WORLD TRADE G/L/134
5November 1996
ORGANIZATION(96-4676)
Council forTrade inGoods
1November 1996
REPORT OFTHE COUNCIL FOR TRADE INGOODS
TOTHE GENERAL COUNCIL
Introduction
ThisreporthasbeenestablishedinaccordancewiththestatementbytheChairmanoftheGeneral
Council, atthemeeting on16April 1996, withregard to"Reporting Procedures fortheSingapore
Ministerial Conference". Itcovers theperiod from 1January to4November 1996;1itcomprises
aSection I:factual part,andaSection II:conclusions and/or recommendations. Thereport also
covers theactivities ofthesubsidiary bodies oftheCouncil forTrade inGoods (hereinafter referred
toas"theCouncil"), asoutlined under item19(a).
Incarrying outitstask, theCouncil hasheldeight regular meetings. Theminutes ofthese
meetings, which remain therecord oftheCouncil 'swork, arecontained indocuments G/C/M/8 to
15.
Thefollowing subject matters which wereraised and/or acted uponintheCouncil areincluded
inthereport:
Page
SECTION I:FACTUAL PART
1. Observer status forInternational Intergovernmental Organizations 5
2. Election ofChairperson oftheCouncil forTrade inGoods 5
3. Appointment ofOfficers fortheCommittee onAgriculture, Committee on
Sanitary andPhytosanitary Measures, Working Party onState-Trading Enterprises,
Working Group onNotification Obligations andProcedures 5
4. Approval ofRules ofProcedure oftheCommittees onAgriculture,
Anti-dumping Practices, Safeguards, Subsidies andCountervailing Measures 6
5. Letter from theChairman oftheCommittee onTrade andDevelopment 6
6. Circulation andDerestriction ofCouncil Documents 6
7. Availability ofdocuments inSpanish 6
1Thereport oftheCouncil forTrade inGoods for1995 iscontained inSection IVofdocument WT/GC/W/25.G/L/134
Page2
8. Committee onMarket Access 6
- Semi-annual report oftheCommittee
9. Agreement onSubsidies andCountervailing Measures 7
- State ofplayconcerning subsidy notifications -lackofcompliance
withsubsidy notification requirements under Article 25.2ofthe
Agreement onSubsidies andCountervailing Measures
10. Working Party onState Trading Enterprises 7
11. Customs Unions andFree-Trade Areas: regional agreements 7
(a) Customs Union between Turkey andtheEuropean Community 7
(b) Agreement between theGovernment ofDenmark andthe
Home Government oftheFaroe Islands, oftheonepart,
andtheGovernment ofIceland, oftheother part,
onfreetrade between theFaroe Islands andIceland 7
(c) Agreement between theSwiss Government, oftheonepart,
andtheGovernment ofDenmark andtheHome Government
oftheFaroe Islands, oftheother part,onfreetrade
between theFaroe Islands andSwitzerland 8
(d) Agreement between theGovernment ofNorway, ofthe
onepart,andtheGovernment ofDenmark andthe
Home Government oftheFaroe Islands, oftheother part,
onfreetrade between theFaroe Islands andNorway 8
(e) Agreements between theCzech Republic andBulgaria, and
theSlovak Republic andBulgaria 8
(f) Preferential tariff treatment forthecountries offormer Yugoslavia 8
(g) EFTA-Estonia, EFTA-Latvia, EFTA-Lithuania FreeTrade Agreements 8
(h) Enlargement oftheCentral European FreeTrade Agreement (CEFTA) 8
(i) Europe Agreements between theEuropean Communities andthe
Czech Republic, andtheEuropean Communities andtheSlovak Republic 9
(j) Free-Trade Agreement between theCzech Republic andRomania 9
(k) Free-Trade Agreement between theSlovak Republic andRomania 9
(l) FreeTrade Agreement between theEFTA States andEstonia 9
(m) FreeTrade Agreement between theEFTA States andLatvia 9
(n) FreeTrade Agreement between theEFTA States andLithuania 10
12. Waivers under Article IXoftheWTO Agreement 10
(a) Harmonized System -Requests forextensions ofwaivers
Bangladesh, Bolivia, Guatemala, Jamaica, Morocco,
Nicaragua, SriLanka 10
(b) Malawi -Renegotiation ofSchedule LVIII 10
(c) Senegal -Renegotiation ofSchedule XLIX 10
(d) Zambia -Renegotiation ofSchedule LXXVIII 10
(e) Decision ontheintroduction ofHarmonized System changes
intoWTO schedules oftariff concessions on1January 1996 11
(f) Waivers falling under paragraph 2oftheUnderstanding inRespect
ofWaivers ofObligations under GATT 1994 11
(i) Cuba -Paragraph 6ofArticle XVofGATT 1994 11
(ii) United States -Former Trust Territory ofthePacific Islands 11
(iii) United States -Imports ofAutomotive Products 11
(iv) United States -Andean Trade Preference Act 11G/L/134
Page3
(v) Canada -CARIBCAN 12
(vi) European Communities 12
-European Communities -Fourth ACP-EEC Convention
ofLomé
-France -Trading Arrangements withMorocco
(vii) South Africa -BaseDates under Article I:4 12
(viii) Zimbabwe -BaseDates under Article I:4 12
13. Issues raised concerning Members 'trade practices 12
(a) Brazilian Measure concerning theautomotive sector 12
(b) USdraftbillconcerning thedefinition of"domestic industry" inthearea
ofsafeguards 13
(c) US-"Cuban Liberty andDemocratic Solidarity Actof1996" 13
(d) Banonexports ofwild-harvested shrimps totheUS 13
(e) USNarcotics Control Trade Act 13
(f) Impairment bytheEuropean Community ofTariff Treatment
ofHigh Technology Products 13
(g) Argentine footwear 13
(h) USrequest forConsultations concerning Restrictive Business Practices
intheJapanese Photographic FilmandPaper Market 14
(i) ECproposal on"Trade Facilitation" 14
14. Agreement onPreshipment Inspection 14
(a) Commencement ofOperations oftheIndependent Review Entity 14
(b) Review under Article 6ofthePreshipment Inspection Agreement 14
(c) Notifications 14
15. Working Group onNotification Obligations andProcedures 15
(a) Status ofwork intheWorking Group 15
(b) Report oftheWorking Group onNotification Obligations
andProcedures 15
16. Implementation oftheAgreement onTextiles andClothing (ATC) andrelated matters 16
- Issues andproblems 16
(i) Integration programmes 16
(ii) Useoftransitional safeguards 17
(iii) Bilaterally agreed arrangements 18
(iv) Functioning oftheTextiles Monitoring Body 18
(v) Treatment ofsmall suppliers andleastdeveloped countries 19
(vi) Particular interests ofcotton-producing countries 20
(vii) Rules oforigin 20
(viii) Other ATC issues (outward processing trade, special regimes, etc.) 20
(ix) Relationship between restrictions andregionalism 21
(x) Useoftrade measures fornon-trade purposes 21
(xi) Market access 21
(xii) Rules anddisciplines 22
(xiii) Circumvention 22
17. Textiles Monitoring Body (TMB) 23
- Report oftheTMB 23
A. Summary ofcomments made byWTO Members 23
B. Action taken bytheCouncil 26G/L/134
Page4
18. Proposals andinitiatives forfurther trade liberalization 26
19. Singapore Ministerial Conference 27
(a) Report ofsubsidiary bodies oftheCouncil forTrade inGoods 27
(b) Report bytheCouncil forTrade inGoods totheMinisterial Conference 28
SECTION II:CONCLUSIONS AND/OR RECOMMENDATIONS
1. Agreement onPreshipment Inspection 29
2. Notification Obligations andProcedures 29G/L/134
Page5
SECTION I:FACTUAL PART
1. Observer status forInternational Intergovernmental Organizations (G/C/M/8 to14)
1.1 Atitsmeeting of29January 1996, theCouncil agreed thatpending theadoption ofcriteria
andconditions forobserver status forinternational intergovernmental organizations intheWTO and
unless adelegation raised anobjection, those organizations invited tothecurrent meeting oftheCouncil
beinvited toitsnextmeeting onanad-hoc basis. Theorganizations concerned were: FAO, IMF, ITCB,
OECD, UN,UNCTAD, World Bank andtheWCO.
1.2 Atitsmeetings of14February 1996, 19March 1996, 22May1996and5July1996theCouncil
agreed toinvite thesame organizations onanad-hoc basis toitsnextrespective meeting.
1.3 Atthemeeting of25July1996, theChairman pointed outthatatitsmeeting of18July1996,
theGeneralCouncilhadapprovedthe"GuidelinesonObserverStatusforInternationalIntergovernmental
Organizations".InlightofthisdecisionheproposedtoholdinformalconsultationsonwhichInternational
Intergovernmental Organizations would begranted observer status intheGoods Council.
1.4 Atitsmeeting of19September 1996, theCouncil agreed thatpending theoutcome offurther
consultations, theorganizations which hadbeenfollowing theCouncil 'smeeting uptonowonanad-hoc
basis, could attend future meetings oftheCouncil onanad-hoc basis.
2. Election ofChairperson oftheCouncil (G/C/M/8)
2.1 Atitsmeeting of14February 1996, theCouncil unanimously elected Ambassador Narayanan,
asChairman oftheCouncil for1996.
3. Appointment ofOfficers fortheCommittee onAgriculture, Committee onSanitary and
Phytosanitary Measures, Working Party onState-Trading Enterprises, Working Group
onNotification Obligations andProcedures (G/C/M/8)
3.1 Atitsmeeting of14February 1996, theCouncil approved theappointments ofthefollowing
Chairpersons: Committee onAgriculture: Mr.D.Tulalamba (Thailand); Committee onSanitary
andPhytosantiary Measures: MrK.Bergholm (Finland); Working Group onNotification Obligations
andProcedures: Mr.AShoyer (United States); Working Party onStateTrading Enterprises: Mr.
P.May(Australia).
3.2 Atitsmeeting of14February 1996, theCouncil tooknoteoftheresults oftheconsultations
heldbytheChairman onChairpersons for1996fortheother subsidiary bodies asfollows: Committee
onTechnical Barriers toTrade: Ms. C.Guarda (Chile); Committee onMarket Access:
Mr.J.Saint-Jacques (Canada); Committee onCustoms Valuation: Mr.P.Palecka (Czech Republic);
Committee onImport Licensing: Mr.C.Mbegabolawe (Zimbabwe); Committee onRules ofOrigin:
Mr.Osakwe (Nigeria); Committee onAnti-Dumping Practices: Mr.O.Lundby (Norway); Committee
onSubsidies andCountervailing Measures: Mr.V.DoPrado (Brazil); Committee onSafeguards:
Mr.A.Buencamino (Philippines); Committee onTrade-Related Investment Measures: Mr.V.Notis
(Greece).
3.3 TheCouncil alsoagreed thatthequestion ofVice-Chairpersons should behandled atthelevel
oftheCommittees themselves through aprocess ofconsultations.G/L/134
Page6
3.4 Anumber ofdelegations stated thatfuture consultations onChairpersons should beinitiated
asearly aspossible, theyshould bemore transparent, andtheprinciple ofrotation should betherule
wherever possible. Thepoint wasalsomade thatinthefuture thequestion oftheVice-Chiarmanship
should besettled inthecontext ofsuchconsultations.
4. ApprovalofRulesofProcedureoftheCommitteesonAgriculture,Anti-dumpingPractices,
Safeguards, Subsidies andCountervailing Measures (G/C/M/10)
4.1 Atitsmeeting of22May1996, theCouncil approved therulesofprocedure oftheCommittees
onAgriculture (G/AG/W/22), Anti-Dumping Practices (G/ADP/W/135/Rev.1), Safeguards
(G/SG/W/59/Rev.1) andSubsidies andCountervailing Measures (G/SCM/W/143/Rev.1).
5. Letter from theChairman oftheCommittee onTrade andDevelopment
(G/C/M/10 and13andCorr.1)
5.1 Atthemeeting of22May1996, theChairman informed theCouncil thattheChairman ofthe
Committee onTrade andDevelopment (CTD) hadsentaletter tohimrequesting information onthe
implementation ofdevelopment-related provisions inthose Uruguay Round Agreements dealtwithby
theCouncil. Thisinformation wasnecessary forthereview tobeconducted bytheCTD. Hehadsent
aletter tothechairpersons ofthevarious subsidiary bodies ofthisCouncil requesting them togive
himinformation onthework doneinthisarea. After receipt ofthisinformation, hewould takefurther
action onthebasis oftheinformation provided.
5.2 Atthemeeting of19September 1996, theChairman informed theCouncil thattheresponses
totheletter hehadsenttotheChairpersons ofthesubsidiary bodies oftheCouncil hadbeenreceived
andforwarded totheChairman oftheCTD. TheSecretariat hadmade acompilation ofthose responses
indocument WT/COMTD/W/16 andAddendum. Thematter wasnowunder consideration intheCTD.
6. Circulation andDerestriction ofCouncil Documents (G/C/M/13 andCorr.1)
6.1 Atthemeeting of19September 1996, theChairman drewtheCouncil 'sattention tothedecision
taken bytheGeneral Council atitsmeeting of18July1996 on"Procedures fortheCirculation and
Derestriction ofWTO documents" (WT/L/160/Rev.1). TheCouncil tooknoteofthedecision.
7. Availability ofdocuments inSpanish (G/C/M/13 andCorr.1)
7.1 Atthemeeting of19September 1996, therepresentative ofElSalvador, alsoonbehalf of
GRULAC, expressed concern atthefactthatdocuments werenotmade available intheSpanish language
intimeformeetings. Another representative stated thatthesame problem hadarisen regarding
documents inFrench.
8. Committee onMarket Access
Semi-annual report oftheCommittee (G/C/M/11)
8.1 Atitsmeeting of5July1996, theCouncil tooknoteofthereport made bytheChairman of
theMarket Access Committee (G/MA/4) concerning (1)implementation ofHS96 changes; (2)other
waivers; (3)establishment ofconsolidated loose-leaf schedules; (4)non-tariff matters; (5)Integrated
DataBase; and(6)Report oftheCommittee totheCouncil inconnection withtheSingapore Ministerial
Meeting.G/L/134
Page7
9. Agreement onSubsidies andCountervailing Measures
State ofplayconcerning subsidy notifications -lackofcompliance withsubsidy notification
requirements under Article 25.2oftheAgreement onSubsidies andCountervailing Measures
(G/C/M/10)
9.1 Atthemeeting of22May1996, therepresentative oftheECconveyed concern about thelack
ofcompliance byMembers withtheir notification obligation under Article 25.2oftheSubsidies
Agreement.
10. Working Party onState Trading Enterprises (G/C/M/14)
10.1 Atitsmeeting of15October 1996, theCouncil tooknoteofthecommunication from the
EuropeanCommunitiescirculatedinG/STR/W/33.TheECrequestedtheCounciltoreferitssubmission
totheWorking Party onStateTrading Enterprises foritsconsideration. TheCouncil agreed torevert
tothismatter atanappropriate time.
11. Customs Unions andFree-Trade Areas: regional agreements
(G/C/M/8, 9,10,11 and13andCorr.1)
11.1 Atitsmeeting of29January 1996, theCouncil tooknoteoftheinformation provided bythe
Chairman thatatthelastmeeting oftheGeneral Council, adecision wastaken inprinciple, toestablish
aCommittee dealing withregional trading matters. Consultations werebeing heldbytheChairman
oftheGeneral Council concerning thenature andterms ofreference ofthenewbody. TheCouncil
agreed thatthequestion ofestablishment ofseparate Working Parties would havetobereviewed in
lightofthefinaldecision onthisissue.
11.2 Atitsmeeting of19March 1996, theCouncil tooknoteofadecision taken bytheGeneral
Council toestablish aCommittee onRegional Trade Agreements (WT/L/127) which would carry out
theexamination ofsuchagreements inaccordance withtheprocedures andterms ofreference adopted
bytheCouncil andwhich would thereafter present itsreport totheCouncil forappropriate action.
(a) Customs Union between Turkey andtheEuropean Community (EC) (G/C/M/8)
11.3 Atitsmeetingof29January1996,theCounciltooknoteofthecommunication(WT/REG22/N/1)
fromtheparties, indicating theentryintoforceon1January 1996oftheCustoms Union between Turkey
andtheEC. TheCouncil established aWorking Party toexamine theAgreement.
(b) Agreement between theGovernment ofDenmark andtheHome Government oftheFaroe
Islands, oftheonepart,andtheGovernment ofIceland, oftheother part,onfreetradebetween
theFaroe Islands andIceland (G/C/M/8)
11.4 Atitsmeeting of19March 1996, theCouncil tooknoteofthenotification from theparties
totheAgreement (WT/REG23/N/1), indicating theentry intoforce on1July1993 oftheAgreement
(WT/REG23/1). TheCouncil established aWorking Party toexamine theAgreement.G/L/134
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(c) Agreement between theSwiss Government, oftheonepart,andtheGovernment ofDenmark
andtheHome Government oftheFaroe Islands, oftheother part,onfreetrade between the
Faroe Islands andSwitzerland (G/C/M/9)
11.5 Atitsmeeting of19March 1996, theCouncil tooknoteofthenotification from theparties
totheAgreement (WT/REG24/N/1), indicating theentry intoforce on1March 1995oftheAgreement
(WT/REG24/1). TheCouncil adopted theterms ofreference under which theCommittee onRegional
Trade Agreements should examine thisAgreement.
(d) AgreementbetweentheGovernmentofNorway,oftheonepart,andtheGovernmentofDenmark
andtheHome Government oftheFaroe Islands, oftheother part,onfreetrade between the
Faroe Islands andNorway (G/C/M/9)
11.6 Atitsmeeting of19March 1996, theCouncil tooknoteofthenotification from theparties
totheAgreement (WT/REG25/N/1), indicating theentry intoforce on1July1993oftheAgreement
(WT/REG25/1). TheCouncil adopted theterms ofreference under which theCommittee onRegional
Trade Agreements should examine thisAgreement.
(e) Agreements between theCzech Republic andBulgaria, andtheSlovak Republic andBulgaria
(G/C/M/9)
11.7 Atthemeeting of19March 1996, therepresentative oftheCzech Republic, speaking also
onbehalf oftheSlovak Republic andtheRepublic ofBulgaria, informed theCouncil ofthesigning
inDecember 1995ofthefreetradeagreements between theCzech Republic andBulgaria andbetween
theSlovak Republic andBulgaria. These agreements hadbeenapplied onaprovisional basis since
1January 1996andwould benotified totheWTO when theratification processes ineachofthesignatory
states hadbeencompleted.
(f) Preferential tariff treatment forthecountries offormer Yugoslavia (G/C/M/9)
11.8 Atthemeeting of19March 1996, therepresentative oftheECinformed theCouncil thathis
delegation intended toaskforawaiver fromobligations under Article IoftheGATT inorder togrant
thecountries offormer Yugoslavia preferential access totheCommunity market foralimited period
oftime.
(g) EFTA-Estonia, EFTA-Latvia, EFTA-Lithuania FreeTrade Agreements (G/C/M/10)
11.9 Atthemeeting of22May1996, therepresentative ofIceland onbehalf oftheEFTA countries
andEstonia, Latvia andLithuania informed theCouncil thattheEFTA states andEstonia, Latvia and
Lithuania respectively hadconcluded FreeTrade Agreements inDecember 1995. TheAgreements
wereexpected toenterintoforce ortobeapplied onaprovisional basisasof1June1996. Thecontent
andstructure oftheAgreements weresimilar tothefreetrade agreements which hadbeenconcluded
between theEFTA states andtheCentral andEastern European countries withcertain adjustments
reflecting recent developments. TheAgreements would benotified under Article XXIV: 7(a)ofGATT
1994.
(h) Enlargement oftheCentral European FreeTrade Agreement (CEFTA) (G/C/M/10)
11.10 Atthemeeting of22May1996, theSlovak Republic onbehalf oftheparties totheCentral
EuropeanFreeTradeAgreement(CEFTA)andSloveniainformedtheCouncilthatthetextoftheCEFTA
hadbeencomplemented byprovisions ofArticle 39(a)which allowed foraccession totheCEFTA
byother countries. Onthisbasis, theRepublic ofSlovenia hadsigned theAgreement onAccessionG/L/134
Page9
withthefourparties on25November 1995. TheAgreement wasbeing applied onaprovisional basis
andwould enter intoforce onceratification procedures inthecountries, parties tothisAgreement,
hadbeencompleted.
(i) Europe Agreements between theEuropean Communities andtheCzech Republic, andthe
European Communities andtheSlovak Republic (G/C/M/10)
11.11 Atthemeeting of22May1996, theChairman informed theCouncil thattheEurope Agreement
between theECandtheCzech andSlovak Federal Republic, hadbeenreplaced byseparate Agreements
witheachofthesuccessor states. Theexamination ofthese Agreements (WT/REG18/6 and7)would
takeplace intheCommittee onRegional Trade Agreements.
(j) Free-Trade Agreement between theCzech Republic andRomania (G/C/M/11)
11.12 Atitsmeeting of5July1996, theCouncil tooknoteofthenotification from theparties to
theAgreement (WT/REG26/N/1), which alsoindicated thatsincetheentry intoforceoftheAgreement
(WT/REG26/1), theparties hadagreed toaccelerate theelimination ofcustoms duties onmostindustrial
products (WT/REG26/2). In1995, theCouncil hadbeeninformed thatthisFreeTrade Agreement,
signed on24October 1994, wasbeing applied provisionally since 1January 1995, andwastobe
established overatransitional period ending notlaterthan1January 1998. TheCouncil adopted the
terms ofreference under which theCommittee onRegional Trade Agreements should examine this
Agreement.
(k) Free-Trade Agreement between theSlovak Republic andRomania (G/C/M/11)
11.13 Atitsmeeting of5July1996, theCouncil tooknoteofthenotification from theparties to
theAgreement (WT/REG27/N/1), which alsoindicated thatsincetheentry intoforceoftheAgreement
(WT/REG27/1), theparties hadagreed toaccelerate theelimination ofcustoms duties onmostindustrial
products (WT/REG27/2). TheCouncil hadbeeninformed in1995, thatthisFreeTrade Agreement,
signed on24October 1994, wasbeing applied provisionally since 1January 1995, andwastobe
established overatransitional period ending notlaterthan1January 1998. TheCouncil adopted the
terms ofreference under which theCommittee onRegional Trade Agreements should examine this
Agreement.
(l) FreeTrade Agreement between theEFTA States andEstonia (G/C/M/13 andCorr.1)
11.14 Atitsmeeting of19September 1996, theCouncil tooknoteofthenotification fromtheparties
totheAgreement (WT/REG28/N/1), indicating thattheFreeTrade Agreement (WT/REG28/1) was
signed on7December 1995 andhadbeenapplied onaprovisional basis asof1June1996, pending
ratification bytheparties totheAgreement. TheCouncil adopted theterms ofreference under which
theCommittee onRegional Trade Agreements should examine thisAgreement.
(m) FreeTrade Agreement between theEFTA States andLatvia (G/C/M/13 andCorr.1)
11.15 Atitsmeeting of19September 1996, theCouncil tooknoteofthenotification fromtheparties
totheAgreement (WT/REG29/N/1), indicating thattheFreeTrade Agreement (WT/REG29/1) was
signed on7December 1995 andhadbeenapplied onaprovisional basis asof1June1996, pending
ratification bytheparties totheAgreement. TheCouncil adopted theterms ofreference under which
theCommittee onRegional Trade Agreements should examine thisAgreement.G/L/134
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(n) FreeTrade Agreement between theEFTA States andLithuania (G/C/M/13 andCorr.1)
11.16 Atitsmeeting of19September 1996, theCouncil tooknoteofthenotification fromtheparties
totheAgreement (WT/REG30/N/1), indicating thattheFreeTrade Agreement (WT/REG30/1) had
beenapplied onaprovisional basis asof1August 1996, pending ratification bytheparties tothe
Agreement. TheCouncil adopted theterms ofreference under which theCommittee onRegional Trade
Agreements should examine thisAgreement.
12. Waivers under Article IXoftheWTO Agreement
(a) Harmonized System -Requests forextensions ofwaivers
Bangladesh, Bolivia, Guatemala, Jamaica, Morocco, Nicaragua, SriLanka (G/C/M/11)
12.1 Atitsmeeting of5July1996, theCouncil considered requests byBangladesh (G/L/77), Bolivia
(G/L/78), Guatemala (G/L/86), Jamaica (G/L/79), Morocco (G/L/80), Nicaragua (G/L/81) andSri
Lanka (G/L/83) foranextension until30April 1997 ofwaivers already granted inconnection with
theirimplementation oftheHarmonized System.
12.2 TheCouncil approved thetextsofthedraftdecisions onthewaiver extensions inG/C/W/40
(Bangladesh), G/C/W/412(Bolivia), G/C/W/483(Guatemala), G/C/W/42 (Jamaica), G/C/W/43
(Morocco), G/C/W/44 (Nicaragua) andG/C/W/46 (SriLanka), andrecommended theiradoption by
theGeneral Council.
(b) Malawi -Renegotiation ofSchedule LVIII (G/C/M/8)
12.3 Atitsmeeting of29January 1996, theCouncil considered arequest byMalawi (G/L/51) for
anextension, until30June1996, ofthewaiver granted toitinconnection withtherenegotiation of
itsSchedule. TheCouncil approved thetextofthedraftdecision (G/C/W/31) onthewaiver extension,
andrecommended itsadoption bytheGeneral Council.
(c) Senegal -Renegotiation ofSchedule XLIX (G/C/M/11)
12.4 Atitsmeeting of5July1996, theCouncil considered arequest bySenegal (G/L/82) foran
extension, until30April 1997, ofthewaiver granted toitinconnection withtherenegotiation ofits
Schedule. TheCouncil approved thetextofthedraftdecision (G/C/W/45) onthewaiver extension,
andrecommended itsadoption bytheGeneral Council.
(d) Zambia -Renegotiation ofSchedule LXXVIII (G/C/M/11)
12.5 Atitsmeeting of5July1996, theCouncil considered arequest byZambia (G/L/84) foran
extension, until30April 1997, ofthewaiver granted toitinconnection withtherenegotiation ofits
Schedule. TheCouncil approved thetextofthedraftdecision (G/C/W/47) onthewaiver extension,
andrecommended itsadoption bytheGeneral Council.
2G/C/W/41/Corr.1 inSpanish.
3G/C/W/48/Corr.1 inSpanish.G/L/134
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(e) Decision ontheintroduction ofHarmonized Commodity Description andCoding System (HS)
changes intoWTO schedules oftariff concessions on1January 1996 (G/C/M/11)
12.6 Atitsmeeting of5July1996, theCouncil considered thedraftofadecision (G/MA/W/6)
concerning awaiver, which related totheHS96 changes tobeintroduced inMember 'stariffschedules
on1January 1996. Awaiver hadappeared necessary forthose Members finding itnecessary toconsult
ornegotiate under Article XXVIII ofGATT 1994 asaresult oftheHS96 changes. TheCouncil
approved theextension ofthetime-limits setoutinthedraftdecision andagreed thatitbetransmitted
totheGeneral Council foradoption.
(f) Waivers falling under paragraph 2oftheUnderstanding inRespect ofWaivers ofObligations
under GATT 1994 (G/C/M/11, 13andCorr.1 and14)
12.7 Atitsmeeting of19September 1996, theCouncil tooknoteoftheconcerns voiced byone
delegation regarding theimportant number ofrequests forextensions ofwaivers fromtheobligations
under paragraph 1ofArticle IofGATT 1994. Intheviewofthisdelegation, stricter conditions applied
under theWTO thanunder GATT 1947 forthegranting ofwaivers ortheirpossible extensions.
(i) Cuba -Paragraph 6ofArticle XVofGATT 1994 (G/C/M/11 and13andCorr.1)
12.8 Atitsmeeting of5July1996, theCouncil considered therequest foranextension ofawaiver
byCuba (G/L/89) withrespect toparagraph 6ofArticle XVoftheGATT 1994. TheCouncil agreed
torevert tothisissue, asappropriate, inthelightoftheoutcome offurther consultations thatwere
inprogress.
12.9 Atitsmeeting of19September 1996, theCouncil tooknoteofthestatement bytheChairman
thattheconsultations hadledtoanunderstanding thatwaivers falling under paragraph 2ofthe
Understanding inRespect ofWaivers ofObligations under GATT 1994 should follow theprocedure
setoutinparagraph 3ofArticle IXoftheWTO Agreement. TheCouncil approved thedraftdecision
(G/C/W/51/Rev.1) onthewaiver extension, andrecommended itsadoption bytheGeneral Council.
(ii) United States -Former Trust Territory ofthePacific Islands (G/C/M/13 andCorr.1)
12.10 Atitsmeeting of19September 1996, theCouncil considered arequest bytheUnited States
(G/L/101) foranextension ofthewaiver fromitsobligations under paragraph 1ofArticle IofGATT
1994. TheCouncil approved thedraftdecision (G/C/W/53) onthewaiver extension andrecommended
itsadoption bytheGeneral Council.
(iii) United States -Imports ofAutomotive Products (G/C/M/13 andCorr.1 and14)
12.11 Atitsmeeting of19September 1996, theCouncil considered arequest bytheUnited States
(G/L/103 andCorr.1) foranextension ofthewaiver granted inconnection withimports ofautomotive
products. Inlightofonedelegation 'srequest forfurther information onthiswaiver request, theCouncil
agreed torevert tothismatter atitsnextmeeting.
12.12 Atitsmeeting of15October 1996, theCouncil approved thedraftdecision (G/C/W/55) on
thewaiver extension andrecommended itsadoption bytheGeneral Council.
(iv) United States -Andean Trade Preference Act(G/C/M/13 andCorr.1)
12.13 Atitsmeeting of19September 1996, theCouncil considered arequest bytheUnited States
(G/L/102) foranextension ofthewaiver granted inconnection withtheAndean Trade Preference Act.G/L/134
Page12
TheCouncil approved thedraftdecision (G/C/W/54) onthewaiver extension andrecommended its
adoption bytheGeneral Council.
(v) Canada -CARIBCAN (G/C/M/13 andCorr.1)
12.14 Atitsmeeting of19September 1996, theCouncil considered arequest byCanada (G/L/100)
foranextension ofthewaiver granted inconnection withCARIBCAN. TheCouncil approved the
draft decision (G/C/W/52) onthewaiver extension andrecommended itsadoption bytheGeneral
Council.
(vi) European Communities (G/C/M/13 andCorr.1)
- European Communities -Fourth ACP-EEC Convention ofLomé
12.15 Atitsmeeting of19September 1996, theCouncil considered arequest bytheECandthe
Governments oftheACPStates which werealsoWTO Members (G/L/107 and108)foranextension
ofthewaiver granted inconnection withtheFourth ACP-EEC Convention ofLomé. TheCouncil
approved thedraftdecision (G/C/W/58/Rev.1) onthewaiver extension andrecommended itsadoption
bytheGeneral Council.
- France -Trading Arrangements withMorocco
12.16 Atitsmeeting of19September 1996, theCouncil considered arequest bytheEC(G/L/107
and109)foranextension ofthewaiver granted inconnection withFrance -Trading Arrangements
withMorocco. TheCouncil approved thedraftdecision (G/C/W/59/Rev.1) onthewaiver extension
andrecommended itsadoption bytheGeneral Council.
(vii) South Africa -BaseDates under Article I:4(G/C/M/13 andCorr.1)
12.17 Atitsmeetingof19September1996,theCouncilconsideredarequestbySouthAfrica(G/L/104)
foranextension ofthewaiver granted inconnection withbasedates under Article I:4oftheGATT.
TheCouncil approved thedraftdecision (G/C/W/56/Rev.1) onthewaiver extension andrecommended
itsadoption bytheGeneral Council.
(viii) Zimbabwe -BaseDates under Article I:4(G/C/M/13 andCorr.1)
12.18 Atitsmeeting of19September 1996, theCouncil considered arequest byZimbabwe (G/L/106)
foranextension ofthewaiver granted inconnection withbasedates under Article I:4oftheGATT.
TheCouncil approved thedraftdecision (G/C/W/57/Rev.1) onthewaiver extension andrecommended
itsadoption bytheGeneral Council.
13. Issues raised concerning Members 'trade practices
(a) Brazilian Measure concerning theautomotive sector (G/C/M/8, 9and10)
13.1 Atitsmeeting of29January 1996, theCouncil tooknoteoftheinformation provided byBrazil,
thatafternegotiations withMercosur, theBrazilian Government hadsenttoCongress aProvisional
Measure 1235 thatdealtwiththeautomotive sector.
13.2 Atthemeeting of19March 1996, therepresentative ofBrazil informed theCouncil thatit
hadsubmitted totheSecretariat on15March 1996, arequest forawaiver (G/L/68) fromcertain WTOG/L/134
Page13
obligations asaconsequence oftheadoption ofaspecial regime concerning investment measures in
theautomotive sector.
13.3 Atthemeeting of22May 1996, Brazil informed theCouncil that, following informal
consultations withinterested WTO Members, ithadwithdrawn itsrequest forawaiver (G/L/75),
presented on15March 1996, regarding theBrazilian automotive regime.
(b) USdraftbillconcerningthedefinitionof"domesticindustry"intheareaofsafeguards(G/C/M/8)
13.4 Atthemeeting of29January 1996, therepresentative ofMexico expressed concern regarding
adraftbillthatwaspassed intheUSSenate concerning thedefinition of"domestic industry" inthe
United States legislation intheareaofsafeguards when dealing withperishable agricultural products.
(c) US-"Cuban Liberty andDemocratic Solidarity Actof1996" (G/C/M/9)
13.5 Atthemeeting of19March 1996, therepresentative ofCuba voiced concern atthesigning
intolawbytheUSPresident ofthe"Cuban Liberty andDemocratic Solidarity Actof1996", which
intheview ofCuba harmed theinterests ofthird-country WTO Members duetoitsextraterritorial
effects".
(d) Banonexports ofwild-harvested shrimps totheUS(G/C/M/9 and10)
13.6 Atthemeeting of19March 1996, therepresentative ofthePhilippines, alsoonbehalf ofthe
ASEAN countries, informed theCouncil thatfollowing thedecision oftheUSCourt ofInternational
Trade on29December 1995, exports ofwild-harvested shrimps totheUSafter1May1996 would
beembargoed iftheexporting country didnotadopt seaturtle conservation programs comparable to
theUSprogram.
13.7 Atthemeeting of22May1996, therepresentative ofHong Kong expressed concern onthis
matter, andrequested further information from theUnited States.
(e) USNarcotics Control Trade Act(G/C/M/9)
13.8 Atthemeeting of19March 1996, therepresentative ofMexico informed theCouncil ofa
USdraftBillwhich ifitbecame lawcould cause problems toUStrading partners. TheBillwould
oblige theUSgovernment toimpose trade sanctions onthose countries which itfeltwere notdoing
enough toactagainst theproduction ortraffic inillegal narcotics.
(f) Impairment bytheEuropean Community ofTariff Treatment ofHigh Technology Products
(G/C/M/10)
13.9 Atthemeeting on22May1996, theUnited States informed theCouncil thaton2May1996,
ithadrequested consultations withtheECconcerning tarifftreatment being applied tohightechnology
products, i.e.Local AreaNetwork (LAN) equipment andpersonal computers withtelevision capability
(G/L/73).
(g) Argentine footwear (G/C/M/11)
13.10 Atthemeeting of5July1996, theUnited States representative stated thatinSeptember 1995,
Argentina hadenacted decrees which established specific duties forimports offootwear, textiles and
apparel. Intheview oftheUS,these specific duties violated Argentina 'stariff bindings, andits
obligations under theCustoms Valuation Agreement.G/L/134
Page14
(h) USrequest forConsultations concerning Restrictive Business Practices intheJapanese
Photographic FilmandPaper Market (G/C/M/13 andCorr.1)
13.11 Atthemeeting of19September 1996, theUSrepresentative stated thathisgovernment had
requested consultations onthismatter withJapan pursuant totheCONTRACTING PARTIES 'Decision
of1960on"Restrictive Business Practices: Arrangements forConsultations" under theGATT (BISD
9S/170).
(i) ECproposal on"Trade Facilitation" (G/C/M/15)
13.12 Atthemeeting of1November 1996, under "Other Business", therepresentative oftheEuropean
Communities drewattention toaproposal submitted byhisdelegation ontradefacilitation (G/C/W/67).
Thisproposal covered thequestion ofsimplification andharmonization oftrade procedures inorder
toarrive atlower trade barriers andimproved market access.
14. Agreement onPreshipment Inspection
(a) Commencement ofOperations oftheIndependent Review Entity (G/C/M/10 and15)
14.1 Atthemeetingof22May1996,theChairmaninformedtheCouncilthattheIndependentReview
Entity under theAgreement onPreshipment Inspection, established byDecision oftheGeneral Council
(WT/L/125/Rev.1) atitsmeeting of13December 1995, hadbecome operational asof1May1996
(G/PSI/IE/2).
14.2 Atthemeeting of1November 1996, theChairman informed theCouncil thatsince the
Independent Review Entity (IE)hadbecome operational, theIEhadreceived noapplications requesting
independent review.
(b) Review under Article 6ofthePreshipment Inspection (PSI) Agreement
(G/C/M/13 andCorr.1 and14)
14.3 Atthemeeting of19September 1996, theChairman informed theCouncil thatArticle 6of
thePSIAgreement provided forareview oftheprovisions, implementation andoperation ofthis
Agreement bytheMinisterial Conference attheendofthesecond yearfrom thedateofentry into
forceoftheWTO Agreement. However therewasnospecific bodydesignated toconduct suchareview.
TheCouncil agreed totheChairman 'sproposal toconsult informally onthequestion ofthebody to
bedesignated toconduct thereview aswellasthetiming oftheexercise.
14.4 Atitsmeeting of15October 1996, theCouncil recommended thattheGeneral Council acting
onbehalf oftheMinisterial Conference inaccordance withArticle IV:2oftheAgreement establishing
theWorld Trade Organization, setupaWorking Party under theCouncil withthefollowing terms
ofreference: "toconduct thereview provided forunder Article 6oftheAgreement onPreshipment
Inspection andtoreport totheGeneral Council through theCouncil, inDecember 1997."4
(c) Notifications (G/C/M/15)
14.5 Atitsmeetingof1November1996,theCouncilhadbeforeitdocumentsconcerninginformation
onthenotificationssubmittedbyMembersundertheAgreement.PursuanttoArticle5oftheAgreement,
35Members hadnotified theirlawsandregulations bywhich theyhadputtheAgreement intoforce
4See1of"Section II:Conclusions and/or Recommendations".G/L/134
Page15
aswellasother lawsandregulations relating topreshipment inspection (G/PSI/N/1, Add.1, Add.2,
Add.3, andAdd.4). Ofthese, 3Members hadnotified lawsandregulations putting theAgreement
onPreshipment Inspection intoforce; 13Members hadnotified other lawsandregulations relating
topreshipment inspection; and19Members hadnotified thattheyhadnolawsorregulations relating
topreshipment inspection.
15. Working Group onNotification Obligations andProcedures
(a) Status ofwork intheWorking Group (G/C/M/9)
15.1 Atitsmeeting of19March 1996, theCouncil tooknoteofthereport provided bytheChairman
ofthatGroup onthestatus ofwork intheGroup. TheGroup hadidentified fourgeneral subjects
forexamination namely: (1)duplication ofnotification obligations; (ii)simplification ofdata
requirementsandthestandardizationofformats;(iii)improvementinthetimingofthereportingprocess;
and(iv)possible assistance tosome developing countries inmeeting theirnotification obligation. The
Council tooknoteofthereport.
(b) Report oftheWorking Group onNotification Obligations andProcedures (G/C/M/14)
15.2 Atitsmeeting of15October 1996, theCouncil considered thereport oftheWorking Group
(G/L/112) andtookthefollowing action ontherecommendations contained inthereport:
(1) itagreed torequest theCommittee onAgriculture toconsider themodified notification formats
contained inthedraftrevision todocument G/AG/2, assetoutindocument G/NOP/W/15 andtorequest
theCommittee onSubsidies andCountervailing Measures toconsider themodified notification formats
contained indraft revision todocument G/SCM/6, assetoutindocument G/NOP/W/15. Both
Committees should consider themodified notification formats withaviewtoachieving greater coherence
andefficiency inthenotification system;
(2) itagreed torequest theGeneral Council totakethenecessary stepstoeliminate thenotification
obligations intheDecisions oftheGATT 1947CONTRACTING PARTIES relating toimport licensing
procedures (L/3756 andSR/28/6)5.TheCouncil alsoagreed torefertheDecisions oftheGATT 1947
CONTRACTINGPARTIESrelatingtoquantitativerestrictionsandnon-tariffmeasures(BISD32S/92-93
andBISD 31S/227-228), andtoMarks ofOrigin (BISD 7S/30-33) totheMarket Access Committee,
andtoretain theDecision onLiquidation ofStrategic Stocks (BISD 3S/51) intheCouncil, forfurther
consideration;
(3) itagreed thatacomprehensive listing ofnotification obligations andthecompliance therewith
byallWTOMembersbemaintainedonanongoingbasisandbecirculatedsemi-annuallytoallMembers.
TheCouncil alsoagreed toanupdating ofthelisting ofnotifications received, assetoutinAnnex III
tothereport oftheWorking Party, prior totheSingapore Ministerial Meeting;
(4) itagreed toconsider thepreparation ofgeneral guidelines forthebodies under itspurview,
providing fortheregular review ofquestionnaires andformats andofthesituation asregards compliance
withnotification obligations;
(5) itagreed toforward thetotheCommittee onTrade andDevelopment therecommendation
that"active consideration begiven ...tothedevelopment ofaspecial programme ofassistance to
developing country Members andparticularly totheleast-developed country Members providing more
5See2(a)of"Section II:Conclusions and/or Recommendations".G/L/134
Page16
intensive technical assistance, possibly withtheparticipation ofother organizations, focusing onthe
development ofsystems andstructures required torespond tonotification obligations";
(6) itagreed torequest theMinisterial Conference ortheGeneral Council toconsider the
establishment, atanappropriate time, ofabody withamandate toreview thenotification obligations
andprocedures throughout theWTO Agreement. Alternatively, consideration might begiven tothe
establishment ofabody, ortheextension/modification ofthemandate ofthecurrent Working Group,
toconduct, atanappropriate time, afurther comprehensive review ofthenotification obligations and
procedures intheagreements inAnnex 1AoftheWTO Agreement. Itwassuggested thatfuture work
alsoencompass matters relating totheCentral Registry ofNotifications, electronic transmission of
notifications andfurther work onthenotifications handbook6.
15.3 Inconnection withthelastrecommendation, onedelegate stated thathisdelegation preferred
theestablishment ofabody toconduct attheendof1998 acomprehensive review ofnotification
obligations andprocedures inalltheagreements covered bytheWTO andnotjustthose inAnnex 1A.
16. Implementation oftheAgreement onTextiles andClothing (ATC) andrelated matters
(G/C/M/11, 12,13andCorr.1, 14and15)
16.1 TheCouncil, attherequest ofsome Members, discussed theimplementation oftheAgreement
onTextiles andClothing andrelated matters pursuant toArticle IV:5oftheWTO Agreement andin
preparation fortheSingapore Ministerial Conference. Thediscussion tookplace on5July,25July,
19September and15October 1996.
16.2 TheCouncil'sdiscussionwasbasedonwrittencontributionsbyPakistanonbehalfoftheASEAN
MembersoftheWTO,i.e.BruneiDarussalam,Indonesia,Malaysia,Philippines,SingaporeandThailand;
andHong Kong, India, Korea andPakistan (G/L/92); theUnited States (G/L/95 andAdd.1); and
theEuropean Communities (G/L/97). TheCouncil alsohadbefore itthereport oftheTextiles
Monitoring Body (G/L/113).
Issues andProblems
16.3 Thefullaccount ofthediscussions intheCouncil wasprovided intheminutes ofitsmeetings
(G/C/M/11-14). Thekeyissues andproblems identified were thefollowing:
(i) Integration Programmes
16.4 Recalling thatacentral feature oftheATC wastheprogressive character oftheintegration
process, concerns wereexpressed thatthefirststage ofintegration programmes implemented byfour
importing Members on1January 1995hadnotbeencommercially meaningful asnoneoftheproducts
integrated (except oneproduct (work gloves) byoneMember) hadbeen subject toquantitative
restrictions. Moreover, these products hadbeenconcentrated inrelatively lessvalue-added areas.
Thefirststage integration hadtherefore notmeaningfully improved access tothese markets. There
werenoindications thatthesecond stage integration on1January 1998would bemore commercially
meaningful. Theintegration programmes should contain amixture ofrestrained andunrestrained
products, andabalanced proportion ofsensitive andnon-sensitive products withgreater emphasis on
clothing. Only integration programmes onthese lines would ensure asmooth transition tothe
GATT/WTO disciplines, intheinterest ofbothrestraining andexporting Members.
16.5 Inresponse, itwasstated thatthechoice ofproducts tobeintegrated ateachintermediate stage
wasamatter foreachindividual Member todecide. Thiscould, withperfect legitimacy, result in
6See2(b)of"Section II:Conclusions and/or Recommendations".G/L/134
Page17
products being integrated which werenotsubject torestrictions. Specific proposals hadbeenmade
inthenegotiations, providing formandatory integration ofrestrained products, butthese proposals
hadnotbeenretained. Therequirements stipulated intheATC hadbeenfullymet. Anumber of
products tobeintegrated orbeing proposed forintegration atStage Twoweresubject toquantitative
restrictions. Thegrowth factors which werealsorequired intheATC werehaving averysignificant
impact onquota levels, bothinterms ofliberalization andtheircontribution tocontinuous adjustments
andincreased competition inthemarkets ofrestraining Members. Furthermore, theATC contained
aprovision forearly elimination ofrestrictions, which oneMember hadmade useof.Inaddition,
itwasstated thatpursuant toArticle 7,Members should takesuchactions asmaybenecessary toabide
byGATT 1994rulesanddisciplines soas,interalia,toachieve improved access toexporting Members '
markets fortextiles andclothing products aspartoftheintegration process.
16.6 Itwasalsoargued thatintegration hadaseparate purpose andhadnotbeendesigned asthe
primary means ofliberalization. Inresponse, itwasargued thattheATC contemplated integration
toproceed inparallel withincreased growth rates; inaddition, boththeseprocesses werealsodesigned
toachieve progressive liberalization oftrade.
(ii) UseofTransitional Safeguards
16.7 Concerns wereexpressed thattheintroduction oftransitional safeguard measures would have
arestrictive aswellasadisruptive effect ontrade, eveniftheyweresubsequently rescinded. They
could alsofrustrate theintegration process. TheATC'stransitional safeguard wasadeviation from
GATT 1994, because itwasselective anddiscriminatory innature. TheATCrecognized theexceptional
natureofthetransitionalsafeguardandprovidedforittobeapplied"assparinglyaspossible,consistently
withtheprovisions ofthisArticle andtheeffective implementation oftheintegration process"
(Article 6.1). However, inthefirstyearoftheATC, oneWTO Member hadnotified theinvocation
ofthisclause inrespect of24cases within thespace ofafewmonths against nolessthan14WTO
Members, which werealldeveloping countries. Inthecaseofseven ofthese actions which came in
theformofdispute casesbefore theTMB, threehadbeenrescinded aftertheTMB found nojustification
forthem. Three actions hadbeenbrought before theDispute Settlement Body, ofwhich twowere
currently being examined bypanels. Thefragile grounds onwhich Article 6hadbeeninvoked inthese
cases wasalsoborne outbythefactthatinanother seven cases, therequests forconsultations orthe
measures adopted hadbeenwithdrawn evenbefore theycould bereviewed bytheTMB; thisincluded
anaction where imports ofaproduct hadalready beenrestrained from theMember concerned. An
unduly large number ofrestraints werestillinplace. Thetransitional safeguard hadthusbeenused
inviolation ofthisimportant provision, andalsocontrary tothe"objective offurther liberalization
oftrade" referred tointhepreamble totheATC.
16.8 Inresponse, itwasstated thatanyMember hadtherighttoinvoke safeguard measures. All
theinvocations referred tohadbeenconsistent withATC procedures andwerejustified. Anumber
ofmeasures hadbeenrescinded andatpresent 11restraints wereinplace. Requests forconsultations
were made togivetimefortrade toadjust andtoprevent damage inthemarket andoncethiswas
achieved themeasures wererescinded. TheTMB recommendations hadbeenheeded. Theconcept
of"sparingly" wasarelative oneandshould alsobeseeninthelightofthefactthattheMember in
question wasahugeimporter. Theexistence ofthisprovision helped toproceed withgreater confidence
ingoing ahead withtheintegration process. Theoverall effect ofwhat hadhappened seems notto
bediscouraging forthefuture oftheintegration process. Over thelastninemonths theparticular
Member hadmade onlyonerequest forconsultations under thisArticle. Asaresult, thetotalnumber
ofrequests forconsultations hadbeenconsiderably lower thanin1995. Itwasalsoargued thatthe
useofArticle 6wasnotexceptional innature. Inthenegotiations specific proposals hadbeenmade
thatwould haveavoided theuseofdiscriminatory measures, buttheseproposals hadnotbeenretained.G/L/134
Page18
(iii) Bilaterally Agreed Arrangements
16.9 Itwasstated thatafundamental concept oftheATCwastostrengthen themultilateral disciplines
inthefieldoftextile andclothing trade withaviewtoensuring finalintegration ofthesector intothe
GATT/WTO rules. Itwasrecalled that,inthecontext ofsafeguard measures, anumber ofbilateral
arrangements hadbeennotified. Concern wasexpressed thatthough under theATC theTMB was
required todetermine whether these bilateral arrangements hadbeenjustified inaccordance withthe
provisions ofArticle 6,some ofthese hadnotbeensubsequently confirmed bytheTMB asbeing in
conformity withtheprovisions oftheATC. Theabsence ofendorsement byTMB ofasafeguard action
didnotmake thesafeguard action legal. Thus, theintegrity ofthemultilateral rules anddisciplines
wasweakened.
16.10 Inresponse, itwasstated thatArticle 6made explicit provisions forbilaterally agreed restraint
measures, andsome otherArticles alsoprovided thatMembers consult withaviewtoreaching mutually
agreed solutions. Intheabsence ofconfirmation bytheTMB, asafeguard action didnotbecome illegal.
During thenegotiations aproposal hadbeenmade formandatory endorsement ofsafeguard actions
bytheTMB. Thisproposal hadnotbeenretained.
16.11 Inresponse, itwaspointed outthatArticle 6.9oftheATC provided foraTMB determination
astowhether bilaterally agreed restraint measures wereinaccordance withtheprovisions ofArticle 6.
(iv) Functioning oftheTextiles Monitoring Body
16.12 Itwasrecalled thattheTMB wasrequired tosupervise theimplementation oftheATC, to
examine allmeasures taken under itandtheirconformity therewith, andtotaketheactions specifically
required ofitbytheATC(Article 8.1). Before raising atextile matter intheDispute Settlement Body,
ithadfirsttoberaised attheTMB. Concerns wereexpressed that,inorder toretain theconfidence
ofallMembers, there wasaparticular needtoenhance transparency oftheTMB'sfunctioning, and
toensure adpersonam participation byitsmembers soastoensure impartiality. TheTMB had
recognized thatinafewcases itcould notarrive ataconsensus decision onmatters brought toit,and,
therefore, could notfulfilitsmandate. This, apartfromhaving anadverse impact ontrade, hadseriously
modified thebalance ofrights andobligations oftheATC. TheTMB should ensure thatsuchsituations
didnotariseinfuture. TheTMB should giveadequate reasons foritsrecommendations or,where
recommendations should havebeenmade butwerenotmade, themainreasons underlying theTMB's
failure todischarge itsfunctions should have been made known. Thiswould have enhanced the
effectiveness andaccountability oftheBody asawhole andwould have further strengthened the
confidence ofWTO Members thatthewayTMB functions wasfair.Those Members which maintained
apermanent seatintheBody hadtheadvantage ofmaintaining an"institutional memory" onpoints
which could berevisited inthefuture, unlike other Members whose representatives served intheTMB
onarotating basis. Greater transparency would provide rotating members withabetter understanding.
Inreviewing safeguard measures, theTMB had,onoccasions, failed topoint outsubstantive aswell
asprocedural inconsistencies inmeasures taken. Itsreview process hadnotalways taken place within
ATCdisciplines. TheTMB should alsomake available notifications received byittoallWTO Members
without delay. Under Article IV:5oftheWTO Agreement, theCouncil "shall oversee thefunctioning
oftheMultilateral Trade Agreements inAnnex 1A."
16.13 Inresponse, itwasstated thattheTMB haddoneitsjobunder difficult circumstances; one
hadfullconfidence initscompetence andintegrity. TheTMB hadsucceeded, byasystematic approach,
insetting certain standards forassessing thejustification oftheexistence ofserious damage. TheTMB's
roleandresponsibilities asestablished bytheATC should berecognized. Theview thattheTMB
haderred inprocedures andsubstance onsome occasions could notbeshared. Some oftheTMB's
problems wereduetoambiguities intheATC itself. TheTMB wasaquasi-judicial body, therefore,
there werereasonable limits tohowtransparent itcould be.TheTMB hadacknowledged problemsG/L/134
Page19
withdecision-making andhadmentioned aspossible factors thecircumstances ofitsestablishment,
thelarge number ofdisputes ithadfaced andtighttime-constraints under which itoften operated.
Itsreports hadtobecarefully crafted andifmore transparency wasrequested thenthereports would
havetobemore detailed, which would inturnalsoincrease theTMB'sworkload anddifficulties with
respect todecision-making. Despite bestefforts andcertainly goodfaithefforts, theTMB hadfaced
cases thenature ofwhich required time-itwasunfair tocriticise this. Onecould onlyurgethatit
make greater efforts andhope thatitsmembers could overcome divergencies ofviews andenhance
TMB'sability toreach consensus. TheTMB'sreport totheCouncil hadfacilitated increased
transparency, which should beencouraged.
16.14 Itwasalsostated thatthedegree ofacceptance orcompliance withTMB recommendations
would beoneimportant element inanyassessment ofitsfunctioning. Itwasargued thatthefactthat
oneMember declined tofollow aTMB recommendation affirming aMember 'ssafeguard action
undermined theATC'sassumption thatMembers would follow theTMB'srecommendations.
16.15 Inresponse, itwaspointed outthattheATCdidnotrequire governments tocomply withTMB
recommendations buttoendeavour toaccept them infullandthatitwould bewrong toimply that
affected exporting Members should notexercise thedispute settlement rights under Article 8.10.
(v) Treatment ofSmall Suppliers andLeast Developed Countries
16.16 With respect tosmall suppliers, itwasrecalled that,according toArticle 1.2,meaningful
increasesinaccesspossibilitiesmustbeprovidedforsmallsuppliers,usingtheprovisionsofArticles2.18
and6.6(b). Concern wasexpressed thattheonlywaytodetermine iftheprovisions werebeing complied
withwastoreceive notifications from Members imposing ormaintaining restrictions, indicating the
wayinwhich "meaningful increases" inaccess possibilities were being implemented.
16.17 Inresponse itwasstated thattheMembers wereabiding nowandwould continue toabide by
theirobligations tosmall suppliers.
16.18 Itwasrecalled thattheATCprovided that,totheextent possible, exports fromaleast-developed
country Member might alsobenefit fromtheprovisions ofArticle 2.18(concerning improved growth
inquotalevels)soastopermitmeaningfulincreasesinaccesspossibilitiesforsuchMembers.Provisions
onspecial treatment ofLLDCs hadalsobeenprovided inthepreamble, inthefootnote toArticle 1.2
andinArticle 6.6(a). These provisions didnotspecify theprecise modalities foraccording such
treatment, butonewaymight betoreview thequotas inplace, including more favourable growth rates.
IntheMarrakesh Declaration, Ministers hadrecognized theimportance oftheimplementation ofspecial
provisionsfortheLLDCsandhaddeclaredtheirintentiontocontinuetoassistandfacilitatetheexpansion
oftheirtrade andinvestment opportunities. They hadagreed tokeepunder regular review bythe
Ministerial Conference andtheappropriate organs oftheWTO theimpact oftheresults oftheUruguay
Round ontheLLDCs withaview tofostering positive measures toenable them toachieve their
development objectives. Positive measures wererequired tostopthefurther marginalization ofLLDCs,
whose integration intotheglobal trading system would beintheinterest ofallWTO Members.
16.19 Inresponse, itwasstated thatMembers were abiding nowandwould continue toabide by
thebestendeavour provisions infavour ofLLDCs. OneMember added thatalthough itmaintained
restraints oncertain textile exports ofanLLDC Member, thatMember, although being averylarge
supplier, hadunusually freeaccess andbenefitted frominitial quota growth ratesinexcess of8percent.
Another Member added thatithadnorestraints onLLDCs andthatitapplied zerotariffs.G/L/134
Page20
(vi) Particular Interests ofCotton-Producing Countries
16.20 Recalling thataccording toArticle 1.4"theparticular interests ofthecotton producing exporting
Members should, inconsultation withthem, bereflected intheimplementation oftheprovisions of
thisAgreement", itwaspointed outthat,aswasclearfromthequoted wording, theonusofconsultations
wasontheimporting Member integrating products intoGATT 1994. Concern wasexpressed thatno
suchconsultations hadbeennotified, norheld. TheTMB hadreceived nonotifications relating to
theimplementation ofthisprovision. Itshould havesought information fromtheMembers concerned.
Therefore therequirements ofthisprovision hadnotbeen fulfilled andtheparticular interests of
cotton-producing exporting Members hadnotbeenreflected intheimplementation oftheprovisions
oftheATC.
16.21 Inresponse itwasstated thatthisprovision hadbeenfaithfully implemented. Nospecific
consultations hadbeenrequested from anyMember withrespect tothisprovision. Some Members
hadheldconsultations withanumber ofcountries which theyconsidered toberelevant toArticle 1.4.
There wasnoobligation tonotify theTMB andnoMember hadtaken thisissue totheTMB.
(vii) Rules ofOrigin
16.22 Itwasrecalled thataccording totheATC theintroduction ofchanges, suchaschanges in
practices, rules andprocedures, should notupset thebalance ofrights andobligations between the
Members concerned; adversely affect theaccess available toaMember; impede fullutilization of
suchaccess; ordisrupt tradeunder theATC(Article 4.1). TheAgreement onRules ofOrigin (ARO)
further provided thatpending thecompletion oftheworkprogramme forharmonization oforigin rules,
Members should ensure, interalia,thattheirrules oforigin were notusedasinstruments topursue
trade objectives directly orindirectly. Concerns wereexpressed thatoneMember hadimplemented
changes initsorigin rulesfortextile andclothing products asaninstrument oftrade policy. Thiswas
contrary totheprovisions oftheARO aswellasArticle 4oftheATC, andhadintroduced great
uncertainty andunpredictability withadverse effects ontheexports ofalarge number ofMembers.
Corrections tothissituation werenecessary. Theharmonization oftherulesoforigin hadbeenmandated
bytheARO tobeundertaken atthemultilateral level; thefactthattheMember concerned had
harmonized itsrules oforigin relating toimports oftextiles andclothing products unilaterally
demonstrated thatithadproceeded contrary totherelevant provisions oftheARO andtheATC. This
development wasverydisturbing considering thattheobjective oftheATC wastobring about further
liberalization, notrestrictions, oftrade intextiles andclothing.
16.23 Inresponse, itwasstated thatMembers requesting consultations under Article 4wererequired
toshow thatthere hadbeenachange intheimplementation andadministration ofrestrictions andif
thatwasthecase,thattheyhadbeenadversely affected ortradedisrupted. Inconsultations withvarious
Members, ithadinanumber ofcases beenagreed thattheimplementation ofrevised origin ruleshad
hadnoadverse impact. Incases where adverse impact could bedemonstrated, theparticular Member
wasworking towards amutually satisfactory solution. Thenewruleshadbeendesigned toconform
withrulesofotherMembers andalsotoprovide greater protection against circumvention. OneMember
hadexpressed concern about thenewrulesandwasconsulting withtheMember inquestion, buthad
sofarnotrequested theintervention ofanyWTO body. TheMembers whofeltthattheywereaffected
bythechanges intherules were freetoraisethematter intheappropriate forum.
(viii) Other ATC Issues (Outward Processing Trade, Special Regimes, etc.)
16.24 Itwasstated thatafundamental principle oftheGATT/WTO wastheelimination of
discriminatory treatment ininternational commerce. Concerns wereexpressed, however, thatspecial
regimes werecontinually being extended toprovide better access tocertain Members. Special regimes
werealsobeing usedtopromote theinterests ofspecial interest groups inimporting countries, suchG/L/134
Page21
asmanufacturers offabrics attheexpense oftheexport oftextile andclothing products fromdeveloping
country manufacturers. Itshould beensured thataccess rights ofother restrained Members werenot
adversely affected.
16.25 Inresponse itwasstated thattheATC required more favourable treatment toqualifying re-
imports asdefined bythelawsandpractices oftheimporting country. TheATC gaveimporting
Members discretion onwhat typeofmore favourable treatment wastobegiven tothistrade. A
particular Member wascurrently providing more favourable treatment tore-imports under itsoutward
processing programme, fullyconsistent withtheATC.
(ix) Relationship Between Restrictions andRegionalism
16.26 Concerns wereexpressed thatexpanding restrictions inthecontext ofregionalism hadadverse
implications, especially fortheexport prospects ofdeveloping country Members. Unilateral restrictions
under thepretext ofregional obligations could notbejustified under GATT 1994ortheATCandcould
undermine theimplementation oftheATC objective offurther liberalization oftrade.
16.27 Inresponse, itwasstated thatregionalism could beneficially influence trade inoverall terms
through itsimpact onbothquantitative restrictions andtariff rates. General conclusions could notbe
drawn fromveryspecific individual cases. Thegeneral question ofregionalism should appropriately
bediscussed intheCommittee onRegional Trading Arrangements.
(x) UseofTrade Measures forNon-Trade Purposes
16.28 Concerns were expressed thatpressures hadbeengrowing fortrade measures inpursuit of
non-trade objectives, particularly affecting textile products. Often, suchmeasures carried aprotectionist
bias,were based oncriteria outside theframework ofWTO rules anddisciplines, produced serious
disruptive effects forthetradeinterest andprospects ofdeveloping country Members, andmayimpinge
ontheeffective implementation oftheATC. Measures being adopted orcontemplated under thepretext
ofsocial andenvironmental concerns were examples ofsuchnon-tariff barriers.
16.29 Inresponse itwasstated thatitwasinappropriate toconcentrate onjustonesector when dealing
withthisissue which hadamuch broader scope thantextiles trade. Thesubject should bedealtwith
inawider context.
(xi) Market Access
16.30 Itwasstated thatanimportant element oftheATCwasincreased opening ofthetextiles markets
ofallWTO Members. Article 7.1(a) provides that"aspartoftheintegration process andwithreference
tothespecific commitments undertaken bytheMembers asaresult oftheUruguay Round, allMembers
shalltakesuchactions asmaybenecessary toabide byGATT 1994 rules anddisciplines soasto:
(a)achieve improved access tomarkets fortextile andclothing products through suchmeasures as
tariffreductions andbindings, reduction orelimination ofnon-tariff barriers, andfacilitation ofcustoms,
administrative andlicensing formalities". Concerns were expressed thatsome exporting Members
hadnotcomplied withtheir obligations under Article 7.Inexamining theextent towhich the
commitment toachieve improved access tomarkets hadbeencomplied with, attention should alsobe
paidtoanyinstances where defacto market access hadbeenreduced through theraising ofapplied
tariffrates, inaddition tothereduction orelimination ofnon-tariff barriers. OneMember hadinvited
exporting Members tomake itclear inwhat waytheywould beprepared togiveeffect tothis
commitment. Atrade-off fortheprogressive liberalization ofrestraints byimporting Members was
theremoval ofvarious impediments totextile imports byexporting Members.G/L/134
Page22
16.31 Inresponse, itwasstated thattheUruguay Round results constituted atotalpackage witha
general equilibrium between rights andobligations forallMembers. Benefits given tocertain Members
intheATCthrough progressive integration ofthetextile andclothing tradeintotheATCweretrade-offs
fortheobligations these Members hadundertaken inother Agreements. Besides, Article 7explicitly
referred to"specific commitments undertaken byMembers asaresult oftheUruguay Round" and
therefore there wasnoobligation onthepartofanyMember toprovide additional market access over
andabove thecommitments already included initsSchedule ofCommitments. International tradecould
notbeconducted onabasisofsectoral reciprocity. There hadbeennotifications expressing appreciation
tocertain exporting Members forhaving provided effective access intheirmarkets fortextiles and
clothing products. Noprovisions intheATCrequired thattheintegration beconditional ontheremoval
ofimpediments totextile imports byexporting Members. Theapproach undertaken byimporting
Members atoffering more meaningful integration inexchange forgreater market access inexporting
Members wasnotjustified. Thesuggestion thatattention should alsobepaidtoincreased applied tariff
rateswasrejected because themultilateral trading system had,asitscornerstone, theconcept ofbindings
oftariffs. ItwastherightofanyMember toapply anyratessolongasthese werewithin thebound
levels initsschedule. Applied ratescould fluctuate depending ontherevenue anddevelopment needs
ofMembers.
16.32 Inresponse, itwasstated thatthere wasnoattempt toestablish anewkindofconditionality;
whatwasbeing looked forwasthewidest possible contribution totheworldwide liberalization oftrade
intextiles andclothing. AMember, ofcourse, might adjust anapplied tariffrateupwards tothebound
level. However, onewould seriously question thelogic ofthose whowould argue thatthere wasno
deterioration oftherealconditions ofmarket access tocountries thatmake suchadjustments.
16.33 Thepoints were alsomade thatneither intheMarket Access Committee, theTMB northe
DSB hadthere beencomplaints astocompliance withmarket access obligations. Thescheduled
commitments onlyprovided secure andpredictable trading opportunities anddidnotnecessarily translate
intohigher trade volumes ineachcase. Moreover, alarge group ofMembers hadadopted unilateral
liberalization measures. What wasneeded wasamechanism which would enable those Members to
becompensated forthese measures which hadbenefitted thewhole multilateral trading system.
(xii) Rules andDisciplines
16.34 Itwasstated thattheCouncil should examine Members 'compliance withGATT 1994 rules
anddisciplines having animpact ontradeinthetextiles sector. Ifnecessary, itshould request relevant
information fromother relevant bodies suchasthose dealing withanti-dumping, balance-of-payments,
subsidies and/or theprotection ofintellectual property.
16.35 Inresponse itwasstated thataneffective evaluation oftheimplementation oftheATC should
notbeextended tocompliance withother WTO disciplines. There wereconcerns about thegrowing
misuse ofanti-dumping proceedings ontextile products which resulted inthedisruption anddislocation
oftradeamounting totradeharassment. Anyperceived non-fulfilment ofobligations should bebrought
totheattention oftherelevant Committees.
(xiii) Circumvention
16.36 Concerns were expressed thateffective implementation oftheATC depended onexporting
Members adopting effective measures toprevent circumvention oftheAgreement. Transshipment,
inparticular, wasalargeandgrowing problem. Theoverall problem oftransshipment wasmuch bigger
thantheamount ofimports which hadbeensubject tocharge-back.Members hadcommitted themselves
intheATC toestablish thenecessary mechanisms todealwiththisproblem. They should abide by
thisandcommit themselves tocloser cooperation inthisarea.G/L/134
Page23
16.37 Inresponse itwasstated thattheconcerned Members continued tofully implement anti-
circumvention measures. They hadfullycooperated withtheirtrading partners atcombating and
redressing situations which might suggest theexistence ofcircumvention. They reaffirmed their
commitments toclose cooperation butstated thatrecourse totheremedies provided forintheATC
wastheproper course tofollow. Oneofthemain problems wasthesubjective manner inwhich the
circumvention provisions werebeing interpreted andapplied. Themagnitude oftheproblem should
notbeexaggerated. Itwasalsopointed outthatimplementation oftheATC could notbemade
conditional oneffective anti-circumvention measures.
*****
16.38 Divergent views wereexpressed withrespect topossible conclusions and/or recommendations,
withreference totheissues andproblems referred toinparagraphs 16.4-16.37 above.
16.39 AttheCouncil 'smeeting of1November 1996Hong Kong, onbehalf alsooftheASEAN WTO
Members, i.e.Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore andThailand; and
Colombia, Costa Rica, India, Pakistan andPeruandwiththesupport ofsomeotherMembers, presented
under"OtherBusiness"aproposalforconclusionsandrecommendationsinrespectoftheimplementation
oftheAgreement onTextiles andClothing. Theproposal wassubsequently circulated asG/C/W/65.
16.40 Atthesamemeeting, alsounder "Other Business" Pakistan, onbehalf ofanumber ofMembers,
presented adraftofaMinisterial Decision, subsequently circulated asG/C/W/66.
16.41 Divergent views were expressed onhowthese proposals should betreated.
17. Textiles Monitoring Body (TMB)
Report oftheTMB (G/C/M/14)
17.1 TheTextiles Monitoring Body isastanding body oftheWTO setuppursuant toArticle 8:1
oftheAgreementonTextilesandClothingtosupervisetheimplementationoftheAgreement,toexamine
allmeasures taken under it,andtheirconformity withit,andtotaketheactions specifically required
ofitbytheAgreement. TheTMB consists ofaChairman and10members. Themembers areappointed
byMembers designated bytheCouncil toserve ontheTMB, discharging their function onan
adpersonam basis. TheTMB'sreport istherefore notareport byabodyconsisting ofWTO Members.
17.2 Atitsmeetingof15October1996,theCouncilconsideredtheReportoftheTextilesMonitoring
Body (G/L/113) inthecontext ofthepreparations fortheSingapore Ministerial Conference. Thefull
account ofthediscussions intheCouncil wasprovided intheminutes ofthemeeting (G/C/M/14).
Thefollowing is(a)asummary ofthecomments made byMembers atthatmeeting; and(b)action
taken bytheCouncil.
A. Summary ofComments Made byWTO Members
17.3 Some Members stated thatthereport wasacomplete, well-documented analysis oftheactivities
oftheTMB based onthemandate given toitintheATC. Itwasthemostimportant reference document
foranalysis oftheimplementations oftheATC, giving afactual account onthewayinwhich the
Members hadcomplied withtheirobligations andthewayinwhich thedifferent problems which had
arisen hadbeen analyzed andassessed. Itwasanimportant contribution totheCouncil towards
understanding themajor complexity ofthematters being handled bytheBody andthedifficulties therein.
TheTMB wasahard-working body, andanumber ofdelegations appreciated theamount oftimeand
effort given bytheTMB members anditsChairman tocompleting thereport. Itwasalsostated that
itwasapparent thattheTMB hadrelied extensively onnotifications byMembers toperform itstasks.G/L/134
Page24
17.4 Some Members stated that,according toArticle 8.3,theTMB wassupposed alsotorelyon
additional andsupplementary information thatcould orshould beavailable toit.Incertain cases, it
hadnotsoughtsuchinformation,e.g.fromtheimportingaswellasthemajorcotton-producingMembers
astowhether consultations required under Article 1.4hadbeen conducted. TheTMB hadalso
overlooked changes intherules oforigin ofoneimporting Member andshould havebeenabletoat
leaststatethatthetransitional safeguard hadnotbeensparingly used. TheTMB hadreceived butnot
yetdisclosed anumber ofnotifications involving administrative arrangements. Itwould seemimportant
fortheTMB toreview these toensure thattheywereconsistent withtheprovisions oftheATC. It
wasalsostated thatthereport confirmed almost allconcerns voiced withregard totheoperation of
theTMB, aswellasontheimplementation oftheATC.
17.5 Inresponse itwasstated thatnocomplaints hadbeenbrought totheTMB concerning changes
intherules oforigin norabout non-sparing useoftransitional safeguards.
17.6 Itwasstated thatwhile theTMB hadbrought outtheabsence ofcommercially meaningful
integration inthefirststage, ithaderred innotpointing outthattheintegration programmes ofMembers
which didnotmaintain quantitative restrictions carried overfromtheMFA wasanotional integration,
andthattheproducts theyselected forintegration hadnoimplication fortheaccess; unlike inthecase
ofthefourother Members.
17.7 Inresponse itwasstated thattheTMB hadhandled theintegration notifications inafactual
andseparate manner which recognized thattheobligations concerning integration arose fromdiffering
legalprovisions (paragraphs 7(a)and7(b)ofArticle 2).
17.8 Itwasalsostated thatthereport should haveincluded information astowhether theMember
taking safeguard action hadclaimed serious damage oractual threat thereof orboth, andwhether the
TMB hadfound serious damage oractual threat orboth.
17.9 Inresponse itwasstated thatsuchinformation wasnotanimportant andcertainly notanecessary
element thatshould havebeenincluded inthereport.
17.10 Some Members stated thatthemanner inwhich Article 6notifications hadbeenreviewed by
theTMB didnotalways seem tohavetaken place within thedisciplines oftheATC. Forexample
specific limits lower thantherollback level, inconsistent withtheATC, should havebeenpointed out
bytheTMB. TheTMB hadaccepted, inseveral cases, bilateral solutions which werenotconsistent
withtheletter andthespirit oftheATC; inthisconnection, theso-called Guaranteed Access Levels
(GALs) were mentioned. TheTMB hadconcluded thatanotified restraint wasjustified "inoverall
terms", atermnotusedinArticle 6.When further bilateral consultations hadbeenrecommended,
rights andobligations hadbeenmodified. Doubts were expressed withregard toastatement inthe
report thatMembers invoking thesafeguard provisions had,inallcases, strictly observed theprocedural
requirements. TheTMB hadgonebeyond theprovisions oftheATC, inthatArticle 8.9didnotenvisage
anyrequirement ofMembers "tocomply" withTMB recommendations, especially when readwith
theprovision ofArticle 8.10which enabled Members topursue unresolved matters intheDSB. It
wasalsorecalled thattheTMB hadstated itsawareness oftheconcerns expressed bysome Members
withrespect tolackofsufficient improvements inaccess tomarkets insome developing country
Members. However, therehadnotbeenanynotification byanyWTO Member totheTMB withregard
totheimplementation ofArticle 7.Norhadthere beenanycommunication fromtheMarket Access
Committee totheTMB onthematter ofcross- andreverse-notifications. Itwassurprising thatthe
TMB should havemade suchanextra-jurisdictional observation.
17.11 Inresponse tosome ofthesepoints itwasstated thattheGALs involved anoutward processing
programme andArticle 6explicitly notonlypermitted suchprogrammes butrequired thataMember
usingArticle6givemorefavourabletreatmenttoMembersinvolvedinoutwardprocessingprogrammes.G/L/134
Page25
TheGALs offered tocertain Members werenecessary toremain inconformity withArticle 6.The
remark bytheTMB thatinmostcases Members could comply withrecommendations wasapositive
statement offactwhich didnotreflect distorted legalobligations, namely thatMembers hadbeenable,
following theirbestendeavours, tocomply infullwiththerecommendations made. Inmost cases
Members hadbeenabletoabide byTMB recommendations, which boded wellfortheATC. Reference
hadbeenmade todispute caseswhere theBody could notreach agreement, buttheavoidance ofdecisions
onlateorabsent notifications wasofequal concern. TheTMB wasentitled tomention market access
because Article 8:1entrusted itwithsupervision ofallaspects oftheATC, including Article 7.
17.12 Recalling thatthereport didrecognize thatthere hadbeendifficulties which wereveryoften
duetothelimited amount oftimeavailable toreview dispute cases, theview wasexpressed thatit
would beinconsistent withtheprovisions oftheATCtoprovide time-frames otherthanthoseprescribed
inArticle 6.Thedanger ofaccepting suchaview, andtransposing ittoother processes under the
Dispute Settlement Body, could notbeoveremphasized.
17.13 Inresponse, theviewwasexpressed thatthiswassimply stating afact.Itwasunfair tocriticize
theTMB inthismatter. Onecould seefrom thelength ofthereport whattasks theTMB faced. In
some cases itmight notbepossible fortheBody toreach consensus, particularly when itwasoperating
under tightdeadlines.
17.14 Recalling thattheTMB hadexpressed awareness oftheneedforgiving reasons foritsdecisions,
some Members didnotagree thatmoredetailed reports might render consensus moredifficult toachieve
orrequire additional time. Thediscipline ofhaving toprovide reasons orcommon rationale fora
decision orrecommendation would encourage TMB members tostudy thevarious elements seriously
anddischarge theirduties strictly inanadpersonam capacity. TheTMB'sreviews should bedictated
bytheactions themselves rather thanbytheconvenience oftheparticipants. They believed greater
transparency provided forgreater accountability andtherefore greater acceptability. Itwasfurther
recalled thattheTMB wasconcerned thatinafewcases ithadnotbeenabletoarrive ataconsensus
decision andtherefore could notfulfil itsmandate. TheTMB alsohadsaidthatthiscould havean
adverse impact ontheMembers affected. Itwasactually concerned about theimplications ofunresolved
issues forthecontinued operation oftheAgreement. However, while theTMB stated itsdetermination
totakeallnecessary steps toovercome suchdifficulties, itwentontosaythatsimilar circumstances
could notbeexcluded inthefuture. Itwasofconcern thattheTMB recognized thatithadnotfulfilled
itsmandate under theATC andthenalsorecognized thepossibility thatsuchasituation might occur
again. Furthermore, theTMB wasaware oftheimplications fortrade ofrequests forconsultations
made withaviewtointroducing transitional safeguard measures. However, theTMB onlysaidthat
further efforts would bemade toprovide asmany details andexplanations aspossible. There was
thusneither ademonstration ofwilltoaddress theroots oftheproblem noracommitment toprovide
common rationale.
17.15 Inresponse theviewwasexpressed thattheTMB hadbeenabletoestablish standards forthe
review ofnotifications anddisputes which could provide guidance toMembers withrespect tothe
implementation oftheATC. Thereasons forTMB'sdecisions wereimportant notonlyfortheparties
towhom theyweredirected, butforallother Members. TheTMB hadacknowledged these problems
andwasdetermined tomake every effort toovercome theobstacles toreaching decisions byconsensus
andtotrytomake itsdecisions more understandable. Onecould onlyurgetheTMB tomake greater
efforts soastoenhance itsability toreach consensus decisions. Anassessment ofTMB'sfunctioning
could notbemade without taking intoconsideration circumstances ofitsestablishment, theinitial
workload itwasfaced with, aswellastheimportance ofthissector ofinternational trade. Itwasa
factthatmoredetailed reports might render consensus moredifficult toachieve and/or require additional
time. Explanations incaseofnoconsensus alsorequired consensus intheTMB. Because ofthe
quasi-judicial nature andneutrality requirement oftheTMB there should beareasonable limittoits
transparency. Some alsoargued thatTMB'sproblems werepartly duetoshortcomings intheATCG/L/134
Page26
itself. TheATC established theTMB andunless onewasready toembark onsubstantial legislative
andnegotiating activity which didnotseem feasible, onehadtocontinue tolivewiththeTMB. The
course ofaction therefore wastotrytoenhance itsfunctioning precisely through adiscussion such
asthepresent one.Bytheverynature ofitsconstitution theTMB hadlimits toaperfect performance.
17.16 Itwasstated thatthereport oftheTMB hadcontributed towards greater transparency ofthe
TMB functioning, andthatthistrend should beencouraged.
B. Action Taken bytheCouncil
17.17 TheCouncil tooknoteoftheTMB'sreport anddecided toannex ittoCouncil 'sownreport
totheGeneral Council.
17.18 TheCouncil alsoagreed totakethefollowing action onthethree recommendations made by
theTMB totheCouncil:
(i) ittooknoteoftheobservations andconcerns contained inparagraph 102oftheTMB report
andrecalled toMembers theparticular importance ofstrictly adhering tothenotification
requirements under theAgreement onTextiles andClothing;
(ii) itagreed thattheChairman resume consultations ontheproposal oftheadpersonam status
ofTMB'smembers (G/C/W/20) atanappropriate time;
(iii) ittooknoteoftherecommendation thatdueconsideration should begiven totheschedule of
meetings oftheTMB intheWTO 'soverall schedule ofmeetings.
18. Proposals andInitiatives forFurther Trade Liberalization
(G/C/M/11, 13andCorr.1, 14and15)
18.1 Atthemeeting of5July1996, therepresentative ofAustralia stated thatwhile thebuilt-in
agenda covered many areas, itfailed todealwithindustrial tariffs. Forthatreason Australia proposed
thattheSingapore Ministerial Conference agree tobegin comprehensive industrial tariff negotiations
intheyear2000, atthesame timeasfurther negotiations inagriculture andservices, andmandate
theCouncil ortheCommittee onMarket Access toundertake preparatory work forsuchnegotiations
asfrom 1997 (G/L/96).
18.2 Atthemeetingof19September1996,therepresentativeofAustraliafurtherclarifiedtheproposal
made byhisdelegation inthecontext ofpreparations fortheSingapore Ministerial Conference. The
Council agreed totheChairman 'sproposal toconsult informally onthismatter.
18.3 Atthemeeting of15October 1996, therepresentative ofAustralia proposed thatadraft
recommendation onthismatter beincluded inthereport oftheCouncil.
18.4 Atthemeeting of1November 1996, therepresentative ofAustralia proposed thattheCouncil
consider theinclusion ofarecommendation inSection IIofitsreport totheeffect that"Members agreed
tokeepunder review theprospect ofeffecting further tradeliberalisation including onanautonomous,
plurilateral ormultilateral basis".
18.5 Inthediscussions ofthismatter intheCouncil, Members expressed divergent views withrespect
tothesubstance oftheAustralian proposal aswellastherequest fortheinclusion ofarecommendation
inthereportoftheCouncil.WhilesomeMembersexpressedsupportinvaryingdegreesfortheproposal,
other Members expressed opposition totheproposal aswellastotherequest forarecommendation.G/L/134
Page27
18.6 Attheresumed meeting of4November 1996, therepresentative ofAustralia stated thathis
delegation would continue towork withother delegations towards theobjective thattheSingapore
Ministerial Conference underlines thecommitment oftheWTO tothefurther progressive liberalization
oftariffs through successive rounds ofmultilateral trade negotiations. Atthisstage, Australia would
notinsist ontheinclusion oftherecommendation proposed inSection IIoftheCouncil 'sreport.
18.7 Atthemeeting of1November 1996, under "Other Business", aproposal wasalsosubmitted
byCanada onFurther Tariff Liberalization (G/MA/W/9) which recommended aWTO workprogramme
toaddress, interaliatheacceleration ofUruguay Round tariff reductions, expansion ofmembership
forexistingsectoralandharmonizationinitiatives,andidentificationofadditionalsectorsforzero-for-zero
andharmonization initiatives.
18.8 Additionally, twocommunications were submitted atthatmeeting under "Other Business":
onebytheUnited States (G/MA/W/8), concerning theInformation Technology Agreement onfurther
liberalization ofinformation technology products; andonebytheEuropean Communities onbehalf
oftheWTO Members concerned (G/MA/W/10), onTrade inPharmaceutical Products outlining the
review ofpharmaceutical product coverage thathadresulted intheaddition of465products forduty-free
treatment.
19. Singapore Ministerial Conference
(a) Reports ofsubsidiary bodies oftheCouncil (G/C/M/13 andCorr.1, 14and15)
19.1 Atitsmeeting of19September 1996, theCouncil agreed totheChairman 'sproposal toconsult
informally ontheCouncil 'streatment ofthereports ofitssubsidiary bodies.
19.2 Atitsmeeting of15October 1996, theCouncil agreed thatthebroad guidelines withregard
tothehandling ofthereports of12ofitssubsidiary bodies (i.e.,theCommittees onAgriculture, Anti-
Dumping Practices, Customs Valuation, Import Licensing, Market Access, Rules ofOrigin, Safeguards,
Sanitary andPhytosanitary Measures, Subsidies andCountervailing Measures, Technical Barriers to
Trade, Trade-Related Investment Measures andtheWorking Party onStateTrading Enterprises) who
wereexpected tosubmit theirreports onaconsensus basistotheCouncil inthecontext oftheSingapore
Ministerial Conference, would betotakenoteofthose reports andannex themtoitsownreport. This
would bewithout prejudice totheability ofMembers toraisepoints withregard tothereports, and
alsotheability oftheCouncil torecord observations, tomake recommendations, andtotakedecisions,
ifconsidered necessary. Withregard tothefactual report fromtheIndependent Entity under thePSI
Agreement andthereport from theWorking Group onNotification Obligations andProcedures, the
Council agreed totreatthem inthesame wayastheother 12reports. Asconcerned theTMB report,
theCouncil agreed totheChairman 'sproposal toconsult informally onhowtodealwiththisreport.
19.3 Asregards thereports oftheCommittees onAgriculture (relating totheMarrakesh Ministerial
Decision onMeasures concerning thePossible Negative Effects oftheReform Programme onLeast-
DevelopedandNetFood-ImportingDevelopingCountries)7,Anti-DumpingPractices,CustomsValuation,
Import Licensing, Market Access, Rules ofOrigin, Safeguards, Sanitary andPhytosanitary Measures,
Subsidies andCountervailing Measures, Technical Barriers toTrade andTrade-Related Investment
Measures, theIndependent Entity, theWorking Group onNotification Obligations andProcedures
andtheWorking Party onStateTrading Enterprises, theCouncil atitsmeeting of1November 1996,
tooknoteofthem anddecided toannex them toitsownreport. Asregards thereport oftheTMB,
7Atthetimeofadoption oftheCouncil 'sreport, thereport oftheCommittee onAgriculture ontheImplementation
oftheAgreement onAgriculture andthework oftheCommittee hadnotbeen received. TheCouncil agreed toconsider
thatreport separately after itsreceipt andforward ittotheGeneral Council asanaddendum totheCouncil 'sreport.G/L/134
Page28
theCouncil tooknoteofitanddecided toannex ittoitsownreport; thisaction waspreceded bya
fullconsideration ofthereport (seediscussion inparagraphs 17.1to17.18).
19.4 Atitsmeeting of1November 1996, theCouncil tooknoteoftheconcerns voiced bysome
delegations onthethirdsentence ofparagraph 15ofthereport oftheCommittee onTechnical Barriers
toTrade (TBT) relating totheissue ofeco-labelling anditscoverage intheTBTAgreement.
(b) Report bytheCouncil forTrade inGoods totheMinisterial Conference (G/C/M/10, 11,13
andCorr.1, 14and15)
19.5 Atitsmeeting of22May1996, theChairman referred tothestatement made bytheChairman
oftheGeneral Council atthemeeting of16April 1996, concerning "Reporting Procedures forthe
Singapore Ministerial Conference" (WT/L/145), andsuggested holding informal consultations ata
laterstage ontheCouncil 'sreport totheSingapore Minsterial Conference.
19.6 Atitsmeeting of5July1996, theChairman stated thatinthecontext ofthestatus ofwork
withrespect totheSingapore Ministerial Conference hewished toaddress twoaspects regarding this
process. While thesituation wassatisfactory inrespect ofscheduled commitments, aserious problem
seemed tobeemerging inrespect ofcompliance withnotification obligations inanumber ofAgreements,
asreflected indocument issued bytheWorking Group onNotification Obligations andProcedures.
Thesecond aspect related totheindication given bytheChairman oftheGeneral Council thatitwould
beappropriate fortheChairmen ofthesectoral Councils topresent anoralreport totheGeneral Council
regardingthecurrentstatusofworkconcerningthepreparationsfortheSingaporeMinisterialConference,
particularly inrespect ofimplementation andthebuilt-in agenda. Accordingly, heintended topresent
anoralreport onhisownresponsibility totheGeneral Council atthemeeting scheduled for18July
1996.
19.7 Atitsmeeting of19September 1996, theCouncil agreed totheChairman 'sproposal toconsult
informally ontheformat andcontent oftheCouncil 'sreport totheSingapore Ministerial Conference.
19.8 Atitsmeeting of15October 1996, theCouncil agreed thattheCouncil 'sreport would consist
oftwoparts, onefactual andonecontaining conclusions and/or recommendations.
19.9 Atitsresumed meeting of4November 1996, theCouncil adopted thereport totheGeneral
Council contained inG/C/W/62/Rev.1, asamended inthelightofthediscussion atthatmeeting8.
8Thereport wassubsequently issued initsfinalversion asG/L/134.G/L/134
Page29
SECTION II:CONCLUSIONS AND/OR RECOMMENDATIONS
Theconclusions and/or recommendations ofthesubsidiary bodies oftheCouncil arecontained
inthereports oftherespective bodies annexed tothisreport.
Thefollowing conclusions and/or recommendations arisedirectly from thedeliberations of
theCouncil:
1. Agreement onPreshipment Inspection
1.1 TheCouncil recommends thattheGeneral Council acting onbehalf oftheMinisterial
ConferenceinaccordancewithArticleIV:2oftheAgreementestablishingtheWorldTradeOrganization,
setupaWorking Party under theCouncil withthefollowing terms ofreference:
"toconduct thereview provided forunder Article 6oftheAgreement onPreshipment Inspection
andtoreport totheGeneral Council through theCouncil, inDecember 1997."
2. Notification Obligations andProcedures
(a) TheCouncil requests theGeneral Council totakethenecessary stepstoeliminate the
notification obligations intheDecisions oftheGATT 1947 CONTRACTING PARTIES relating to
import licensing procedures (L/3756 andSR/28/6).
(b) TheCouncil requests theMinisterial Conference ortheGeneral Council toconsider
theestablishment, atanappropriate time, ofabodywithamandate toreview thenotification obligations
andprocedures throughout theWTO Agreement. Alternatively, consideration might begiven tothe
establishment ofabody, ortheextension/modification ofthemandate ofthecurrent Working Group,
toconduct, atanappropriate time, afurther comprehensive review ofthenotification obligations and
procedures intheagreements inAnnex 1AoftheWTO Agreement. Itwassuggested thatfuture work
alsoencompass matters relating totheCentral Registry ofNotifications, electronic transmission of
notifications andfurther work onthenotifications handbook.