RESTRICTED  WORLD TRADE  
ORGANIZATION  G/C/M/72 
30 January 2004 
 (04-0345) 
Council for Trade in Goods 
26 January 2004  
 
 
 
MINUTES OF THE MEETING OF THE COUNCIL FOR TRADE IN GOODS 
26 JANUARY 2004 
 
Chairman:  H.E. Ambassad or Hovorka (Czech Republic ) 
 
  The meeting of the Council for Trade in Goods was convened by airgram WTO/AIR/2238 and 
the proposed agenda for the meeting was containe d in document G/C/W/479.  The meeting proceeded 
on the basis of the proposed agenda.  
I.
 REVIEW OF THE OPERATION OF THE TRIMS AGREEMENT UNDER 
ARTICLE 9 ...................................................................................................................... .........2  
II. REQUEST BY PAKISTAN FOR EXTENSION OF THE TRANSITION 
PERIOD UNDER THE AGREEMENT ON TRADE-RELATED INVESTMENT MEASURES (G/C/W/478)............................................................................3
 
III. REQUESTS FOR A WAIVER – INTRODUCTION OF HARMONIZED SYSTEM 2002 CHANGES TO WTO SCHEDULES OF TARIFF CONCESSIONS (G/C/W/477).................................................................................................4
 
IV. REGIONAL TRADE AGREEMENTS ..................................................................................4  
A. FREE  TRADE  AGREEMENT  BETWEEN  THE  UNITED  STATES  AND  CHILE..................4  
-  NOTIFICATION  FROM  THE  PARTIES  TO THE  AGREEMENT   (WT/REG160/N/1,  
WT/REG160/1)................................................................................................................... ........4  
B. FREE  TRADE  AGREEMENT  BETWEEN  THE  UNITED  STATES  AND  
SINGAPORE ...................................................................................................................... ........4  
-  NOTIFICATION  FROM  THE  PARTIES  TO THE  AGREEMENT   (WT/REG161/N/1,  
WT/REG161/1)................................................................................................................... ........4  
C. CLOSER  ECONOMIC  PARTNERSHIP  ARRANGEMENT  BETWEEN  CHINA  
AND  HONG  KONG,  CHINA.....................................................................................................4  
-  NOTIFICATION  FROM  THE  PARTIES  TO THE  ARRANGEMENT   (WT/REG162/N/1,  
WT/REG162/1)................................................................................................................... ........4  
D. CLOSER  ECONOMIC  PARTNERSHIP  ARRANGEMENT  BETWEEN  CHINA  
AND  MACAO,  CHINA..............................................................................................................5  
-  NOTIFICATION  FROM  THE  PARTIES  TO THE  ARRANGEMENT   (WT/REG163/N/1,  
WT/REG163/1)................................................................................................................... ........5  
V. OTHER BUSINESS................................................................................................................. .5 
 
 G/C/M/72 
Page 2  
 
 I. REVIEW OF THE OPERATION OF THE TRIMS AGREEMENT UNDER 
ARTICLE 9 
 
1.1 The Chairman
 opened the floor to Members after requesting delegations to refrain if possible 
from repeating well-known and recorded positions regarding the nature, scope and possible outcome of 
the review. 
 1.2 The representative of Brazil
 recalled that India and Braz il had presented a proposal for 
amendment of the TRIMs Agreement in October 2002,  which was circulated as document G/C/W/428.  
That proposal contained the rationale  of Brazil's demand for further fl exibility for developing countries 
in adopting performance requirem ents.  Today, he addressed the importance of performance 
requirements for the promotion of small- and medium-sized enterprises (SMEs).  SMEs comprised the 
bulk of developing country economies  in terms of employment, income  generation and growth.  They 
were also an essential tool in pove rty reduction, producti on diversification and wi dening the export base.  
SMEs were an important component of a well-design ed and vibrant development strategy.  Numerous 
market failures, however, prevented domestic enterprises from building competitive advantages, 
because they could not access finance, informatio n, technology and markets.  Specific policies, 
programmes and institutional frameworks were needed  to help SMEs overcome these failures.  To 
transit the high road to competitiveness, firms in developing countries had to build and enhance 
endogenous capabilities which could be applied to add value to ex isting activities and make new 
products that could compete in the global economy. 
 
1.3 Business linkages could be a remarkable source for fostering SMEs.  TNC-SME linkages 
whereby trans-national cor porations built up competitive supply chains could help  SMEs access new 
and diversified markets.  Through linkages, TNCs sh ared their road-maps with SMEs so they could 
preposition themselves and be ready for changes in market and technology trends.  A number of 
developed and developing count ries had benefited from the positive developmental impact of 
TNC-SME linkages that had been instrumental in m odernising and making their local industries more 
dynamic.  Unfortunately, these linkages did not ha ppen automatically.  There might be cases where 
governments needed to play an ac tive role in inducing all stake holders to interact.  The TRIMs 
Agreement largely ignored the mi cro-economic conditions for deve lopment and SMEs by preventing 
developing countries from maximisi ng the benefits of FDI inflow s.  The experience with the 
implementation of the TRIMs Agreement had shown th at its S&D provisions were insufficient to meet 
the legitimate development expectations of deve loping countries.  Current prohibited TRIMs for 
instance, had limited developing count ries' margin for manoeuvre to fu rther stimulate a sound relation 
between foreign investors and SMEs .  He concluded by stressing th e importance of this revision. 
 
1.4 The representative of India  stated that she would like to associate her delegation with the 
statement by Brazil and as had been  indicated by Brazil, she reiterated that the proposal in G/C/W/428 
was on the table for further reflection and discussion .  There were a couple of other suggestions which 
were made in the previous meetings on how to pro ceed with this review.  Re garding consultations, her 
delegation looked forward to t hose consultations taking place. 
 
1.5 The representative of Pakistan  said that Brazil had said something about SMEs and how 
important they were, and how their policy space wa s limited because of TRIMs.  He would like to 
volunteer Pakistan for a study to be  conducted there.  He suggested th at the proposal by Brazil and India 
should be seriously considered and a study be c onducted for this purpose.  The representative of 
Colombia  urged all other delegations to continue supporting this review. 
 
1.6 The representative of the European Communities  proposed focusing mo re on concrete matters 
of substance and experience.  Instead of trying to  use time and resources for abstract studies, he 
suggested taking advantage of point 2 of the agenda  to examine together what were the concrete  G/C/M/72 
 Page 3 
 
 
 problems that a specific country had been experi encing in phasing out its TRIMs and secondly, what 
possible solutions could be found on a case-by-case basis.  1.7 The representative of the United States
 said that it seemed that what was being proposed 
could only be termed as a reopening of the TRIM s Agreement, which did not fall under the purview 
of a review.  As mentioned by the EC, the US was willing to discuss concrete problems and specific 
instances that delegations had run into.  He was intere sted in listening to Members' experiences in this 
area, but something that moved into the discussi on of a wholesale revision would be problematic.. 
 1.8 The Chairman
 saw no major movement in positions as Members continued to differ on whether 
and how to proceed with the Article 9 review.  He proposed that the Council take note of the statements 
made and agree to revert to this item at its next  meeting.  In the meantime, he intended to take up 
informal contacts with interested delegations.  It was so agreed . 
  II. REQUEST BY PAKISTAN FOR EXTENSION OF THE TRANSITION PERIOD 
UNDER THE AGREEMENT ON TRADE-RELATED INVESTMENT MEASURES (G/C/W/478) 
 
2.1 The Chairman
 drew Members' attention to the request by Pakistan to extend the transition 
period with regard to the elimination of certain TR IMs.  He recalled that at the last meeting the 
Ambassador of Pakistan had alluded to the possibi lity of such a request.  This request had been 
circulated to Members in document G/C/W/478. 
 
2.2 The representative of Pakistan  said that during the transition period until 31 December 2003, 
Pakistan had made substantial progress in elimination of its TRIMs and had so far successfully 
deleted 86 programmes relating to ma chinery and domestic appliances.   However, Pakistan still had 
16 remaining programmes for automobile industry for which it was facing difficulties to phase them 
out because of development, financial, and trade need s.  Pakistan would, therefore, like to request 
further extension for three years for the ma intenance of 16 remaining programmes up until 
31 December 2006.  The major beneficiary of main taining the TRIMs in the automobile sector was 
the small-scale vendor industry which was providing employment to more than 115,000 persons.  It 
was also raising taxes for the government exche quer of more than US $450 million and contributing 
to a saving of US $700 million in imports.  Also due to this policy Pakistan was entering into exports 
of auto parts and last year its exports were worth US $25 million.  The essential problem for the 
Pakistan Government was whether to raise tariffs on  auto parts if the TRIMs were eliminated.  It 
seemed more feasible to avoid raising tariffs and request an extension for the maintenance of its 
indigenisation/deletion policy for the automobile sector for a further period of time. 
 
2.3 The representative of the United States  said that his delegation was willing to approach this 
issue with an open mind.  The place to start was to  develop additional information about exactly what 
was being talked about, and he announced his inte ntion to circulate, through the Secretariat to 
Members, a fairly detailed list of ques tions about this particular proposal. 
 
2.4 The representative of Japan  also echoed the sentiment expressed by the United States in the 
sense that Japan would welcome further information and facts on the need for a further extension of 
three years.  It would be open-minded in pursuing this issue and underlined the importance that all 
Members understand the background and the r easons for this request for extension. 
 
2.5 The representative of the European Communities  believed that the Council had had neither 
enough time nor enough information at this stage to make up its mind on this issue.  He raised the G/C/M/72 
Page 4  
 
 possibility of further possible consultations with in terested parties to conduc t a thorough and in-depth 
review of this request. 
 
2.6 The representative of Canada
 would have welcomed more in formation, specifically on the 
difficulties faced by Pakistan in the elimination of  the 16 remaining programmes and also with regard 
to future steps, i.e. what kind of phase-out programme would be considered necessary for the 
elimination of the remaining TRIMs.  He thought that further consultations on this issue will be 
useful. 
 
2.7 The representative of Brazil  strongly supported the proposition made by Pakistan.  Like 
others, Brazil would participate in a more detailed de bate on this issue so that it could reinforce the 
need for a further revision of this Agreement.  Measures like this would prove how important it was to have more flexibility so that development goals  can be met by a sound relation between national 
governments and investors. 
 
2.8 The representative of India
 underlined the importance of adequate flexibility with respect to 
TRIMs so that countries could meet their legitimate  development objectives.  This was why the paper 
had been put forward by India and Brazil, and Pakist an's case pointed to the need to discuss the issue 
further. 
 
2.9 The representative of Pakistan  was willing to provide further information and looked forward 
to receiving the questions from the US. 
 
2.10 The Chairman  said that in the light of the discussion,  he proposed that the Council take note of 
the statements made and that he hold informal consulta tions with interested delegations on this request.   
It was so agreed . 
 
 
III. REQUESTS FOR A WAIVER – INTROD UCTION OF HARMONIZED SYSTEM 2002 
CHANGES TO WTO SCHEDULES OF TA RIFF CONCESSIONS (G/C/W/477) 
 
3.1 The Chairman  drew Members' attention to the draft waiver decision circulated in document 
G/C/W/477, made in connection with  the introduction of HS2002 changes into WTO schedules of tariff 
concessions.  This had been the subject of consul tations in the Market Access Committee.  The CTG 
recommended that the draft waiver decision cont ained in G/C/W/477 be forwarded to the General 
Council  for adoption.  
 
IV. REGIONAL TRADE AGREEMENTS 
A. FREE
 TRADE  AGREEMENT  BETWEEN  THE  UNITED  STATES  AND  CHILE 
-  NOTIFICATION  FROM  THE  PARTIES  TO THE  AGREEMENT   (WT/REG160/N/1,  
WT/REG160/1) 
 
B. FREE  TRADE  AGREEMENT  BETWEEN  THE  UNITED  STATES  AND  SINGAPORE 
-  NOTIFICATION  FROM  THE  PARTIES  TO THE  AGREEMENT   (WT/REG161/N/1,  
WT/REG161/1) 
 
C. CLOSER  ECONOMIC  PARTNERSHIP  ARRANGEMENT  BETWEEN  CHINA  AND  
HONG  KONG,  CHINA 
-  NOTIFICATION  FROM  THE  PARTIES  TO THE  ARRANGEMENT   (WT/REG162/N/1,  
WT/REG162/1)  G/C/M/72 
 Page 5 
 
 
 D. CLOSER  ECONOMIC  PARTNERSHIP  ARRANGEMENT  BETWEEN  CHINA  AND  
MACAO,  CHINA 
-  NOTIFICATION  FROM  THE  PARTIES  TO THE  ARRANGEMENT   (WT/REG163/N/1,  
WT/REG163/1)  
4.1 The Chairman
 drew Members' attention to the four Ag reements listed under this item that had 
been notified under GATT Article XXIV.  The texts of the Agreements and their notifications had 
been circulated in the documents listed.  4.2 Regarding the Free Trade Agreement between  the United States and Chile, the representative 
of Chile
 stated that his delegation was pleased to be able to present this Agreement and the 
representative of the United States  said that the FTA was welcome because it had been in preparation 
for a long time. 
 
4.3 The Chairman  proposed that the Council take note of the statements made and the Committee 
on Regional Trade Agreements carry out the examin ation of the above-quoted four Agreements in 
accordance with the following terms of reference:  "to examine, in light of the relevant provisions of 
the GATT 1994, the four free trade agreements just  referred to and to submit a report to the Council 
for Trade in Goods.  It is understood that the unde rstanding read out by the Chairman of the Council 
for Trade in Goods under Item 7 of the agenda of  the meeting of the Council for Trade in Goods on 
20 February 1995, as contained in document WT/REG3/1, will apply mutatis mutandis  to the 
examination of the agreements.  It is also unders tood that, during the examination, due account will be 
taken of the intrinsic differences between customs unions and free trade areas."  It was so agreed . 
  
V. OTHER BUSINESS 
 
5.1 The representative of the European Communities
 said that the EC would notify, within the 
framework of procedures laid down in GATT Arti cle XXIV, measures taken with regard to the 
enlargement of the EC by the accession of the new me mbers as of 1 May 2004.  The EC was ready to 
enter into Article XXIV and XXV III procedures, including tariff ne gotiations or consultations to 
address compensatory adjustments provided for under Article XXIV:6 of GATT 1994. 
 
5.2 The representatives of Canada , Argentina  and Brazil  requested more information on how the 
notification procedure would work. 
 
5.3 The representative of the Secretariat  said that the EC notification would be distributed in the 
G/SECRET/- series.  She said it might be useful to  recall that according to GATT rules and Article 
XXVIII provisions, which applied in the case of ne gotiations under Article XXI V:6, negotiations for 
the modification or withdrawal of concessions constituted a mechanism whereby a WTO Member 
could offer compensation.  The data necessary for the purposes of applying Article XXIV:6 was at present being processed in the Secretariat and would be made available in electronic form on the WTO Members' homepage.  From the date of circul ation of the statistics, and of the notification, 
Members would have 90 days to notify their in terest to renegotiate.  She understood that the 
notification of the enlargement under GATT XXIV: 7 and GATS V:7 had not yet been received.  
When these were received the notifications would be  made to the CTG and the CTS, leading to the 
examination of the enlargement in the context of the CRTA. 
 
5.4 The Chairman
 informed Members that the date of th e next meeting of the CTG was scheduled 
for Thursday, 15 April 2004.  The agenda would close on Friday, 2 April 2004.  
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