cast doubts on the evidence supplied.  The injury aspect of the complaint wason attributes on dumping and not subsidies.  As established from the beginning, this was an anti-
subsidy case, not an anti-dumping case.  The reply fr om the EC authorities had been that references to
dumping instead of subsidies were typing errors.  Thailand considered that this was an issue of
substance, and revealed a shortcoming on the part of  the authority, whose responsibility was to ensure
that an application was properly documented.  In Thailand's view, the EC was misusing proceedingson subsidies as an attempt to offset a temporary and transient competitiveness of the devaluation of
Asian currencies, without due attention being paid to the requirement of substantiating evidence.
Thailand requested that the EC not use CVD measures as trade barriers and that it be more objective
in the operation of CVDs.  The Committee should provide a forum where a discussion should take
place regarding issues not yet sufficiently defined in the Agreement.  The requirements of sufficientevidence needed to be defined further to avoid proliferation of countervailing proceedings initiated in
such a fashion by the EC among others.  In this case, the evidence of subsidies consisted of
investment guides, one of which was outdated.  If such evidence were considered sufficient for
initiation, there would be a proliferation of proceedings in the future.G/SCM/M/24
Page 18
102. The delegate of Korea stated that Korea was an  interested party to the PET CVD case raised
by the Thai delegation.  Korea had similar concerns to those raised by Thailand concerning the text of
the complaint.  Korea had been named in four previous CVD cases initiated by the EC, and in all five
cases, the texts of the complaints were almost the same.  Korea had concerns regarding the burden of
proof in complaints.  Article 11.2 provides that when deciding whether to initiate an investigation,simple assertion is not sufficient.  Investigating authorities should examine the accuracy and adequacy
of the evidence in the CVD cases.  In Korea's view, all of these investigations had been initiated in
spite of a lack of evidence.
103. The delegate of the European Communities stated that the EC was not fully prepared to
respond to the questions that had been raised, noted that no decision had been made regarding
initiation, and suggested that if the questions were put in writing it would facilitate answering them,
either in writing or at the next meeting.  The comp lainant in this case had also been the complainant in
a previous case concerning these countries, so it was not surprising that much the same language was
used in this complaint.  It was inevitable that if the same schemes were involved, similar language
would be used.  Regarding the questions on eviden ce, the EC was examining them.  The EC did not
use CVDs or AD measures as trade barriers, but as measures to remedy unfair trading.  Thailand's
suggestion that the Committee discuss issues that were not defined already in the Agreement would besupported by the EC.  If the new round were to include consideration of the Agreement then more
specific rules could be developed in this context.
(iii) Chairman's Report to the Chairman of the Goods Council
104. The Chairman recalled that, as decided at the 21 July informal consultations of the
Committee, in September he had sent a letter on his own responsibility to Ambassador Farrell,
Chairman of the Council for Trade in Goods, reporting on the activities of the Committee since the
adoption of the Committee’s 1998 annual report.  A copy of the letter had been circulated to the
Committee at the time that it was sent to Ambassador Farrell.  The Chairman had taken this step so
that the Goods Council would have updated information concerning the Committee’s activities at the
time that the Goods Council prepared its 1999 annual report.
105. The Committee took note of all statements made under "other business".
N. ANNUAL REPORT TO THE COUNCIL FOR TRADE IN GOODS
106. Before turning to consideration of the draft annual report of the Committee that had been
circulated to Members earlier in the week, the Chairman noted that  a number of Members had raised
the concern, in the context of preparations for the Seattle Ministerial Conference, that the annualreview process was routine and did not provide an opportunity for meaningful review of the
implementation of, inter alia , the SCM Agreement.  The Committee early on had decided on a
process for conducting its annual reviews, but this could always be changed if the Committee so
wished
.  The Chairman invited comments as to how the annual review process in future years could
be made more useful and meaningful to Members, noting that to make any changes, some input from
Members would be needed.   
107. No comments or suggestions were made.
108. The Committee adopted its 1999 Annual Report, which has been circulated in document
G/L/341+Corr.1.G/SCM/M/24
Page 19
O. DATE OF THE NEXT REGULAR MEETING
109. The Chairman reminded the Committee that all 1998 new and full subsidy notifications that
had not been reviewed in the special meetings conv ened for that purpose would be reviewed at future
regular meetings of the Committee, with the same  procedures regarding deadlines for placing a
notification on the agenda of a meeting, and for the written question and answer process, as were used
for the special meetings.
110. The Chairman noted that the next regular meeting of the Committee would be held during the
week of 8 May 2000.
111. The meeting was adjourned.
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