RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/M/43
17 March 2003
(03-1521)
Committee on Subsidies
and Countervailing Measures
MINUTES OF THE REGULAR MEETING HELD ON
31 OCTOBER AND 1 NOVEMBER 2002
Chairman: H.E. Mr. Milan Hovorka (Czech Republic)
1. The Committee on Subsidies and Countervailing Measures (the "Committee") held a regular
meeting on 31 October and 1 November 2002.
2. The proposed agenda for this meeting was circulated to Members in document
WTO/AIR/1939.  The Chairman asked whether any delegation would like to comment on the agenda
or raise any matter under "Other Business".
3. The delegation of China stated that the term "Republic of China” was used in WTO
documents G/ADP/N/1/TPKM/1, G/SCM/N/1/TPKM/1.  Both documents were included in item A.1
of the Committee's meeting agenda, concerning review of notifications of legislation.  In the view of
that delegation, this caused a serious problem.  The delegate of China stated that, in the WTO, therewas no such Member as the "Republic of China".  He further stated that these terms would confuse
Members during the discussion.  The Chinese delegate said that his delegation had the right to make
clear whom they were going to talk about.  The Chinese delegation requested that corrections should
be made in line with the formal designation of the Separate Customs Territory of Taiwan, Penghu,
Kinmen, and Matsu, or Chinese Taipei, as indicated in the cover page of the said document in order to
facilitate the Committee's deliberations.  The delegate of China proposed to drop this particular sub-
item from the agenda of the Committee's meeting.
4. The delegate of Chinese Taipei stated that he was surprised to hear these comments from the
delegation of China.  He stated that he first wished to make a general observation.  He stated that the
notification process was a very important part of the WTO's functions and that, for the benefit of
transparency and certainty, all notifications should be precise, correct and transparent.  He stated that
Chinese Taipei had been following this principle very honestly and diligently.  Second, the delegate ofChinese Taipei thought that all Members treasured the nature of the WTO, which was non-political.
He stated that delegates to this Committee were offi cials dealing with trade issues.  He thought that, if
there were issues relating to substance, it would be worthwhile for Members to spend day and night
dealing with a particular issue.  But, for some thing irrelevant, the delegation of Chinese Taipei
expressed its wish that Members would refrain from doing that, for the benefit of the WTO.
5. Coming to the specific issues raised by the de legation of China, he stated that the delegation
of Chinese Taipei had checked the document referred to by China.  The document read “Notification
of the laws and regulations under Articles 18.5 and 32.6 of the Agreement, the Separate Customs
Territory of Taiwan, Penghu, Kinmen and Matsu”.  The delegate of Chinese Taipei said that every
word had been honestly translated from Chinese Taipei's law.  The translation reflected what the lawsaid.  This exactly served the purpose of the notification, which was to give legal certainty and
transparency.  Therefore, any terms used in Chinese Taipei's law had to be translated into English and
notified to the Secretariat.  The delegate of Chinese Taipei stated that he had not heard from theG/SCM/M/43
Page 2
delegation of China that there was anything in the document contrary to the obligations imposed on
Chinese Taipei by the Agreement.  He further stated that Chinese Taipei had fulfilled its obligation to
notify. Lastly, the delegation of Chinese Taipei did not think that any Member could ask the
Committee to drop an agenda item.  If this became a practice, then the Committee would not be able
to function.  Hence, the delegate of Chinese Taipei expressed his wish that the Chinese delegationwould consider this and that this issue could be resolved amicably.
6. With respect to the issue raised by the delegation of China and, in light of the reaction of
Chinese Taipei, the Chairman stated that it was apparent that there was a problem.  He also stated that
he might not have enough time to deal with this problem at this particular point in time.  TheChairman suggested the following way of proceeding .  Item A of the agenda – review of national
legislation –would be placed in square brackets.  The Committee would deal with the rest of the items
on the agenda, as amended by the interventions of the United States and the European Communities.Then, it would be the Chairman's intention to revert to this item when the Committee would resume
its regular meeting on 1 November.  In the meantime, the Chairman would be in touch with the
delegations concerned, as well as others who might show a systemic interest in this issue, with a view
to dealing with the problem.  If it proved impossibl e to find a solution by that time, then it would be
the Chairman's intention to suspend the meeting on this item so that he could have additional time toconduct consultations and to revert to it as soon as he possibly could.  The Chairman asked whether
this way of proceeding was acceptable to Members of the Committee.
7. The Committee took note of the statements made and agreed
 to proceed accordingly.
8. The Committee therefore adopted the following agenda:
[A.  NATIONAL LEGISLATION - REVIEW OF NOTIFICATIONS OF NEW OR AMENDED
LEGISLATION OR REGULATIONS NOT PREVIOUSLY REVIEWED BY THE
COMMITTEE (INCLUDING SUPPLEMENTAL NOTIFICATIONS OF EXISTING
PROVISIONS NOT PREVIOUSLY REVIEWED)
ANTIGUA & BARBUDA  - G/ADP/N/1/ATG/2
G/SCM/N/1/ATG/2
ARGENTINA  - G/ADP/N/1/ARG/1/SUPPL.  6
G/SCM/N/1/ARG/1/SUPPL.  6
BRAZIL  - G/ADP/N/1/BRA/2/SUPPL.  1
G/SCM/N/1/BRA/2/SUPPL.  1
CHINESE TAIPEI   - G/ADP/N/1/TPKM/1
G/SCM/N/1/TPKM/1
GRENADA - G/ADP/N/1/GRD/2
G/SCM/N/1/GRD/2
JAPAN - G/ADP/N/1/JPN/2/SUPPL.  3
G/SCM/N/1/JPN/2/SUPPL.  3
LITHUANIA - G/ADP/N/1/LTU/1 (ADP ONLY)
TURKEY - G/ADP/N/1/TUR/3/SUPPL.  1
G/SCM/N/1/TUR/3/SUPPL.  1]G/SCM/M/43
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B. SUBSIDIES NOTIF ICATIONS................................................................................................ 3
1. 2000 updating notifications (G/SCM/N/60 …) .......................................................................3
CANADA - G/SCM/N/60/CAN
SLOVENIA - G/SCM/N/60/SVN-G/SCM/N/1/SVN
UNITED STATES - G/SCM/N/60/USA-G/SCM/N/71/USA
2. 1999 updating notifications (G/SCM/N/48…) ........................................................................4
JAPAN - G/SCM/N/48/JPN/SUPPL.  1-
G/SCM/N/71/JPN/SUPPL.  1
UNITED STATES - G/SCM/N/48/USA-G/SCM/N/71/USA
3. 1998 new and full notifications (G/SCM/N/38/...) ..................................................................4
HUNGARY - G/SCM/N/38/HUN
C. SEMI-ANNUAL REPORTS OF COUNTERVAILING ACTIONS –
NOTIFICATIONS (ARTICLE 25.11)........................................................................................4
D. NOTIFICATIONS OF PRELIMINARY  AND FINAL COUNTERVA ILING ACTIONS.......5
E. TRANSITION REVIEW UNDER PARAGRAPH 18 OF THE PROTOCOL OF
ACCESSION OF THE PEOPLE'S REPUBLIC OF CHINA TO THE WORLD TRADE
ORGANIZAT ION ................................................................................................................... ...5
F. CHAIRMAN'S REPORT ON THE 29-30 OCTOBER SUBSIDIES NOTIFICATION
SEMINAR FOR CAPITAL- BASED OFFI CIALS ..................................................................20
G. OTHER BU SINESS ............................................................................................................... ..21
1. Korea – Government support for the paper industry - Statement by the
United States.................................................................................................................. ..........21
2. Funding of the Subsidies Notification Seminar - Statement by the European
Communities.................................................................................................................... ........23
3. Communications from the Chairman of the Special Session on Trade and
Development and the Chairman of the Working Group on Trade and Transfer
of Technology – Statement by the Chairman .......................................................................23
H. DATE OF NEXT RE GULAR MEETING ...............................................................................24
I. ANNUAL REPORT TO THE COUNCIL FOR TRADE IN GOODS (ARTICLE 32.7) ........24
B. SUBSIDIES NOTIFICATIONS
1. 2000 updating notifications (G/SCM/N/60 …)
9. The Chairman recalled that the following Members' notifications were on the agenda for
review: Canada, Slovenia and the United States.  He also noted that two of these notifications—those
of Slovenia and the United States—were multiple-symbolled and also contained those Members' 2001
new and full notifications.  As such, these notifications had already been on the agenda of the special
meeting for the review of 2001 new and full notificatio ns that the Committee held prior to this regularG/SCM/M/43
Page 4
meeting.  The Chairman proposed therefore that only the notification of Canada be taken up under this
agenda item.
10. The Committee so agreed.
11. Concerning Canada's notification, to be found in G/SCM/N/60/CAN, the United States had
submitted written questions in document G/SCM/Q2/CAN/16.  Responses can be found in document
G/SCM/Q2/CAN/17.
12. The Committee took note of the statements made.
2. 1999 updating notifications (G/SCM/N/48…)
13. The Chairman stated that the notifications of Japan and the United States were multiple-
symbolled and also contained those Members' 2001 new and full notifications.  As such, these
notifications had been on the agenda of the special meeting for the review of 2001 new and full
notifications held on 31 October.  He thus proposed not to re-address them at this meeting, if this was
acceptable to Members.
14. The Committee took note of the statements made and so agreed .
3. 1998 new and full notifications (G/SCM/N/38/...)
15. The Chairman recalled that there was one notification on the agenda for review concerning
Hungary.  He stated that the United States had submitted written questions in respect of this
notification, in document G/SC M/Q2/HUN/7.  Hungary had submitted written responses to these
questions, in document G/SCM/Q2/HUN/8.
16. No further questions or comments were raised in respect of this notification.
17. The Committee took note of the statement made.
C. SEMI-ANNUAL REPORTS OF COUNTERVAILING ACTIONS – NOTIFICATIONS
(ARTICLE 25.11)
18. The Chairman recalled that a request for semi-annual reports for the first half of 2002, to be
submitted by 31 August 2002, was circulated to Members in document G/SCM/N/87, dated
1 July 2002.  As was unfortunately almost always the case, a number of the semi-annual reports had
been received later.  He reminded Members that semi-annual reports were always due at the end of
August for the period January through June of the current year, and at the end of February for the
period July through December of the previous year.  With respect to any problems experienced byMembers with reporting in accordance with the guidelines adopted by the Committee and set out in
document G/SCM/2, he reminded Members that the Secretariat was always available to assist
Members with questions about the form of reports.  He urged Members to bring to the attention of the
Committee any problems that they had with other Members' notifications, as he hoped this peer
pressure would lead Members to more fully comply with their notification obligations and wouldprovide an incentive for Members to seek the assistance of the Secretariat in this respect, if necessary.
He urged all Members to take the steps necessary to submit these notifications on time.  Particularly
for those Members that had taken no actions, this notification should be purely a mater of routine, as
all that was required was a one-sentence letter stating that no actions had been taken.
19. Members who had submitted semi-annual reports were identified in paragraph 1 of document
G/SCM/N/87/Add.1, dated 18 October 2002:  Argentin a;  Australia;  Brazil;  Canada;  European
Communities;  South Africa;  United States and Venezuela.  To the extent possible, the semi-annual
reports had been translated and circulated to th e Committee, and were included in the documents
made available for the meeting.  In addition to the eight Members who had submitted semi-annualG/SCM/M/43
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reports of countervailing actions, forty-five Members, listed in paragraph 2 of document
G/SCM/N/87/Add.1, had notified the Committee that they had not taken any countervailing actions
during the period in question.  He noted that, while Members who took actions appeared generally to
comply with this notification requirement, there remained a significant number of Members who had
not responded to the request for semi-annual reports , and had therefore failed to comply with this
important requirement set forth in Article 25.11 of the Agreement.  He again expressed his grave
concern with the state of compliance with these notification obligations.  These Members were
identified in document G/SCM/N/87/Add.1, paragraph 3.
20. No Member raised any comments or questions in respect of the semi-annual reports
submitted.
21. The Committee took note of the statement made.
D. NOTIFICATIONS OF PRELIMINARY AND FINAL COUNTERVAILING ACTIONS
22. The Chairman recalled that lists of the notifications of preliminary and final countervailing
duty actions received by the Committee had been  circulated in documents G/SCM/N/86 and
G/SCM/N/88-91.  Since the previous meeting of the Committee, preliminary and final countervailing
actions had been notified by European Communities, South Africa and the United States.  He noted
that there seemed to be a continued to be a lack of  full compliance in this area, as some Members who
had submitted semi-annual reports indicating actions in progress may not have submitted reports of
preliminary or final actions taken.  He recalled that an important aspect of the Committee's task was
its role in monitoring and discussing actions taken by Members.  If Members did not take their
obligations to notify seriously and comply, the Committee would be prevented from accomplishing its
goal of considering Members' compliance with the requirements of the Agreement.
23. No Member raised any comments or questions in respect of the notifications submitted.
24. The Committee took note of the statement made.
E. TRANSITION REVIEW UNDER PARAGRAPH 18 OF THE PROTOCOL OF
ACCESSION OF THE PEOPLE'S REPUBLIC OF CHINA TO THE WORLD TRADE
ORGANIZATION
25. The Chairman recalled that paragraph 18 of the Protocol of Accession of the People's
Republic of China to the World Trade Organization provided that all subsidiary bodies, including this
Committee, "which have a mandate covering China's commitments under the WTO Agreement or
[the] Protocol shall, within one year after accession ... review, as appropriate to their mandate, the
implementation by China of the WTO Agreement and of the related provisions of [the] Protocol."
China was to provide relevant information in adva nce of the review, including information specified
in Annex 1A to the Protocol.  China could also raise issues relating to any reservations under
Section 17 or to any other specific commitments made by other Members in the Protocol, in
subsidiary bodies which had a relevant mandate.  He recalled in this connection that at the
Committee's spring regular meeting, it was agreed that the review for this year would take place at
this fall 2002 regular meeting.  The Chairman said that this Committee had to report the results of the
review promptly to the Council for Trade in Goods.  Review was to take place after accession in each
year for eight years, with a final review in year 10 or at an earlier date decided by the General
Council.
26. The Chairman said that there were no procedures set out for the conduct of the transition
review in the Protocol, except that China was to provide relevant information in advance of the
review.  In this regard, the Chairman noted that Annex 1A specified China was requested to provide
information on the following to this Committee in accordance with Article 18.1 of its Accession
Protocol:  "Pricing Policies": (a) "application of existing or any other price controls and the reason forG/SCM/M/43
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their use"; and (b) "pricing mechanisms of China's state trading enterprises for exported products".
He said that China had submitted a notification in this respect on 30 October 2002.
27. The Chairman noted that China had also made several of the notifications required of all
Members under the Agreement on Subsidies and Coun tervailing Measures.  China's notification of
countervailing duty legislation, under Article 32.6 of the Agreement, could be found in document
G/SCM/N/1/CHN/1.  He said that this legislation notification would be included on the agenda of the
Committee's meeting next spring in the regular course of business.  China had also submitted, under
Article 25.11 of the Agreement, a "nil" semi-annual report for the period 1 January to 30 June 2002,
as reflected in paragraph 2 of document G/SCM/N/87/Add.1.  The Chairman stated that certain
Members had submitted questions in the context of the transition review, which related to China's
notification of legislation in G/ SCM/N/1/CHN/1, to subsidies and to the information specified in
Annex 1A of China's Accession Protocol.
28. The delegate of the United States made a statement regarding the views of the United States
on the transitional review mechanism.  He stated that the Agreement on Subsidies and Countervailing
Measures built on the rules and disciplines of Article VI, XVI and XXIII of the GATT 1994.
Accordingly, it provided extensive guidance and re quirements as to the use and transparency of
subsidies, the application of countervailing measures to offset the injurious effects of subsidizedimports and addressing the adverse trade effects of subsidies in export markets.  In general, the
Agreement on Subsidies and Countervailing Measures sought to balance the need to counteract the
international trade distortions which subsidies could cause with the recognition that governments
often use subsidies to achieve a wide range of public policy objectives.  Because of this careful
balance, WTO Members placed a high priority on multilateral surveillance of Members’ obligationsunder the Agreement on Subsidies and Countervailing Measures and in ensuring that each Member
promptly and effectively implements its WTO obligations in this area.
29. In the Committee on Subsidies and Countervailing Measures, the scope of China’s
transitional review necessarily involved obligations concerning both countervailing measures and
subsidies.  In addition to its obligation to implement any countervailing duty legislation it may chooseto enact consistent with WTO requirements, and to respect the rules of the Agreement concerning the
use and transparency of subsidy measures, China undertook several specific commitments with
respect to subsidies in the context of its accession to the WTO.  Among other things, China agreed to
eliminate upon accession all subsidy programmes falling within the scope of Article 3 of the
Agreement.  The Protocol of Accession also stipulated that for purposes of applying Article 1.2 and 2
of the SCM Agreement, subsidies provided to state-owned enterprises would be viewed as specific if,
inter alia, state-owned enterprises were the predomin ant recipients of such subsidies or state-owned
enterprises received disproportionately large amount s of such subsidies.  Finally, for purposes of
China’s transitional review in this Committee, it was also understood that the review would
encompass China’s specific commitments with respect to pricing practices and controls, and, in this
regard, his delegation noted and thanked China for the information they had recently supplied
concerning these issues.
30. In the view of the United States, the goal of  this transitional review mechanism should have
been to conduct a thorough and meaningful review of China’s progress on WTO implementation that
both highlighted China’s successes and identified areas that needed more focus and clarification.
Since China had neither used its countervailing duty law nor submitted a subsidy notification since
acceding to the WTO, a careful and analytical review at this point in time may have helped to preventunnecessary confusion or disagreements in the future.  It was important for China to set forth its plan
to ensure that its practices and policies would comply with its WTO commitments in those areas
where there may have been gaps.  The United States wanted to help make this review as meaningful
and helpful as possible, and looked forward to work ing with its Chinese colleagues with that end in
mind.  A key part of the review was for Members to ask questions about areas of China’s practicesand policies that required further clarification or elaboration as regards China’s multilateralG/SCM/M/43
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obligations.  The United States and several other Members had posed such questions covering both
countervailing duty and subsidy matters.1
31. Part I - Countervailing Duty Laws and Regulations .  The United States recognized and
applauded China’s efforts to implement a domestic countervailing duty (CVD) regime consistent with
WTO requirements.  China had been prompt in promulgating new regulations and implementingrules, with new regulations having gone into effect on 1 January 2002, followed by the issuance of
certain provisional implementing rules.  The United States was disappointed, though, by China’s
delay in notifying these regulations to the WTO insofar as the text of the regulations was only
circulated in September (G/SCM/N/1/CHN/1).  To the knowledge of the United States, China had not
yet notified its underlying statute governing countervailing measures nor the text of its provisional
implementing rules.  In that regard, the United States reserved its right to comment and pose questions
on the provisional rules and the topics that they covered once China had formally submitted the text ofthose rules to this Committee.
32. A fair number of the United States' specific questions and concerns about China’s
countervailing duty regulations were identical or similar to those which the United States had raised in
regard to its anti-dumping regulations, especially those concerning common procedural and injury
issues.  Therefore, the areas of interest which the United States summarized in this meeting echoedmany of those which the United States had raised in the TRM conducted in the Committee on
Antidumping Practices.
33. With regard to transparency, the United States urged both the Ministry of Foreign Trade and
Economic Cooperation (MOFTEC) and the State Ec onomic and Trade Commission (SETC) to take
steps to ensure that non-confidential information submitted during countervailing duty proceedingswas available to interested parties and to the public.  Since it had not yet initiated a countervailing
duty case, the United States hoped China would use this opportunity to develop and implement
additional procedures that would help to ensure appropriate transparency in its countervailing duty
proceedings.
34. The United States was encouraged that the notified regulations generally embraced the
principles of rule of law and due process.  However, the regulations provided little practical or
detailed elaboration of these principles.  In partic ular, China should identify the specific statute or
statutes that governed its countervailing duty actions and notify those laws to the Committee.  China
also should clarify the roles of Chinese government entities involved in China’s countervailing duty
regime: MOFTEC, SETC and the State Council Tariff Commission.  Also unclear were the entities to
whom appeals of countervailing duty determinations may be made and the rules under which such
appeals would be conducted.
35. China had made a deliberate effort to conform its CVD regulations to the provisions and
requirements of the Agreement on Subsidies and Countervailing Measures.  The language in China’s
notified regulations appeared generally to follow that in the Agreement on Subsidies and
Countervailing Measures, although there were certain areas where key provisions were omitted or
were worded in an ambiguous manner.  In additi on, China included certain provisions that did not
appear in the Agreement.  The most prominent and troubling example was in Article 55 of the notified
regulations, which indicated that China may take “corresponding” measures when another country
“discriminatorily” imposed countervailing duty measures against exports from China.  The
United States and other Members also had questions about such topics as:
• the role and function each Chinese governmental entity involved in a case would have;
• the suggestion in Article 3 of the regulations that any funding provided by a government
through a private body would be considered a subsidy;
                                                     
1 G/SCM/Q1/CHN/2, and 8 to 10 as  well as G/SCM/Q2/CHN/1 to 4.G/SCM/M/43
Page 8
• how China intended to determine specificity under its laws and regulations in accordance with
Article 2 of the Agreement;
• how China would determine injury in accordance with Article 15 of the Agreement; and
• China’s provisions for ensuring respect for the confidentiality of submissions while also
providing transparency.
36. Part II – Subsidies.  GATT Article XVI:1 generally required all Members to notify certain
information about any subsidy which produced a trade effect, and Article 25 of the SCM Agreement
supplemented this obligation by providing that Members “shall notify any subsidy as defined in
paragraph 1 of Article 1, which is specific within the meaning of Article 2, granted or maintained
within their territories”.  Article 25 further provided that such notifications “shall be submitted not
later than 30 June of each year” and should be “sufficiently specific to enable other Members toevaluate the trade effects and to understand the operation of notified subsidy programmes”.  In this
regard, notifications were to indicate: (i) the form of the subsidy; (ii) the amount per unit or, where
this was not possible, the total or annual amount budgeted for the subsidy; (iii) the policy objective
and/or purpose; (iv) its duration and (v) statistical data illustrating its trade effects.  Although China
had submitted a subsidies notification in the contex t of its accession (see Protocol Annex 5A), the
information contained therein was generally current only through 1998 or 1999.
37. The United States fully appreciated both the importance and the difficulty of satisfying this
fundamental notification obligation.  Prompt and timely compliance with such subsidy notification
requirements required considerable organization and commitment on the part of the authorities
responsible for providing the information, but it was also critical for satisfying the rights of other
Members to know and understand the range and operation of subsidy measures that were subject to
the provisions of the Agreement.  Used properly, the notification process could also provide a meansof disseminating information domestically about the obligations of the Agreement on Subsidies and
Countervailing Measures and could help to avoid the adoption of measures that might be inconsistent
with a Member’s multilateral obligations, thereby preventing unnecessary trade frictions.
38. As China had not submitted at the time of the meeting its annual notification of subsidies that
was due on 30 June, the United States hoped that the Chinese delegation had been able to makeprofitable use of the subsidy notification seminar that had been held earlier in the week.  The expertise
of the Secretariat and the experience of other Members should have provided useful guidance to
China on how best to organize its efforts and resources to meet this important obligation.  Although
the United States understood that it was sometimes challenging to balance the need to supply
complete notifications with the need to meet no tification deadlines, the United States urged the
Chinese authorities to make a maximum effort to satisfy both requirements.
39. The questions posed by the United States on s ubsidies were aimed at learning, and confirming
China’s success in complying with its accession co mmitments in this area.  As a result, the
United States had asked for information demonstrating China’s compliance with its commitments to
eliminate certain specific subsidy practices, and ensuring that other measures about which the
United States had learned certain information did not conflict with China’s agreement not to provide
subsidies contingent upon export performance or the use of domestic over imported goods.  TheUnited States also had sought assurances that when China submitted its forthcoming subsidy
notifications, it would include measures bestowed at sub-central government levels, consistent with
the requirements of the Agreement and the practices of other WTO Members.  The United States
understood that gathering such information could be  time-consuming and difficult, but it remained an
important element of all Members’ transparency obligations.  To the extent that learning about theUnited States' own efforts and procedures to gather information about sub-central measures might be
helpful to China, the United States would be happy to share such experiences.G/SCM/M/43
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40. Conclusion .  The questions that the United States had posed in this review sought an
improved understanding of the issues relevant to the Transitional Review Mechanism, which would
benefit both China and other WTO Members.  The United States was disappointed that China had not
provided written answers to those questions.  In or der to make the review useful to all, including
China, the United States urged China to reconsider its position.  At the very minimum, theUnited States expected China to work with the United States in order to ensure that written and
informative responses to the questions posed by the Members could be provided in some timely
fashion and appropriate forum.
41. The delegate of the United States stressed that the United States did not take issue with
China’s use of countervailing duty remedies, so long  as such actions comported with WTO rules.  The
United States also looked forward to continued cooperation with China, such as through technical
assistance exchanges, as it develops its trade remedy regime and procedures for the notification ofsubsidies to the WTO.  The United States hoped these exchanges would foster a mutual understanding
of each other’s trade remedy laws and promote fair application of the rules in accordance with WTO
guidelines.  In that regard, the United States had just completed a programme of comprehensive
training assistance concerning matters relevant to the SCM and Anti-dumping Agreements with a
delegation of trainees from the Shanghai WTO Affairs Consultation Centre over the course of theirfour-month stay in Washington this fall.  The United States was eager to provide similar assistance to
the Government of China, as well as other groups within China that would request such training.
42. The Chairman thanked the delegate of the United States and reminded Members that the
following Members had posed questions in the tr ansition review context: the European Communities,
the United States, Japan, and the Separate Custom s Territory of Taiwan, Penghu, Kinmen and Matsu
can be found in documents G/SCM/ Q1/CHN/2 and /8-10, respectively, concerning China's countervail
legislation.  In addition, the European Communities, the United States and Japan had submitted
questions in respect of subsidies, in documents  G/SCM/Q2/CHN/1-3, respectively.  Finally, at the
beginning of this meeting, Mexico had submitted questions in respect of subsidies, in document
G/SCM/Q2/CHN/4.  The Chairman invited the delegate  of China to take the floor to respond to the
questions posed by Members.
43. The delegate of China stated that China we lcomed this opportunity to present to this
Committee the following information within th e framework of the transitional review under
paragraph 18 of the Protocol of China’s Accession to the WTO.  He said that the statement would
begin with some updated information regarding subsid ies and the pricing policy in China.  The second
part would concern China’s countervailing regulation which was notified to this Committee with full
text in English.  He stated that he believed that the information was sufficient to address concerns and
respond to questions that Members raised to China prior to this meeting.  His statement would be
circulated after it was delivered.
44. Part I - subsidy programmes and the notification obligations under the Subsidies
Agreement.   The delegate of China stated that, in common with many other Members, China had
experienced difficulty in obtaining accurate data and details of all types of subsidies.  Some membersof the Chinese delegation had participated in the Subsidies Notification Seminar for capital-based
officials prior to this meeting of the Committee.  They were impressed by the delay of notifications of
many other WTO Members.
45. Soon after WTO accession, China began to collect the information of subsidies, although the
preoccupation was placed on regulation and policy streamlining and formulation to honour thecommitments and undertakings made.  Due to the time constraints and also the complexity of this job
known to all of us, this information collection process was far from finishing, and it seemed very
difficult at the time of this Committee meeting to tell a clear-cut deadline.  However, the work that the
Chinese authorities had done did turn up with some new information which the Chinese delegationG/SCM/M/43
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would like to share with other Members at this Committee's meeting, although in the view of the
Chinese authorities these incomplete information we re not sufficient for the Chinese authorities to
update the subsidy notification that they made during the accession negotiations, the delegate of China
thought that it was sufficient for a meaningful review at this Committee's meeting.  The delegate of
China stated that they would certainly continue th eir efforts to collect more information and further
improve their quality, so as to notify to the Committ ee at an earlier date.  The delegate of China said
that the information that he would disclose in th is Committee meeting would be reflected in China's
future notification.
46. First and foremost, on the subsidy programme related to the Strategy of the Chinese
government to develop the western regions, the delegate of China said that the Strategy initiated in
year 2000 aimed at accelerating the social and economic development of the western regions of
China.  The subsidy programme took the form of pr eferential taxation treatment for enterprises in the
West.  To be more specific, for the industries and sectors encouraged by the State, all enterprises in
the regions — both domestic and foreign-invested — were entitled to a preferential income tax rate of
15 per cent from year 2001 to 2010.  The delegate of China stated that this was a ten-year programme.
The Ministry of Finance, the General Administration of Taxation and the taxation authorities at the
local levels were responsible for the implementation.
47. Secondly, regional subsidy programmes in China as notified in Annex 5A to the Accession
Protocol, including those for special economic zones, were still valid.  The purpose of the
programmes was to promote regional social and economic development and absorbing foreign
investment, and they were by no means contingent upon export performance or on use of domestic
products.  China believed that those programmes were extremely important and necessary to achievethe development goal of the nation, and they were not in any way prohibited by the Agreement on
Subsidies and Countervailing Measures.  The delegate of China said that China therefore had no plan
to cancel these programmes.
48. During the accession negotiations, China committed to eliminating the subsidy programmes
contained in Annex 5B to the Accession Protocol.  The two programmes relating to the Industrial
Policy on Automobiles were ceased from implementation as of 1 January 2002, according to a Decree
of the Ministry of Finance dated 11 December 2001.  China no longer maintained subsidy
programmes that were contingent upon export performance or use of domestic products.  The
subsidies provided to certain state-owned enterprises running at a loss by the central budget, as listed
also in Annex 5B, were eliminated in 2001.  Since 2001, such an item no longer existed in the central
budget.  The subsidies provided to certain state-ow ned enterprises running at a loss by the local
budget, which appeared in Annex 5A, had also been eliminated since 2001.
49. One Member mentioned the incentive programme for export of new and hi-tech products.  As
a general policy, China encouraged export of new and hi-tech products with a view to upgrading the
structure of products exported and to adapting enterp rises to the competition in international markets.
However, up to October 2002, no specific trade policy or concrete incentive measure had been
applied.  The delegate of China assured Members that China would fulfil its notification obligationonce China had such specific incentive programmes.
50. One Member asked about new policies of China to support exports.  The delegate of China
reiterated that all the promotion policies and measures taken by China to support exports would not go
out of the scope permitted by the Agreement on Subsidies and Countervailing Measures.  For the
industry of integrated circuits in China, some preferential taxation policies had been adopted topromote its development since year 2001.  More specifically, (1) for integrated circuit manufacturing
enterprises established in China with total investment of RMB 8 billion and above or for
manufacturing of circuits less than 250 millimicron, import of certain specialized construction
materials for purification rooms, manufacturing equipment and spare parts etc.  were exempted fromG/SCM/M/43
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tariff and value-added tax from 1 January 2001; (2) for the same kind of enterprises, import of certain
manufacturing raw materials and consumption goods fo r self-use was exempted from tariff and value-
added tax from 1 July 2001; (3) from 1 January 2001 to the end of 2010, for the value-added tax
applied to integrated circuit products at the rate of 17 per cent, collection exceeding 3 per cent of
actual tax should be refunded upon collection.  These three taxation policies were adopted for aproduct or an industry, regardless of the ownership of  the enterprise or the source of the investments.
They were not based upon export performance.  Therefore, these policies were consistent with the
Agreement on Subsidies and Countervailing Measures.  The delegate of China stated that China had
no plan to eliminate or change those programs.
51. The delegate of China stated that China had eliminated its export subsidies on agricultural
products as early as the beginning of 1990s.  Duri ng the course of the WTO accession negotiations,
China committed itself not to resume agricultural export subsidies.  China honoured this commitmentsince accession.  After accession, to alleviate burdens of farmers and to increase competitiveness of
the agricultural products, China increased transportation and distribution efficiency for the
agricultural products.  The Railway Construction Fund imposed on transportation of agricultural
products including grain and cotton, and unreasonable fees and charges imposed by some local
railway enterprises were also ruled out.  This led to a drastic decrease of cost of transportation anddistribution, facilitating domestic circulation and export of agricultural products.  Furthermore, taking
the international prevailing practice, agriculture products were also exported with zero value-added
tax.  All these measures contributed to the decline of the cost of exporting agricultural products.
Those measures were WTO-consistent and in line with international common practices.
52. With regard to the pricing policy in China, the de legate of China stated that, in advance of this
meeting, the Chinese delegation had provided this Committee with some information as required by
Annex 1A to the China’s Accession Protocol.  He sa id that prices of most products and services in
China were completely determined by the market.  Price control by the government took only two
forms, of state pricing and government guidance pricing, and was limited to very few products and
services as listed in Annex 4 of the Protocol of China’s Accession to the WTO.  He stated that theState Development and Planning Commission wa s the government authority responsible for
implementation of price control.  The Catalogue of Pricing by the State Development Planning
Commission and Relevant Administrative Bodies of the State Council, which was promulgated by the
State Development Planning Commission on 4 July 2001, was still in force.  This catalogue was fully
discussed by the members of the Working Party on China during the accession negotiations, and its
conformity to China’s commitment had been recognized by all WTO Members.
53. Reasons behind use of price control in China were specifically provided in Article 18 of the
Pricing Law of the People’s Republic of China, which stated that price control was restricted only to:
(1) a limited number of products that were of great importance to national economy and people’s
livelihood, (2) a small number of products of scarce resources, (3) products under natural monopoly,
(4) important public utilities, and (5) important services of public interest.  In China, the practice of
one product or service under multiple pricing had been terminated.  Transparency of pricing policywas well observed, with a list of products and services subject to state pricing and government
guidance pricing as well as their price-setting mechanism published with the Price Gazette of the
People’s Republic of China.
54. Regarding the pricing mechanism of state trading enterprises, about which some Members
were concerned, the delegate of China emphasized that according to the Pricing Law of the People’sRepublic of China, state pricing and government guidance pricing only applied to products and
services as published, regardless of the ownership of the enterprises.  Prices of products and services
that were not subject to state pricing and government guidance pricing shall be determined by the
market, and eventually by the enterprises themselves .  Therefore, pricing mechanism of state trading
enterprises was also determined by those enterprises according to the market situation.  On thisG/SCM/M/43
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particular issue, the delegate of China stated that more information would be provided in China's
notification to the Council for Trade in Goods concerning state trading enterprises.
55. Part II – Response to the questions posed to China prior to this meeting by several
Members regarding China’s Countervailing Regulations.  The delegate of China stated that since
China had not initiated any countervailing investigation and no questions in this regard were raised,his instruction would be limited to the regulatory aspect.
56. The delegate of China then addressed some specific questions posed by Members:
1.  The function of various government authorities in countervailing
investigations in China.  The delegate of China referred to the explanation given in
the Safeguards and Anti-dumping Committees with respect to similar questions posed
by Members.  Three government agencies in China were legislatively involved in
countervailing investigation matters, namely the Ministry of Foreign Trade andEconomic Cooperation (MOFTEC), the State Economic and Trade Commission
(SETC) and the Tariff Commission under the State Council (TCSC).  According to
the Regulations on Countervailing Measures, MOFTEC and SETC were the
investigating authorities.  MOFTEC was in charge of the investigation and
determination of subsidy.  If a provisional countervailing measure took the form ofundertakings, a decision should have been made and published by MOFTEC as the
foreign trade administrative authority.  SE TC was responsible for the investigation
and determination of injury.  TCSC was to decide whether to levy provisional or
definitive countervailing duties, upon proposal made by MOFTEC on the basis of the
investigation findings.  The specific provision governing the decision-making ofTCSC could be found in Article 43 of the notified Regulation.  According to that
Article, no countervailing duties shall be levied in excess of the amount of subsidy as
determined in the final determination made by MOFTEC.  The delegate of China said
that, while the TCSC was empowered to decide whether to adopt recommendations
for application of countervailing measures, it was not in a position to overrule ormodify the determination made by MOFTEC on the amount of subsidy.  Other than
the above functions carried out by SETC and TCSC, MOFTEC was also responsible
for the other issues relating to countervailing investigations, including consultations,
notifications, dispute settlement etc.
2.  Implementation of Article 55 of the Regulations on Countervailing
Measures.  The delegate of China stated that some Members were concerned that
China may take the “corresponding measures” under Article 55 of our Regulations onCountervailing Measures.  The delegate of China made clear that until October 2002
China had not applied Article 55 of the Regulations on Countervailing Measures and
therefore had not taken any “corresponding measures”.  Furthermore, being a WTO
Member, China would first resort to the dispute settlement provisions provided in the
Agreement on Subsidies and Countervailing Measures and the dispute settlementprovisions under Annex II of the WTO Agreement before taking the “corresponding
measures”, if the other party was also a WTO Member.
3.  Administrative reconsideration and judicial review.  The delegate of
China stated that, if the parties concerned in a specific case disagreed with the
relevant countervailing decisions, Article 52 of the Regulation prescribed themechanism of administrative reconsideration and judicial review.  If interested parties
were not satisfied with a final determination, a decision on imposition of
countervailing duties, a decision on retroactive imposition of a countervailing duty
and review findings, they could apply for administrative reconsideration.  InG/SCM/M/43
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accordance with Article 14 of Law of the People’s Republic of China on
Administrative Reconsideration, the reconsideration authority should be the
department under the State Council that carried out the administrative action.
For judicial review, China had The Law of the People’s Republic of China on
Administrative Litigation Procedure.  According to this law, the People’s Court atintermediary level within the jurisdiction of which the government authority making
the administrative decision in question was located would deal with litigation against
this government authority.  Furthermore, the Supreme People’s Court of China was in
the process of formulating rules on hearing administrative litigation on countervailing
investigations.  The Rules would be notified to the Committee once promulgated.
As to the standard of review, the reconsideration authority or the court shall focus on
whether there were procedural irregularities, abuse of power, improper interpretationand application of law, etc.  Nevertheless, they were not entitled to reinvestigate the
case.
4.  Anti-circumvention .  Some Members raised concerns about Article 54 of the
Regulations on Countervailing Measures, which stipulated that MOFTEC and SETC
may take appropriate measures to prevent circumvention of countervailing measures.Although this Article provided the possibility of taking remedy measures when
circumvention takes place, the delegate of China made clear that to date China had
not invoked this Article and had not taken any anti-circumvention measures.
Meanwhile, China noted that quite a number of other Members also had relevant
rules and practices on anti-circumvention.  He said that this issue had been longdiscussed in the WTO and it was also a subject in the Negotiation Group on Rules as
well as in this Committee.  In this regard, the delegate of China stated that, once any
new disciplines are agreed, China would implement them.
The delegate of China stated that paragraph 18 gave China equal legitimate right to
review the fulfilment of this obligation by other Members vis-à-vis China.  He statedthat Chinese enterprises viewed the unjustifiable application of subsidy rules and
countervailing measures in some US anti-dumping cases against Chinese products
with great concern.  The delegate of China said that, in the anti-dumping investigation
against imports of windshields from China and several cases on steel products, the
prices actually paid by the Chinese companies concerned on raw materials imported
from market economy countries were not used as a basis for the calculation of the
normal value by the authorities of the United States.  The reason given by theUnited States authorities to reject that information was that the countries where those
raw materials were sourced maintained generally available export subsidies.  Such a
decision was made without any investigation, and without any determination on
subsidies despite the fact that the Chinese companies, as importers of the raw
materials, had demonstrated and proven to the authorities of the United States thatimported raw materials had not benefited from those generally available subsidies in
the source countries.  The practice of the United States in the above-mentioned cases
ran afoul of the principle of due legal process.  He stated that the anti-dumping case
on windshields was pending in the Court of International Trade of the United States.
China urged the government of the United States to repeal immediately suchunjustifiable practice and respect the principles of rule of law and due process.
57. Before giving the floor to one of his colleagues in the Chinese delegation, the delegate of
China thanked all those Members who had raised questions and made comments.  He also expressed
his gratitude to those Members who had not raised que stions or make comments.  He also thanked theG/SCM/M/43
Page 14
Chairman of this Committee and the Secretariat for th e painstaking efforts that they had made for the
sound preparation and smooth proceeding of this Transitional Review Mechanism exercise.
58. The delegate of China stated that he wished to take this opportunity to provide responses to
those questions put to this delegation concerning its notified regulations on countervailing measures.
He said that replies would be given grouped by article.
59. On Article 3, three questions were raised.  The first question related to the first paragraph of
Article 3 of the Regulation.  In the first paragraph, the words “will  benefit the recipients” were used
and some Members were concerned with the future tense of this paragraph.  He said that it was simply
a matter of translation.  He stated that it should have been translated as “which benefits the
recipients”.  The second question related to item 2 of Article 3, in which the exemption of exported
products from duties or taxes borne by the like product when destined for domestic consumption, or
the remission of such duties or taxes was not mentioned.  The delegate of China referred toparagraph 7 of the Annex to the Regulation, which was an integral part of the Regulation.  He said
that it was made clear in that Annex that the exemption of an exported product from duties or taxes
borne by the like product when destined for domestic consumption or the remission of such duties or
taxes in amounts not in excess of those which have accrued should not be deemed to be a subsidy.
The third question related to item 4 of Article 3, with regard to which some Member noted thatsomething was omitted in the Regulation as compar ed to Article 1.1(a)1(iv) of the Agreement on
Subsidies and Countervailing Measures.  He said that those items would be construed in light of
Article 1.1(a)1(iv) of the Agreement on Subsidies and Countervailing Measures.  That is, the fundings
through a private body would be deemed to be a subsidy only when the practice in no real sense
differed from practices normally followed by governments.
60. The delegate of China stated that two questions were posed concerning Article 4 of the
Regulation.  The first question was related to item 2: the subsidies received by certain enterprises or
industries explicitly provided for in laws and regulations of an exporting country or region.  Some
Members noted that Article 2.1(b) mentioned that, where the granting authority or the legislation
pursuant to which the granting authority operated established objective criteria or conditionsgoverning the eligibility for and the amount of a subsid y, specificity should not exist.  He said that he
wished to make it clear that China would construe item 2 of Article 4 of the Regulation in light of the
provisions contained in Article 2.1(a) and (b) of the Agreement on Subsidies and Countervailing
Measures.  The second question was related to the final paragraph of Article 4 of the Regulation:
factors that should be taken into account when specificity was to be determined, notwithstanding any
appearance of non-specificity.  He said that China would take such factors into account as required by
Article 2.1(c) of the Agreement on Subsidies and Countervailing Measures.
61. The delegate of China said that two questions were raised concerning Article 6.  The first
question concerned paragraph 2 of Article 6 on commercial loans.  He said that China would interpret
those items in light of provisions contained in Article 14(b) of the Agreement on Subsidies and
Countervailing Measures; a loan by a government should not be considered as conferring a benefit
unless there was a difference between the amount that the firm receiving the loan paid on thegovernment loan and the amount that the firm would have paid on a comparable commercial loan
which the firm could actually have obtained on the market.  The second question related to
paragraph 4 of Article 6: when an equity infusion by the government would be considered as a
subsidy.  He stated that government provision of equity capital should not be considered to confer a
benefit unless the investment decision could be regarded as inconsistent with the usual investmentpractice of a private investor in the territory of that Member.
62. The delegate of China said that several questions were raised concerning Article 8.  In the
first question, a Member was concerned that China listed six factors when an injury determination
was to be made.  This provision distinguished what kind of injury should be determined.  He said thatG/SCM/M/43
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Article 8 of the Regulation used the term "injury" in the general sense.  Injury included three types of
injury:  material injury, threat of material injury and material retardation.  He stated that it could be
possible that those six factors listed in Article 8 related only to one of the three types of injury.
However, in practice, China would consider those factors related only to one type of injury.  In the
Provisional Rules on Initiation of Countervailing Investigations, China separated those three types ofinjury.  China required a different set of data to be submitted when the injury allegation was made for
the different types of injury.  The second question concerned the word “possibility”, which appeared
in paragraph 2 of Article 8.  He said that this was simply a matter of translation; one could read
“possibility” as “likelihood”.  The third question was what kind of economic factors and indices
would be evaluated when the injury determination was made.  It was noted that paragraph 4 of
Article 8 did not list all those economic factors and indices as listed in Article 15.4.  He stated that the
wording of paragraph 4 of Article 8 of the Regulation meant that all relevant economic factors andindices should be evaluated including the actual and the potential decline in output, sales, market
share, profits, productivity, return on investments, utilization of capacity, factors affecting domestic
prices, actual and potential negative effects on cash flow, inventories, employment, wages, growth,
ability to raise capital or investments.  The fourth question related to the second paragraph of
Article 8.  Some Members noted that the determination of threat of material injury was omitted fromthe Regulation.  He said that, if a determination of threat of material injury had to be made, the threat
should be clearly foreseen and imminent.  China would not repeat the relevant articles, however, the
determination of threat of material injury should be based on facts and not merely on remote
possibility.  He stated that this would mean that the threat should be clearly foreseen and imminent.
The fifth question related to the last paragraph of Article 8:  not all factors listed in Article 15.5 of theAgreement were listed in the Regulation.  He stated that China would construe this paragraph in light
of the provisions of Article 15.5: all those factors would be evaluated.
63. The delegate of China stated that a question was raised concerning Article 11 with regard to
when domestic producers would be deemed to be related to exporters or importers.  He said that
China would interpret this term as required by footnote 48 to Article 16.1 of the Agreement onSubsidies and Countervailing Measures.  In this regard, domestic producers would be deemed to be
related to exporters or importers when one of them directly or indirectly controls the other and/or
together they controlled directly or indirectly a third person or both of them directly or indirectly were
controlled by a third person.
64. The delegate of China stated that three questions were raised concerning Article 13.  The first
concerned the definition of “relevant organization”.  He said that some organizations, like trade
associations and trade unions, would be covered by this term.  The second question was whether anatural person, or legal person, or relevant organization should be the producer within the domestic
industry.  He said that the answer would be no.  A trade association or trade union would apparently
not be a producer within the domestic industry.  The third question concerned the requirements for the
application made by relevant organizations.  He stated that all provisions dealing with the
requirements applicable to petitions made by applicants would apply to applications made by therelevant organizations.
65. The delegate of China stated that a question was raised concerning Article 19 regarding the
definition of “other interested organizations".  He said that all those interested parties listed in
Article 12.9 of the Agreement on Subsidies and Countervailing Measures would be deemed to be
interested organizations, including the consumer organizations and industrial users.
66. The delegate of China stated that three questions were posed concerning Article 20.  The first
question concerned the time-period for replies by interested parties.  He said that, according to
Article 17 of the Provisional Rules on the Investigation, the time-period to reply questionnaires would
be 37 days.  The second question related to on-the-spot verifications.  The question posed was
whether prior consent of the firm concerned would be required.  He said that under Article 9 of theG/SCM/M/43
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Provisional Rules, explicit prior consent of the firm concerned would be required before on-the-spot
verification could be carried out.  The third question concerned the definition of “all interested
parties”.  He said that industrial users and cons umer organizations would be included in this group.
67. The delegate of China stated that a question was raised under Article 21 about how "best
information available" would be used.  He said that no guidance was provided by the Agreement onSubsidies and Countervailing Measures.  However, China would take a similar approach to that
adopted in anti-dumping investigations.  China would refer to Annex 2 of the Anti-Dumping
Agreement.
68. The delegate of China stated that three questions were posed regarding Article 22.  The first
concerned the procedure for the interested parties to have access to public files of the investigation.
He referred to Article 23 of the Regulation.  He sa id that Article 23 provided that the investigating
authority should allow applicants, interested parties and the governments of interested countries orregions to have access to information relevant to the investigation, provided that the information had
not been treated as confidential.  He said that China would follow the procedures applicable in the
context of anti-dumping investigations, for which China had very specific rules on the inspection of
public files.  The second question concerned the provisions applicable to the summaries of
confidential information submitted.  He said that Ch ina had similar rules to those applicable in anti-
dumping investigations, i.e., the summary had to be  meaningful in order to enable other interested
parties to understand the substance of the information submitted.  The third question concerned the
rules and procedures, including penalties for violators, that China had in place to guarantee the
confidentiality of information submitted in countervailing measure procedures.  He referred to the
Regulation for Respecting Confidentiality by Government Officials.  In that regulation manysanctions were stipulated, including criminal penalties.
69. The delegate of China stated that two questions were raised about Articles 25 and 26.  The
first question was whether a two-step approach, i.e., a provisional determination and a final
determination, would be used in every countervailing investigation.  The answer was yes.  China
considered that a two-step approach would facilitate interested parties' defence of their interests, evenwhen provisional countervailing measures were not taken.  He stated that the two-step approach
would be used because, in the provisional determ ination, China would disclose some information and
analysis on the relevant data to the interested parties that would facilitate the interested party in
defending their interest.  The second question was whether provisional measures would have to be
applied in the event of an affirmative preliminary determination.  He referred to Article 29.  That
Article provided that provisional countervailing measures may be applied if the preliminary
determination established the existence of a subsidy and injury caused by a subsidy to a domesticinjury.  China did not set forth all those requirements for the imposition of provisional countervailing
measures as contained in Article 17.1 of the Agreement on Subsidies and Countervailing Measures;
however, China would follow those procedures an d only when those requirements were met would
China impose provisional countervailing measures.
70. The delegate of China stated that two questions were posed about Article 28.  The first
concerned the last paragraph of Article 28, where China omitted item 1 and 6 as listed in the first
paragraph of that Article.  He stated that there was a translation problem.  The proper translation of
the last sentence would be “the countervailing investigation on the said country or region shall be
terminated”.  Paragraph 1 related to the termination of the whole proceeding.  The second question
related to "the other circumstances that both MOFTEC and SETC consider not appropriate to continuean investigation", mentioned in paragraph 6 of that Article.  He said that a countervailing
investigation may be terminated because of public interest considerations.
71. A question was raised about Article 42, concerning the definition of “reasonable way” for
determining a separate countervailing duty for the exporters which were not investigated at the initialG/SCM/M/43
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investigation.  The delegate of China stated that Article 42 addressed the matter of new shipper review
as required by Article 19.3 of the Agreement of Subsidies and Countervailing Measures.  He said that
"reasonable way" meant that the procedure applicable to new shipper investigations would be
identical to the procedure in initial investigations, but for the time or the duration of the investigation.
That would mean that the investigation would be carried out in an expeditious manner.
72. With regard to Article 43, it was asked whether China was considering the application of the
lesser duty rule.  The delegate of China stated that China did not have explicit rules on lesser duty;
however China kept such a possibility because th e Tariff Commission and the State Council had the
power to reconsider the recommendation made by MOFTEC.  This power was limited by the
provision of Article 43: no countervailing duty should be levied in excess of the amount of a subsidy
as established in the final determination.
73. Regarding Article 45, the delegate of China confirmed that Article 45 would be applied in
light of Article 20.6 of the Agreement on Subsidies and Countervailing Measures.  That is, a
cumulative assessment would be made only when the conditions provided for in Article 20.6 of the
Agreement were met.
74. The delegate of China stated that three questions were posed about Article 46.  The first
question concerned the actions that would be requir ed of importers to obtain refunds of provisional
duties following a negative final determination. He st ated that no further actions on the part of the
importer would be required.  In the final determination, China would notify Customs that the
provisional countervailing duties levied on imports should be refunded automatically.  The second
question concerned the time-period in which the refund had to be made.  On this point, he stated that
there were no specific provisions contained in the Agreement Subsidies and Countervailing Measures.He said that the refund would be made in an expe ditious manner, as required by Articles 20.3 and
20.4 of the Agreement.  He said that no interest would be paid on duties levied.
75. Under Articles 47 and 48, two questions were raised.  The first question concerned the lack of
distinction between sunset and annual reviews.  The delegate of China stated that, from the provisions
of Articles 47 and 48, it seemed clear to him that Article 47 related to sunset reviews while Article 48related to annual reviews.  The second question concerned the length of the period of extension of
countervailing measures.  He stated that according to the relevant provisions of the Agreement on
Subsidies and Countervailing Measures that period would be five years.  However, he stated that
China kept the possibility to extend countervailing duty measures for less than five years.
76. Several questions were raised regarding the list of export subsidies annexed to China’s
Regulation.  Some Members were concerned that some factors were omitted from China’s list of
export subsidies.  He stated that China would construe the list of export subsidies in light of Annex 1of the Agreement on Subsidies and Countervailing Measures.
77. The delegate of the United States thanked the Chinese delegation for their extensive replies.
The information provided helped considerably to clarify a number of United States’ questions and
doubts.  Given the extent of the information contained in the Chinese delegation’s oral replies, the
United Stated very much appreciated China’s commitment to make available its statement to otherMembers.  The United States also encouraged the Chinese delegation to provide a copy of the more
technical statement as well.  The United States noted that many of the replies explained that, where
China did not replicate the words or substance of the Agreement in its domestic legislation, it would
apply or honour the unincorporated parts in practice.  The delegate of the United States stated that that
was helpful.  He stated that the United States did not expect Members to have to repeat the Agreementverbatim in their domestic law, but it was often important to take additional steps to ensure both
domestic and foreign parties of the rules and practices that would be followed.  This was especially
important for China, where it was clear from the Chinese delegation’s informative responses that itG/SCM/M/43
Page 18
had not developed a detailed or well-practiced system of justicial or administrative review.  Courts
needed guidance about how to properly judge the exer cise of discretion by investigating authorities, as
much as did the parties subject to the investigation.  In that regard, the United States would be
interested in knowing whether there was a principle or mandate in Chinese law which generally
charged both agencies or courts with applying or interpreting less specific areas of the countervailingduty law in a manner consistent with WTO rules.  Whether or not there was any such law, the
United States urged China to continue efforts to spell out additional areas of practice in its
supplementary implementing rules and to make those rules available for WTO Members’ review, in a
timely manner.  In closing, the United States thanked the Chinese delegation again and looked
forward to reviewing China’s written st atements in the very near future.
78. The delegate of the European Communities thanked the Chinese delegation for the extremely
elaborate replies to the questions posed by his delegation and to the questions of other Members.  He
stated that his delegation was slightly overwhelmed by the sheer amount of information that was
provided by the Chinese delegation during this Committee meeting.  He stated it was clear to his
delegation that it was for a good reason that most of the review procedures in this Committee were
made on a written basis.  He said that he understood that the statement that was read out had been
provided and that there would be a report by the Chair with a transcript circulated to Members thatwould certainly provide helpful documentation of the exchange of questions and replies on the matter
before the Committee.
79. The delegate of the European Communities stated that his delegation had a few follow-up
comments and questions concerning the three subject matters that were addressed by the Chinese
delegate.  The first related to subsidies.  He stated that his delegation had heard the remark that theChinese delegation would be hesitant to provide an update of its information on subsidies also
because at the moment information that was available was incomplete and that they would wait until
information was completed.  He stated that his delegation would like to point to two of the lessons
that Members had learned during the Subsidies Notification Seminar.  The first lesson was  “if in
doubt, notify”.  That would certainly also apply to the situation where information might not be
perfect, but information was there.  Second, the European Communities had learnt from the
experience of other delegations that, if there was too much time between notifications, institutional
memory would be lost and it would become increasi ngly difficult to make an update of a subsidy
notification.  He stated that China already put considerable efforts into producing a subsidy
notification which was attached to the Accession Protocol, so it might also be worth considering
whether it would not increase the necessary efforts to produce an update of this information if too
much time elapsed.  As a more technical follow-up question on subsidies, the delegate of theEuropean Communities said that his delegation had noted that an export subsidy with regard to the
export of automobiles ceased as of 11 December 2001, and that an indication of the Decree was given.
He stated that his delegation requested the Chinese delegation to provide similar information,
meaning the exact date and also the exact legal basi s, for the expiry of incentives given to state
enterprises on a central government and on a local government level.  He stated that his delegationhad heard that such incentives were not given any more and that his delegation requested the exact
information on the dates and the legal basis.  With regard to state trading enterprises, the delegate of
the European Communities stated that his delegati on had listened with interest to the information
provided by the Chinese delegation.  He stated that his delegation had also studied the information
that provided in writing and thanked the Chinese delegation for providing the information in writing
on this particular issue.  He stated that his delegation would study this information further and come
back to this issue at a later stage.  With regard  to the countervailing duty legislation, the European
Communities appreciated the efforts by the Chinese delegation to enact legislation which is in line
with WTO obligations.  The European Communities also thanked the Chinese delegation for the
elaborate replies to the European Communities’ detailed questions on that.  The delegate of theEuropean Communities stated that his delegation would like to reiterate a question that it had posed in
writing and which either might not have been answered in the oral reply, or which might just haveG/SCM/M/43
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slipped this delegation’s attention.  The question was “how much time did exporters, producers or
interested Members have to complete questionnaires or give replies in countervailing duty
investigations”?
80. The delegate of Japan stated that his delegation had put high importance on the transitional
review mechanism which served as a vehicle for better understanding how China was pursuing its
implementation of WTO rules and the Accession Protocol.  He stated that it was very important to
have a very thorough and meaningful review in this Committee.  The delegate of Japan thanked China
for all the efforts that China had made for having the Chinese legislation conform with the Agreement
on Subsidies and Countervailing Measures, with WTO rules, and also to cooperate with the
Committee and the Members regarding the Transitional Review Mechanism.  He stated that his
delegation was also impressed by the fact that China had eliminated all the export subsidies and also
the subsidies contingent upon domestic over imported goods.  He stated that this was a very goodprecedent.
81. Japan had submitted a number of questions in writing.  A very comprehensive answer was
given by the Chinese delegation.  He stated that he thought that most of the questions posed by his
delegation had been answered in some way.  He said that his delegation had posed a lot of questions
and also accordingly the amount of answers given by the delegation of China was also very detailed.He said that his delegation would appreciate it if the Chinese delegation could submit a written note of
the technical answers that were given.  He said that  he looked forward to China providing the rest of
the relevant rules on subsidies and countervailing measures as early as possible.  His delegation also
looked forward in the future to seeing that China would be implementing its rules as it was outlined in
the answers given during the first session of this meeting.  He thanked the Chinese delegation for theanswers given.  He stated that his delegation would like to reflect on these answers, preferably in
written form, and come back to this at a later stage.
82. The delegate of Chinese Taipei stated that  his delegation wished to thank the Chinese
delegation for its efforts in preparing the responses to the questions raised by his delegation.  As one
of the major trading partners of China, he stated that his delegation believed the smoothimplementation of the Accession Protocol was in the best interest of all Members, including China
itself.  Therefore, his delegation appreciated the opportunity to exchange views with the Chinese
delegation, taking advantage of the Transitional Review Mechanism.
83. The delegate of China thanked the United States, the European Communities, Japan, and
Chinese Taipei for their positive comments and the foll ow-up questions they raised.  He stated that his
delegation wished to respond some questions and make some comments. First of all, concerning the
question regarding the time-period given to exporters and governments to submit replies to thequestionnaires, the delegate of China said that, as mentioned during the first session of this meeting,
the time-period was stipulated in China’s Provisional Rules for Conducting Investigations.  This time-
period was 37 days. Second, concerning the circulation of the statement made during the first session
of this meeting, the delegate of China stated that, as he had said during the first session, the Chinese
delegation would provide one copy of the statement to the Secretariat after some double-checking.This statement could be circulated, the Members could receive a written copy from the Secretariat.
Almost everything, the important responses to the major questions were in that statement.  For the
written work of the technical responses, he stated that it was beyond the mandate of his delegation.
He stated that he hated to repeat the same words, but the Chinese delegation had repeatedly stated the
position of the Chinese government on this issue.  Since everyone in the Committee was clear aboutChina’s position on this issue, he stated that he did not want to repeat it and waste time.  Third, the
delegate of China confirmed that the Chinese countervailing regulation and any measures would stick
to the WTO rules.  China welcomed the comment s from other Members.  China appreciated the
cooperation with other Members in this regard. Fourth, with respect to subsidies, the delegate of
China stated that China was in the process of coll ecting more information in order to satisfy theG/SCM/M/43
Page 20
notification needs, but until last June, Members were required to notify subsidy measures of the year
2001.  He stated that China only joined the WTO in December 2001 and had been in the WTO for one
month during the notification period.  China had shared with other Members the updated information,
whenever that was available to us.  Apart from that, China was collecting more information but it was
not complete, not accurate, at this stage.  When the information was complete and accurate andsufficient to notify to the WTO, China would do that, and would update China’s notification in the
Protocol.  China was facing similar difficulties to those other Members had, it was very complicated,
and much more difficult than China had expected.  So China was making efforts, and would continue
to make efforts.  Finally, with respect to the expiry  date of the incentives for automobiles, the delegate
of China referred to his statement delivered during the first session of this meeting. He repeated that
the date was from 1 January 2002.  The delegate of China again thanked all Members who raised
questions and made comments. He stated that his delegation hoped that Members could takeadvantage of other channels, bilateral and multilateral, which China believed were supplementary to
each other, before the annual Transitional Review Mechanism ended for the Members’ common goals
and objectives.
84. The Chairman thanked China for its interven tion and invited other delegations to make
comments.
85. The delegate of Mexico stated that his delegation had submitted an advance copy containing
some questions for the People’s Republic of China under its Protocol of Accession and under
Article 25.8 of the Agreement on Subsidies and Count ervailing Measures.  Those questions were read
out by the delegate and circulated during this meeting as document G/SCM/Q2/CHN/4.  The delegate
of Mexico stated that his delegation would be grateful to the delegation of China for its answers inwriting, including relevant legal documents.
86. The delegate of China thanked the delegation of Mexico for the questions.  He stated that,
unfortunately, nobody in his delegation nor in the Permanent Mission of China, spoke Spanish.  He
stated that the Chinese delegation had only received the questions in Spanish from the Mexican
delegation on 31 October and that the Chinese delegation had not had time to reflect on thosequestions.  He said that his delegation took note of the questions and would provide a response in the
future.  This response would be reflected in China's future notification.
87. The Chairman thanked the delegation of China for its indication to provide answers also to
those questions that had been presented by the delegation of Mexico.  The Chairman thanked those
delegations that had raised questions.  He also expressed his sincerest appreciation to the delegation of
China for responding to those questions or indicat ing that some additional responses may reach the
Committee in the near future.  He recalled Members that there were no guidelines for the report in theProtocol of Accession of the Peopl e’s Republic of China to the World Trade Organization.  He stated
that he was aware of the fact that in several other bodies that have already undertaken the transition
review the Chairman, acting on his own responsibility, prepared a brief factual report with references
to the documents and attached the portion of the minutes of the meeting which relate to the
transitional review.  He stated that this was the way of proceeding that he would like to put before theCommittee for consideration.
88. The Committee took note of the statements made and agreed to proceed as suggested by the
Chair.
F. CHAIRMAN'S REPORT ON THE 29-30 OCTOBER SUBSIDIES NOTIFICATION
SEMINAR FOR CAPITAL-BASED OFFICIALS
89. The Chairman recalled that the subsidies notification seminar for capital-based officials had
taken place on 29 and 30 October in Geneva.  This seminar had been a technical assistance activityG/SCM/M/43
Page 21
under the purview of the Committee.  The timing of the seminar had been planned to coincide with
the regular and special autumn meetings of the Committee.
90. He said that the seminar was a highly successful, constructive and educational experience for
all of those involved.  Officials from over 80 Members had participated.  It had been gratifying to see
that delegations viewed this seminar with such importance.  The seminar had involved a series ofsubstantive sessions dealing with the obligation to notify subsidies under Article 25 of the Agreement.
The sessions had addressed: the key elements in the definition of a subsidy, the concept of specificity,
and the identification of substantive and logistical problems and solutions concerning the logistical
and substantive aspects of subsidies notifications.  After the seminar, all Members should be more
than well aware that, pursuant to the terms of the Agreement on Subsidies and Countervailing
Measures, while all WTO Members were under an obligation to notify specific subsidies, such
notification did not prejudge the status of the noti fied measures.  Furthermore, the obligation was to
submit a notification by 30 June of a given year.
91. The Chairman stated that many of the participants had devoted a great deal of effort and
intellectual capital to this seminar.  The capit al-based experts in attendance were an extremely
important resource.  He thanked the three rapporteurs from the group sessions:  Mr. Alexis Miranda of
Panama; Mr. Omar Tidiane Wade of Senegal; Mr. Karabo Modimokwane of South Africa.  He also
thanked the capital-based experts that had devoted their time, energy and valuable insights as
discussants: Ms. Elizabeth Young of Australia; Mr. Don Orth of Canada; Mr. Nobuyuki Yagi of
Japan; Mr. Rodrigo Orozco Galvez of Mexico; Mr. Mohammed Essabar of Morocco; Ms. Carol
Showers of the United States; and Mr. Johann Human (currently of the WTO Secretariat).
92. The Chairman strongly encouraged all Members to retain and apply the valuable lessons they
had learned in the seminar to their future subsidies notifications.  He stated that practical work on
subsidies notifications would also continue w ithin the Working Party on Subsidy Notifications,
building on the seminar's lessons.
93. The Committee took note of the Chairman's report.
G. OTHER BUSINESS
1. Korea – Government support for the paper industry - Statement by the United States
94. The delegate of the United States said that his delegation wished to bring to the attention of
the Committee its concerns about reports regarding the continued and seemingly substantial support
which various Korean government authorities were providing the Korean paper industry, particularly
to producers of coated free sheet.  In the view of the United States, the preferential aid apparently
being provided implicated Korea’s obligations under the Agreement on Subsidies and Countervailing
Measures.  He said that, as the Committee was well aware, the adverse commercial consequences ofsuch support by governments could impact all Members of the international trading system, as it often
led to structural overcapacity and injurious trade competition.
95. He stated that, while the present difficulties of United States and other paper producers no
doubt stemmed from a variety of factors, they were partly attributable to the history and continued
signs of government support in Korea to its paper industry.  The delegate of the United States statedthat Korea’s paper industry had been created and had grown with considerable government help
throughout the 1980s and 1990s.  The result was a significant expansion of capacity, far beyond the
absorption capacity of Korea’s domestic market.  In the wake of the Asian financial crisis, several
Korean paper companies, like many other companies in Korea, were beset by severe liquidity
shortages and overwhelming debt-to-equity ratios.  As in other sectors, such as steel and semi-conductors, some companies which, under normal market conditions, would have been reorganized,G/SCM/M/43
Page 22
sold or forced out of business were instead beneficiaries of special government help designed to
ensure their survival.  In the paper sector, reports of debt for equity swaps, reduced interest rates on
various types of loans, loan guarantees, extensions on debt repayment periods and tax benefits for
facilities expansion had been noted.  In the view of the United States, most, if not all, of these
measures appeared to have been undertaken either directly by the government or by government-owned or -controlled financial institutions, such as the Korean Development Bank and the Industrial
Bank of Korea, two institutions which frequently implemented government policy.  Other
interventions stemmed from banks in which the government had an important investment stake.
96. Unfortunately, this kind of intervention could not help but have an adverse impact on
producers elsewhere.  The United States had expr essed its concerns and posed questions to Korean
authorities on a bilateral basis.  The delegate of the United States stated that the United States looked
forward to receiving answers to the questions posed in the near future and continued to seek
clarification and assurances from Korea that it would refrain from providing further inappropriate
support to the paper sector.  In the interim, the United States continued to monitor the situation closely
and fully reserved its rights under WTO instruments to take appropriate action should that become
warranted.
97. The delegate of Korea stated that the United States and Korea were in the process of friendly
bilateral clarification in the form of questions and answers.  He said that his delegation was somewhat
surprised that the United Stated had placed this issue under "Other Business" before even listening to
Korea's answers.  He stated that his delegation found it odd that the United States raised the issue
without any factual evidence.  He said that the only thing the Committee had heard was “its concerns
about reports”, without even providing the sources of the reports.  By publicly making factually
unsubstantiated claims, the United States gave the impression to Members that it was a given that the
Korean Government had given substantial support to its paper industries, which Korea had not.
However, as the issue had been raised in this venue, the delegate of Korea said that he would like to
take this opportunity to clarify the situation and set the record straight.
98. The delegate of Korea emphasized that the Korean Government was not involved in the
restructuring of its paper industry after the financial crisis.  Debt for equity swaps were carried out on
a normal commercial basis by creditors that included financial institutions whose major stockholders
were foreign investors.  There were no reduced interest rates offered for facility expansion.  The
delegate of the United States had stated that “the result was a significant expansion of capacity, far
beyond the absorption capacity of Korea’s domestic market”.  The delegate of Korea stated that, given
that the aim of the WTO Agreements was to achieve open and borderless trade and not autarchic
economic organizations, the capacity of Korean industry beyond domestic absorption should beapplauded in this house, as opposed to being cited as evidence of any wrongdoing.  The delegate of
Korea stated that his delegation was ready to answer the specific questions which had been submitted
by the United States bilaterally at any time that was convenient for the United States.  In addition to
that, he said that his statement was preliminary and did not prejudice Korea's position in the future.
99. The delegate of the European Communities stated that his delegation did not have any
comments to make on the particular case at issue since they did not have any information beyond
what had been stated in this meeting.  However, he noted that the issue of government intervention in
the restructuring process was an issue that had already been discussed in the Committee with regard to
other sectors in the Korean economy.  He registered the interest of his delegation in this particular
issue and stated that the European Communities would follow future developments closely.
100. The delegate of the United States said that he  wished to make some brief remarks.  The
United States had done a very substantial amount of research with respect to potential government
financial support provided to the Korean paper industry and the United States would be happy toG/SCM/M/43
Page 23
share that with the Korean delegation.  He insist ed that his delegation looked forward to working
further with the Korean delegation to resolve this matter.
101. The Committee took note of the statements made.
2. Funding of the Subsidies Notification Seminar - Statement by the European
Communities
102. The delegate of the European Communities stated that his delegation believed that the way
the issue of financing of participation of certain delegations in the subsidies notification seminar had
been handled had been far from transparent.  Th e European Communities believed that the seminar
had been a success and that it should not be tainted by developments which should and could have
been avoided.  The delegate of the European Communities said that one important point of substance
should be noted: the way in which this issue had been handled should not serve as a precedent for the
future.  The fact that some delegations had received funding did not, in any way, either have a bearingon decisions in future technical assistance projects, or, in a wider sense, on the way these countries
were being treated or rather would be treated in the WTO.  His delegation was confident that, in the
future, such important initiatives would be pursued with the proper transparency.
103. The Chairman assured the delegate of the European Communities that his point had been
properly taken into account.
104. The Committee took note of the statements made.
3. Communications from the Chairman of the Special Session on Trade and Development
and the Chairman of the Working Group on Trade and Transfer of Technology –
Statement by the Chairman
105. The Chairman informed the Committee that, in the week of 28 October 2002, he had received
two letters: one from Ambassador Smith, Chairman of the Special Session of the Committee on Trade
and Development, and one from Ambassador Johannesson, the Chairman of the Working Group on
Trade and Transfer of Technology.  The Chairman wished to bring to the attention of the Committee
how he intended to react to these two letters.
106. With respect to the letter from Ambassador Smith, the Chairman stated that the delegates who
had attended the meeting of the Working Group on Implementation with the Committee on Anti-
Dumping Practices on 21 October would recall that the Chairman of that body had been kind enough
to announce that the special session was meeting in the afternoon of 21 October to continue analysis
and examination of the various proposals and issues on special and differential treatment that had
been raised in that body relating to the SCM Agreement.  In addition to asking the Chairman of the
Committee on Subsidies and Countervailing Measures to have those meetings announced, the
Chairman of the Special Session had also requested information on any discussions or otherdevelopments relating to special and differential treatment that had taken place in the Committee on
Subsidies and Countervailing Measures and the Working Group on Subsidy Notifications in the form
of a report before 30 November 2002.  A similar request had been made earlier, to which the Chair
had responded on its own responsibility by letter in February 2002.  This had been reported to
Members at the spring 2002 meeting of the Committee, and copies of the letter had been provided toMembers.  In respect of that letter, the Chairman said  that he intended to react by way of indicating to
the Chairman of that Committee the work of the Committee on Subsidies and Countervailing
Measures with respect to the special and differentia l treatment provisions of the Agreement, including
the Implementation-related issues referred to it by Ministers at Doha.  The Chairman stated that he
intended to mention, inter alia , the following:G/SCM/M/43
Page 24
• that the Committee had completed its review of the provisions of the Agreement having to do
with countervailing duty investigations that was mandated by paragraph 10.3 of the Decisionon Implementation-Related Issues and Concerns and that he had reported on that review to the
General Council at the end of July 2002;
• that, with respect to the agreement by Ministers, in paragraph 10.1 of the Implementation
Decision, that Annex VII(b) of the Agreement in cludes the Members listed therein until their
GNP per capita reaches US$1,000 in constant 1990 dollars for three consecutive years, this
decision would enter into effect upon the adoption by the Committee of an appropriate
methodology for calculating constant 1990 dollars or, if no such consensus was reached by
the Committee, then as of 1 January 2003, the methodology set forth in G/SCM/38 App.2,
should be applied.  He would note that no proposal had been received from any Member; and
• that the Committee was engaged in consideration of requests by certain developing country
Members with respect to the extension of the transition period for export subsidies pursuant to
Article 27.4 and the special procedures agreed by Ministers.
107. The Chairman stated that, should there be furt her developments particularly with respect to
the latter before 30 November 2002, he would undertake to provide any relevant additional
information to the Chairman of the special session at that time.
108. The Chairman stated that Ambassador Johannesson, the Chairman of the Working Group on
Trade and Transfer of Technology, had sent a letter which indicated that the Working Group was
examining the relationship between trade and transfer of technology, as well as any possible
recommendations on steps that might be taken with in the mandate of the WTO to increase flows of
technology to developing countries.  The Working Group had decided, at a meeting held on
10 October, to request information from other WTO bodies regarding any work that they may havedone in this regard, or that they planned to carry out in relation to trade and transfer of technology.
Ambassador Johannesson had requested that the SCM Chairman inform him of any discussion,
submissions and/or other developments relating to trade and technology transfer that might have taken
place in the Committee or its subsidiary bodies, by 20 November, in order that he could report the
response at the meeting of the Working Group on 28 November.  In response to this request, the SCMChairman stated that he intended to send a letter to that Chairman, informing him that there had been
no discussions, submissions, or ot her developments in the Committee or its subsidiary bodies relating
to trade and technology transfer.  The SCM Chairman said that he would ensure that copies of his
response were provided to Members.
109. The Committee took note of the statement made.
H. DATE OF NEXT REGULAR MEETING
110. The Chairman noted that the meetings of the Anti-dumping Committee and the Rules
Negotiating Group were scheduled from 29 April to 7 May 2003.  He suggested that this Committee’s
spring meetings would take place on 8 and 9 May 2003.
111. The Committee so agreed.
I. ANNUAL REPORT TO THE COUNCIL FOR TRADE IN GOODS (ARTICLE 32.7)
112. The Committee adopted its annual report.  The report was subsequently circulated in
document G/L/585.G/SCM/M/43
Page 25
113. The Chairman noted that the Committee had finished the review of all of the remaining items
on the agenda.  He recalled that, when considering the agenda for adoption at the beginning of the
Committee meeting, comments had been made by the delegations of China and Chinese Taipei.  He
stated that, in reaction to those statements, the Chairman had proposed that the Committee place
square brackets around item A.  He had said that he proposed to revert to that item at the end of themeeting and that, in the meantime, the Committee deal with all remaining items on the agenda.  He
had also said that, should it not be possible to have an agreement or solution to the issue raised by the
delegation of China, it would be his intention to suspend the regular meeting of the Committee on
item A.  The Chairman stated he had a series of extremely useful exchanges, not only with those two
delegations, but also with some others, on how to address this issue.  He said that he had felt obliged
to inform the management of the WTO Secretariat about this development and that he had thought
that he had to bring it also to the attention of the Chairman of the General Council, because the issuewas of a horizontal and highly political nature.  The Chairman stated that, despite all the efforts that
had been made, a solution to the problem faced could not yet be found.  Therefore, instead of opening
the discussion on item A, the Chairman suggested that the Committee suspend the meeting on this
item and that the Committee come back to that issue as soon as possible and once there was a
resolution of that issue.  The Chairman thanked all delegations with whom he had the chance to speakfor their constructive approach and for their readine ss to join him, even at short notice.  He asked
Members whether this way of proceeding was acceptable.
114. The Committee took note of the statement made and so agreed
.  The Chairman suspended  the
meeting on item A, and the meeting was adjourned in respect of all other items.
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