RESTRICTED
WORLD TRADE G/STR/M/5
11December 1996
ORGANIZATION(96-5226)
Working Party onState Trading Enterprises
MINUTES OFTHE MEETING OFTHE
WORKING PARTY HELD ON
26SEPTEMBER 1996
Chairman: Mr.Peter May(Australia)
Page
A. Adoption oftheAgenda 1
B. Review ofnotifications submitted byMembers pursuant tothe 1
request fornotifications inG/STR/N/1 and2
C. Development ofanillustrative listshowing thekinds ofrelationships 6
between governments andenterprises andthekinds ofactivities engaged
inbythese enterprises
D. Review oftheadequacy ofthe1960 questionnaire andthecoverage of 9
statetrading enterprises notified under paragraph 1oftheUnderstanding
E. "Other Business" -Proposal bytheEuropean Communities forfurther work 10
F. Report totheCouncil forTrade inGoods 12
A. Adoption ofagenda
1. Therepresentative oftheEuropean Community saidthathisdelegation would liketointroduce
under "Other Business" asubmission which hadjustbeencirculated totheWorking Party1.The
Chairman proposed reversing theorder ofitems CandDoftheproposed agenda inlightofthetwo
newsubmissions under itemD.TheWorking Party adopted theagenda contained inWTO/AIR/411
asamended.
B. Review ofnotifications submitted byMembers pursuant totherequests fornotifications in
G/STR/N/1 and2
2. TheChairman recalled thataccording toparagraph 5oftheUnderstanding ontheInterpretation
ofArticle XVII (the"Understanding"), theWorking Party wastasked toreview thenotifications and
counter-notifications onstatetrading submitted byMembers, andthatinthelightofthisreview, the
Council forTrade inGoods could make recommendations withregard totheadequacy ofnotifications
andtheneed forfurther information. TheCouncil forTrade inGoods, atitsmeeting on
20February1995,hadestablishedadeadlineof30June1995fornewandfullnotificationsbyMembers
1Thissubmission wassubsequently circulated indocument G/STR/W/33.G/STR/M/5
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ontheirstatetrading enterprises, andsubsequently theWorking Party hadagreed tomaintain 30June
asthedateforfurther (updating) notifications. On10May1996arequest forupdating notifications had
beencirculated inG/STR/N/2.
3. Asofthedateofcirculation oftheairgram convening thepresent meeting (3September), a
totalof44Members (counting theEEC Member states andtheCommission asone)hadsubmitted
a"new andfull"notification inresponse tothe1995 request, andonly15updating notifications had
beenreceived. Hesaidthatwhile thenumber offullnotifications hasincreased somewhat, thefailure
ofthevastmajority ofMembers tomake updating notifications wasdisappointing. Herecalled that
theinformation provided inthenotifications wasessential input totheprocess ofrevising the
questionnaire anddeveloping anillustrative list,inthecontext ofdetermining what notifiable state
trading was. Thus far,nocounter-notifications hadbeenreceived.
4. Therepresentative ofMexico saidthathisdelegation would submit itsnotification verysoon.
5. TheChairman noted thattheairgram divided thereview exercise intotwosections: onedealing
withnewandfullnotifications made under G/STR/N/1, andtheother withupdating notifications made
under G/STR/N/2. Hesuggested thattheWorking Party conduct thereview inthesame manner as
attheprevious meeting, i.e.withafocus ontwomainelements: (1)whether thenotification responded
adequately totheinformation requested inthequestionnaire; and(2)whether more information was
needed inorder topermit -inthelanguage ofparagraph 2oftheUnderstanding -"aclearappreciation
ofthemanner ofoperation oftheenterprises notified andtheeffect oftheiroperations oninternational
trade".
(1) Newandfullnotifications under G/STR/N/1
(i) Barbados (G/STR/N/1/BRB)
6. Therepresentative ofNewZealand saidthathisdelegation hadsubmitted written questions
toBarbados (G/STR/Q1/BRB/4) which hadtodowiththeimport/export monopoly fordairy products.
7. Therepresentative oftheUnited States saidthathisdelegation aswellhadsubmitted questions
inwriting (G/STR/Q1/BRB/1 and3)regarding thedairy monopoly andtheBarbados Agricultural
Development Corporation which hadmonopoly rights onimports ofchicken.
8. Therepresentative ofAustralia saidthathisdelegation hadalsosubmitted questions inwriting
(G/STR/Q1/BRB/2).
9. Astherepresentative ofBarbados wasnotpresent atthemeeting, theChairman proposed,
andtheWorking Party agreed, thatifBarbados submitted written responses which were deemed
satisfactory bythedelegations inquestion, thereview ofthisnotification could beconsidered ashaving
beenconducted.
(ii) Brazil (G/STR/N/1/BRA)
10. Therepresentative ofNewZealand saidthathisdelegation wasinterested infurther clarification
oftheroleofCONAB.2
2Thequestion wassubmitted inwriting indocument G/STR/Q1/BRA/2G/STR/M/5
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11. Therepresentative ofBrazil saidthatCONAB wasapublic enterprise linked totheMinistry
ofAgriculture. Itwasresponsible forthemanagement ofminimum price guarantees andforthe
administration ofpublic stockholding forfoodsecurity purposes. Thepolicy ofminimum price
guarantees aimed toguarantee farmers theoption ofselling theirproduct tothefederal government
ifprices wereexcessively lowinthemarket. Intheadministration ofpublic stockholding, CONAB
purchased product from farmers atmarket prices andsoldit,ifnecessary, always atmarket prices.
CONAB operated through auctions, when buying orselling products. Initspurchases, CONAB did
nottakeintoaccount theorigin oftheproduct, which could beeither domestically produced orimported.
Hestressed thattheuseofpublic stockholding forfoodsecurity purposes wasdefined andregulated
bylaw. Hisgovernment sought tolimititsinterference inthemarket totheminimum levelsufficient
toavoid crises. CONAB didnotdirectly import orexport anyproduct. Only inexceptional
circumstances justifiable forsecurity reasons andauthorized bythefederal government, could CONAB
engage inimports orexports. Thispossibility hadnever beenresorted to.
12. Therepresentative oftheUnited States asked Brazil toexplain certain aspects ofCONAB and
Petrobras.3
13. TherepresentativeofBrazilsaidthatPetrobras'sactivitiesweredefinedinthejuridicalframework
ofthemonopoly established inArticle 177ofthefederal constitution. Until recently, thatArticle gave
Petrobras amonopoly onimports andexports ofpetroleum anditsderivatives. However, asaresult
ofsignificant changes intheBrazilian constitution, thegovernment -while stillretaining themonopoly -
could contract withenterprises other thanPetrobras. Asthese constitutional changes were notyet
incorporated intheordinary law,Petrobras remained forthetimebeing thesoleenterprise authorized
tooperate inimports andexports ofpetroleum anditsderivatives, butthese operations hadtobebased
onmechanisms andcriteria ofanexclusively commercial nature.
14. Therepresentative ofNewZealand asked about theextent towhich CONAB wasinvolved
inpurchasing andselling product onthelocalmarket. Regarding Brazil 'sstatement thatCONAB bought
andsoldatmarket prices, heasked howthisrelated totheobjective ofminimum price guarantees.
15. Therepresentative oftheUnited States asked Brazil toconfirm thespecific products covered
byCONAB.
16. Therepresentative ofBrazil saidthathisdelegation would respond toallofthequestions in
writing.
(iii) Malta (G/STR/N/1/MLT)
17. TherepresentativeofNewZealandreferredtothewrittenquestionshisdelegationhadsubmitted
toMalta regarding Medigrain Ltd.(G/STR/Q1/MLT/1).
18. TherepresentativeofMaltasaidthatNewZealand'squestionshadbeenforwardedtotherelevant
authorities andaresponse would bemade induecourse.
(iv) Israel (G/STR/N/1/ISR, G/STR/Q1/ISR/1)
19. TheChairman drewattention tothefactthatsincethenotification inG/STR/N/1/ISR hadbeen
circulated, afurther communication hadbeenreceived from Israel on18September withtherequest
thatitbecirculated asarevision totheearlier notification. Thelatterdocument notified sixstatetrading
3Thequestions were submitted inwriting indocument G/STR/Q1/BRA/3.G/STR/M/5
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enterprises. Hesuggested thatinlightofthefactthatthisrevision (G/STR/N/1/ISR/Rev.1) hadnot
yetbeencirculated, theWorking Party postpone itsreview oftheIsraeli notification untilthenext
meeting.
20. TheWorking Party soagreed.
(2) Updating notifications under G/STR/N/2
(i) Australia (G/STR/N/2/AUS)
21. Therepresentative oftheUnited States referred tothewritten questions hisdelegation had
submitted toAustralia (G/STR/Q1/AUS/1).
22. Therepresentative ofNewZealand welcomed theexpansion ofAustralia 'snotification and
theinclusion ofanumber ofsub-central statebodies. Notification requirements forstatebodies in
federal systems wasanareaofinterest tohisgovernment, particularly where products might befocused
inoneareasuchthatthesub-central statebody functioned atadefacto federal level.
23. Therepresentative ofAustralia saidthatithadnotified these sub-federal entities inaneffort
toenhance transparency inthisarea. Regarding theUSquestions, hisauthorities would provide detailed
answers inwriting. Henoted thatfortheAWB, itsfuture wasmore relevant thanitspast,given the
changes itwasundergoing. TheRiceMarketing Board didhaveadefactoexport monopoly, butthis
wasonlybecause riceproduction inother states hadceased.
24. Therepresentative ofArgentina saidthathisdelegation toowasinterested inthereason or
purpose formaintaining theAWB.
25. Therepresentative ofAustralia saidthattheshort answer wasthatthenewgovernment had
recently decided thattheAWB would continue toexistandthatitsmonopoly onexports would continue.
(ii) Canada (G/STR/N/2/CAN)
26. Therepresentative ofNewZealand referred tothewritten questions hisdelegation hadsubmitted
toCanada regarding theoperations oftheCanadian Dairy Commission (G/STR/Q1/CAN/2).
27. Therepresentative oftheUnited States referred tothewritten questions hisdelegation had
submitted toCanada (G/STR/Q1/CAN/1).
28. Therepresentative ofCanada saidthatwritten replies would befurnished tothequestions posed.
29. Therepresentative ofArgentina referred toSection IIIonpage4ofG/STR/N/2/CAN regarding
theOntario Bean Producers 'Marketing Board andasked Canada toelaborate onthestatement that
export prices werebased onworld market conditions. Hesaidthathisquestion wasbased onaninterest
inhowother exporters were dealing withthetough competition intrade inthisproduct.
30. Therepresentative ofCanada saidthatCanadian exporters ofwhite peabeans werebasically
price takers andtherefore determined theirexport prices onthebasisofwhattheworld market would
bear.G/STR/M/5
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(iii) NewZealand (G/STR/N/2/NZL)
31. Therepresentative ofNewZealand clarified thatthere hadbeennochanges inthesituation
outlined inthe1995notification, butthatsome changes wereunder consideration byParliament. Once
these changes were known, theywould benotified totheWorking Party.
(iv) Norway (G/STR/N/2/NOR)
32. Therepresentative oftheUnited States asked Norway toexplain whytheexport armofthe
Norwegian Dairies Association hadbeenomitted fromthenotification, astheUSunderstood thatthis
entity hadamonopoly ontheexport ofmost ofthecheese produced inNorway.
33. Therepresentative ofNorway saidthattheNorwegian Dairies Association hadnomonopoly
ontheexport ofcheese, andthattheTineNorwegian Dairy enjoyed nospecial orexclusive rights
intheterms ofArticle XVII andtherefore hadnotbeenincluded inthenotification. TheTinehad
aleading position intheNorwegian dairy market, butanyone wishing todosocould engage in
production andexport ofcheese oranyother dairy product.
(v) Switzerland (G/STR/N/2/CHE)
34. TherepresentativeofAustraliareferredtoSwitzerland'sresponseindocumentG/STR/Q1/CHE/1
thatthegovernment hadtheexclusive righttoimport butthatimports were actually carried outby
private traders. Hisauthorities would submit aquestion onthismatter inwriting.
(vi) United States (G/STR/N/2/USA)
35. Therepresentative ofNewZealand saidthathisauthorities hadsubmitted anumber ofquestions
totheUSinwriting (G/STR/W/14). Henoted thattheUShadreferred inpoint oneofitsanswers
(G/STR/Q1/USA/1, page3)tothe"world market priceprevailing inthatcountry orregion", andasked
forclarification ofwhatwasintended bythisreference. Healsoasked whether theUScould confirm
thatthepricegapbetween procuring andtransporting USproducts toaspecific region orcountry and
theprice prevailing inthatcountry differed depending onthecountry orregion inquestion. Heasked
whether theoperation oftheDairy Export Incentive Program provided forvarying levels ofbonuses
toexporters depending onthese pricedifferences evenwhen thesame commodity wasbeing exported.
Inaddition, NewZealand hadquestions about anumber ofsub-national entities. OnewastheCalifornia
Kiwifruit Growers Organization andanother wastheorganization representing theWashington state
apple producers. Heasked theUSforinformation ontherelationship ofthese entities tothecriteria
laidoutinArticle XVII.
36. TherepresentativeofArgentinareferredtotheUSdescriptionofthefinancingoftheCommodity
Credit Corporation (CCC) andasked: (i)whether thedifference between thecostofborrowing and
thecostofloans tothebeneficiaries ofthese loans wasdulynotified under theSubsidies Agreement;
(ii)whether ingeneral, when adeficit wasincurred, thiswasnotified under WTO commitments; and
(iii)whether, afterpassage oftheFederal Agricultural Improvement andReform Actof1996(FAIR),
thefocus ofdomestic support, andespecially export subsidies, conducted bytheCCC hadregistered
anychange infocus, especially during theimplementation oftheUruguay Round.
37. TherepresentativeoftheUnitedStatessaidthathisauthoritieswouldrespondinwritingregarding
thesub-national entities referred to.Hesaidthatthe"world market price", inthecontext usedinthe
USanswers toNewZealand 'squestions, represented anactual orderived landed priceofthecommodity
atapoint intimeinatargeted country. Because theECaccounted forroughly 40percentofalldairy
export sales, the"world market price" largely reflected ECexport prices. However, totheextentG/STR/M/5
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thattheECattemptedtomaintainexportcompetitivenessbyadjustingrebatesvis-à-vismajorcompetitors,
theworld market pricebydefault encompassed prices offered byunsubsidized competitors. Regarding
theprice gapbetween procuring andtransporting products toaspecific region, thebonus level did
varybetween countries andregions. Asageneral rule,thegeographic disposition ofacountry was
akeydeterminant asitimpacted onthetransportation costoftheUSproduct. Regarding Argentina 's
questions, hesaidthatheunderstood thattheinformation referred towasincluded intheUSsubsidies
notification.
38. There were nocomments orquestions onthefollowing updating notifications:
- Chile (G/STR/N/2/CHL)
- EEC (G/STR/N/2/EEC)
- Hong Kong (G/STR/N/2/HKG)
- Singapore (G/STR/N/2/SGP)
(3) Notifications already reviewed
Morocco (G/STR/N/1/MAR)
39. Therepresentative ofMorocco saidthathisdelegation would shortly circulate written replies
(G/STR/Q1/MAR/2) tothewritten questions fromtheUnited States (G/STR/Q1/MAR/1), aswellas
anupdating notification.
40. Therepresentative ofNewZealand saidthathisdelegation hadsubmitted anumber ofquestions
toMembers onpreviously reviewed notifications andwasawaiting responses.
41. TheWorking Party tooknoteofthestatements andagreed thatinfuture, theairgram forthe
Working Party'smeetings would include onlypreviously reviewed notifications which aMember had
specifically asked tobeincluded.
C. Development ofanillustrative listshowing thekinds ofrelationships between governments
andenterprises andthekinds ofactivities engaged inbythese enterprises
42. TheChairman recalled thatatitsJune1996meeting, theWorking Party haddecided thatwork
onthisissue should continue tobepursued inaninformal setting along withtherevision ofthe
1960 questionnaire towhich itwasclosely linked. Healsorecalled thathehadinvited delegations
wishing todosotosubmit written proposals regarding theillustrative listforconsideration byMembers.
Twodelegations hadsubmitted proposals: on16September NewZealand hadsubmitted atextwhich
hadbeencirculated on18September inG/STR/W/31, andon25September theUnited States had
submitted anon-paper4,copies ofwhich wereavailable inthemeeting room. While neither texthad
beenreceived intimetobeincluded ontheairgram forthepresent meeting, hesuggested thatitwould
beuseful tohaveanexchange ofviews onthem. Hereiterated thatanyMember wishing todoso
wasencouraged tomake itsownsubmission, andexpressed thehope thatonthebasis ofthese
submissions theWorking Party could cullelements foraworking textofadraftillustrative list,and
thereby accelerate work onthisissue.
43. Therepresentative ofNewZealand saidthathisdelegation hadsubmitted adraftofwhatan
illustrative listmight looklike. Thetextwasbased onconservative assumptions. Itdidnotattempt
tointerpret orreshape thedirection given totheWorking Party bytheUnderstanding, butrather kept
4Thissubmission wassubsequently circulated indocument G/STR/W/32.G/STR/M/5
Page7
closely totheterms usedinthattext.Further, noattempt hadbeenmade toincorporate aninterpretation
ofArticle XVII ortheUnderstanding intothelist.Itwasbased substantially onparagraphs 101and
102oftheSecretariat background paper (G/STR/2) which hisdelegation hadsupported asagoodbasis
forthisexercise. Anattempt hadbeenmade toexpand andreshape somewhat thesections onthe
relationships between theSTEandgovernment. Thesection onactivities hadbeendivided intotwo
categories --those directly related toimports, exports, orthetrade régime, andthose which were
essentially related todomestic production butwhich could potentially haveanimpact onthedirection
orleveloftrade. Inthisregard itwasuptogovernments todetermine howanactivity measured up
against thecriteria inArticle XVII andtheUnderstanding. Anattempt hadalsobeenmade topick
uponsuggestions thattheremight beahierarchy oftheactivities listed. Thedraftillustrative listwas
notintended tobeanything more thanaguide toassist Members indetermining which enterprises
theywould notify.
44. Therepresentative oftheUnited States saidthathisdelegation placed agreatdealofimportance
onthework oftheWorking Party, duetotheneedforgreater transparency intheareaofstatetrading.
Theworking definition ofstatetrading agreed intheUruguay Round wasverybroad. Therefore, it
would beuseful totrytodistinguish between activities andrelationships thatweremore likely toresult
intradedistortions andthose thatweremore innocuous, andtoestablish different levels ofnotification
obligations fortwobroad categories ofSTEs, i.e.asummary overview notification for"minimally
trade distorting" STEs, andacomplete notification for"trade integrated" STEs.
45. Hesaidthatthelistofrelationships theWorking Party hadbeencharged withexamining related
tothe"special rightorprivilege" element ofthedefinition intheUnderstanding. Given thatanystate
authorization conferred onanentity thatwasnotavailable tothegeneral public could qualify asaspecial
rightorprivilege, thelistofrelationships covered bythedefinition wasverybroad. Thelistofactivities
related tothesecond element ofthedefinition, i.e.theinfluence ontrade through purchases orsales.
While there appeared tobealimiting element inthedefinition -thatentities hadtopurchase orsell
inorder tobecaptured -insome cases thislimitation might notbeappropriate. Forexample, where
anentity hadbeengranted aspecial rightbythegovernment, anditassigned thisrighttoanother entity,
itwould bedifficult toidentify which entity wastheSTE. Therefore, therange ofactivities covered
bythedefinition wasalsoverybroad.
46. Hesaidthatgiven thisbroad coverage, itmight beuseful toidentify some oftheentities covered
thatwereofmore interest thanothers. Several principles identified relationships ofgreater potential
trade distortion. Forexample, thebroader theauthority provided bytherelationship withthe
government, themore insulated theentity wasfromcompetition, thecloser itwastotrading activities,
andthecloser therelationship wastothegovernment. Similarly, several principles identified activities
ofgreater potential fortradedistortion, e.g.engaging intrade, exercising discretionary authority over
theprivilege todistribute imports, exercising discretionary authority todistribute trading privileges
(import orexport) toother entities, administering domestic stabilization schemes, providing credit or
credit guarantees, administering long-term contracts forthegovernment. Insummary, hesaidthat
theillustrative listshould beascomprehensive aspossible while assigning some kindofmeasure to
eachdiscrete activity/relationship sothatitmight becategorized according toitspotential fortrade
effects.
47. Therepresentative ofArgentina saidthathisdelegation hadastrong preference forusing the
USpaper asabasis forfurther work, andagreed thatthefocus should betodevelop theconcept of
special rights andprivileges. Hisdelegation hadtwosuggestions regarding thedraftinG/STR/W/32:
onpage4,following theseventh indent, andonpage5following thefifthindent, theconcept oftime-
frame should beadded. Inthecontext ofseasonal purchasing ordomestic absorption, timeframe should
beincluded asanelement intheadministration ofspecial rights andprivileges bythegovernment orG/STR/M/5
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byanentity delegated thistaskbythegovernment. Hisdelegation remained opentoincluding additional
concepts from other submissions.
48. TherepresentativeofCanadaassociatedhisdelegationwiththeelementssetoutinNewZealand's
paper, inparticular itsparagraph 2which referred tothepurpose oftheWorking Party andofthe
illustrative list.Canada agreed thatthelistshould notattempt todefine whatanSTEwas.Thepurpose
oftheWorking Party wasnottofurther refine orinterpret theworking definition ofSTEs, butrather
toofferillustrations thatwould provide guidance inthedecision astowhether anentity wasanSTE
andtherefor covered byArticle XVII. Thelistwasintended tobeillustrative, notexhaustive, and
should beallowed toevolve asfurther knowledge wasgained about statetrading, forexample through
notifications. Further, thepossibility ofMembers tosubmit counter-notifications provided anopening
fordialogue which might leadtoimprovements tothelist.Hesuggested thatNewZealand 'spaper
might include, inthePreliminary Guidance section, areference tothedefinition inArticle XVII and
totheworking definition intheUnderstanding.
49. Regarding theUSpaper, hemade thefollowing preliminary comments. Thehierarchy of
transparency obligations suggested intheUSpaper seemed tobeacounterpart tothehierarchy of
relevance ofactivities suggested inNewZealand 'spaper. Bothwereuseful contributions andshould
beexplored further withaviewtoincorporating them inthefinaltext. There didseem tobeaneed
forathreshold ofrelevance soastoavoid rendering thenotification obligation meaningless dueto
thenature oftheinformation provided ortothedifficulty ofcompliance. Theconcepts setoutin
paragraph 9ofthepaper would require further consideration, astheysetoutsome basicrulesofthumb
thatcould serve aspreliminary guidance. Heassumed thattheconcept of"exclusive orspecial privilege"
should bereadintotheAnnexes totheUSpaper. Regarding Annex 2,hesaidthatitwasbetter to
erronthesideofexcessive transparency, asthisprocess would permit abetter understanding ofthe
notion ofstatetrading.
50. Therepresentative ofAustralia shared Canada 'ssupport forparagraph 2oftheNewZealand
paper.
51. Therepresentative oftheEuropean Communities welcomed thesubmissions byNewZealand
andtheUS.These textsprovided elements andraised issues, thediscussion ofwhich would contribute
toacross-section ofrelationships andactivities thatwerethemostrelevant forinclusion inanillustrative
list.Hisdelegation would contribute tothisprocess.
52. Therepresentative ofHungary saidthattheNewZealand paper seemed tomake adistinction
among entities onthebasis ofownership. Thishadnotbeentheintent ofhisdelegation during the
Uruguay Round negotiations.
53. Therepresentative ofMexico saidthatlikeCanada, hisdelegation wasoftheviewthatthe
listshould serve asaguide forMembers andthatthere should benomodification ofelements in
Article XVII ortheUnderstanding.
54. Therepresentative ofRomania saidthatherdelegation wasready towork onthebasis ofthe
twopapers submitted. However, more discussion andclarification wasneeded before alistcould be
established.
55. Therepresentative ofPoland saidthattheconcepts intheNew Zealand paper should be
considered indepth. Some assumptions inparagraphs 2and4wereveryimportant. Regarding the
USpaper, thetwo-stage approach seemed tobeagood one. Hisdelegation shared tosome extent
theideainparagraph 16ofthatpaper thatathreshold ofrelevance might beapplied sothatG/STR/M/5
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WTO notification requirements didnotbecome overburdensome. Heagreed withCanada thatthe
question ofregulatory bodies should bediscussed further.
56. Therepresentative ofNewZealand saidthatthesuggestions inthetwopapers wereinmany
respects notmutually exclusive. Hesaidthatathreshold ofrelevance would involve asubjective
judgment astowhatagreater orlesser impact ontradewas;however, some agreement might bereached
astowhatactivities orrelationships weremore relevant thanothers. Regarding Hungary 'squestion,
hesaidthatNewZealand 'spaper included anelement notfound intheSecretariat background paper.
Thepurpose wastoinclude thepossibility ofstate-owned enterprises thatmight becorporate entities
owned bythestate, which might ormight notbeSTEs depending onhowtheymetthedefinition in
Article XVII andtheUnderstanding.
57. Therepresentative oftheUnited States saidthattheUSpaper hadincluded thepossibility of
making distinctions between relationships andactivities ofSTEs based ontheirpotential fortrade
distortion, aswellastheconcept oftheauthority granted anentity andthedirect orlegislative links
togovernment. While inthese areas thepapers differed, there wasconsiderable potential tomerge
thekeyconcepts inthem.
58. Therepresentative ofCanada saidthatitwould beuseful tousetheterm"potentially trade
distorting", astheobligation wasforSTEs tooperate inaccordance withArticle XVII.
59. TheWorking Party tooknoteofthestatements andagreed thatthisissue would continue to
beconsidered ininformal consultations.
D. Review oftheadequacy ofthe1960questionnaire andthecoverage ofstatetrading enterprises
notified under paragraph 1oftheUnderstanding
60. TheChairman recalled thatatitsJune1996meeting, theWorking Party hadbefore itaworking
text(G/STR/W/30) which attempted toreflect thediscussions heldininformal meetings. Heemphasized
thatparticipation intheinformal meetings wasopentoanydelegation wishing toattend. While he
continued tobelieve thataninformal setting wasthemostappropriate waytopursue work onthisissue,
heasked ifMembers hadanycomments onthetext.
61. Therepresentative oftheUnited States saidthataninformal setting wasthemostappropriate
fordiscussion ofthequestionnaire.
62. Therepresentative ofNewZealand saidthatthequestionnaire seemed tobeheaded intheright
direction. NewZealand wasprepared tobeflexible onpricing information, butwasnothappy with
theideaoftransaction-specific information ascalled forinthedraft(G/STR/W/30). Hisdelegation
wasnotconvinced thatindividual transaction information wasuseful, sinceitwould reflect theparticular
circumstances andmarket conditions ofasaleanddidnotsaymuch about theenterprise thathad
transacted theprice inquestion. Furthermore, where such information wasconsidered tobe
commercially sensitive, itwould have tobewithheld, aswasallowed under paragraph 4(d)of
Article XVII. Hesaidthatthetables inthetextshould bebalanced sothattheyreflected more equally
import information andexport information.
63. Therepresentative ofAustralia fullyendorsed NewZealand 'sstatement andstressed itsstrong
objection todetailed sales datainbothvalue andquantity terms. Australia considered thistobe
confidential information thedivulgence ofwhich would prejudice thecommercial interests ofparticular
enterprises andforwhich Article XVII:4(d) provided specific exemption.G/STR/M/5
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64. Therepresentative ofCanada saidthathisviews onthequestionnaire hadalready beenrecorded.
ThetextinG/STR/W/30 represented asignal effort. Canada agreed withAustralia andNewZealand
regarding theinappropriateness ofcertain ofthedatarequested. Thequestionnaire wasintended to
helpMembers todetermine whether anSTErespected thedisciplines inArticle XVII. Thus, the
questions asked andthedatacompiled should serve thispurpose. Transaction prices fromseveral years
earlier would bemeaningless. Further, therewasalackofconsistency: Article XVII:1 indicated that
anSTEhadtoactonthebasis ofcommercial considerations; however, thedivulging ofsuchdata
would make commercial market operations impossible.
65. Therepresentative ofSwitzerland saidthetextwasheaded intherightdirection, butheshared
theconcerns ofseveral Members regarding thepricing information sought.
66. Therepresentative oftheUnited States saidthatintheUSview, information onprices was
vital, andthenotifications currently didnotprovide specific information inthisregard. AstheUS
hadsaidinthepast,theinformation sought wasgenerally widely known inthetrade andbythetime
itwasreported would beoflittlecommercial use.Further, itwould beprovided onlyonanadhoc
basis.
67. TheChairman asked ifanyMember feltthatthedraftinG/STR/W/30 didnotprovide abasis
onwhich agreement might eventually bereached. Ifnot,thistextwould continue tobethebasis of
work intheinformal consultations.
68. Therepresentative ofNewZealand suggested thatdelegations submit theirviews onthedraft
textinwriting totheSecretariat forcirculation toparticipants intheinformal meetings.
69. TheWorking Party tooknoteofthestatements andagreed thattheChairman would continue
tohold informal consultations, open toanyinterested delegation, ontherevision ofthe
1960 questionnaire, using thedrafttextinG/STR/W/30 asabasis forfurther work.
E. "Other Business" -Proposal bytheEuropean Communities forfurther work
70. Speaking under "Other Business", therepresentative oftheEuropean Communities saidthat
thematter hewished toraisewasrelated totheWorking Party'sreport totheCouncil forTrade in
Goods (CTG). Hisdelegation hadatthepresent meeting circulated apaper5which hesaidwasself-
explanatory. Hisdelegation didnotintend todistract theWorking Party fromthework itwascurrently
carrying out,andhoped thatbythetimeoftheSingapore Ministerial thiswork might befinished.
ThemotivationfortheCommunity'ssubmissionwaslargelytheaccessionexercisesthatwereunderway.
Itwasimportant forallMembers toensure thatmarket access commitments wererespected, andmore
generally thatrights andobligations werenotundermined byrecourse totheprovisions ofArticle XVII.
With aviewtothis,theCommunity wassuggesting thatMinisters atSingapore agree toenlarge the
remit oftheWorking Party inorder tobegin adiscussion onthecurrent disciplines ofArticle XVII
andwhether these were adequate orinneedofreinforcement.
71. Therepresentative ofArgentina saidthatupon firstreading, most oftheideas inthepaper
seemed tomerit further consideration, astheypointed toconcrete problems andconcerns ofMembers.
However, henoted thattheword "exports" appeared onlyonceintheentire text.
72. Therepresentative ofAustralia supported thegeneral recommendation made inthesecond point
under paragraph 4ofthepaper, regarding theneedtostrengthen theprovisions ofArticle XVII, and
5Subsequently circulated asaWTO document inG/STR/W/33.G/STR/M/5
Page11
agreed ontheneedtotrytominimize thewayinwhich importing STEs impaired market access rights.
However, herdelegation hadsome initial reservations concerning theotherthreepoints inparagraph 4.
Regarding thefirst, Australia would liketobearinmind therelationship between thequestionnaire
andtheillustrative listandtheneedtoensure some complementarity between them inbothformand
purpose. Herdelegation didnotagree withthethirdpoint, asitcould notaccept terms ofreference
forwork predicated ontheremoval ofthestatus ofsingle deskexporters. InAustralia 'sview, asimple
recommendation along thelinesofthesecond point under paragraph 4would suffice.
73. Therepresentative oftheUnited States saidthattheCommunity 'sproposal would bequite
useful inthecontext oftheneedtomake further progress. TheUSplaced thehighest importance on
increased transparency intheareaofstatetrading, andshared theCommunity 'sview thataneffort
could bemade tocomplete thequestionnaire bythetimeoftheSingapore meeting. Thepaper proposed
examination ofsome oftheissues theUShadbeentrying topursue forsome time.
74. Therepresentative ofNewZealand thanked theCommunity forraising thisissueandforstarting
theprocess ofthinking about Article XVII itself. Hisdelegation agreed withAustralia thataprocess
oftrying tostrengthen Article XVII andtheUnderstanding inorder toguarantee market access and
non-discrimination would beagood thing; however, theroleofexport andimport monopolies was
notsymmetrical andtheirimpact onworld trade wasnotthesame. Hesaidthatnoartificial deadline
should besetforcompletion ofthequestionnaire, andthatwork ontheillustrative listshould proceed
inparallel withwork onthequestionnaire.
75. Therepresentative ofMexico saidthatatfirstsight itwasnotclear thattheCommunity 's
proposal waswithin themandate oftheWorking Party setoutinparagraphs 2and5ofthe
Understanding, norwasitclearthattheWorking Party wastheproper forum toraisematters dealing
withrevision ofprovisions oftheGeneral Agreement.
76. Therepresentative ofCanada saidthatCanada supported thegoalofrapidly completing the
questionnaire; however, there wasalogical linkbetween thequestionnaire andtheillustrative list
thatshould notbelostsightof.Heasked forclarification ofwhatwasmeant by"guaranteeing market
access" inthesecond point. Onthethirdpoint heassociated hisdelegation withAustralia 'scomments.
Thefirstpartofthefourth point appeared torefertowhattheWorking Party wasalready engaged
in,i.e.what Article XVII covered andwhat disciplines applied, butthiswasputinthecontext of
competition-related principles. Heasked whether itwasinthisbroader context thattheproposal was
being made.
77. Therepresentative oftheEuropean Communities saidthathisdelegation hadtaken noteof
thecomments andwould revert tothesepoints atalatertime. Regarding thequestionnaire, theintention
wasmerely toshow commitment tothiswork, andnottotrytoforce completion byaparticular date.
TheCommunity 'soverall objective andmotivation formaking thisproposal wastoensure thatthe
marketaccesscommitmentswhichhadbeennegotiatedwerenotunderminedbyrecoursetoArticleXVII.
Thiswasanimportant issueforthefuture, given current developments, andtheCommunity wasmaking
arecommendation thatdiscussion ofthisissuebegin now. Hesaidthatwerethemandate oftheWorking
Party limited tothequestionnaire andtheillustrative list,there would benothing lefttodooncethese
tasks were completed. Hisdelegation intended tocirculate thispaper totheHeads ofDelegations,
butwanted todoitfirstintheWorking Party, asthiswasthelogical forum fordiscussion oftheissue.
78. Therepresentative ofMexico saidthattheECproposal should notbediscussed intheWorking
Party because itfelloutside itsterms ofreference. Hisdelegation hadnoviews onthesubstance of
theproposal.
79. TheWorking Party tooknoteofthestatements.G/STR/M/5
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F. Report totheCouncil forTrade inGoods
80. TheChairman recalled thatparagraph 5oftheUnderstanding onArticle XVII instructed the
Working Party toreport annually totheCouncil forTrade inGoods. Asthelatter body would meet
on1November 1996 toconsider thereports from thestanding bodies, itwould benecessary forthe
Working Party tomake itsreport prior tothatdate. TheSecretariat hadprepared adraftreport on
theWorking Party'sactivities since thelastreport wasmade inNovember 1995, andthishadbeen
circulated atthemeeting. Thereport wasintended tobeafactual account oftheWorking Party's
activities. However, herecalled Ambassador Rossier 'sstatement asChairman attheApril 1996meeting
oftheGeneral Council concerning theformat forreports ofstanding WTO bodies (WT/L/145), in
whichithadbeensuggestedthatadditionalmattersmightbeincludedintheannualreports-forexample,
anindication ofissues andproblems which hadbeenidentified andrecommendations ifany. Inlight
ofthis,heinviteddelegationstoproposesuchadditionalelements,wherethesewerethoughtappropriate,
forinclusion inthedraftreport.
81. Therepresentative oftheEuropean Communities saidthathisdelegation would liketohave
areference inthereport tothesecond indent under point 4initssubmission onfuture work.
82. Therepresentative ofNewZealand saidthatwhile hisdelegation supported thegeneral thrust
ofthesecond indent, themandate suggested forconsidering thisissue would havetobefairly broad
andshould notbelimited toafocus onmarket access. Language encouraging thecompletion ofwork
onthequestionnaire andtheillustrative listwould beuseful.
83. Therepresentative oftheUnited States saidthathisdelegation supported areference inthe
report tothesecond indent intheECpaper.
84. Therepresentative ofMexico saidthathisdelegation could notatthepresent timeagree to
theinclusion inthereport ofthesecond indent intheECsubmission. Anyrecommendation ofthe
Working Party would havetobelimited exclusively toitsmandate.
85. Therepresentative ofPoland suggested thatthereport indicate thatpreliminary views were
expressed ontheECsubmission.
86. Therepresentative ofAustralia expressed satisfaction withthefactual nature ofthereport.
Regarding thesecond indent, herdelegation supported NewZealand 'sstatement concerning theneed
tomaintain thebreadth oftheWorking Party'smandate onanyfuture work, andthesuggestion for
positive language ontheillustrative listandthequestionnaire.
87. TheChairman proposed thatwithin thenextfewdays, hewould circulate arevised drafttext
ofthereport which would takeintoaccount thesuggestions made atthepresent meeting. Hewould
thencallafurther meeting oftheWorking Party on24October forthepurpose ofadopting thereport.
88. TheWorking Party tooknoteofthestatements andsoagreed.