RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/M/16
15 July 1998
(98-2787)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
MINUTES OF THE REGULAR MEETING
HELD ON 23-24 APRIL 1998
Chairman: Mr. Gilles Gauthier (Canada)
1. The Committee on Subsidies and Countervailing Measures ("the Committee") held its regular
meeting on 23-24 April 1998.
2. The Committee adopted the following agenda:
Page
A. National legislation 3
(i) Review of countervailing duty legislation and/or regulations
(Article 32.6) - New or amended texts:
(i) Brazil (G/ADP/N/1/BRA/2)
(ii) Bulgaria (G/ADP/N/1/BGR/1 - G/SCM/N/1/BGR/1)
(iii) Canada (G/ADP/N/1/CAN/3 - G/SCM/N/1/CAN/2)
(iv) European Community (G/ADP/N/1/EEC/2)
(v) Japan (G/ADP/N/1/JPN/2/SUPPL.2 -
G/SCM/N/1/JPN/2/SUPPL.2)
(vi) Mongolia (G/ADP /N/1/MGN/1 and CORR.1)
(vii) Peru (G/ADP/N/1/PER/1/SUPPL.2 -
G/SCM/N/1/PER/1/SUPPL.2)
(viii) Singapore (G/ADP/N/1/SGP/2/SUPPL.1 -
G/SCM/N/1/SGP/2/SUPPL.1)
(ix) United States (G/ADP/N/1/USA/1/SUPPL.2 -
G/SCM/N/1/USA/1/SUPPL.2)
(ii) Continuing review of previously  reviewed notifications (Article 32.6):
(i) European Community  (G/ADP/Q1/EEC/11 -
G/SCM/Q1/EEC/11 a nd G/ADP/Q1/EEC/12 -
G/SCM/Q1/EEC/12)
(ii) Israel (G/ADP/Q1/ISR/9 - G/SCM/Q1/ISR/9)
(iii) Singapore (G/ADP/Q1/SGP/12 - G/SCM/Q1/SGP/12and G/ADP/Q1/SGP/13 - G/SCM/Q1/SGP/13)
(iv) Thailand (G/ADP/Q1/THA/10 - G/SCM/Q1/THA/10)G/SCM/M/16
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B. 1995 new and full notifications (Article 25.1 of the SCM Agreement 4
and Article XVI:1 of GATT 1994):
(i) Burkina Faso (G/SCM/N/3/BFA - G/SCM/N/16/BFA -
G/SCM/N/25/BFA)
(ii) Gambia (G/SCM/N/3/GMB - G/SCM/N/16/GMB -
G/SCM/N/25/GMB)
(iii) Senegal (G/SCM/N/3/SEN/SUPPL.1 - G/SCM/N/16/SEN/SUPPL.1 -
G/SCM/N/25/SEN/SUPPL.1)
(iv) Tunisia (G/SCM/N/3/TUN - G/SCM/N/16/TUN –
G/SCM/N/25/TUN)
C. 1996 updating notifications (Article 25.1 of the SCM Agreement and 5
Article XVI:1 of GATT 1994):
(i) Bolivia (G/SCM/N/16/BOL)
(ii) Costa Rica (G/SCM/N/16/CRI)
(iii) Indonesia (G/SCM/N/16/IDN/SUPPL.1)
(iv) Nigeria (G/SCM/N/16/NGA)(v) Switzerland (G/SCM/N/16/CHE)
(vi) United States (G/SCM/N/16/USA)
D. 1997 updating notifications (Article 25.1 of the SCM Agreement and 6
Article XVI:1 of GATT 1994):
(i) Australia (G/SCM/N/25/AUS)
(ii) Bolivia (G/SCM/N/25/BOL)
(iii) Canada (G/SCM/N/25/CAN)
(iv) Chile (G/SCM/N/25/CHL)
(v) Colombia (G/SCM/N/25/COL)
(vi) Costa Rica (G/SCM/N/25/CRI)(vii) Cuba (G/SCM/N/25/CUB)
(viii) European Community (G/SCM/N/25/EEC and CORR.1)
(ix) Hong Kong (G/SCM/N/25/HKG)
(x) Japan (G/SCM/N/ 25/JPN and SUPPL.1)
(xi) Korea (G/SCM/N/25/KOR)(xii) Liechtenstein (G/SCM/N/25/LIE)
(xiii) New Zealand (G/SCM/N/25/NZL)
(xiv) Norway (G/SCM/N/25/NOR)
(xv) Poland (G/SCM/N/25/POL)
(xvi) Singapore (G/SCM/N/25/SGP)
(xvii) Switzerland (G/SCM/N/25/CHE)
(xviii) Thailand (G/SCM/N/25/THA)
(xix) Uruguay (G/SCM/N/25/URY)
E. Requests pursuant to Article 25.10: 7
(i) Japan (G/SCM/Q2/JPN/14)
(ii) United States (G/SCM/Q2/USA/11)G/SCM/M/16
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Page
F. US follow-up to request to the EC pursuant to Article 25.8 8
(G/SCM/Q2/EEC/13 and G/SCM/Q2/EEC/14)
G. Procedures for arbitration under Article 8.5 8H. Informal Group of Experts - St atus Report (G/SCM/W/415/Rev.1) 11
I. Permanent Group of Experts - Election of an expert 13
J. Review of the operation of Articles 6.1, 8, and 9 (Article 31) 13
K. Semi-annual reports of countervailing duty actions (Article 25.11) 14
(G/SCM/N/35 and Addenda)
L. Reports of preliminary and final countervailing duty actions 14
(Article 25.11) (G/S CM/N/33, 34, 36, and 37)
M. Recent international financial commitments by certain WTO Members – 14
Aspects relevant to the Agreement on Subsidies and CountervailingMeasures (G/SCM/17)
N. Observers - International intergovernmental organisations 15O. Other business: 16
Graduation from Annex VII - Statement by the Philippines
P. Date of next regular meeting 16Q. Election of Officers 16
A. National legislation
(i) Review of countervailing duty legislation and/or regulations (Article 32.6) - New or 
amended texts
(ii) Continuing review of previously  reviewed notifications (Article 32.6)
3. The Committee agreed that, since all legislations and related questions on the agenda were
also on the agenda of the Committee on Anti-Dumping Practices, there was no need to duplicate that
discussion.  However, since the European Communities  ("EC") had requested that the review of its
countervailing duty regulation be conducted at this meeting, questions regarding this regulation would
be addressed in this Committee.
4. The questions regarding the EC's notification can be found in the following document:
G/SCM/Q1/EEC/13 (Submitted by the United States)G/SCM/M/16
Page 4
5. The answers provided by the EC to these quest ions can be found in the following document:
G/SCM/Q1/EEC/16 (To que stions submitted by the United States)
6. The Chairman reminded Members that, in order for a previously reviewed notification of
legislation to appear on the agenda of the Committee's regular meeting in October 1998, questions
were to be submitted to the Secretariat and to the concerned Member no later than six weeks before
the meeting, i. e., 14 September 1998.
B. 1995 new and full notifications (Article 25.1 of the SCM Agreement and Article XVI:1 of
GATT 1994)
7. The Chairman indicated that there were four new and full notifications for review by the
Committee.
8. The questions regarding the Gambia's notification can be found in the following document:
G/SCM/Q2/GMB/1 (Submitted by Japan)
9. The answers provided by the Gambia to thes e questions can be found in the following
document:
G/SCM/Q2/GMB/2 (To questions submitted by Japan)
10. The questions regarding Senegal's notification can be found in the following document:
G/SCM/Q2/SEN/5 (Submitted by Japan)
11. The answers provided by Senegal to these questions can be found in the following document:
G/SCM/Q2/SEN/6 (To questions submitted by Japan)
12. The questions regarding Tunisia's notification can be found in the following documents:
G/SCM/Q2/TUN/2 (Submitted by Japan)
G/SCM/Q2/TUN/3 (Submitted by the EC)
13. The answers provided by Tunisia to these que stions can be found in the following document:
G/SCM/Q2/TUN/4 (To que stions submitted by Japan and the EC)
14. No questions were posed regarding the notification of Burkina Faso.
15. The Chairman reminded Members that would like a written response to their oral questions or
would like to pose follow-up questions that these questions were to be submitted in writing to the
notifying Member and to the Secretariat within two weeks, i. e., by 7 May 1998, and that written
answers were due within six weeks, i. e., by 4 June 1998.
16. The Chairman noted that some Members had not yet submitted written answers to questions
regarding their new and full notifications.  In particular, answers had been due by 18 October 1996
from Brazil , and were now a year and a half overdue.  Further, answers had been due by 13 June 1997
from Benin , Brunei Darussalam , Cameroon , Côte d'Ivoire , and Ghana .  Finally, Bulgaria  stillG/SCM/M/16
Page 5
owed responses, which had been due by 4 December 1997, to questions posed by Japan and Poland.
The Chairman encouraged Members which had not yet submitted responses to re-double their efforts
to do so.
17. As regarded the status of 1995 new and full notifications, the Committee had reviewed 81
notifications to date.  One further notification -- that of Zimbabwe -- had been received, but could notbe circulated before the deadline of 9 March 1998.  While the review of 81 notifications was quite an
achievement, more than 50 Members had yet to submit 1995 new and full notifications, which had
been due on 30 June 1995.  It was now only a few months before the 1998 new and full notifications
were due.  Some of these countries were very active WTO Members and it was difficult to understand
the failure of such Members to meet their notification obligations.
18. The representative of the European Communities indicated that the apparent lack of response
and interest on the part of certain Members who ha d not provided answers to questions posed in the
review process was difficult to understand.  In the case of non-notifying inactive countries, the EC
understood the position they were in and was always willing to provide bilateral assistance.  The EC
seconded the Chairman's exhortations to these Members to get more involved in the work of the
Committee.
19. The Committee adopted procedures for the review of 1998 new and full subsidy
notifications.1
C. 1996 updating notifications (Article 25.1 of the SCM Agreement and Article XVI:1 of
GATT 1994)
20. The Chairman indicated that six updating notifications appeared on the agenda.  Written
questions had been posed with respect to three of the updating notifications, those of Indonesia,
Nigeria, and the United States.
21. The questions regarding Indonesia's notification can be found in the following document:
G/SCM/Q2/IDN/10 (Submitted by Japan)
22. The answers provided by Indonesia can be found in the following document:
G/SCM/Q2/IDN/11 (To questi ons submitted by Japan)
23. The questions regarding Nigeria's notification can be found in the following document:
G/SCM/Q2/NGA/ 5 (Submitted by the EC)
24. The answers provided by Nigeria can be found in the following document:
[NO ANSWERS HAVE BEEN PROVIDED BY NIGERIA AS YET]
25. The questions regarding the United States' notification can be found in the following
document:
G/SCM/Q2/USA/12 (Submitted by the EC)
                                                     
1 The text of the procedures may be found in document G/SCM/18 dated 27 April 1998.G/SCM/M/16
Page 6
26. The answers provided by the United States can be found in the following document:
G/SCM/Q2/USA/13 (To questi ons submitted by the EC)
27. No questions were posed with respect to the notifications of Bolivia, Costa Rica , and
Switzerland.
28. The Chairman pointed out that, while 1996 updating notifications were due on 30 June 1997,
only 60 Members had submitted such notifications to date.  The Chairman emphasised his concern
about the situation and urged all Members to make a concerted effort to bring themselves up to date
regarding these notifications.
29. The representative of the EC echoed the Chairman's remarks and pointed out that, while most
1995 new and full non-notifiers were inactive Members, 1996 and especially 1997 updating non-
notifiers included some very active Members.  It was becoming increasingly difficult to accept thistotal imbalance of transparency.  Some Members had used other Members' notifications, also
available through the internet, to corroborate information for the initiation of countervailing duty
investigations.  While some Members were practising full transparency, others were getting a "free
ride".  The question arose as to how long this situation could go on and what could be done about it.
In the future, if a Member had made no notification or an inadequate notification, it might not receivecooperation from the EC in the review process.
30. The representative of Norway indicated his support for the Chairman's and the EC's remarks.
If Members could not steadily improve their notification record, it might in fact begin to deteriorate as
the Members who had fulfilled their notification obligations would have less incentive to do so in the
future.
D. 1997 updating notifications (Article 25.1 of the SCM Agreement and Article XVI:1 of 
GATT 1994)
31. The Chairman indicated that 19 such updating notifications appeared on the agenda.  Written
questions had been posed with respect to two of the updating notifications, those of Canada and
Japan.
32. The questions regarding Canada's notification can be found in the following documents:
G/SCM/Q2/CAN/9 (Submitted by Poland)
G/SCM/Q2/CAN/10 (Submitted by the United States)
33. The answers provided by Canada can be found in the following document:
[NO ANSWERS HAVE BEEN PROVIDED BY CANADA AS YET]
34. The questions regarding the EC's notification can be found in the following document:
G/SCM/Q2/EEC/15 (Submitted by the United States)
35. The answers provided by the EC can be found in the following document:
G/SCM/Q2/EEC/16 (To questions submitted by the United States)G/SCM/M/16
Page 7
36. The questions regarding Japan's notification can be found in the following documents:
G/SCM/Q2/JPN/16 and Rev.1 (Submitted by Poland)
G/SCM/Q2/JPN/18 (Submitted by the United States)
37. The answers provided by Japan can be found in the following document:
[NO ANSWERS HAVE BEEN PROVIDED BY JAPAN AS YET]
38. The questions regarding Switzerland's notifica tion can be found in the following document:
G/SCM/Q2/CHE/6 (Submitted by the United States)
39. The answers provided by Switzerland ca n be found in the following document:
G/SCM/Q2/CHE/7 (To questions submitted by the United States)
40. No questions were posed with respect to the notifications of Australia, Bolivia, Chile,
Colombia, Costa Rica, Cuba, Hong Kong, Korea, Liechtenstein, New Zealand, Norway, Poland,
Singapore, Thailand, and Uruguay.
41. The Chairman stated that the situation regarding 1997 updating notifications was even worse
than that regarding 1996 updating notifications and that, less than three months before the 1998 new
and full notifications were due, only 45 Members had submitted 1997 updating notifications.  This
situation was highly unsatisfactory and raised serious questions as to whether the current cycle of
annual notifications was sustainable.
E. Requests pursuant to Article 25.10
42. The Chairman stated that two requests for information had been received pursuant to
Article 25.10 of the Agreement.
(i) G/SCM/Q2/JPN/14
43. The representative of Japan indicated that his government was ready to notify sub-national as
well as national programmes.  With regard to the EC's request for information, Japan was preparing to
notify subsidies 1-2, the Fund for Textiles in Fukui and the Fund for the Glass Industry in Fukui.  As
for subsidies 3-9, which were regional aid and industrial zone programmes, the Japanese government
was closely studying the interpretation of the releva nt articles, including Article 2, as well as the
coverage of the programmes.  The Japanese government would need more time to complete the
process.  However, it was well aware of the conc erns expressed by the EC and would respond to the
EC's request as soon as possible.
44. The representative of the EC stated that the document received from Japan appeared to be a
reasonable, if somewhat belated, effort to res pond to the EC's counter-notification.  The EC noted
that, in this document, Japan referred to the 1996 review of its 1995 new and full notification, and not
to the EC's counter-notification.  The EC had po sed follow-up questions on Japan's notification and
there had been a discussion in the Committee as to whether federal regional aid was specific.  It was
disappointing that Tokyo had not responded to that question.  It was a fundamental part of the
Agreement and there had to be an acceptance, in accordance with Article 2, that regional aid wasspecific and notifiable.  The EC notified it, and practically all other Members notified it.  The EC had
submitted these questions before the end of 1996, and the matter was now coming to the stage whereG/SCM/M/16
Page 8
the EC would have to resubmit the questions.  In order for there to be clarity on this issue, Japan had
to resolve the matter, and the EC requested a commitment from the Japanese authorities that they
would address the questions.
45. The representative of Japan indicated that some responses had been provided to the EC that
morning and additional answers were to follow.  As for the question of regional aid, Japan was
studying the matter.
(ii) G/SCM/Q2/USA/11
46. The representative of the United States regretted that his delegation was not able to provide
responses to the EC at this meeting, as the request pursuant to Article 25.10 had been outstanding for
some time.  The process of consultations with their state governments was complex.  His delegation
expected to reply to at least some aspects of this request when notifying state-level measures.  Heexpected that the Enterprise Zone programmes in Georgia, Minnesota, Pennsylvania, and Virginia
would be a component of the notification.  As a general matter and without prejudice to what they did
notify, the United States was of the view that, where a government limited aid to specific areas of its
jurisdiction, the aid was specific under Article 2 of the Agreement.
F. US follow-up to request to the EC pur suant to Article 25.8 (G/SCM/Q2/EEC/13 and 
G/SCM/Q2/EEC/14)
47. The representative of the United States had indicated, at the last Committee meeting, that his
delegation had at the time only very recently received the EC's response.  He had stated at the time, as
a preliminary view, that his delegation was disappointed by the EC's lack of specificity, and, having
had time to consider the EC's replies, this was sti ll the case.  The representative of the United States
wondered why, at a minimum, certain factual information could not be supplied.  For instance, one
question they had asked was whether premiums were charged under the guarantee programmes.  The
United States remained eager for more specific responses.
48. The representative of the EC expressed his government's intent to cooperate to the fullest
extent possible.  With regard to the questions as to the Belairbus Programme, it was under review at
present, as explained in paragraph 3 of the EC's  response.  The EC looked forward to providing
further details as soon as possible.
49. The representative of the United States stated that there was perhaps historical information
and urged the EC to provide whatever information was available as quickly as it could.
G. Procedures for arbitration under Article 8.5
50. The Chairman reminded Members that this issue had been deadlocked since May 1995, when
a draft text failed to attract a consensus, largely due to a disagreement among some Members over
certain substantive provisions of the text.  Consultations had been held on the basis of trying to re-focus the text towards purely procedural and administrative aspects.  On the basis of those
consultations, the Chairman had prepared a new draft text (G/SCM/W/411).  Since that document had
been circulated, informal consultations had led to an amended version of the document, on which
there was a near-consensus.
51. The Chairman stated that the only place in the amended text where there was an unresolved
issue was paragraph 22, where bracketed language reflected the US suggestion.  The United States
had proposed that the provision read: "A Party or Third Party to an arbitration shall make available toG/SCM/M/16
Page 9
all other Parties and Third Parties its written submissions.  A Party or a Third Party shall also, upon
request of a Member, provide [,within a reasonable time period,] a non-confidential summary of the
information contained in its written submissions that could be disclosed to the public."  Could
Members agree to include this language in the text?
52. The representative of Mexico indicated that his delegation was prepared to adopt the draft text
without the US proposal.
53. The representative of Canada stated that her delegation was prepared to support the draft text
with the US proposal.  Given that Article 8.5 had a time limitation, Canada was confused by Mexico's
position and sought further clarification.
54. The EC, Switzerland , and Australia  indicated that, while they could accept the Chairman's
text with or without the US proposal, they preferred to have some time constraint.
55. The representative of the Philippines was of th e same view.  It was implicit in any obligation
that compliance must be "within a reasonable time period", whether or not this was stated.  Making
Article 8.5 operational was paramount, and the Philippines appealed to the delegations involved to
resolve the matter as soon as possible.  This was also the ASEAN view.
56. The representatives of Brazil and Argentina  had no opposition to either version and hoped
that the text could be adopted in either version at this meeting.
57. The representative of the United States expressed two outstanding concerns.  The first was the
matter of the phrase "within a reasonable time period".  His delegation was reassured by comments
indicating the view that this id ea was implicit in any obligation.  Arbitration was a highly truncated
procedure and many complicated matters had to be attended to between day 1 and day 120 of the
process.  Given the sensitivity and importance of the subject matter that would be dealt with in anyarbitration under Article 8.5, the greatest degree of transparency possible had to be assured in the
process.  Obviously, care had to be taken to treat issues of confidentiality in the appropriate fashion,
but the credibility of this whole exercise was at stake.  Where there were opportunities to make the
process somewhat more open, transparent, and understandable to all Members' constituents, Members
would be better off doing so.  The United States ha d initially thought that it made much more sense to
not make the provision of a non-confidential summary contingent upon a Member's request and to
also specify a particular period of time, but had, in the interests of a compromise, agreed to the much
more open-ended reference to having a non-confidential summary upon request and within a
reasonable time period.
58. The representative of the United States indicated that the second matter of concern was
paragraph 21 of the draft procedures, with respect to the confidentiality of the proceedings of the
arbitration body.  The United States had raised the possibility in consultations of a hearing, or aparticular aspect of the hearings, being made open to the public.  That suggestion was not reflected in
the Chairman's draft text.  Given that the matter remained important to the United States, continued
creative thought on the idea would be appreciated.  The United States could accept the wording of
paragraph 21 as it was, but with an indication that this might be one of the matters subject to review at
a future point in time.
59. The representative of Mexico stated that the language of paragraph 22 without the US
proposal was from Article 18.2 of the Dispute Sett lement Understanding ("DSU") and had thus been
agreed to by all Members of the Committee, so there should be no difficulty in adopting it.
60. The Chairman indicated that the issue of open hearings had been thoroughly debated in
consultations.  There had also been discussion of a provision that would allow Parties to adopt aG/SCM/M/16
Page 10
different set of procedures if there was consensus among them, and paragraph 5 of the procedures
provided this possibility.  It was also accepted in consultations that the issue of open hearings was
horizontal in nature rather than pertaining solely to arbitration proceedings under Article 8.5.
Regarding review, the draft included a reference to the possibility of review and expressed no pre-
conceived view as to the elements that could be discussed in such a review.  The flexibility shown bymany Members was an indication of a strong desire to reach a conclusion on the matter.  However,
some delegations saw the issue as having broader horizontal implications and thus found it difficult to
reach a compromise for the sole purpose of arbitration procedures under Article 8.5.  These
delegations would perhaps want to reflect further on the issue.
61. The representative of Brazil strongly supported any effort to achieve an agreement at this
meeting.  Could the parties involved summarise their views?  Brazil understood that there was an
issue of the translation of Article 18.2 of the DS U into Spanish and how the US proposal would affect
the rights of Members in the context of that particular language.
62. The representative of Mexico stated that the US proposal was unacceptable, because the
provision of a non-confidential summary of the in formation contained in written submissions was
entirely optional.  The introduction of the phrase "within a reasonable time period" went against the
fully voluntary nature of Article 18.2 and deformed, if not changed, the legal nature of that obligation.One alternative was to simply have each delegation express its position on the matter, which would be
reflected in the record, and there would be no need for a Chairman's statement.
63. The representative of the United States commented that they could accept the text without the
US proposal, but the Chairman could make some  observations to the effect that timely non-
confidential summaries were seen as normal practice by some delegations and that provisions couldbe reviewed in the interests of transparency.  There were three parts to the US proposal.  The
following phrase could be introduced at the end of paragraph 35: " . . . , including such relevant
provisions as paragraphs 21 and 22."  Further, th e Chairman's explanatory statement could read: "The
adoption of these procedures is without prejudice to the positions of Members with respect to
increasing the transparency and openness of dispute settlement proceedings, in order to enhance theeffectiveness and credibility of the WTO for their constituents.  In this connection, many Members
have observed that it is expected that Members respond in a timely manner to requests for non-
confidential summaries of information submitted to an arbitration body established under Article 8.5
of the Agreement on Subsidies and Countervailing Measures."
64. The representative of Brazil noted that the two proposals indicated that both delegations
involved were showing flexibility.  A third alternative could be to introduce the following phrase at
the end of paragraph 22: " . . . taking into account the expeditious nature of the proceedings."  Thiswould take into account both the United States' concern that time-frames be respected and Mexico's
concern that obligations not be altered.
65. The representative of Mexico, following on from Brazil's suggestion, proposed the
introduction of the phrase "in accordance with Article 18.2" into paragraph 22 in order to give the
provision a more dynamic meaning.  The language of Article 18.2 in the Spanish version of theprocedures would, in any event, be based on the Spanish version of the DSU and not on the language
of Article 18.2 in the English version of the procedures.  The Chairman could still note that adoption
of these procedures was without prejudice to Members' positions with respect to the review of the
DSU.
66. The Chairman proposed that the following phrase be added at the end of paragraph 22: "When
providing a non-confidential summary, a Party or Third Party will duly take into account the
expeditious nature of these proceedings." Furt her, the following Chairman's statement could
accompany the Committee's decision to adopt the procedures: "The adoption of these procedures isG/SCM/M/16
Page 11
without prejudice to the position of any Member concerning the transparency and openness of dispute
settlement proceedings.  With reference to paragraph 35, nothing in these procedures precludes
Members from reviewing relevant provisions of these procedures, including paragraphs 21 and 22, in
light of any decision taken with respect to dispute settlement proceedings."  The Chairman proposed
that the procedures amended thus be adopted on an ad referendum  basis, to be confirmed one month
from the circulation of the amended procedures in all three working languages, failing receipt by the
Secretariat of objections from any Member.
67. The Committee so decided.2
H. Informal Group of Experts - Status Report
68. The Chairman recalled that the Informal Group of Experts ("IGE") had been created by
decision of the Committee in order to consider issues relating to the calculation of 5 per cent ad
valorem  subsidization in the context of Article 6.1(a) of the Agreement.  The IGE thus undertook a
purely technical exercise, and its mandate did not pertain to questions of the applicability of
Article 6.1(a).  The Chairman further recalled that the IGE's report had been originally circulated last
July (G/SCM/W/415) and, at its last meeting, the Committee had decided that an informalconsultation session would be convened at which the IGE would be present to answer any questions
from Members.  This session had been held in January 1998, the IGE had made a number of changes
to its report in light of the comments received, and a revised version of the report had been circulated
(G/SCM/W/415/Rev.1).  Since then, the IGE had informed the Chairman that they intended to make
two further "fine-tuning" changes to the report, namely to remove paragraph 3 of the cover note toRecommendation 1 and to add a sentence to the in troduction stating that any subsidy exempted from
the application of Article 6.1(a) by the Agreement was not covered by the report and
recommendations.  This would further emphasise th at the report and recommendations were without
prejudice to the legal status of, or the applicability of Article 6.1(a) to, any subsidy.
69. The representative of Thailand indicated that the paper submitted by ASEAN expressed the
views of Brunei Darussalam, Indonesia, Malaysia, Myanmar, the Philippines, and Thailand.  Thailand
believed that Article 6.1(a) had to be interpreted in the sense of common business practice.  The report
of the IGE recommended allowing the threshold of subsidization to remain high during the start-up
period and to consider the subsidy as operating to assist the business during the remaining period.  In
accepting this recommendation, the Committee would be altering the language of Article 6.1(a) of and
Annex IV to the Agreement, which it had no authorization to do.  The five ASEAN Members thus
could not agree to the adoption of the report at this point.
70. The representative of the United States stated that the IGE's report made specific
recommendations and put forward compromises for areas where agreement had to be reached if
meaningful and comprehensive recommendations were to be issued.  The United States did not itself
subscribe to all 21 recommendations in the report, but the report made a constructive contribution to
providing clarity to the application of Article 6.1(a) and Annex IV.  The Committee had theopportunity to reach a consensus at this meeting, and its apparent failure to do so compelled the
United States to delineate the areas of its disagreement with the recommendations of the IGE.  In this
regard, Recommendation 3, which covered the allocation of subsidy benefits over time, had to be
highlighted.  It was appropriate to allocate the benefit of certain subsidies over some period of years.
The real value and significance of a subsidy had to be maintained as it was apportioned over the
allocation period.  To do this, the IGE recommended the use of the relevant inflation rate and a
portion of the real interest rate in the given country.  The use of this adjustment factor unquestionably
                                                     
2 The procedures as adopted may be found in document G/SCM/19 dated 10 June 1998.G/SCM/M/16
Page 12
understated the cost of the subsidy to the granting government.  The United States believed that, at a
minimum, the adjustment factor had to be based on the bond rate of the granting government.
71. The representative of the United States further indicated paragraph 67 of the report, where the
IGE had failed to reach agreement on whether export subsidies had to be attributed exclusively to
export sales when calculating the ad valorem  rate of subsidization.  A similar disagreement had arisen
over whether subsidies tied to particular markets had to be attributed to sales in that particular market.
In both cases, the United States was of the view that any subsidy tied to particular products had to be
attributed solely to those products.  This approach was specifically provided for in paragraph 3 of
Annex IV.  Finally, the report failed to address adequately the issue of commercial risk.  This was
perhaps an oversight of the IGE, and if the IGE continued to meet, it was the United States' request
that this issue be more specifically and fully addressed.  The United States stood ready to reach
agreement on an appropriate set of valuation rules under Article 6.1(a).  However, in light of theCommittee's failure to reach a consensus on the report, the United States reserved its right to advance
methodological and other arguments it deemed appropriate in the context of any future dispute
settlement proceedings that might be convened.
72. The representative of Australia indicated that her government was in the process of studying
the report internally and was not in a position to agree to its adoption at this point.
73. The representative of Brazil indicated that his authorities were examining the report.  Brazil
believed that the experts were acting in their personal capacities and that the report should not be
subject to major changes, unless the IGE so wished.  If the IGE continued its work, it should do so on
that basis.
74. The representative of the EC stated that each of the experts was acting in his personal
capacity, and that this was reflected in the report, which was a technical compromise.  The report
attempted to harmonise in some way the understanding of Members as regards the calculation of
subsidies and to make the calculations more transparent.  The report went a long way towards that
goal, and the EC supported its adoption.
75. The Chairman remarked that certain Members were not in a position to adopt the report as
they had differences with some of the recommendations made by the IGE.  The Chairman did not
believe that it would be productive for the Committee to engage in a substantive discussion of the
report with a view to modifying it, because the report was not a product of the Committee, but of the
IGE, in fulfilment of its mandate.  If the Committee wished to discuss the same substantive issues as
those considered by the IGE, that would be a separate matter, unrelated to the consideration of the
IGE's report.  It was important to bring discussion of the report as such to some closure.  The
Chairman proposed that the Committee take note of the report as well as of the statements made byMembers at this meeting.
76. The Committee so decided.
77. The Chairman further stated that the IGE had identified in its report a number of issues on
which no conclusion had been reached and no recommendations made.  The Chairman proposed that
the Committee request the IGE to continue its work with respect to the unresolved issues.
78. The Committee so decided.
79. The Chairman reminded the Committee that participation in the IGE was open to all Members
wishing to nominate an expert.  Any Member that wi shed to designate an expert was invited to submit
a nomination in writing to the Secretariat before the summer break, so that the first meeting of the
IGE could be organised in the autumn.G/SCM/M/16
Page 13
80. The Committee took note.
81. The representative of the Philippines stated that the ASEAN paper went to the very rationale
for the allocation of post-WTO subsidies and suggest ed that the IGE consider this paper in doing
further work.
82. The Chairman indicated that, in taking note of the IGE's report, the Committee had also taken
note of all communications with respect to it.  The ASEAN contribution would therefore certainly be
part of the record.
I. Permanent Group of Experts - Election of an expert
83. The Chairman reminded Members that the term of office of one Member of the Permanent
Group of Experts ("PGE"), Mr. Chang of Korea, wa s drawing to a close.  It was incumbent on the
Committee under Article 24.3 of the Agreement to elect a new expert.  Following a request for
nominations, Korea had nominated Mr. Chang for re-election, supported by Namibia, and Brazil had
nominated Professor Renato Galvao Flores Junior.  Did delegations have any comments on the
nominations?
84. The representative of Korea explained that his authorities' nomination of Mr. Chang for re-
election came from the belief that, as a highly qualified expert, Mr. Chang could usefully contribute to
the PGE's work.  Further, the PGE had been inactive during Mr. Chang's term, and he had therefore
not been given an opportunity to contribute.  However, given that Article 24.3 might preclude the
renewal of Mr. Chang's term, as suggested by another Member, and after due consultation with legal
experts in capital, Korea was withdrawing its request at this point.
85. The Chairman stated that the Committee now had one nomination, and recognized that
Members probably needed additional time to study Professor Flores Junior's candidacy.  However,
two deadlines had been set and only one nomination received.  The Chairman therefore proposed that
the Committee provisionally accept the nomination of Professor Flores Junior, and Members would
have two weeks to complete their consideration of his candidacy and write to the Chairman and theSecretariat with any objections they might have.
86. The representative of Mexico indicated that his delegation needed time to remit the
information to capital and could return to this Co mmittee with a response at a meeting in two weeks.
87. The Chairman proposed that a special meeting of the Committee be called in early May to
consider the matter.
88. The Committee so decided.
J. Review of the operation of Articles 6.1, 8, and 9 (Article 31)
89. The Chairman reminded Members that it was incumbent on the Committee under Article 31
of the Agreement to review the operation of Articles 6.1, 8, and 9, which applied for a period of five
years from 1 January 1995, with a view to determining whether to further extend their application.The timetable for the Article 31 process required the Committee to undertake this review no later than
30 June 1999.  Although this date was a full 15 months away, given the importance of this review, the
Chairman requested the Committee to authorise him to begin informal consultations on the matter.G/SCM/M/16
Page 14
90. The representative of Australia enquired as to whether the informal consultations would
pertain to the proposed procedure for, or the substance of , the review.
91. The Chairman clarified that the consultations would relate to the proposed procedure for the
review.
92. The Committee so decided.
K. Semi-annual reports of countervailing duty actions (Article 25.11)
93. The Chairman reported that 50 of the 117 Members had submitted semi-annual reports for the
second half of 1997 to date.  Turning then to the reports submitted since the circulation of document
G/SCM/N/35/Add.1/ Rev.1, which reflected the status of these notifications, did any Member have
comments or questions concerning the semi-annual reports of Argentina, Australia , Canada , the EC ,
Mexico, New Zealand , Peru , South Africa , the United States , or Venezuela ?
94. The representative of the EC noted that Israel had indicated in its semi-annual report that it
had not taken any countervailing duty action during the second half of 1997.  While the EC did not
dispute this fact, Israel had initiated a countervailing duty investigation against pasta from Italy in
September 1995.  Following a period of responding to certain questionnaires and making certainsubmissions, there had been silence on Israel's part with regard to this investigation.  Article 11.11 of
the Agreement required that all countervailing duty investigations be terminated within 18 months, a
period that Israel frequently exceeded in the case of anti-dumping investigations.  In the EC's view,
Israel would no longer be in any position to impos e a countervailing duty in the Italian pasta case,
because it had gone well beyond the 18-month period.
95. The representative of the United States wi shed to clarify to the Committee that the US
administrative orders imposing countervailing duties on oil country tubular goods and on cold-rolled
carbon steel flat-rolled products from Argentina had been revoked.
96. The Committee took note  of the EC's and the United States' comments.
97. The Chairman expressed his concern regarding compliance with this notification obligation.
A very substantial number of Members had not responded to the request for semi-annual reports.  The
Chairman urged Members which had not yet submitted a semi-annual report to do so promptly.
L. Reports of preliminary and final countervailing actions (Article 25.11)
98. No statements were made with respect to this item.
M. Recent international financial commitments by  certain WTO Members - Aspects relevant to
the Agreement (G/SCM/17)
99. The representative of the United States stated that, since the last regular meeting of the
Committee, certain Members had unfortunately experienced destabilizing financial situations.  To
respond to this crisis, Members had negotiated comprehensive economic reform programmes withinternational financial institutions ("IFI").  The United States understood that, in the context of these
programmes, the affected Members had taken steps that involved the strengthening of disciplines on
various government practices.  The United States believed that, insofar as some of the reforms may
affect policies and measures relevant to the Agreement, it would be beneficial if these Members couldG/SCM/M/16
Page 15
provide information concerning the implementation of subsidy-related commitments.  Such a
discussion could provide an affirmative sign of multilateral support for the important steps of
economic reform being undertaken.
100. The representative of Thailand expressed his appreciation for the support shown by some
Members through the International Monetary Fund.  Thailand had been able to regain international
confidence, but additional time was needed for the impact of reforms to be felt.  Thailand still firmly
upheld the philosophy and objectives of multilateralism and was in full compliance with its WTO
commitments.  Indeed, it had embarked upon ever greater liberalisation efforts.  If any measures taken
in the course of the crisis were found to be notifiable to the Committee, Thailand would do so.
However, in view of the economic havoc experienced by Thailand and others, Article 27.1 of the
Agreement had to take relevant meaning.  Members should allow developing countries in such severe
economic circumstances to recover, before placing additional burdens on them.
101. The representative of Indonesia supported the statement made by Thailand, particularly the
last comment.  Indonesia was preparing to notify its reform programme to the WTO in due course.
102. The representative of Korea stated that his authorities were reviewing the US proposal.  Korea
wished to emphasise that it was respecting its WTO and IFI obligations.
103. The representative of the United States conveyed his appreciation for the spirit of these
reactions and indicated that his delegation looked forward to future dialogue with these Members.
104. The Committee took note of the statements made.
N. Observers - International intergovernmental organizations
105. The Chairman recalled that, when the Committee had previously taken up the issue of regular
observer status for the OECD, a number of Members had raised questions regarding reciprocity and,
in particular, the issue of observer status for the WTO in the Group of Participants to the Arrangement
on Officially-Supported Export Credits and Export Credit Guarantees.  The Committee had
accordingly decided to defer action on the OECD's request to allow time for consultations.Meanwhile, the OECD continued to be invited to attend Committee meetings on an ad hoc  basis.  The
issue of observer status for the WTO had been considered again that day by the Participants' Group,
and the WTO had been granted observer status on an ad hoc  basis, i. e., the Participants' Group would
reach a judgement as to whether a particular meeting contained items of interest to the WTO.  The
WTO would be given access to most documents, but the Group had reserved the right to refuse access
in particular cases.  The results achieved in the Participants' Group appeared to represent a significant
movement in the right direction, but did not appear to justify extending regular observer status to theOECD at this point.
106. The Chairman therefore proposed that the Comm ittee invite the OECD to continue to attend
meetings on an ad hoc   basis.  With respect to documents, most Committee documents were in fact
issued unrestricted.  Regarding those that were issued restricted, the Chairman proposed that the
Committee grant the OECD full access, subject to objection by a Member in particular cases.  TheChairman further suggested that these decisions be taken on a preliminary basis, to be confirmed at
the Committee's next meeting, following receipt of full details of the decision of the Participants'
Group.
107. The Committee so decided.G/SCM/M/16
Page 16
108. Turning to the ACP Group's request for regular observer status, the Chairman recalled that, at
its last meeting, the Committee had agreed to in vite the ACP Group to attend its meetings on an ad
hoc basis.  This decision was taken pending resolution of the horizontal process underway at the
Council level regarding requests for observer status by the ACP Group and other international
intergovernmental organisations.  To date, no horizontal resolution of the ACP Group's request hadbeen achieved, and the Chairman would report back to the Committee as the situation developed.  The
Chairman suggested that, meanwhile, the Committee continue with the same arrangement as before.
109. The Committee so decided.
O. Other business
Graduation from Annex VII - Statement by the Philippines
110. The representative of the Philippines recalled that, at its last meeting, the Committee had
taken note that the Philippines' GNP per capita had exceeded $1,000 per annum as per the 1997 World
Bank Atlas.  The Philippines had indicated at that point that, while its GNP per capita had indeed
reached $1,050 in 1995, that was no longer the case based on the rate of exchange at the time theCommittee took note.  Further, as of this meeting, the equivalent of $1,050, based on the still lower
exchange rate, was $750.  The Philippines reserved the right to bring up this issue once the 1996 and
1997 World Bank figures came out and confirmed that the Philippines' GNP per capita did not in fact
exceed $1,000.
111. The Committee took note.
P. Date of next regular meeting
112. The Chairman recalled that by decision of the Committee, regular meetings would normally
be held in the last week of April and October.  However, given the number of days that would be
needed for the meeting of the Committee on Anti-Dumping Practices and its subsidiary bodies, it wasproposed that the next regular meeting be held in the week of 2 November 1998.
113. The Committee so decided.
Q. Election of Officers
114. The Committee elected Mr. Carlos Antonio da Rocha Paranhos of Brazil as Chairman and
Ms. Laurence Wiedmer of Switzerland as Vice Chairperson.
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