RESTRICTED
WORLD TRADE G/SCM/M/13
6March 1997
ORGANIZATION(97-0905)
Committee onSubsidies andCountervailing Measures
MINUTES OFTHE MEETING HELD
ON23-24 OCTOBER 1996
Chairman: Mr.V.doPrado (Brazil)
1. TheCommittee onSubsidies andCountervailing Measures ("theCommittee") heldaRegular
Meeting on23-24 October 1996.
2. TheCommittee adopted thefollowing agenda:
Page
A. Countervailing dutylegislation orregulations -notifications ofnewor 3
amended legislations notpreviously reviewed bytheCommittee (Article 32.6):
(i) Argentina (G/SCM/N/1/ARG/1/Suppl.1)
(ii) India (G/SCM/N/1/IND/2/Suppl.1)
(iii) Israel (G/SCM/N/1/ISR/2)
(iv) Kenya (G/SCM/N/1/KEN/1)
(v) Norway (G/SCM/N/1/NOR/3)
(vi) Peru(G/SCM/N/1/PER/Suppl.1)
(vii) Senegal (G/SCM/N/1/SEN/1)
(viii) Zimbabwe (G/SCM/N/1/ZWE/2)
B. Countervailing dutylegislation orregulations -notifications without legislative text: 3
(i) Australia (G/SCM/N/1/AUS/1/Suppl.1)
(ii) Brazil (G/SCM/N/1/BRA/1/Suppl.1)
(iii) Venezuela (G/SCM/N/1/VEN/1/Suppl.1+2)
C. Countervailing dutylegislation orregulations -questions regarding legislations that 3
havealready beenreviewed bytheCommittee:
(i) Canada (G/SCM/Q1/CAN/1)
(ii) European Communities (G/SCM/Q1/EEC/1)
(iii) NewZealand (G/SCM/Q1/NZL/1)
(iv) United States (G/SCM/Q1/USA/1)
D. Status of1995 newandfullsubsidies notifications 3
E. Subsidies -requests pursuant toArticle 25.10 5
(i) Cameroon (G/SCM/Q2/CMR/1)
(ii) Côted'Ivoire (G/SCM/Q2/CIV/1)
(iii) Iceland (G/SCM/Q2/ISL/1)G/SCM/M/13
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(iv) Israel (G/SCM/Q2/ISR/1)
(v) Macau (G/SCM/Q2/MAC/1)
(vi) Mexico (G/SCM/Q2/MEX/1)
(vii) Pakistan (G/SCM/Q2/PAK/1)
(viii) Slovenia (G/SCM/Q2/SVN/1)
(ix) South Africa (G/SCM/Q2/ZAF/1)
(x) SriLanka (G/SCM/Q2/LKA/1)
(xi) Tunisia (G/SCM/Q2/TUN/1)
F. Subsidies -1996 updating notifications (G/SCM/N/16 andaddenda): 6
(i) Australia (G/SCM/N/16/AUS)
(ii) Brazil (G/SCM/N/16/BRA)
(iii) Japan (G/SCM/N/16/JPN)
(iv) Thailand (G/SCM/N/16/THA)
Notifications thataMember doesnotmaintain anynotifiable subsidies:
(i) Hong Kong (G/SCM/N/16/HKG)
(ii) NewZealand (G/SCM/N/16/NZL)
G. Semi-annual reports ofcountervailing dutyactions (G/SCM/N/19 andaddenda) 7
H. Preliminary andfinalcountervailing actions: notifications (G/SCM/N/17, 20&21) 7
I. Permanent Group ofExperts -Rules ofProcedure (G/SCM/W/365/Rev.1) 8
J. Notification ofcompetent authorities (G/SCM/N/18/Add.2) 11
K. Formats forupdates ofArticle 8.3notifications 12
L. Procedures forarbitration under Article 8.5(G/SCM/W/5) 12
M. Observers: intergovernmental organizations 13
N. Honduras -non-inclusion inAnnex VII 13
O. Other business 14
(i) Information request from theChairman oftheCommittee onTrade
andDevelopment
(ii) Note from theInformal Group ofExperts
(iii) Notification ofcountervailing investigation procedures (Article 25.12)
P. Annual Report totheCouncil forTrade inGoods (G/SCM/W/412) 14
Q. Dateofnextregular meeting 15G/SCM/M/13
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A. Countervailing dutylegislation orregulations -notifications ofneworamended legislations
notpreviously reviewed bytheCommittee (Article 32.6)
3. TheChairman explained thatsince most ofthenotifications under review hadalready been
reviewed intheCommittee onAnti-Dumping Practices on21October 1996, therewasnogeneral need
forMembers torepeat questions posed andanswers given inthatmeeting. However, questions to
Argentina andNorway hadbeendeferred tothismeeting.
4. Thequestion posed regarding Argentina 'snotification canbefound inthefollowing document:
G/SCM/Q1/ARG/1 (Submitted bytheEC)
5. Theanswer provided byArgentina tothisquestion canbefound inthefollowing document:
G/SCM/Q1/ARG/2 (totheEC)
6. Thequestions posed regarding Norway 'snotification canbefound inthefollowing documents:
G/SCM/Q1/NOR/1 (Submitted bytheEC)
G/SCM/Q1/NOR/2 (Submitted bytheEC)
7. Theanswers provided byNorway canbefound inthefollowing document:
[NOREPLIES PROVIDED TODATE]
8. TheChairman recalled thatquestions which hadbeenposed orally andforwhich awritten
response wasdesired should besubmitted inwriting totheMembers whose legislation wasconcerned
andtotheSecretariat notlaterthan21November 1996. Written responses toquestions should be
submitted totheSecretariat nolaterthan23December 1996.
B. Countervailing dutylegislation orregulations -notifications without legislative text
9. TheChairman proposed that, since these notifications hadalready been reviewed bythe
Committee onAnti-Dumping Practices on21October 1996, theCommittee notrepeat that
discussion.
C. Countervailing dutylegislation orregulations -questions regarding legislations thathavealready
beenreviewed bytheCommittee
10. TheChairman proposed that, since these notifications hadalready been reviewed bythe
Committee onAnti-Dumping Practices on21October 1996, theCommittee notrepeat thatdiscussion.
D. Status of1995 newandfullsubsidies notifications
11. TheChairman waspleased toreport thatChile, Ghana, Iceland, Mexico, Pakistan, Romania,
Slovenia, SriLanka, andUganda hadnowsubmitted their1995 newandfullsubsidies notifications.
However, heremained concerned that17months aftertheduedatealmost halfofWTO Members
hadnotyetsubmitted a1995 notification. These Members were Antigua andBarbuda, Bahrain,
Bangladesh, Barbados, Belize, Benin, Brunei Darussalam, Burkina Faso, Burundi, Cameroon, Central
African Republic, Cuba, Cyprus, Djibouti, Dominica, Ecuador, Egypt, ElSalvador, Fiji,Gabon,
Grenada, Guatemala, Guinea Bissau, theRepublic ofGuinea, Guyana, Haiti, Israel, Jamaica, Kenya,
Kuwait, Lesotho, Macau, Madagascar, Malawi, Maldives, Mali, Malta, Mauritania, Mozambique,G/SCM/M/13
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Myanmar, Namibia, Papua New Guinea, Paraguay, Poland, Qatar, Rwanda, St.Kitts andNevis,
St.Lucia, St.Vincent andtheGrenadines, Senegal, Sierra Leone, Solomon Islands, South Africa,
Tanzania,Togo,Tunisia,UnitedArabEmirates,Uruguay,andZimbabwe.TheChairmanaskedwhether
delegates ofthese Members present hadanynews onthestatus ofthese notifications.
12. Therepresentative ofSouth Africa stated thatthedelay wasduetocapacity constraints inthe
Department ofTrade andIndustry caused byfundamental political andeconomic reform inSouth Africa
andthatafullnotification would besubmitted assoonaspossible.
13. Therepresentative ofPoland stated thathisGovernment hoped tosubmit itsnotification within
aweek.
14. TheChairman noted thatthenature ofanysolutions totheproblem ofnon-notification depended
onthereasons fornon-notification. Ifoneoftheproblems wasanxiety thattheactofnotification
represented some form ofadmission, thenfurther delinking notification from actionability might be
apossible solution. TheCommittee could make clear thatwhen indoubt astowhether ameasure
wasnotifiable, itshould benotified forthesakeofthefullest possible transparency. TheChairman
sought theviews oftheCommittee onsucharecommendation. Totheextent thattheproblem arose
from sheer administrative overload, thetiming ofnotifications might beanissue. Some Members
wereoftheviewthatarequirement foranewandfullorupdating notification every yearmight be
toomuch. Finally, theChairman finally referred totheissue ofleastdeveloped country Members.
Roughly athirdoftheMembers thathadnotnotified wereleastdeveloped countries whodidnoteven
haveadelegation inGeneva. While theCommittee obviously could notexcuse these Members from
theirlegalobligations under theAgreement, itmight distinguish between theleastdeveloped country
Members andother Members when reporting onsubsidy notification issues.
15. Therepresentative ofNorway indicated thattheproblem ofnon-notification wasaserious one
thatwasbothqualitative andquantitative. Thework done intheWorking Group onNotifications,
particularly ahandbook detailing thelegal obligations which wasintheprocess ofbeing produced,
should helpconsiderably. Norway further acknowledged thatthere might beaproblem infrequency
andwaswilling todiscuss theissue. Withregard totheleastdeveloped country Members, assistance
should beprovided tohelpthese Members fulfil obligations.
16. Therepresentative oftheUnited States shared theviews ofNorway, butwasnotconvinced
thattheChairman 'sproposal would infactsucceed indelinking whatwasessentially atransparency
requirement from theimpression thatsome mayhave oftheimplication ofactionability. The
United States suggested thatoneaspect oftheproblem might betherequirement thatMembers identify
thetradeeffects oftheirsubsidies. TheUnited States wasalsoattracted tothenotion ofalessfrequent
notification procedure.
17. TheUnited States sought clarification fromPoland withrespect toitsnotification ofmeasures
intheagricultural sector andfromCôted'Ivoire withrespect toitsnotification ofsubsidies other than
export subsidies.
18. TheECstated thattherewerethreemainreasons fornon-notification: lackofresources, lack
ofknow-how, andperhaps alackofwill. With respect tothelatter, theCommittee mustemphasize
toMembers thattheissueofnon-compliance wassimply notgoing tofadeaway. Withregard tolack
ofresources andknow-how, reviewing thetiming ofnotifications would beagood idea. Breaking
thelinkbetween transparency andself-incrimination would alsobehelpful, andthepossibility ofa
deminimis threshold could beexplored inthiscontext. Regarding theproblem oftheleastdeveloped
country Members, while modulating thelevelofobligations would bedifficult, theworkoftheWorking
Group onNotifications might betherightwayforward.G/SCM/M/13
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19. TheChairman clarified thatithadnotbeenhisintention tosuggest modulating thelevelof
obligations buttoidentify theproblems ofnotification.
20. Therepresentative ofEgypt stated thatsubsidy notifications imposed aheavy burden, especially
fordeveloping countries, because theyinvolved different Ministries andorganizations. Theprocess
needed tobesimplified.
21. Therepresentative ofPoland stated thatitsnotification onagricultural subsidies would follow
theindustrial partofthenotification tobesubmitted thefollowing week.
22. TheCommittee tooknoteofthestatements made.
E. Subsidies -requests pursuant toArticle 25.10
23. TheChairman indicated thattheEChadinvoked thisprovision withrespect tocertain Members
thathadnotyetmade asubsidies notification. Thecountries thesubject ofrequests wereCameroon,
Côted'Ivoire,Iceland,Israel,Macau,Mexico,Pakistan,Slovenia,SouthAfrica,SriLanka,andTunisia.
Heasked whether these Members would liketorespond totheEC'srequest fornotification. Henoted
thatsince theserequests weremade Iceland, Mexico, Pakistan, Slovenia, andSriLanka hadsubmitted
notifications.
24. Therepresentative ofSouth Africa stated thatthereweresome inaccuracies inthelistofsubsidy
programmes which theEChadidentified andthatthose would beaddressed initsfullnotification to
besubmitted assoonaspossible.
25. Therepresentative ofPakistan confirmed thattheEC'scommunication wasunder consideration
byhisauthorities andthatthenotification would beprovided assoonaspossible.
26. InresponsetothequestionsposedbytheEC,TherepresentativeofMexicostatedthatBancomext
wasadevelopment bankwhich provided financing forMexican exporters fromresources thatitobtained
oninternational markets. Inother words, theFederal Government didnotgrant suchfinancing.
Bancomext regularly channelled itscredits through thecommercial banks anditsratesweretheLIBOR
orPRIME rateplusthemargin added byBancomext, inother words, itsratesatthepresent timewere
around LIBOR plus2.5fordirect exporters andLIBOR plus3.5forindirect exporters. These rates
weregranted byBancomext provided Bancomext itself obtained financing abroad below theLIBOR
rate. Itwasimportant topoint outthatBancomext 'smain customers werethecommercial banks, to
which itgavebasically 90percentofitsloans. Inthisconnection, thecommercial banks channelled
loans fromBancomext totheircustomers atdomestic market rates. Theratesitgranted wereregarded
asmarket rates, forwhich reason thefinancing could notbeconsidered asanexport subsidy ofany
kind. Since, fromthestandpoint ofthecriteria setoutinArticle 1.1oftheAgreement, Bancomext 's
financing didnotconstitute asubsidy itdidnotneedtobenotified totheCommittee under Article 25.2
oftheAgreement.
27. Therepresentative ofMexico stated thatCEPROFIs wereintroduced on6March 1979bythe
Federal Government aspartoftheimplementation oftheNational Development Plan. Theywerefiscal
incentives forfirms investing instarting uporexpanding apriority industrial activity. Under this
programme, credits were granted totheinvesting firms andtheyranged from 15to40percentof
theinvestments made. Thiswasshown ontheCEPROFIs, forthepurposes ofpaying certain federal
taxes within aperiod ofuptofiveyears. Thisfiscal incentive wasabolished on28December 1989.
28. Regarding subsidies bytheindividual states andmunicipalities, therepresentative ofMexico
stated thatinformation wasnotavailable because ofthelackoffacilities andhuman resources toprocessG/SCM/M/13
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suchinformation fornotification purposes. However, there weresufficient reasons tostatethatthis
kindofaid,ifitdidexist, wasnotsignificant, sincetheStategovernments didnothaveenough finances
toprovide thiskindofbenefit fromtheirownresources. Inanyevent, Mexico could findnosubfederal
subsidy tobenotified totheCommittee andconsidered thatanycounter-notification regarding ameasure
thatanyMember deemed tobeasubsidy should besufficiently precise toactually form acounter-
notification.
29. Regarding PITEX, therepresentative ofMexico stated that,afteraverythorough examination
ofprogrammes thatmight beregarded assubsidies under theAgreement, Mexico hadsubmitted its
notification tothisCommittee. Theinformation onPITEX, along withthecorresponding Decree,
wasannexed tothenotification inaccordance withtheusual format.
30. Therepresentative ofTunisia indicated thatTunisia 'snotification would bepresented shortly.
31. Therepresentative ofCôted'Ivoire explained thatthedelay insubmitting anotification was
duetoalackofnational expertise andfinancial resources. TheCôted'Ivoire would nothesitate in
making anappeal fortechnical assistance when appropriate. TheEC'scommunication wasbeing
considered andaresponse would beprovided assoonaspossible.
32. Therepresentative ofCameroon indicated thatinspiteofCameroon 'slackofresources, its
authorities werestudying theEC'scommunication andareply would befurnished assoonaspossible.
33. Therepresentative oftheECthanked thedelegations fortheirresponses. TheECsympathized
withtheadministrations ofcountries suchasCameroon, Côted'Ivoire, South Africa, andTunisia.
TheECwasdisappointed thatIsrael hadnotresponded. Hethanked Mexico foritsreply, butrequested
preciseassurancethatthestategovernmentsinMexicodidnothaveenoughresourcestoprovidesubsidies
suchasthrough CEPROFI.
34. TheChairman indicated thattherepresentative ofIsrael wasabsent because hehadbeenurgently
called toIsrael forprofessional reasons; hehadbeeninformed thatawritten response would beprovided
byIsrael.
35. Therepresentative ofMexico confirmed thatthere were nostatesubsidies inMexico.
36. TheChairman expressed hisappreciation fortheconstructive spirit inwhich Members had
received theEC'srequests. Thepurpose ofArticle 25.10 wastoimprove transparency andarequest
under thisprovision wasnottobeseenasaconflictual act.
37. TheCommittee tooknoteofthestatements made.
F. Subsidies -1996 updating notifications (G/SCM/N/16 andaddenda)
38. TheChairman urged Members whohadnotyetsubmitted updating notifications todoso
promptly. Heindicated thattheupdating notifications ofAustralia, Japan, andThailand would be
reviewed atthefollowing week'sspecial session andasked ifMembers hadanyquestions regarding
thenotifications ofBrazil, Hong Kong, orNewZealand.
39. Therepresentative oftheECindicated thatwhile theECupdating notification wasready, a
further check oftheaccuracy oftheinformation wasrequired andthenotification would besubmitted
shortly.G/SCM/M/13
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40. Therepresentative ofCanada indicated thatCanada 'supdate notification wasbeing finalized
andwould besubmitted bytheendofthemonth.
41. Therepresentative oftheUnited States informed theCommittee thatwhile theUSupdate
notification wasready, there would beaslight delay insubmission assome newmeasures might be
added inareas thatwere notpreviously reported.
G. Semi-annual reports ofcountervailing dutyactions (G/SCM/N/19 andaddenda)
42. TheChairman pointed outthatnineMembers -Argentina, Australia, Brazil, Canada, theEC,
Mexico, NewZealand, theUS,andVenezuela -hadnotified actions pursuant totherequest forsemi-
annual reports. Thirty-six Members notified thattheytooknoactions during theperiod. Thefollowing
Members hadnotsubmitted reports: Antigua andBarbuda, Bahrain, Bangladesh, Barbados, Belize,
Benin, Bolivia, Botswana, Brunei Darussalam, Burkina Faso, Burundi, Cameroon, Central African
Republic, Chad, Colombia, Costa Rica, Côte d'Ivoire, Cyprus, Djibouti, Dominica, Ecuador, El
Salvador, Fiji,Gabon, Ghana, Grenada, Guatemala, Guinea Bissau, theRepublic ofGuinea, Guyana,
Haiti, Honduras, Jamaica, Kenya, Lesotho, Liechtenstein, Macau, Madagascar, Malawi, Maldives,
Mali,Mauritania,Mauritius,Mozambique,Myanmar,Namibia,Nicaragua,Nigeria,PapuaNewGuinea,
Poland, Qatar, Rwanda, St.KittsandNevis, St.Lucia, St.Vincent andtheGrenadines, Sierra Leone,
Slovenia, Solomon Islands, South Africa, Suriname, Swaziland, Tanzania, Togo, Trinidad andTobago,
andZimbabwe.
43. TheChairman noted thatover60%ofthemembership oftheWTO hadnotyetsubmitted a
semi-annual report andurged Members tomake theirbestefforts toimprove theircompliance with
thisnotification obligation. Further, withfewexceptions, semi-annual reports hadnotbeenreceived
bytheduedateof30August 1996. Thecontinuing failure ofMembers tosubmit semi-annual reports
ontimelimited theCommittee 'sability toconsider thesubstance ofthose notifications andtransparency
wasthusreduced. Finally, semi-annual reports wereoften incomplete andMembers were urged to
taketheir obligations withregard tonotifications seriously andmake aneffort toimprove their
compliance.
44. TheChairman asked theMembers iftheyhadanyquestions regarding thesemi-annual reports
submitted.
45. Therepresentative ofColombia queried theUnited States onitsintentions vis-à-vis active
suspension agreements undertaken withregard toColombia.
46. Therepresentative oftheUnited States indicated thathewasnotinaposition toaddress the
specific nature ofindividual suspension agreements orconditions oftermination. Aswithallorders
entered intoprior totheUruguay Round Agreement, these would besubject tosunset review starting
fiveyears afterentry intoforce oftheWTO Agreement.
H. Preliminary andfinalcountervailing actions: notifications (G/SCM/N/17, 20&21)
47. TheChairmanstatedthatonlyAustralia,Canada,Côted'Ivoire,theEC,Mexico,NewZealand,
andtheUnited States hadnotified preliminary and/or finalactions andthere appeared tobealackof
fullcompliance inthisarea. TheChairman asked ifMembers wished toaddress anyofthese
notifications.
48. TherepresentativeofIndiareferredtothenotificationmadebyCôted'IvoireunderArticle25.11
inwhich ithadreported countervailing measures taken against sacks andbagsofvegetable fibrefrom
India. India regretted tostatethatithadonlylearnt oftheaction through thenotification andhadnotG/SCM/M/13
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beeninformed byCôted'Ivoire priortotheaction being taken. Indiarequested Côted'Ivoire tofurnish
details ofthecaseandtoindicate whether ithadfollowed Articles 11,13,and17oftheAgreement
before taking suchaction against Indian exports.
49. Therepresentative ofCôted'Ivoire indicated thatareply would bedrawn upforIndia and
emphasized theearlier point thatlackofnecessary means tohavefullknowledge oftheAgreement
created aparadoxical situation.
50. Therepresentative oftheUnited States accepted thatthere wereadministrative andlogistical
difficulties inherent ininstituting theprocedures necessary torespect obligations under theAgreement,
butitwasaproblematic situation where measures weretaken without theimposition ofthose measures
being infullconformity withtheprocedural obligations under theAgreement.
51. Therepresentative ofCôted'Ivoire stressed thatlackoftechnical means andnational know-how
caused lackofknowledge about procedural obligations andallefforts would bemade torectify the
situation. Côted'Ivoire appealed toitsmajor partners forassistance incoping withthese difficulties.
52. Therepresentative ofThailand indicated thatasacountry listed asunder countervailing duty
action from Côted'Ivoire, Thailand reserved itsrighttoforward enquiries toCôted'Ivoire.
I. Permanent Group ofExperts -Rules ofProcedure (G/SCM/W/365/Rev.1)
53. TheChairman recalled thatthePGEhadsubmitted itsdraftRules ofProcedure totheCommittee
inApril 1996 andafterextensive discussion attheCommittee 'sregular meeting thesame month, the
PGEhadsubmitted revised draftRules inJune1996. AttheCommittee 'sspecial session inJuly1996
therehadbeendifferences ofviewastowhether members ofthePGEwhowerenationals ofaMember
involved inaproceeding could beexcluded from serving inthatproceeding. While some Members
believed thatsuchnationals should beexcluded without exception, others believed thatnationality should
notbeanautomatic basis forexclusion. TheChairman enquired whether Members hadcomments
ontheproposal submitted byCanada relating tothisissue.
54. TherepresentativeofColombiawishedtoclarifythatCanadahadproposeddeletingRules19(1),
(2),and(3),inwhich casenationality would innocasebegrounds fortheexclusion ofanExpert.
Colombia further enquired astoCanada 'spurpose behind itsproposed Rule37.
55. TherepresentativeofCanadaexplainedthatunderRule37intheCanadianproposal,thegrounds
whichmightgiverisetoreasonableapprehensionofbiasincluded,butwerenotlimitedto,theillustrative
listthatfollowed. Thus, nationality could besuchagrounds butthere would havetobesufficient
evidence ofapprehension ofbias.
56. Therepresentative ofChile explained thathisgovernment approached thequestion ofnationality
withdelicacy since there wasnoclearguidance onthisquestion intheAgreement. Article 4.5ofthe
SCM Agreement provided thatthedecisions ofthePGEwerebinding andobligatory onaPanel, and
theDSU setforthveryclearguidelines withrespect tothePanelists 'nationality. Thus, thePGEwas
notplaying acomplementary rolebuteffectively fulfilling outtheroleofaPanel.
57. Therepresentative ofThailand requested clarification from Canada ontheterm"interested
Member" initsproposed Rule37.Who diditenvisage asbeing involved andhaving thegrounds
toexpress doubts regarding anExpert?G/SCM/M/13
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58. Therepresentative ofCanada explained thattheterm"interested Member" referred primarily
totheparties toadispute. Ifaspecific reference totheparties toadispute would make thelanguage
clearer, Canada would begladtoeffect thatrevision.
59. Therepresentative ofCanada thenresponded toColombia 'squery regarding therelationship
ofRule37withtheCode ofConduct. TheCode ofConduct applied tothePGEwhen itperformed
itsdispute settlement function. ButthePGEalsohadother functions andthese Rules ofProcedure
would beofgeneral application toallfunctions ofthePGE. They could besupplemented bytheCode
ofConduct when thePGEperformed itsdispute settlement function, which meant thatthere would
beadditional rulesforthatparticular function, butaslongasthere wasnocontradiction between the
twosetsofrules, Canada didnotseeaproblem.
60. TherepresentativeoftheEC,NorwayandSwitzerlandexpressedsupportforCanada'sproposal.
Experts were independent andtheirautomatic exclusion should notbecontemplated.
61. Therepresentative ofBrazil enquired astowhether itmight bepossible toinclude intheproposal
language stating thatapplication oftheRules ofProcedure didnotpreclude application oftheCode
ofConduct.
62. TheChairman indicated that,given thedivision ofviews ontheCanadian proposal, itseemed
clear thattheCommittee wasnotprepared toapprove theRules ofProcedure forthePGEasthey
currently stood orasamended. Ithadbeentwoyears since theWTO Agreement entered intoforce.
There were several disputes pending under Article 3which could require theassistance ofthePGE
atanytime, yettheinstitutional framework fortheoperation ofthePGEhadstillnotbeenputinto
place. Members hadtobewilling tocompromise inthisareaoraccept responsibility foryetanother
deadlock intheCommittee.
63. TherepresentativeofChileproposedthatnationalityshouldsimplybeoneofthepossiblegrounds
forexclusion.Itshouldnotbeapriorigroundsforexclusionwhichwouldimplyanintransigentposition.
64. TherepresentativesofAustralia,theECandNorwayrespondedfavourablytoChile'ssuggestion.
65. Therepresentative ofMexico expressed support fortherevised proposal ofthePGE, which
putforward modifications toRule19,andforChile'ssuggestion. Rule19wasveryimportant for
Mexico andtheCanadian proposal wentinaverydifferent direction.
66. TheChairman enquired astowhether therewasanyopposition tohaving theissueofnationality
inserted intheCanadian proposal inamodulated manner assuggested byChile. Hewould decide
onthematter ofinformal consultations depending ontheresponse tothisquestion.
67. Therepresentative oftheUnited States asked Canada which setofrules would apply should
there beaconflict between theRules ofConduct andCanada 'sproposed Rule37.
68. Therepresentative ofMexico considered itindispensable toretain Rule19.Meanwhile, the
revised Rules ofProcedure thatwere inforce forthismeeting beextended foranother sixmonths,
thusproviding enough timeforanother Committee meeting.
69. Therepresentative ofCanada waswilling toattempt toarrive ataconsensus onthebasis of
elements mentioned byChile andtheEC.Byimplication itmeant thattherewould beverylittlescope
toreturn toRule 19asthenproposed. Canada would notsupport aprolongation ofpreliminary
application oftheRules ofProcedure ifRule19would bepartofthose Rules. AsfortheUSpointG/SCM/M/13
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about rules ofprecedence, while Canada wasprepared toexplore theissue, itwould havetofirstbe
determined thatacontradiction existed before rules ofprecedence were outlined.
70. Therepresentative ofNorway found discouraging thelackofexpressed willonthepartof
some delegates tolookforasolution orindicate flexibility. Heproposed altering thesecond sentence
ofthesecond paragraph ofRule37toread, "None oftheaforementioned grounds shallinthemselves
beconsidered sufficient tojustify exclusion ofanExpert from aparticular proceeding, butmust be
substantiated asgiving risetoareasonable apprehension ofbias."
71. Therepresentative ofColombia stated thattheCode ofConduct hadbeensubject tolong,
careful drafting andexpressed concern thatRule37wastrying torepeat infiveminutes adifficult
anddelicate exercise. Colombia proposed asimple Rule37thatwould say,"Forallfunctions ofthe
PGE, theCode ofConduct would apply." Rule19asitstood wasagood compromise thatreflected
thedifferent points ofview.
72. TheChairmanstatedthattheproblemwasnottheCodeofConductbutthequestionofnationality
andthathewould beinterested tohearreactions toNorway 'sproposal.
73. Therepresentative ofAustralia found Norway 'sproposal helpful. Regarding some Members '
concerns about theautomatic application ofanyruling bythePGEinrespect ofArticle 4.5,itwould
always beuptothePanel tonotaskthePGEforanopinion. Thatmight alleviate Members 'concern
thatnationality automatically conferred abias. IftheExperts 'views werestilldesired, thatcould be
done through regular dispute settlement procedures byasking fortheviews ofsome oftheExperts
andperhaps notallofthem.
74. Therepresentatives oftheECandJapan alsosawtheNorwegian proposal asapositive
development.
75. Therepresentative ofMexico expressed hiswillingness tobeflexible inthattherevised
Rule19(2) -which retained thepossibility fornationals ofCountry Xtoparticipate inthePGE-was
seenaspositive. Rule19should bepartoftheRules.
76. TheChairman stated thathewould undertake informal consultations onlyifhesensed thatthere
wasapossible areaofagreement between Members. Inthemeanwhile, would theCommittee authorize
thePGEtocontinue tooperate under thedraftRules ofProcedure untiltheCommittee 'snextmeeting?
77. Therepresentative ofCanada could agree tothatwiththestipulation thatRule19notremain
inforce.
78. Therepresentative ofMexico could agree onlytoprovisional application ofthedraftRules
ofProcedure intheirentirety.
79. Therepresentative oftheUnited States stated that,totheextent thatthePGErequired Rules
ofProcedure, therewaslittleornodisagreement overthenon-conduct related Rules anditmade sense
thatthePGEbeabletooperate under those onaprovisional basis. However, those Rules would have
tobeapplied intheirentirety; allowing Rule 19tobeapplied provisionally would notcontribute
positively totheresolution ofthenationality issue.
80. Therepresentatives ofNorway andKorea supported theCanadian proposal.
81. TheChairman stated thatsincetherewasnoagreement onthesubstance, theCommittee would
havetocontinue todiscuss thisissue. Asfortheoperation ofthePGE, itcould goahead withallG/SCM/M/13
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theRulesofProcedureapplyingprovisionally,orwithalltheRulesofProcedureexceptRule19applying
provisionally, orwithnorules applying atall.Ifthere wasnoconsensus ontheapplication ofthe
Rules ofProcedure, theCommittee would appreciate thatnorules applied.
82. Therepresentative ofMexico feltthatithadbeendecided bytheCommittee thatthePGEwork
onthebasisofruleswhich itwould determine itselfandwhich theCommittee would approve. There
wasnopossibility forthePGEtowork without Rules ofProcedure.
83. TheChairman reminded theCommittee thattheAgreement didnotmention anyRules of
Procedure andifthePGEwere called towork, itwould dosofollowing theAgreement andbased
onwhatever rules itdeemed fitorwithout rules.
84. Therepresentative ofAustralia agreed withtheChairman 'sstatement. Itwaspreferable to
havethePGEoperating onthebasis ofmost oftheRules ofProcedure thannoneatall.
85. Therepresentative ofNorway suggested thethirdpossibility ofapplying thedraftRules except
Rule19provisionally andasfarasRule19wasconcerned, referring thePGEtotoday'sdiscussion.
86. Therepresentative ofMexico wasunable toagree toNorway 'ssuggestion. Inorder forthe
PGEtowork, theRules would havetohaveprovisions governing nationality andthose werecontained
inRule19.
87. Therepresentative oftheECsetouttheoptions aseither having thePGEoperate inamore
orlessorderly fashion, albeit onaprovisional basis andinamanner thatdidnotfullysatisfy the
Committee orhaving itoperate inarather disorderly fashion withunforeseen circumstances. The
former waspreferable.
88. TheChairman suggested thatifthere were arequest forthePGEtoperform itsduties ina
dispute case, itwould consult withtheparties involved inthatspecific dispute astowhether ornot
Rule19would apply tothatdispute.
89. Therepresentative oftheUnited States stressed thatthePGEwascomprised offiveExperts
whowerecapable ofinformally consulting among themselves todealwithsituations onanadhocbasis.
There wasnorequirement forRules ofProcedure.
90. TherepresentativeofMexicostatedthattheywouldliketoensurethatgeneralRulesofProcedure
werepreserved andnotàlacarte Rules. There could beasituation ofconflict ifofthetwoparties
toadispute, onewished touseRule19andtheother didnot.Rule19should thusapply.
91. TheChairman repeated hisviewthat,ifthere wasarequest forthePGEtoperform oneof
itsfunctions, itwould work according towhatever rulesitfound applicable. Meanwhile, there would
needtobefurther consultations withMembers onthematter.
92. TheCommittee tooknoteofthestatements made.
J. Notification ofcompetent authorities (G/SCM/N/18/Add.2)
93. TheChairman recalled that,atitslastregular meeting, theCommittee haddecided torequest
MemberstonotifytheSecretariatofthecontactdetailsoftheauthoritiescompetenttoinitiateandconduct
countervailing dutyinvestigations. Todatethefollowing Members haddoneso:Argentina, Australia,
Bolivia, Brazil, Canada, Chile, theEC,Guatemala, Hong Kong, Hungary, Iceland, Israel, Jamaica,G/SCM/M/13
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Kenya, Korea, Mauritius, Malaysia, Mexico, New Zealand, Norway, Peru, Romania, Singapore,
Slovenia, Switzerland, Thailand, Turkey, Uganda, theUnited States, Venezuela, andZambia.
K. Formats forupdates ofArticle 8.3notifications
94. TheChairman recalled thatconsiderable effort hadbeendevoted overthepast18months to
trying todevelop aformat forupdate notifications under Article 8.3. Unfortunately, noconsensus
hadbeenreached. TheChairman hadlastmonth proposed anewapproach inanattempt toreopen
discussion. While thekindofinformation thatwould ultimately beprovided under thenewapproach
would notbeverydifferent, themechanism bywhich thatinformation would beobtained would change
somewhat.Thelistingofallprojectsapprovedandfundedduringtherelevantperiodwouldbeexpanded,
whichwouldenablereviewingMemberstodetermineforwhichprojectstheyneededdetailedinformation.
Theadvantages tothenewapproach would bethatitwould nolonger benecessary foranotifier to
provide detailed information withrespect toarandom sample ofprojects andMembers would also
berelieved oftheburden ofpreparing andreviewing project-specific information thatmight beoflimited
ornointerest toanyone. Reviewing Members would befreetoidentify theprojects ofmostinterest
tothemandwould havetherighttoreceive whatever details ofthose projects theyconsidered relevant
andnecessary. Most delegations hadindicated thatthenewproposal could provide apromising basis
onwhich torenew discussions intheWorking Party. Itwasimportant thatallcomponents ofthe
Article 8mechanism beinplace sothatMembers could begin tomake useofthatprovision. The
Chairman would continue discussions intheWorking Party onthisbasis.
95. TheCommittee tooknoteoftheChairman 'sstatement.
L. Procedures forarbitration under Article 8.5(G/SCM/W/5)
96. TheChairman recalled thatithadbeen twoyears since work hadbegun ontheissue of
procedures forarbitration pursuant toArticle 8.5.While adraftsetofprocedures hadbeenputbefore
theCommittee inmid-1995, consensus hadnotbeenreached. Thefailure toresolve thiskeyissue
hadcontributed toMembers 'obvious reluctance tousetheArticle 8mechanism. Itwaspossible that
some Members sawtheoutstanding issues under Article 8aslinked tooneanother andpossibly as
linked toother aspects oftheSCM Agreement. TheChairman strongly urged Members nottoallow
perceptions ofanysuchlinkages tostallprogress inthese areas, atleastonatechnical level. Rather,
recognizing thatpolitical decisions would beneeded forthefinalapproval ofvarious mechanisms under
Article 8,Members should trytoresolve theoutstanding issues onatechnical basis tothegreatest
extent possible.
97. Therepresentative oftheUnited States indicated thathisdelegation wasprepared tocontinue
toseekasolution onboththeprevious itemaswellasthisone. There appeared tobeasequential
linkbetween thetwo,andoncetheUnited States hadclarified theformats forupdates ofArticle 8.3
notifications, itwould bebetter abletoresolve thetechnical concerns withrespect toarbitration.
98. Therepresentative ofAustralia indicated thatthere could beavariety ofreasons other than
thefailure toagree onarbitration procedures forMembers notnotifying under Article 8,andthatfailure
theCommittee 'sAnnual Report should notidentify theabsence ofarbitration procedures asbeing the
solereason fornon-notification.
99. Therepresentative oftheECagreed thatthereasons weremanifold andwork should continue
onallpossible issues. There wastobeareview inthree years'timeanditwould behardforthe
Committee toconduct areview atthetimeifithadnotseenthemechanism work.
100. TheChairman would consult informally toseewhether progress could bemade onthisissue.G/SCM/M/13
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M. Observers: intergovernmental organizations
101. TheChairman stated thatthecriteria forgranting observer status tointergovernmental
organizations having nowbeen established, there would beinformal consultations astowhich
organizations would begranted observer status. Pending theoutcome ofthese consultations, the
Committee could continue toinvite those organizations which hadbeenfollowing theCommittee 's
meetings uptothispoint onanadhocbasis.
102. TheCommittee sodecided.
N. Honduras -non-inclusion inAnnex VII
103. TheChairman recalled thatAnnex VII(b) conferred special anddifferential treatment oncertain
identified Members untilsuchtimeastheirGNP percapita reached US$1,000 perannum. Thelist
ofsuchMembers inAnnex VIIhadbeenupdated on20October 1993 andincluded allGATT 1947
contracting parties whofulfilled thatcriterion atthetime. However, Honduras 'Protocol ofAccession
hadnotbeenapproved until9March 1994. Honduras wasthustheonlyWTO Member withaGNP
percapita oflessthanUS$1,000 perannum thathadnotbeenincluded inAnnex VII.Could something
bedone inlightofthisunique situation toaddress Honduras 'status under Annex VII? While this
CommitteedidnothavethecompetencetoamendtheWTOAgreementtoincludeHondurasinAnnexVII
nortogrant Honduras awaiver fromitsobligations thereunder, itcould takeadecision thatMembers
would treatHonduras asifitwere anAnnex VIIcountry forpurposes ofPartIIoftheAgreement.
While suchadecision might nothavebinding legaleffect, itcould giveHonduras sufficient assurance
toproceed onthatbasis.
104. TherepresentativeofHondurasstatedthathiscountryaccededtotheGATT1947inMarch1994.
Thus,althoughHonduraswasanoriginalMemberoftheWTO,itdidnotparticipatefullyintheUruguay
Round negotiations andforthisreason hadnotbeenincluded inAnnex VII. Honduras hadavery
small share ofworld trade anditneeded tostrengthen itsindustrial andservice sectors topromote
development.HondurasthusrequestedthatitbeabletoinvoketheadvantageswhichAnnexVIIgranted.
105. Therepresentatives ofArgentina, Colombia, Mexico andNorway supported thecourse ofaction
proposed bytheChairman.
106. Therepresentative ofJapan expressed sympathy fortheunique situation ofHonduras buthad
doubts astothelegalbasisofthedecision proposed bytheChairman. TheWTO Agreement provided
foramendment orwaiver incases suchasthis.
107. Therepresentative ofColombia suggested thattheCommittee firstconsider whether therewas
aconsensus thatHonduras should beaccepted forinclusion inAnnex VII. Ifthatwerethecase, the
Committee could goontoconsider howtoresolve thequestion ofthebasis ofthatconsensus.
108. Therepresentative ofBrazil sympathized withHonduras 'situation butunderstood thepoint
ofview ofJapan andother delegations. TheCommittee clearly understood thatanydiscussion on
Honduras would notsetaprecedent forother situations arising inthefuture and,recognizing the
uniqueness ofthesituation, theCommittee didnotrunanyriskofopening doors topossible misuse
ofthedecision.
109. Therepresentative ofJapan reserved hisrighttocomment onthematter untildiscussion had
beenconcluded.G/SCM/M/13
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110. Therepresentative oftheUnited States understood thesituation faced byHonduras. He
considered thatclarification fromHonduras astohowitperceived using theprovisions ofAnnex VII
would behelpful. Pragmatic solutions should bepursued where possible. However, Annex VIIhad
beendrafted inaveryspecific wayandpresented certain constraints. Thus, theUnited States needed
more timetoreflect onthematter andtoexamine possibilities foraddressing itinlightofthelanguage
oftheAgreement.
111. TheChairman regarded thepreliminary reaction oftheCommittee aspositive buttooknote
ofthewords ofcaution expressed bysome Members. Thesituation wasunique andshould notcreate
precedents; however, legal considerations would ofcourse havetobeexamined. Asnodelegation
hadopposed examining further thepossibilities, theChairman would continue toexplore pragmatic
solutions totheissue.
O. Other business
(i) Information request fromtheChairman oftheCommittee onTrade andDevelopment
112. TheChairman stated thathehadreceived aletter on2May1996 from theChairman ofthe
Committee onTrade andDevelopment requesting information ontheimplementation ofdevelopment-
related provisions intheAgreement. TheChairman hadsubmitted aresponse under hisown
responsibility, which wasavailable from theSecretariat toanyMember which wished toseeit.
(ii) Note from theInformal Group ofExperts
113. TheChairman wished todraw theCommittee 'sattention tothenotethattheInformal Group
ofExperts circulated inG/SCM/W/413, which contained anoutline oftheissues discussed todate
bytheGroup.
(iii) Notification ofcountervailing investigation procedures (Article 25.12)
114. Therepresentative ofKorea proposed thateachMember notify itsinvestigation procedures
along withitscountervailing dutylegislation andregulations. Legislation didnotalways clearly
demonstrate suchprocedures orinclude provisions about theprocedures. Thus, eachMember should
notify asummary ofitsinvestigation procedures. Since every country haddifferent procedures, it
would bepreferable toavoid afixed format fornotification. Suchanotification would show, bystage
ofinvestigation, suchdetails astheobject oftheinvestigation, theduration oftheinvestigation,
investigating figures, requirements ofthecompany subject toinvestigation, necessary requirements
toproceed tothenextstrategy, measures expected asaresult ofastrategy, andthenumber ofrelevant
provisions ofdomestic legislation.
115. TheCommittee tooknoteofthestatement ofKorea.
P. Annual Report totheCouncil forTrade inGoods (G/SCM/W/412)
116. Therepresentative ofJapan noted thatArticle 32.7oftheAgreement required areview ofthe
implementation andoperation oftheAgreement. Dispute settlement under Articles 4,7,8,9,24and
30oftheAgreement wasoneofthemost important aspects ofthis. Thus, Japan reserved theright
totakeupthequestion ofthefullimplementation ofArticle 32.7atalaterdate.
117. TheCommittee adopted itsAnnual Report totheCouncil forTrade inGoods.G/SCM/M/13
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Q. Dateofnextregular meeting
118. TheChairman indicated thatthenextRegular Meeting oftheCommittee would beheldinthe
week of28April 1997. Previously reviewed legislation would beplaced ontheagenda ofthatmeeting.
Questions regarding suchlegislation weretobereceived fromMembers nolaterthansixweeks before
themeeting orby14March 1997. Members receiving questions should submit written answers by
11April 1997.