RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/M/22
17 February 2000
(00-0589)
Committee on Subsidies
and Countervailing Measures
MINUTES OF THE SPECIAL MEETING
HELD ON 20 DECEMBER 1999
Chairman:  Mr. Jan Söderberg (Sweden)
1. The Chairman recalled that the purpose of this special meeting of the Committee, as indicated
in WTO/AIR/1221, was to conclude the review under Article 31 of the SCM Agreement of
Articles 6.1, 8 and 9 of that Agreement.  The Chairman further recalled that in the Committee'sinformal consultations on 13 December, he had circulated a proposal to the Committee regarding the
possibility of extending the application of these Articles until the fourth Ministerial Conference, while
continuing to review their substance.  He had indicated at that time that he would consult with
delegations individually to gauge reactions of Members to that proposal, and had scheduled further
informal consultations of the Committee for 16 Decemb er to continue the discussions.  During the
course of the previous week the Chairman had held a number of individual consultations and
concluded, on the basis of those consultations, that it would not be worthwhile to hold the
16 December informal session of the Committee.  In large part, this was because Members had
wanted to wait and see what would happen at the 17 December meeting of the General Council where
it had been expected that the question of deadlines in various Agreements would be discussed.  As the
Committee was aware, at the 17 December meeting of the General Council, the General Council
Chairman had concluded the meeting with his understanding that, inter alia , provisions which would
lapse at the end of the year in various WTO Agreements would be the subject of his consultations to
be held during the new year, and that due restraint would be exercised by Members on those matters
pending the outcome of those consultations.  Thus Members, in a spirit of goodwill, would not
prejudice Members' positions in or the results of those consultations.  The Chairman understood that
the provisions being discussed by the Committee at this meeting would also be subject toconsultations.  He noted, however, that it appeared that no amount of goodwill in itself would be
sufficient to preserve those provisions for consultations in 2000, because the situation faced by this
Committee could not be resolved through the exercise of restraint by Members.  In particular, as the
Chairman saw it, the only way to preserve the existing situation in respect of Articles 6.1, 8 and 9
would be for the Committee to provisionally extend the application of these Articles for the period ofconsultations, at the end of which the Committee could resolve the question of whether or not the
provisions should be extended for a further period as presently drafted or in a modified form.  If the
Committee did nothing, and instead only relied on the statement of the General Council Chairman,
these provisions would definitively lapse at the end of 1999, and if they lapsed, it would not be
possible subsequently to have further consultations on them.  The Chairman therefore assumed thatthe Committee, in the same spirit of goodwill as was evident in the General Council on 17 December,
could agree to a provisional extension of the app lication of Articles 6.1, 8 and 9 of the Agreement
until the end of the period of consultations to be conducted in early 2000, at which time the
Committee would revert to this matter.  The Chairman asked whether the Committee could so agree.
2. The representative of Malaysia stated that the short answer was no.  Malaysia was just willing
to follow and abide by the decision of the Genera l Council Chairman in which he read out his ownG/SCM/M/22
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statement on his own accord.  Malaysia preferred to live by that good faith and good spirit of due
restraint for all extensions that the Committee Chairman had mentioned in his statement, and was not
willing to give any particular extension to Articles 6.1, 8 and 9.  Malaysia saw no reason why this
subject should be treated as in any way more special than the other extensions on TRIMs and TRIPs
which the developing countries had been seeking.  In short, Malaysia would say no, and preferred to
live by the decision of the General Council Chairman until such provision was made.  In addition,
Malaysia did not see the need to extend Article 6.1, 8 and 9, but if the demandeurs  insisted on an
extension, then Malaysia insisted that Article 8 of the SCM Agreement be amended accordingly.
Without such an amendment, Malaysia was not willing to give any extension.  Finally, in Malaysia’s
view, in the consultations of the Chairman of the General Council, all the extensions should be done
expeditiously, sometime in January, and decisions should be made as soon as possible.
3. The Chairman did not wish to get into a debate with the representative of Malaysia, but
wanted to point out that the situation in the SCM Agreement was a bit different.  Unless this
Committee decided on an extension, the review was over.  The interpretation of the statement of the
representative of Malaysia made it clear, at least to the Chairman, that the review might as of that
point be over, but he wanted to listen to other interventions by delegations.
4. The representative of Mexico stated that in the light of the situation before the Committee, the
best would be for no one, including the Chairman, to try to give his or her own interpretation of the
matter under consideration, and the Committee should then more or less roughly follow the same
decision that was followed in the General Council on 17 December.  That is, the Committee shouldpurely and simply agree to suspend the meeting, or in English the word would be "adjourn", and
revert to these issues as soon as possible in 2000.  This would be the best way forward because in this
way the Committee would be consistent with what had taken place in the General Council.
Furthermore, the Committee should not get into a debate on interpretation, because while legally there
would be one single interpretation, at that point no one knew which interpretation that wouldeventually be.  This would depend on what Members did in the new year.  All that Mexico was
seeking was to leave all doors open so that Members would have time to come up with a single
interpretation.  With that single interpretation, agreed to by consensus, Members could basically work
miracles.  Thus, it was best not to prejudge wh at would happen tomorrow, but rather wait for
tomorrow (in the figurative sense), so that then Members could see whether after some informal
consultations they could manage to have this single interpretation, rather than to debate at present on
the basis of varying interpretations.  Thus, Mexico’s suggestion would be simply to adjourn themeeting so as to meet once again as soon as possible in 2000 to take up this item of the agenda.  The
Committee could even use the same language of the fi rst sentence of the Chairman's statement in the
General Council for this purpose.
5. The representative of Panama joined with the views of the two previous speakers that it would
be better to wait and see what the outcome of the consultations in the General Council would be.
Furthermore, Panama also held the view that the language of Article 31 did not give this Committee
the authority to agree to any extension.  In Panama’s view, this should be done by means of an
amendment to the Agreement which was the authority of the Ministerial Conference or the General
Council when the Ministerial Conference was not in  session.  In view of the additional complication
of not knowing whether the Ministerial Conference was or was not in session, it would be rather
difficult for the Committee at this meeting to reach any decision to extend the provisions under
consideration.  Furthermore, Panama would feel ra ther uncomfortable with a decision being taken by
the Committee even if using language that had been discussed in the General Council.  That is,
Panama would agree to suspend the meeting, but did not believe that there should be any languagewhich would constitute a decision regarding terms of due restraint or any other words that were used
in discussion in the General Council.  Rather, the issue should be kept in the context of what was
discussed in the General Council without any action by the Committee that would modify or prejudgeG/SCM/M/22
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the outcome of the consultations which would even tually be held in the context of the General
Council.
6. The representative of Canada stated that as Canada understood it, the Chairman’s proposal
was simply that the provisions in question be extended until the completion of the consultations with
regard to what Members would do next.  Canada s upported that proposal, and indeed thought it rather
important, because Canada shared the view that the situation might be somewhat different in the case
of these provisions from that regarding extension of deadlines for implementation of transition periods
in other Agreements.  Canada took the point made by the Ambassador of Mexico that all doors should
be left open.  Canada’s view, however, was that if there was no agreement on some kind of extension,
the door would be closed on the particular issue of these subsidy provisions, since the review of them
would be over, both de facto  and de jure .  It was in the spirit of wanting to continue the discussions
that Canada could support the Chairman’s proposal to extend these provisions for the period required
to complete the consultations.  Canada’s fear was that if there were no agreement to a temporary (or
provisional) extension, these provisions would expire and in effect the Committee would throw the
baby out with the bath water.  Therefore, Canada encouraged others to at least agree to an extension
on a provisional basis, pending further consultations.
7. The representative of Pakistan indicated that Pakistan broadly supported the views expressed
by Malaysia, Mexico and Panama on this issue.  Pakistan agreed with Panama that the Committee did
not have the authority to grant any extension under Article 31 of the provisions under review, and it
was necessary to look at the statement by the Chairman of the General Council of 17 December.  Thatstatement clearly dealt with all of the issues and provisions which would lapse and the deadlines
which would expire on 31 December 1999.  It di d not make any distinction between the SCM
Agreement and the TRIMs and the TRIPs Agreements, so therefore the Committee should carefully
look into the wording of the statement of the Chairman of the General Council and should not
distinguish between any of the deadline issues.  Paki stan therefore felt that this matter should be a part
of the consultations to be continued, and for the General Council to look at and to examine on
7 February when it was to meet.  Therefore, Pakistan requested the Chairman to adjourn the meeting
or suspend the meeting; Members would take up th is issue on 7 February when the General Council
met.
8. The representative of Japan stated that Japan could live with the consensus of whatever
emerged at the meeting, but for the sake of transparency reiterated Japan’s basic position that since
Members had not had the chance to get really into the discussion about the extension of the
provisions, including the interests of developing countries and other interests, Japan would prefer to
have extensions for the three provisions, at least for the period proposed by the Chairman.  This was a
restatement of Japan’s position for the sake of transparency, and if the Committee did not agree, Japan
could live with the consensus.
9. The representative of India could support the proposal made by Malaysia and Mexico to
adjourn this meeting,  recalling that the Chairman of the General Council on 17 December had said
clearly that everything – by which he meant ev ery deadline -- would be part of the upcoming
consultations, and that Members would exercise due restraint in respect of all deadlines, withoutprejudice to any individual Member's position in the consultations.  Thus, on the basis of the
understanding that was reached in the General Council, India could support adjournment of this
meeting.
10. The representative of Poland recalled that Poland had consistently supported extension of the
Articles under review, although at the same time Poland was open to any further discussions on
modifications of Article 8 of the Agreement.  Po land was in favour of keeping Article 6.1 in its
present form.  Poland could agree on a temporary extension of the three articles, accompanied by an
initiation of the review of Article 8.  Regarding the Chairman’s proposal, Poland would be interestedG/SCM/M/22
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to include in the consultations on Article 8 issues concerning countries transforming to market-type
economies, and would have a text ready to submit.  On the matter of the fresh circumstances in the
aftermath of the 17 December General Council meeting, in Poland’s view the SCM Committee was
enjoying a privilege in having this meeting before the year's end, a privilege that the other bodies
which were also in the situation of having started various mandated actions within the framework ofvarious Agreements did not have.  Thus, this wa s an opportunity for the SCM Committee, and the
proposed extension of these provisions for a period of consultations announced on 17 December
perfectly fit within the framework of the Chairman of the General Council's statement, and would
make the matter more clear.  Poland recommended taking a second look at this opportunity.
11. The representative of Egypt supported the statements of Mexico, Panama, Pakistan and
Malaysia, that after the 17 December meeting of the General Council the Committee should wait until
the consultations in the General Council had ended, to see what would be the second step.  Egypt
therefore proposed that the meeting be suspended until the end of those consultations.
12. The representative of Colombia stated that for Colombia, the presence of non-actionable
subsidies was important for economic development or related programmes, but that Colombia’s lack
of experience in the application of such subsides and the complexity of the drafting of Article 8 had
made it difficult for Colombia to design programmes covered by these provisions.  Even if Colombia
had done so, the scope would be limited due to Article 8’s conditions regarding thresholds for
granting of subsidies and coverage for programmes to be subsidized.  Thus, Colombia would be
willing to agree to an extension of the Articles as long as they were submitted to review to take intoaccount the conditions and concrete needs of the developing countries.  Extension of Article 8 could
be more viable for Colombia’s development objectives if there were a modification to include
measures applied by developing countries with a view to obtaining legitimate development goals such
as regional growth, research and development and technological development, diversification of
production, development and application of production methods that do not harm the environment,and production of high technology and high value added products.  These modifications would not be
enough if there were not also a review of the thresh olds in Annex VII of the Agreement with a view to
incorporating into that Annex those countries in  the World Bank’s lower and lower-middle income
categories, as well as a provision establishing as non-actionable subsidies granted by developing
countries which were less than 5 per cent of the f.o.b. value of the product.
13. The representative of Indonesia recalled that in the informal meeting of the Committee the
preceding week, Indonesia had expressed its position that it could not agree on the extension of
Articles 6.1, 8 and 9 of the SCM Agreement.  Indonesi a was not a user of those Articles and there was
a great possibility that Indonesia would never use them. Indonesia supported the positions of
Malaysia, Pakistan, Panama and India.
14. The representative of Bulgaria supported the proposal of Poland that in any future proposals
for modification of Article 8, countries in transition be included.
15. The representative of Cyprus noted Cyprus’s support for the extension of application of the
provisions until the end of the period of consultations.
16. The representative of Korea recalled that in the past consultations, Korea had stated that it
favoured maintaining Articles 6.1, 8 and 9 without modification for a certain period of time.  That
position had not changed.  Korea had reiterated why these Articles should be maintained on many
occasions.  Korea did not want to repeat all of those reasons, but wanted simply to say that moreexperience and time were needed in order to judge whether these Articles had been used in the way
that the drafters had originally intended.  Some Members had argued that the Articles as drafted, and
the whole Agreement, should be revised so that those Members’ legitimate concerns could be
properly reflected.  Korea was ready to discuss the possibility of modifying the relevant Articles ifG/SCM/M/22
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necessary.  The Committee should, however, keep in mind the fact that modifying the existing
categories would be much easier for achieving consensus than creating new categories after having
destroyed the existing categories.  In this sense, Korea supported the Chairman’s proposal.
17. The representative of Turkey reiterated Turkey’s previously-stated position on Articles 6.1, 8
and 9 of the Agreement that Turkey favoured extending these provisions, which Turkey considered to
be necessary and fundamental.  Thus, the formulation proposed by the Chairman was reasonable and
fair.  In view of the General Council's decision, it would be appropriate that these provisions be
maintained in one way or another so that they could be subject to consultations in ensuing months and
revised as necessary.
18. The representative of the Czech Republic stated that although his country was landlocked, on
this question the Czech Republic was in the same boat as Canada, Cyprus, Turkey and Korea.
19. The representative of Canada emphasized three points.  First, Canada's position regarding the
extension of the provisions was well known, and did not need to be repeated.  Second was the point
made by a number of delegations, including Korea, that the whole issue at that point was to keep theseprovisions alive in order to allow Members to continue the review.  As the Korean representative had
quite rightly said, it was lot easier to maintain or to amend something that existed than to try to
introduce something new that no longer existed.  That was an entirely different situation and the
whole purpose of the present discussion from Canada’s point of view was to keep the provisions alive
so that Members could continue the review on all the issues, whether Article 6.1, Article 8 orArticle 9.  Otherwise, as Canada had said earlier, Members would be throwing the baby out with the
bath water if nothing was done in this regard.  Third, Canada saw no inconsistency between what was
said in the General Council on 17 December and a decision at this meeting to extend these provisions
for the period of consultations.  The whole idea was to keep them alive, so that there could be
consultation on them.  Otherwise, Members would be  starting from scratch, which would affect the
entire balance of the consultations.
20. The representative of the European Community  noted that the EC’s position vis-à-vis the
decision on Article 31 by the Committee was well -known.  The EC would favour extending the
application of Articles 6.1, 8 and 9 to allow time to evaluate their operation, and to allow time to
consider what developing country Members had mentioned in regard to the usability and applicability
of these provisions for their needs, and what other countries had mentioned or might mention toimprove the provisions.  That was the EC’s general position.  Regarding the Chairman’s proposal at
this meeting that the Committee decide to extend for a further period linked to the consultation
process taking place in the General Council, the EC considered this to be a possibility, as long as it
were done without prejudice to any Member’s position in the consultations.  The Committee had
heard some Members supporting the proposal, and had also heard other Members that would notsupport the proposal, beginning with Malaysia saying a very clear no, as the first word.  The EC
representative was grateful for that because it gave some clarity to the discussion.  First, it meant that
the Committee’s answer to the Chairman’s proposal was no, as had been heard from Mexico and other
countries.  Instead these countries had suggested that the Chairman should suspend the meeting as had
happened in the General Council on 17 December. In addition, the argument had been made that thisCommittee had no power to decide anything.  On that point, and without prejudicing whether the
Chairman could suspend the meeting, or what legal consequence that would have, it needed to be said
that Article 31 of the Subsidies Agreement was quite unique in giving the Committee the power to
decide something, in particular to decide whether these provisions should be extended or not.  Indeed,
the drafts with regard to these provisions in the Draft Declaration for Seattle did not say that Ministersdecided, but that Ministers instructed the Committee on Subsidies and Countervailing Measures to
decide, so that in that context it was recognized that it was the SCM Committee that could do this.
How often this Committee could do this was perhaps something for interpretation, but there should be
no lack of clarity that Article 31 empowered unique ly the SCM Committee to extend these provisions.G/SCM/M/22
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The EC was concerned that if this mandate of Article 31 were not used to its letter, the provisions
would lapse, because, completely independent of the question whether the Ministerial Conference was
over or not, this was not something that could be decided by the General Council.  That was the issue.
The EC would try to support the Chairman where it coul d, but feared that if the issue were left open in
the sense that the Chairman just suspended the meeting, the consequences for Articles 6.1, 8 and 9 atbest would be unclear.
21. The representative of Thailand added his delegation’s support to the statements made by
Malaysia, Mexico and India.  Thailand was of the view that all deadline issues should have the same
treatment and were to be dealt with in 2000 as agreed at the General Council.
22. The representative of Switzerland supported the Chairman’s proposal, and fully agreed with
the statements of Canada and the EC.  In fact, Switzerland was extremely reluctant to suspend the
meeting and instead favoured a provisional extension until the next meeting of the General Council.
There needed to be some clarity in this resp ect, rather than being trapped in the hazy word
“suspension”. Switzerland was in favour of setting up a very clear deadline for extending
provisionally these provisions, which was the reason that, rather than resorting to the vague word“consultations”, it preferred to have the deadline of the next meeting of the General Council.
23. The representative of the United States stated that the United States was prepared to support
the Chairman’s proposal, although perhaps the modification suggested by the delegation of
Switzerland was an improvement.  Thus, the United States could join a consensus to extend theprovision.
24. The representative of Argentina stated, concerning the only issue before the Committee for
discussion, which the Chairman’s specific proposal, that the most appropriate procedure would be to
take up the proposal made by the Ambassador of Mexico.  After a long and arduous debate in theGeneral Council on 17 December, Members had reached an understanding on the basis of the
statement made by the Chairman of the General Council.  Thus, it seemed that if this Committee was
to take individual decisions on the basis of a particular interpretation of what was said by the
Chairman of the General Council on 17 December, th en quite obviously those would be actions which
would modify what each delegation might understand vi s-à-vis what was implicitly agreed to in the
General Council. It seemed therefore that the best and most comfortable procedure would be to
suspend this meeting and leave everything at a status quo situation; that is, that all of the deadlineswhich would lapse on 31 December would be part of the consultations that would be carried out, and
that it was best to leave the situation as it was for the time being.
25. The representative of Mexico stated that it was a pity that many of the comments being made
at this meeting had not been made at the 17 December General Council meeting, when Members were
discussing precisely this type of problem.  If there were delegations that felt that these provisions were
different and required different treatment, they s hould have said so then, and not waited until this
meeting on 20 December.  The question was not whether this issue or situation was different, on
which one could elaborate very sophisticated legal these; rather, there was a negotiating link – some
wanted one thing and others wanted something else, so it should be negotiated.  In the view of Mexicothis issue should receive the same treatment as other issues.  This was a negotiating position, and
Mexico did not want to enter into legal details.  At the General Council meeting, Members had
reached a solution which some qualified as constructive ambiguity.  It had not been possible to reach
a solution which was absolutely clear cut as would have been Mexico’s preference,  and so it had been
necessary to go along with this constructive ambiguity.  The status of the Articles of the SCMAgreement on 31 December would be the same as that of other expiring provisions.  A very similar
case, for example, was the situation of the non-vi olation aspect in the TRIPs Agreement, where as
well there was a clear peremptory expiry date.  In the view of Mexico, where there was consensus,
Members could do anything, for example, as in Article X, paragraph 2 of the WTO Agreement itself;G/SCM/M/22
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the key word was negotiation and consensus.  In Mexico’s view, therefore, in order not to take up
more time, there were only two alternatives be fore the Committee. The Committee could decide to
suspend the meeting, and here it needed to be stressed that the word in English would be "adjourn", to
use the same word used by the General Council Chairman on Friday – it had become very fashionable
to speak of suspend, adjourn, etc., and such legal subtleties.  Or, the Committee could quite simplytake note that there was no consensus to extend the Article 31 review.  The rest had been a very
interesting discussion, but these were the only two options open to the Committee.
26. The representative of Slovenia added Slovenia’s support for the extension of the provisions
referred to in Article 31 of the SCM Agreement.  Slovenia supported the Chairman’s proposal.
27. The Chairman noted that the Committee had almost completed a tour de table, and had had a
rich exchange of views, but that there had been no direct and clear consensus of how to proceed, in
view of which he intended to adjourn the meeting.
28. The meeting was adjourned.
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