RESTRICTED
WORLD TRADE G/C/M/20
10July1997
ORGANIZATION(97-2883)
Council forTrade inGoods
11June 1997
MINUTES OFTHE MEETING
Held intheCentre William Rappard
on11June1997
Chairperson: Mr.T.Johannessen (Norway)
TheproposedagendacontainedindocumentG/C/W/81wasadoptedasfollows,withtheinclusion
ofitems 9to13under "Other Business":
Page
1. Harmonized System -Request foranExtension ofWaiver ............... 2
- SriLanka (G/L/164, G/C/W/73/Rev.1)
2. Approval oftheRules ofProcedure oftheCommittee onSanitary and
Phytosanitary Measures (G/SPS/W/48/Rev.1) ....................... 2
3. HS96 Changes andArticle IIofGATT 1994 ........................ 3
- Communication from Switzerland (WT/GC/W/56-G/C/W/79)
4. Trade Facilitation (Paragraph 21oftheSingapore Ministerial Declaration)
(WT/MIN(96)/DEC) ....................................... 3
- Note bytheSecretariat (G/C/W/80)
5. Appointment ofChairperson oftheWorking Party onState Trading
Enterprises ............................................. 9
6. Agreement between European Community andtheFaroe Islands
(Government ofDenmark) ................................... 9
- Communication from theParties totheAgreement
(WT/REG21/N/2 andWT/REG21/1/Rev.1)
7. Free-Trade Agreement between theCzech Republic andtheRepublic
ofBulgaria .............................................10
- Communication from theParties totheAgreement
(WT/REG41/N/1 andWT/REG41/1)
8. Free-Trade Agreement between theSlovak Republic andtheRepublic
ofBulgaria ............................................10
- Communication from theParties totheAgreement
(WT/REG42/N/1 andWT/REG42/1)G/C/M/20
Page2
9. Israel-Turkey FreeTrade Area Agreement .........................11
10. United States -USRequest forConsultations concerning Restrictive
Business Practices intheJapanese Photographic FilmandPaper Market ......11
11. United States -Brazil Import Financing Restrictions ...................12
12. Korea -Price Range orRange ofValue System applied byArgentina ........13
13. Dateofnextmeeting ......................................14
_______________
1. Harmonized System -Request foranExtension oftheWaiver
- SriLanka (G/L/164, G/C/W/73/Rev.1)
1.1 TheChairman recalled thattherequest from SriLanka foranextension ofitswaiver in
connection withthetransposition ofitsschedule intotheHarmonized System, circulated indocument
G/L/164, wasconsidered atthelastmeeting oftheCouncil. AtthattimeNewZealand wasnotina
position toagree tothewaiver, andtherefore, theCouncil hadnotforwarded thedraftdecision granting
thiswaiver (G/C/W/73/Rev.1) totheGeneral Council foradoption. Itwasagreed thatthedelegations
concerned would report totheChair onthestatus oftheirconsultations onthismatter before the
Council 'snextmeeting. Inthemeantime hehadbeeninformed thatthedelegations hadmetandhad
detailed discussions onthematter. However, atthisstage progress hadnotyetbeenmade.
1.2 TheChairman alsorecalled thatthiswaiver hadexpired on30April 1997, andthatanextension
hadbeenrequested until30October 1997. Pursuant toArticle IXoftheWTO Agreement, theCouncil
hadaperiod notexceeding 90daystoconsider suchrequests andtosubmit areport totheGeneral
Council. Thisperiod hadstarted on14April 1997when theCouncil hadfirstconsidered therequest.
Heurged thedelegations concerned tocontinue theirefforts toachieve anunderstanding before that
date.
1.3 TheCouncil agreed torevert tothismatter atitsnextmeeting.
2. Approval oftheRules ofProcedure oftheCommittee onSanitary andPhytosanitary Measures
(G/SPS/W/48/Rev.1)
2.1 TheChairman recalled thatatitslastmeeting of14April 1997, theCouncil hadconsidered
therulesofprocedure oftheCommittee onSanitary andPhytosanitary Measures contained indocument
G/SPS/W/48 andcorrigendum. Inlightofstatements made bytheEuropean Communities andPeru
seeking certain clarifications, theCouncil hadagreed torevert tothismatter atitsnextmeeting.
2.2 Now, theCouncil hadagain before itforapproval, pursuant toparagraph 6ofArticle IVof
theWTO Agreement, therulesofprocedure oftheCommittee onSanitary andPhytosanitary Measures
contained indocument G/SPS/W/48/Rev.1.
2.3 Therepresentative oftheEuropean Communities indicated thathisdelegation wasnowina
position toapprove these rules ofprocedure.
2.4 TheCouncil approved therulesofprocedure oftheCommittee onSanitary andPhytosanitary
Measures.G/C/M/20
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3. HS96 Changes andArticle IIofGATT 1994
- Communication from Switzerland (WT/GC/W/56-G/C/W/79)
3.1 TheChairman recalled thatafirstdiscussion ontheSwiss proposal hadtaken place atthe
Council 'slastmeeting where ithadbeenagreed thatconsultations should beheldonthismatter.
Accordingly, consultations, towhich allMembers wereinvited, hadtaken placeon22and30April, and
on9June1997. Toassist inthese consultations, theSecretariat hadprepared aninformal noteon
"Rectifications toschedules oftariff concessions andtheircertification" which wassentouttoall
delegations. Theconsultations revealed ageneral agreement thattherewasaneedtoremedy thecurrent
situation where theprocedures leading tothecertification ofanychanges toschedules, either asaresult
ofHarmonized System (HS)changes oranyother changes, werenotworking properly orsatisfactorily.
3.2 TheChairman proposed tocontinue hisconsultations andtosubmit aproposal forasolution
totheCouncil inthenearfuture.
3.3 TheCouncil soagreed.
4. Trade Facilitation (Paragraph 21oftheSingapore Ministerial Declaration) (WT/MIN(96)/DEC)
- Note bytheSecretariat (G/C/W/80)
4.1 TheChairman recalled thatthisitemwasontheCouncil agenda following thedirective of
Ministers atSingapore inparagraph 21oftheSingapore Ministerial Declaration to:
"undertake exploratory andanalytical work, drawing onthework ofother international
organizations, onthesimplification oftrade procedures inorder toassess thescope forWTO
rules inthisarea".
4.2 Thefirstsubstantive discussion onthismatter washeldattheCouncil 'sfirstmeeting thisyear
inJanuary. Itwasagreed thattheSecretariat should gather information onthework doneonthesubject
oftrade facilitation invarious international organizations. Theinformation should besubmitted to
theCouncil sometime inMay1997. Itwasalsoagreed thataninterim report should bemade bythe
Secretariat giving anoverview oftheorganizations contacted inorder toobtain factual information
inthisfield, aswellasoftheareas oftrade facilitation inwhich these organizations hadundertaken
orwereundertaking work. Abackground notebytheSecretariat contained indocument G/C/W/70
responded tothisrequest forpreliminary information. Document G/C/W/80 which wasnowbefore
theCouncil, contained acompilation bytheSecretariat ofthework already doneonthesubject oftrade
facilitation inother international organizations, including certain non-governmental organizations.
4.3 TherepresentativeoftheUnitedStatesstatedthattheSecretariat'sreportconcerningtheactivities
andinitiatives related totrade facilitation wasimportant inthatitshowed thewiderange ofcritical
workgoingoninthisareainnolessthanteninternationalintergovernmentalorganizationsandnumerous
other fora. TheUnited States wasactively involved inmostofthese efforts. There wasnodenying
theimportance oftrade facilitation asanareaoffocus fortheWTO. Increasingly, trade facilitation
waslinked toensuring thatmarket access commitments were kept.
4.4 There wasagreat dealofunfinished WTO work related totrade facilitation. Oneexample
wastheWorking Party currently conducting anextensive review oftheoperation andimplementation
oftheAgreement onPreshipment Inspection. Another important contribution totradefacilitation would
bethetimely completion oftheongoing work bytheCommittee onRules ofOrigin leading tothe
harmonization ofnon-preferential rules oforigin. Thedeadline forcompletion ofthiswork was
July1998, andthework wasbehind schedule. Significant resources andenergy would beneeded from
allMembers inorder toachieve timely completion ofthisimportant work. Forthetrading community,G/C/M/20
Page4
oneofthemostimportant areas ofongoing work relating totradefacilitation concerned theAgreement
onCustoms Valuation. TheCommittee onCustoms Valuation hadbegun tomove forward inthearea
oftechnical assistance, sothatdeveloping anddeveloped country Members could work together in
acoordinated fashion toensure timely implementation oftheAgreement byallMembers. Asthereport
oftheSecretariat indicated, there werealsonumerous customs-related procedural elements ofvarious
Agreements related toproviding transparency tothetrading community; thesealsoincreasingly needed
attention toensure fullimplementation. Completion ofallthisongoing work hadtobethepriority
withregard totrade facilitation, andalready presented asignificant challenge interms ofresources
andenergy. Newwork would draw from whatwasneeded tocomplete these important tasks.
4.5 Work inother areasoftradefacilitation wasalready underway inother fora,astheSecretariat 's
report observed. Anywork attheWTO inthese additional areas -while efforts inother forawere
underway -would beredundant andwould notbeaprudent useofresources. Given itsimportance,
trade facilitation should continue toremain amatter ofattention. However, further work onthe
development ofWTO rules inthisareashould beundertaken onlyaftercompletion oftheongoing
work, particularly intheareas ofrules oforigin, customs valuation andpreshipment inspection.
4.6 Therepresentative oftheEuropean Communities stated thatthere wereareas where theWTO
needed tobecome more concerned withtheissues oftradefacilitation. Inexamining theSecretariat 's
document thefollowing points needed tobekeptinmind. First, itwould beuseful toknow ifthere
were gapsinthework currently being carried outinother forawhich theWTO could usefully fill.
Inother words whether theWTO could bring tothisexercise any"added value". Itwasacrucial
question which hisdelegation, other Council Members andtheSecretariat should bereflecting on.
Hisdelegation intended topresent someideasonthissubject atthenextCouncil meeting. Hisdelegation
alsobelieved thatthemomentum inthisareaofwork within theWTO should bemaintained, butthat
more analytical work wasrequired. Additionally, hisdelegation wasoftheview thatprivate
organizations andprivate sector entities should bemore closely involved. They should beinformed
ofthewayinwhich work wasproceeding intheWTO andtheyshould beinvited asnecessary to
participate inanyfurther discussion which theWTO might haveonthissubject. Lastly, while being
aware thatthismight bedifficult forsome delegations, hewondered whether theGoods Council was
infactthebestforum forcontinuing thisdebate, andwhether, Members might consider setting up
aWorking Group atalaterstage forthispurpose.
4.7 Therepresentative ofIndia stated thatthesubject oftrade facilitation hadattracted interest
forovertwodecades withdifferent aspects oftrade facilitation being studied, analyzed anddiscussed
atvarious forabyspecialized agencies. TheSecretariat 'sbackground noteprepared andcirculated
pursuant totheSingapore Ministerial Conference wascomprehensive anddrew onthework ofother
international organizations onthesimplification oftrade procedures. Thenotehadcovered thework
andactivities undertaken byinternational intergovernmental organizations, non-governmental
organizations, regional organizations, freetrade agreements andcustoms unions. While thesubject
oftrade facilitation hadbeenthefocus ofwork inmany ofthese agencies, itwasstillamatter tobe
considered whether trade facilitation should relate toprocedures andstandards andtosimplification
andharmonizationtoimproveefficiencyofhandlingforeigntradebyalltradingpartnersor,alternatively,
whether itshould encompass allaspects andfunctions relating totheconduct ofinternational trade
including varying aspects suchasbanking, transport, insurance, telecommunications etc. While
developed countries might beatanadvanced stage ofintegrating these functions andactivities relating
totheconduct ofinternational trade, developing countries wereatvarious stages ofcomprehending
theimportance andneedfortradefacilitation measures evenintheareaoftradeinformation andcustoms
procedures. Itmight beuseful todefine theprecise areatobecovered bytrade facilitation before
further work wasplanned.G/C/M/20
Page5
4.8 Herdelegation hadparticipated inthedeliberations oftheadhocWorking Group onTrade
Efficiency ofUNCTAD. These deliberations alsoseemed toindicate thattradefacilitation could initially
focus ontrade information andcustoms procedures considering thecosts involved incomplying with
these requirements. Thetrade efficiency programme ofUNCTAD prepared theguidelines and
recommendations bytheadhocWorking Group covering allaspects oftrade facilitation foradoption
byMember countries. Herdelegation hadalsoparticipated intheUNinternational symposium on
tradeefficiency inOctober 1994. Theglobal network oftrade points waslaunched atthissymposium
towhich Indiawasconnected. TheDelhi Trade Point wassetuptoenable asmooth switch toelectronic
commerce mode especially inareas oftradeinformation, exchange andbusiness development through
thetrade point network.
4.9 Indiawasalsoimplementingtheguidelinesandrecommendationsresultingfromthesymposium.
India hadinitiated various programmes suchasEDI,document andprocedural harmonization, aswell
asmutual administrative agreements withtrading partners. EDIhadbeenintroduced inselect custom
houses andportsandwasbeing extended tocover allmajor ports andcustom houses within aspecified
period oftime. Efforts werebeing made toparticipate ininformation exchange under thetrade point
network. Thisprogramme hadbeeninitiated byherauthorities andhadbeendependent onresource
availability. Technical cooperation support could haveenabled expeditious implementation ofthe
guidelines andrecommendations asalsothelaunch ofEDIforcommerce.
4.10 Thework currently being handled attheWorld Customs Organization (WCO) andsimilar
international agencies concerned withtheaspects oftrade facilitation, simplification, automation and
efficiency would needtobeintegrated withanyprogramme oftheWTO. Forinstance, WCO was
reviewing theKyoto Convention, andanyharmonization anddocumentation forcustoms anticipated
bytheWTO, would needtobeintegrated withthework already commenced under theaegis ofWCO.
Indiawasactively participating intheKyoto Convention review ofthe32annexes andwasalsodrafting
twoannexes relating towarehousing andexport processing zones inthisreview. Massive work was
being donewithregard toharmonization, review ofstandards andguidelines besides preparation of
amanual ofguidelines andprocedures bylooking atitasahorizontal issue from theviewpoint of
automation. Thereview wasexpected tobecompleted by1998 andtheWTO should consult with
theWCO onthework presently inprogress. India wasalready exchanging information bilaterally
under theNairobi Convention foradministrative purposes.
4.11 Inanymove towards trade facilitation, theenormity ofthetasks involved should begauged
forbothdeveloped anddeveloping countries andcarried outonamutually agreed andbinding basis.
However, asregarded thefinalobjective ofaccepting theexport billasanimport document atthe
destination point, thiscould bedone onamutually accepted basis andshould bebacked upeither
multilaterally orbilaterally withadequate legalarrangements.
4.12 Automation andtrade facilitation were stillatanevolving stage asthefullcanvas involved
other sectors related totrade. Inmany countries, inother sectors except customs, automation was
stillatanascent stage. Forinstance inthebanking sector theelectronic funds transfer system needed
tobeputinplace. Difficulties wereenvisaged bybothdeveloped anddeveloping countries inextending
tradefacilitation andautomation toother sectors. Forinstance, customs waslargely asovereign sector
owned bythegovernment inallthecountries whereas banking andtransport were sectors inwhich
thegovernment andtheprivate sector participated.
4.13 Itwaspossible tolookatthetrade facilitation issue asacritical minimum programme which
could beadhered tobyalltrading partners. Forinstance thetwomaindocuments which werecrucial
forinternational trade, namely theinvoice andthetransport document, could beharmonized and
standardized asacritical minimum programme under thetrade facilitation process which could be
multilaterally andbilaterally accepted forimplementation andexchange ofinformation asmight beG/C/M/20
Page6
required. Thiswould ensure thattherequired standardization andharmonization were achieved to
anacceptable standard inview oftheevolutionary process which wasalready underway inseveral
countries forimplementation ofautomation.
4.14 Thefunctions contributing totrade facilitation were manifold andvaried asoutlined inthe
Secretariat 'sbackground note. Inviewoftheassociation ofseveral international agencies andspecific
bodies handling various aspects oftradefacilitation, Indiacould consider having areporting mechanism
withtheWTO. Herdelegation understood thatprogress wasalready being made inthisdirection since
theTechnical Committee onCustoms Valuation andtheTechnical Committee onRules ofOrigin in
WCO werebothcoordinating theirworkwiththeCommittee onCustoms Valuation andRules ofOrigin
intheWTO, respectively.
4.15 Thesuccess oftrade facilitation measures would largely depend onthetechnical cooperation
available tothedeveloping countries andincreased market access totheirproducts. These elements
should bepresent inorder tomake additional investment intradefacilitation bythedeveloping countries
meaningful andbeneficial.
4.16 Therepresentative ofNigeria stated thattheSecretariat 'sdocument showed theenormity and
complexity oftheissue thatMembers were dealing with. Itrevealed thattrade facilitation didnot
stand onitsown, butwastheintersection point ofseveral important areas ofWTO work. Some had
already beenidentified suchaswork intheMarket Access area,intheCommittee onRules ofOrigin
aswellasintheWorkingPartyonPreshipmentInspection.InJanuary1997,whensubstantivediscussion
hadfirsttaken placeonthissubject, hisdelegation hadstated thatitwasnecessary toidentify, ifpossible,
eveninanon-restrictive open-ended manner areas ofwork thatwould becovered oracheck-list of
issues, asthemandate setbyMinisters onthissubject waspursued. Thatpoint hadalsobeenreiterated
byIndia andhisdelegation wished tore-affirm itsmerit.
4.17 TheEuropean Communities 'representative hadstated thatfurther analytical workwasrequired
inthisareaandthatperhaps another Working Group under theauspices ofthisCouncil would beneeded.
Hisdelegation wasnotinfavour ofcreating suchaWorking Group. Onthequestion ofmore analytical
work being doneinthisarea,hisdelegation 'sviewwasthatpriority should begiven firsttocompleting
ongoing work intheWTO which wasrelated totrade facilitation. However, ifitwerefeltthatmore
analytical work wasrequired, assuggested, thenacheck-list ofissues oridentification oftheform
andcharacter ofthisfurther analytical work hadtobedrawn up.
4.18 Therepresentative ofSwitzerland stated thathisdelegation considered thatthemandate given
totheCouncil byMinisters atSingapore hadnotbeenentirely fulfilled. Hisdelegation feltthatmore
knowledge ofexisting rulesandactions already taken inthisareashould beacquired through further
examination oftheissues. Forexample, afurther study should beundertaken onefforts made to
1)facilitate orsimplify custom 'sformalities, notably through means ofanelectronic transfer of
information; 2)improve transit procedures inorder tocounter abusive formalities, corruption, or
arbitrary customs formalities. More specifically, hisdelegation wasproposing thattheWTO bring
together experts oftheorganizations concerned, whether theywereintergovernmental orincaseswhere
theirexpertise wasclearly demonstrated, non-governmental. Thismeeting might taketheform ofa
workshoporseminar,undertheauspicesofthisCouncil.Thepurposewouldbetoclarifytheapproaches
adopted andtoexchange information about tradefacilitation which would include forexample, technical
assistance. Subsequently, specific needs which required standardization might beidentified.
4.19 Inresponse toarequest forclarification bytheChairman, therepresentative ofSwitzerland
statedthathisdelegationhadwishedtostatethatfirstthecurrentsituationwithrespecttotradefacilitation
should befurther examined. Itwasonlyinlightofthatexamination would itbepossible toseewhat
should bedonesubsequently.G/C/M/20
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4.20 Therepresentative ofKorea stated thatitwasimportant fortheWTO toavoid duplicating the
efforts ofother organizations. Inthiscontext, itwasnecessary tolookattheWTO provisions which
affected international trade, andtoanalyze therelationship ofthose provisions tothework ofother
bodies.
4.21 Hisdelegation wished tomake twoobservations ontheSecretariat 'sbackground noteviewing
itfromtheother sideofthecoin. First, Members hadtokeepinmind theexistence oftrade-related
decisions orprovisions insome international organizations orconventions forthepurpose of,for
example, environmental protection. Hisdelegation wasoftheviewthattheseactivities should beduly
monitored andtaken intoaccount inorder nottocause aconflict between them andtrade facilitation
efforts. Second, afteracareful examination ofthe"non-exhaustive" listofWTO provisions inSection E
ofthebackgroundnote,hisdelegationhadfoundthatcertainprovisions(i.e.thoseconcerningprocedures
governing thereview processes oftrade measures already taken byMembers invoking provisions of
WTO Agreements) should alsobeadded totheprovisions whose impacts weretobeanalysed. These
provisions might include, among others, Article 11.4oftheAgreement ontheImplementation of
Article VIoftheGATT (Anti-Dumping Agreement), Article 21oftheAgreement onSubsidies and
Countervailing Measures, andArticle 7.4oftheAgreement onSafeguards.
4.22 Therepresentative ofHong Kong stated thathisdelegation agreed withtheUnited States that
completion ofongoing work intheareaoftrade facilitation wasofthehighest priority. The
United States 'representative hadmentioned thattheWTO wascarrying outwork inanumber ofareas
related totrade facilitation, including theexercise toharmonize rules oforigin, which wasavery
fundamental andimportant project forhisdelegation. Itwasimportant thatthiswork bedoneontime
andnothing should detract from that. Having saidthathowever, hisdelegation didnotbelieve that
theongoing work should preclude Members from considering further thequestions asked bythe
representative oftheEuropean Communities, which werevalid. Forexample, weretheregapsinthis
area? Andhereclearly theconcern wasofduplication ofwork. So,asafirststepananalysis should
takeplace inorder toidentify anygaps, andsecondly consideration hadtobegiven astowhether it
would beappropriate fortheWTO tofillsuchgaps. Another point mentioned bytherepresentative
oftheEuropean Communities wasthequestion ofwhat scope there might beforprivate sector 's
involvement inthisexercise. Hong Kong tended tobeinfavour ofprivate sector involvement but
recognized thatitwasasensitive subject which would require careful consideration. Examining these
questions would enable Members toconsider whether work intrade facilitation should form partof
theWTO 'sfuture agenda.
4.23 Therepresentative ofNorway stated thatthemandate from Ministers inSingapore directed
theCouncil todoexploratory andanalytical work. Theanalytical work hadyettostart, andshould
bedone withaview toidentifying thepotential for"added value" bytheWTO, aswasmentioned
bytherepresentative oftheEuropean Communities. There might begapsthatcould beidentified that
required further work. TheUnited States haddrawn attention totheimportant work being donein
theCommittee onRules ofOrigin, onCustoms Valuation andtheWorking Party onPreshipment
Inspection, which raised thequestion ofco-ordination andtiming. Members should notdrawanyfinal
conclusions onthesubject oftrade facilitation before ongoing work hadbeenconcluded inthese other
areas. But,heagreed withtherepresentative ofHong Kong, thatMembers might inaparallel fashion
identify anylacunae which might beusefully filled bytheWTO.
4.24 TherepresentativeofMexicostatedthattheSecretariat'sdocumentprovidedaverybroadpicture
ofwhatwasgoing oninvarious forainthisparticular field. Inhisview, thenextstepwould beto
receive input from delegations astowhere theysawgapsconcerning work currently being doneon
trade facilitation which theWTO might trytofill.Hesawthree broad factors inthelightofthe
Ministerial Declaration. Onewasthefacilitation oftrade which wascontained inthetitleofthe
Declaration. Facilitation oftrade didnotnecessary need tobeconfined tothepreparation andG/C/M/20
Page8
improvement ofstandards. Forexample, intheWTO, themainframe integrated database wasbeing
transformed intoapersonal computer environment, which would make itpossible foroperators toaccess
valuable information, andthiswaspartoftheoverall operation offacilitating trade. Theother issue
wasthesimplification ofprocedures. Indiahadmentioned oneortwoideasatthismeeting, andperhaps
other ideas would beforthcoming. Inthisregard, hisattention wasdrawn tooneofthepoints dealt
withintheSecretariat 'sdocument pertaining tothefactthattheEconomic Commission forEurope
waspreparing aninternational trade transaction model foridentifying thestages intheforeign trade
process andguide activities inthisdirection. Perhaps interms ofmethodology itmight beuseful to
usethisasastarting point inorder toseewhat theforeign trade process orprocedure would be.
Subsequently onecould decide astohowtosimplify aspects ofit.Athirdissue, andperhaps themost
important, which arose fromtheSingapore Declaration wastheidentification ofwhattheWTO could
doasfarasruleswereconcerned. Here, heagreed withtherepresentative oftheUnited States, that
theWTO bodies which werealready working onmatters related totrade facilitation andwhich were
nowbehind schedule should notbefurther delayed bythisprocess. Finally, oncontacts with
non-governmental organizations, Members should abide bywhatwasagreed uponinthisconnection.
There should benoattempt tosecure differential treatment onthepretext thatbecause oftheverynature
ofthesubject, theCouncil should deviate fromtheguidelines established regarding WTO 'srelations
withnon-governmental organizations.
4.25 Therepresentative ofMorocco stated thatthesubject oftradefacilitation wasenormous, proof
ofthiswere thevastnumber ofspecialised agencies which wereworking onthissubject andwhich
hadbeendoing soforalongtime. Itwasalsoasubject verymuch related toWTO 'sactivities. The
logic behind anyexamination ofabroad fieldofthiskindwould betolookatwhatother competent
international bodies weredoing, thenlettheWTO identify thegapswhich itmight contribute towards
filling. Suchanexamination wasnecessary inorder toreduce thisvasttopicdown tooneortwoissues
which might beofprimary concern totheWTO. Inthisconnection, Switzerland 'sspecific proposals
were welcome. Aseminar orsymposium would alsoenable theCouncil toheartheviewpoints of
anumber ofinternational bodies which would thenallow ittofurther discuss trade facilitation ina
more informed fashion. Moreover, hisdelegation didnotbelieve thataseparate working group should
becreated tocarry outthisexercise; thework could bedoneinthisCouncil.
4.26 Therepresentative ofAustralia stated thatfrom theSecretariat 'sdocument itwasclear that
therewasalotoftradefacilitation-related work going on.Hehadparticipated inthework being done
ontrade facilitation inAPEC, forexample intheareaofstandards andstreamlining ofcustom 's
procedures. Itwasimportant thattheWTO should notduplicate anyongoing work, andthenextstep,
therefore, wastodetermine where theWTO might "addvalue". Theideaofasymposium seemed
good.
4.27 Therepresentative ofNigeria stated thatthereappeared tobethreepositions which hademerged
onhowtheCouncil should proceed. First, further work ontrade facilitation wassubject towork that
wasongoing indifferent foraandinseveral areas oftheWTO. Thesecond wasthatMembers proceed
withafurther analysis oftheissues thathadbeenraised. Thethird wasthattheCouncil identify a
check-list ofissues forfurther analysis withtheobjective ofeither identifying gapsand/or determining
areas where theWTO could "addvalue". Hisdelegation shared theviewexpressed bytheSecretariat
initsdocument inNote(v)that:"This document issubmitted totheCTG withtheacknowledgement
thatother activities andinitiatives related totradefacilitation mayexist; anyomission ofsuchactivities
orinitiatives innowayconnotes anymeaning bytheSecretariat. Theinformation presented isbased
ontheSecretariat 'sbestefforts, given thetimeandinformation available." Itappeared thatfurther
analysis would beneeded. However, firstaclearsetofissues hadtobeidentified, which would then
enable theCouncil toidentify anygaps, andtodetermine theareastowhich theWTO could "addvalue"
ifany.G/C/M/20
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4.28 TherepresentativeoftheUnitedStatesstatedthattherepresentativeoftheEuropeanCommunities
hadindicated anintention tosubmit some ideas totheCouncil onareas ofwork related totrade
facilitation where gapsmight exist. So,theitemof"Trade Facilitation", onlyneeded tobeontheagenda
ofafuture Council meeting atsuchatimethattheEuropean Communities hadsubmitted apaper on
thismatter.
4.29 Therepresentative ofSwitzerland stated thathisdelegation preferred tohavethisitemincluded
ontheagenda oftheCouncil 'snextmeeting.
4.30 Therepresentative oftheEuropean Communities requested thatthisitemappear ontheagenda
ofthenextCouncil meeting. Heclarified thatideas from hisdelegation would bepresented either
inwriting ororally.
4.31 TherepresentativeofMexicostatedthatanydelegationcouldmakeacontributiononthissubject,
andcould request thatanitembeincluded ontheagenda ofameeting.
4.32 TheChairmanencourageddelegationstomakecontributionstobuildontheprocess,andproposed
thattheCouncil takenoteofthestatements andrevert tothismatter atitsnextmeeting.
4.33 TheCouncil soagreed.
5. Appointment ofChairperson oftheWorking Party onState Trading Enterprises
5.1 TheChairman stated thatasagreed atthelastmeeting oftheCouncil, hehadcarried out
consultations pursuant totheguidelines fortheappointment ofofficers toWTO bodies (WT/L/31),
tofindareplacement forMs.Vibeke Roosen (Denmark) whohadresigned asChairperson ofthis
Working Party asindicated inherletter of19March 1997. Hewished toreport thathisconsultations
indicated thattherewasagreement toappoint Mr.Jacques Teyssier D'Orfeuil (France) asChairperson
totheWorking Party onState-Trading Enterprises.
5.2 TheCouncil agreed toappoint Mr.Jacques Teyssier D'Orfeuil asChairman oftheWorking
Party onState-Trading Enterprises.
6. Agreement between European Community andtheFaroe Islands (Government ofDenmark)
- Communication from theparties totheAgreement (WT/REG21/N/2 and
WT/REG21/1/Rev.1)
6.1 TheChairman drawtheCouncil 'sattention tothenotifications fromtheparties totheAgreement
contained indocument WT/REG21/N/2. ThetextofthisnewAgreement hadbeencirculated in
document WT/REG21/1/Rev.1.
6.2 TheChairman proposed thattheCommittee onRegional Trade Agreements carry outthe
examination ofthisagreement inaccordance withthefollowing terms ofreference:
"toexamine, inlightoftherelevant provisions oftheGATT 1994, theTrade Agreement
between theEuropean Community andtheGovernment ofDenmark andtheHome
Government oftheFaroe Islands andtosubmit areport totheCouncil forTrade in
Goods."
6.3 Itwasunderstood thattheunderstanding readoutbytheChairman oftheCouncil forTrade
inGoods under item7oftheAgenda ofthemeeting oftheCouncil forTrade inGoods on
20February 1995, ascontained indocument WT/REG3/1, would apply mutatis mutandis tothisG/C/M/20
Page10
examination. Itwasalsounderstood that,during theexamination, dueaccount would betaken ofthe
intrinsic differences between customs unions andfree-trade areas.
6.4 TheCouncil soagreed.
6.5 TheCouncil agreed todealwiththetwofollowing agenda items together.
7. Free-Trade Agreement between theCzech Republic andtheRepublic ofBulgaria
- Communication fromtheparties totheAgreement (WT/REG41/N/1, WT/REG41/1)
8. Free-Trade Agreement between theSlovak Republic andtheRepublic ofBulgaria
- Communication fromtheparties totheAgreement (WT/REG42/N/1, WT/REG42/1)
8.1 TheChairman drewtheCouncil 'sattention tothenotifications fromtheparties totheAgreement
contained indocuments WT/REG41/N/1 andWT/REG42/N/1. ThetextsoftheAgreements hadbeen
circulated indocuments WT/REG41/1 andWT/REG42/1, respectively.
8.2 TherepresentativeoftheSlovakRepublic,speakingonbehalfoftheCzechRepublicandSlovakia
ononesideandtheRepublic ofBulgaria ontheother, informed theCouncil thatpursuant to
Article XXIV:7(a), theparties totheAgreements hadmade therelevant notifications which were
contained indocuments WT/REG41/N/1 andWT/REG41/1, andWT/REG42/N/1 andWT/REG42/1
respectively. TheFreeTrade Agreement between theCzech Republic andtheRepublic ofBulgaria
wassigned on15December 1995, andthatbetween theSlovak Republic andtheRepublic ofBulgaria
on8December 1995. BothAgreements hadbeenapplied onaprovisional basissince1January 1996
andhadentered intoforce on7June1996 andon11March 1996, respectively. These FreeTrade
Agreements applied toallproducts coming under Chapters 1to97oftheHarmonized Commodity
Description andCoding System. Theparties totheAgreements would gradually establish, inconformity
withArticle XXIV ofGATT 1994, afreetradeareaforsubstantially allofthetradewithin theperiod
oftwoyearsforindustrialproducts,andwouldliberalizegraduallytradeinagriculturalproductsspecified
intherespective protocols ofbothAgreements.
8.3 Theservices sector, within themeaning ofArticle VoftheGATS Agreement, wasnotcovered
intheAgreements. However, anevolutionary clause offered thepossibility ofextending theAgreement
toareas notcovered byit.TheAgreements alsocontained provisions dealing with, interalia,state
monopolies, competition, stateaid,public procurement andprotection ofintellectual property.
8.4 Therepresentative oftheUnited States stated thatwithrespect toagenda items 6,7and8,
hisdelegation welcomed thenotification oftheseagreements andhoped thatinallcases theinformation
would bepresented inthestandard format totheCommittee onRegional Trade Agreements andin
atimely manner sothatthereview could beconducted inanexpeditious wayinthatCommittee.
8.5 TheChairman proposed thattheCouncil takenoteofthestatements andthattheCommittee
onRegional Trade Agreements carry outtheexamination ofthese agreements inaccordance withthe
following terms ofreference:
Terms ofreference fortheFree-Trade Agreement between theCzech Republic andtheRepublic of
Bulgaria
"toexamine, inlightoftherelevant provisions oftheGATT 1994, theFreeTrade
Agreement between theCzech Republic andtheRepublic ofBulgaria andtosubmit
areport totheCouncil forTrade inGoods."G/C/M/20
Page11
Terms ofreference fortheFree-Trade Agreement between theSlovak Republic andtheRepublic of
Bulgaria
"toexamine, inlightoftherelevant provisions oftheGATT 1994, theFreeTrade
Agreement between theSlovak Republic andtheRepublic ofBulgaria andtosubmit
areport totheCouncil forTrade inGoods."
8.6 Itwasunderstood thattheunderstanding readoutbytheChairman oftheCouncil forTrade
inGoods under item7oftheAgenda ofthemeeting oftheCouncil forTrade inGoods on
20February 1995, ascontained indocument WT/REG3/1, would apply mutatis mutandis tothese
examinations. Itwasalsounderstood that,during these examinations, dueaccount would betaken
oftheintrinsic differences between customs unions andfree-trade areas.
8.7 TheCouncil soagreed.
9. Israel-Turkey FreeTrade Area Agreement
9.1 Therepresentative ofIsrael, speaking under "Other Business", informed Members thatthe
Israel-Turkey FreeTrade AreaAgreement wassigned lastyearandhadalready beenratified bythe
Government ofIsrael andtheParliament ofTurkey, respectively. Israel hadbeen applying the
Agreement since1May1997, andTurkey would apply theAgreement retroactively asof1May1997.
Therespective notifications pursuant toparagraph 7(a)ofArticle XXIV ofGATT 1994 would be
submitted totheCommittee onRegional Trade Agreements inthenearfuture.
9.2 TheCouncil tooknoteofthestatement.
10. United States -USRequest forConsultations concerning Restrictive Business Practices inthe
Japanese Photographic FilmandPaper Market
10.1 Therepresentative oftheUnited States, speaking under "Other Business", recalled thathis
Government hadrequested consultations withtheGovernment ofJapan concerning restrictive business
practices intheJapanese photographic filmandpaper market. Hisauthorities hadrequested these
consultations withtheGovernment ofJapan pursuant totheCONTRACTING PARTIES Decision on
"Restrictive Business Practices: Arrangements forConsultations" under theGeneral Agreement on
Tariffs andTrade assetoutinBISD 9S/38. ThisDecision waspartofGATT 1994 asdefined under
Article1(b)ofthatAgreementandthereforethisCouncilhadresponsibilityforoverseeingthefunctioning
ofthatDecision.
10.2 TheContracting Parties adopted thisDecision withtherecommendation that,upon request,
"acontracting party should enter intoconsultations onsuchpractices onabilateral oramultilateral
basisasappropriate". Hisauthorities wished toonceagain bring totheCouncil 'sattention thatithad
beennearly afullyearsince theUnited States hadpresented itsrequest totheGovernment ofJapan,
i.eon13June1996. Moreover, ithadbeennearly ninemonths since theUnited States hadaccepted
theEuropean Communities 'request tojoininthese consultations while Japan hadyettorespond to
thisrequest.
10.3 Japan continued tomaintain preconditions foraccepting theUnited States 'request for
consultations.TheGATTDecisiondidnotimposeanypreconditionsonthesubjectmatterortheconduct
oftheconsultations thatwould prevent productive dialogue about, andpotential resolution of,issues
concerning business practices intheJapanese photographic filmandpaper markets thatappeared to
restrict competition ininternational trade. Infact,suchpreconditions rancounter tothespirit ofWTO
dispute resolution. Consulting parties hadtodiscuss factors andconditions thatwould enhance theirG/C/M/20
Page12
understanding oftheenvironment inwhich business practices weretaking place andtheirimpact on
competition ininternational trade.
10.4 Among thepreconditions Japan hadimposed wasthattheparties holdconsultations onbusiness
practices inthephotographic filmandpaper market intheUnited States. Hisauthorities hadmade
itabundantly clear toJapan thatitwaswilling toaccept Japan'srequest forconsultations ontheUS
market. However, hisauthorities hadalsomade itclearthatitwillnotaccept alinkage between these
consultations andtheconsultations ontheJapanese market, asJapan hadsought todo.Linking the
consultations wascontrary totheimportant GATT principle ofnotlinking claims andcounterclaims
andtherefore wasunacceptable.
10.5 Hisauthorities strongly urged Japan toenterintotheseconsultations without further delay and
without seeking inappropriate preconditions.
10.6 Therepresentative oftheEuropean Communities shared theconcerns expressed bythe
United States andinvited Japan togivetheearliest possible response tohisdelegations 'request tobe
joined intheconsultations referred to.
10.7 Therepresentative ofJapan stated thathisauthorities hadreplied totheUnited States on
October 1996 thatitaccepted theUnited States 'request oncondition thattheUnited States accepted
Japan'srequest forconsultations, pursuant tothesame decision, onU.S.consumer photographic film
andpaper markets. Japan'srequest wasbased onthebelief thatcertain business practises intheUS
market restricted andadversely affected competition intheinternational tradeofconsumer photographic
filmandpaper, andonthebelief thattheU.S. andJapanese markets shared certain significant
similarities. ThefactthattheUShadmade clear itswillingness toaccept Japan'srequest for
consultations ontheUSmarket, asmentioned bytherepresentative oftheUnited States, wasnewto
hisdelegation. Thelastcommunication received from theUnited States hadstated onlythatthe
United States would carefully examine andconsider Japan'srequest. Nevertheless, hehadtaken note
ofthestatements andwould transmit them tohisauthorities.
10.8 TheCouncil tooknoteofthestatements.
11. United States -Brazil Import Financing Restrictions
11.1 Therepresentative oftheUnited States, speaking under "Other Business", stated thathis
delegation wasconcerned about theimport financing restrictions recently imposed byBrazil. This
measure ineffect eliminated supplier credit oflessthan180days; inother words importers hadto
paythefullpurchase priceoftheimported goods uponcustoms clearance ifsupplier credit terms were
for180daysorless. Incases where theterms ofsupplier credit werefor180to360daysfinancing,
payment toalocalcommercial bankhadtomade 180daysinadvance oftheduedateofthecontract,
which ineffect reduced supplier credit. Thismeasure didnotapply fororders forlessthanUS$10,000.
Brazil 'sMercosur partners aswellasChile andBolivia weretemporarily exempt from thebrunt of
themeasure until31July1997. Ifimports originated inMercosur, Chile orBolivia andthevalue
oftheshipment waslessthan$40,000, import finance ofupto90dayswaspermitted.
11.2 UScompanies hadexpressed considerable concern thatthismeasure wasrestricting theirexports
toBrazil. TheUSshared thisconcern, asthemeasure wasadversely impacting USexports toBrazil
andappeared tobeastepbackfromBrazil 'sstated policy ofbeing onanirreversible course totrade
liberalization.
11.3 Hisauthorities werereviewing thismeasure forWTO consistency. Itappeared thatthismeasure
hadtheeffect ofanimport surcharge which would beinconsistent withBrazil 'stariffobligations underG/C/M/20
Page13
theWTO. Inaddition, theexemption forMercosur, Chile andBolivia discriminated against USexports
andmight constitute afurther infringement ofBrazil 'sWTO commitments. Hisauthorities urged Brazil
todiscontinue thisdiscriminatory measure.
11.4 Therepresentative ofSwitzerland stated thathisdelegation shared theconcerns expressed by
therepresentative oftheUnited States.
11.5 Therepresentative oftheEuropean Communities stated thathisdelegation wasalsoconcerned
about themeasures which hadrecently beentaken bytheBrazilian Government. Themeasures had
theeffect ofrequiring immediate payment forimports atthepoint ofcustom 'sclearance. Andthis,
inallcases where theprivate contracts allowed upto180dayspayment credit. Ifthepayment terms
wereformore than180daysthenthelegislation obliged importers tobuytherequired currency for
payment atleast180daysbefore theactual payment wasdue. Thishadseverely restrictive effects,
onsupplier credit, astherepresentative oftheUnited States hadobserved. Hisauthorities tookthe
viewthatthese measures which wereclosely trade related should havebeennotified byBrazil tothe
WTO under theDecision onNotification Procedures. Suchanotification wasallthemore necessary
because itwould enable hisdelegation toclarify thecompatibility ofthemeasures taken withWTO
rules.
11.6 Therepresentative ofBrazil stated thathisdelegation hadundertaken informal consultations
withpartners whohadshown aninterest toknow about thefinancial measures Brazil hadrecently
adopted. During such consultations theBrazilian delegation hadprovided lengthy anddetailed
explanations about thefinancial measures andhowtheyrelated totherights andobligations ofBrazil
asmember oftheInternational Monetary Fund. Hisdelegation hadagreed during theconsultations
toprovide trading partners withadditional information. Itwashisdelegation 'sfirmbelief thatraising
thismatter intheWTO wasnotwarranted inthelightoftheinformation provided during those
consultations when thefinancial nature ofthemeasures taken wasmade clear. Hepointed outthat
hadthese measures beenofatrade-nature, theywould havebeennotified byBrazil incompliance with
itsnotification obligations. Nevertheless, hehadtaken noteofthestatements made andwould transmit
them tohisauthorities.
11.7 TheCouncil tooknoteofthestatements.
12. Korea -Price Range orRange ofValue System applied byArgentina
12.1 Therepresentative ofKorea, speaking under "Other Business", expressed concern atthe"Price
Range orRange ofValue System" which hadrecently beenintroduced byArgentina, andwhich greatly
affected Korea 'sexports toArgentina. According tohisauthorities 'information, under thisnewsystem,
which wasinoperation since 21March 1997, based onResolution 2432/96 andresolution 823/97 of
theArgentine Government, anyelectronic goods imported toArgentina regardless ofthecountry of
origin, weresubject toprice verification bytheArgentine customs authorities iftheprice marked on
theimportation document wasoutofthepricerange developed bythecustoms authorities inco-operation
withthedomestic electronic manufacturers. Items affected bythissystem include taperecorders,
microwave ovens, T.V.s, radios/cassette recorders, C.D. players, minicomponents, camcorders and
other electronic goods.
12.2 Thissystem wasunderstood tobeaimed atpreventing importers fromdeclaring import prices
below therealtransaction price forthepurpose ofevading highimport duties. However, thesystem
wasbelieved tobeoperated asfollows:G/C/M/20
Page14
- ifthedocumented import pricewasbelow thepricerange theimporter wastogrant aguarantee
equivalent totheamount ofduties calculated from thedifference between thedeclared price
andtheaverage range price, eventhough ananti-dumping procedure hadnotyetbeeninitiated;
- ifthedocumented import price wasabove theprice range, thecustoms authorities informed
thetaxauthorities ofsuchimportation fortaxation purposes.
12.3 Hisdelegation believed thatsuchasystem might violate theprovisions oftheCustoms Valuation
Agreement inwhich thecustoms value oftheimported good should becalculated onthebasis ofthe
transaction value. Furthermore, asitappeared tooperate likeanimport-price monitoring mechanism,
itwentagainst Article 11.1(b) oftheSafeguards Agreement, which required Members toabolish or
phase outanygreymeasures oneither theimport ortheexport side.Suchasystem might alsoeventually
violate theobligation ofgeneral elimination ofquantitative restrictions under Article XIofGATT 1994.
12.4 Korean exports ofelectronic goods toArgentina werebeing hurtbythisPrice Range System.
Hisdelegation hoped thattheArgentinean authorities would provide Korea withanexplanation oftheir
justification ofthissystem under WTO Agreements, aswellaswithanyrelevant detailed information
assoonaspossible.
12.5 Therepresentative ofArgentina stated thathehadtaken noteofKorea 'sconcern about
Argentina 'spricerange system. Herequested theKorean delegation tospecify itsconcerns inwriting.
12.6 TheCouncil tooknoteofthestatements.
13. Dateofthenextmeeting
13.1 TheCouncil tooknotethatthenextmeeting wasscheduled for21July1997.