RESTRICTED
WORLD TRADE G/C/M/18
26March 1997
ORGANIZATION(97-1249)
Council forTrade inGoods
11March 1997
MINUTES OFTHE MEETING
Held intheCentre William Rappard
on11March 1997
Chairman: Mr.T.Johannessen
TheproposedagendacontainedindocumentG/C/W/71wasadoptedwiththeinclusionofitems5
and6under "Other Business".
Page
1. Observer status forInternational Intergovernmental Organizations (G/L/140) 2
2. Trade Facilitation (paragraph 21oftheSingapore Ministerial Declaration 2
(WT/MIN(96)Dec))
3. Recommendations from theWorking Group onNotification Obligations 3
andProcedures (Point Bandparagraph 4.6,Point Dandparagraphs 4.8
and4.9ofG/C/M/14)
(i) Gatt1947 CONTRACTING PARTIES Resolution onLiquidation 3
ofStrategic Stocks (BISD 3S/51) (paragraph 65ofG/L/112)
(ii) Preparation ofgeneral guidelines forthebodies under theCouncil 's 4
purview, providing fortheregular review ofquestionnaires and
formats andofthesituation asregards compliance withnotification
obligations (paragraph 76ofG/L/112)
4. FreeTrade Agreement between Slovenia andEstonia 4
5. EC-Korea 's"Frugality Campaign" 5
6. Dateofthenextmeeting 6
_________________
TheChairman welcomed delegations tothismeeting convened byWTO/AIR/545.G/C/M/18
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1. Observer status forInternational Intergovernmental Organizations (G/L/140)
1.1 TheChairman recalled thatatitslastmeeting of27January 1997, theCouncil hadgranted
observer status tothose international intergovernmental organizations which hadbeeninvited tofollow
thework oftheCouncil onanadhocbasis (category Iofdocument G/L/140).
1.2 Asconcerned thesecond category oforganizations, whose requests forobserver status were
pending (category IIofdocument G/L/140), theCouncil hadauthorized theChairman tohold
consultations onthose requests. Heinformed theCouncil thathehadstarted theconsultations and
from hisfirstcontacts itappeared thatthere wasneedforcareful scrutiny, inparticular concerning
theareas ofactivities ofthose organizations andtheirrelation toWTO 'sactivities aswellastheWTO 's
interest inobserving thework ofthese organizations. Itwould appear thatthese consultations would
takeacertain timetobecompleted.
1.3 TheCouncil agreed thattheChairman continue these informal consultations andreport back
totheCouncil when thematter wassufficiently advanced totakedecisions.
2. Trade Facilitation (paragraph 21oftheSingapore Ministerial Declaration (WT/MIN(96) Dec))
2.1 TheChairmanrecalledthatafirstdiscussiononthismatter,onthebasisofthemandatecontained
intheSingapore Ministerial Declaration, hadtaken place attheCouncil 'slastmeeting of27January
1997. Itwasagreed thattheSecretariat should give, attheCouncil 'snextmeeting, anoverview of
theorganizations contacted inorder toobtain factual information inthisfield, aswellasoftheareas
oftrade facilitation inwhich these organizations haveundertaken orwere undertaking work. The
background notebytheSecretariat contained indocument G/C/W/70 responded tothisrequest for
preliminary information.
2.2 Therepresentative ofHong Kong stated thatalthough itwasprobably premature atthisstage,
andhewasaware thatsome sensitivities existed, itwould beuseful atsome juncture toinclude private
sector thinking inthisexercise. There wasareference totheInternational Chamber ofCommerce
inpartBofSection IIofdocument G/C/W/70, butthatwould notbesufficient forthesubsequent
stages ofthisexercise. Itshould benoted thatthewhole point wastomake theWTO 'swork inthis
arearelevant totherealbusiness world.
2.3 Additionally, Section IIIofdocument G/C/W/70 listed WTO provisions relating totrade
facilitation, andhisdelegation would welcome atalaterstageamore detailed analysis bytheSecretariat
onhowrelevant WTO/GATT rulesmight beimproved soastoreduce impediments totrade. Members
might needtoadvise theSecretariat onthisaspect ofthework atanappropriate juncture.
2.4 Therepresentative ofIndiarecalled thatthissubject wasdiscussed extensively attheCouncil 's
lastmeeting. Hereferred to,inparticular, thepoint made onnon-governmental organizations which
wasreflected inparagraph 3.13ofdocument G/C/M/17 containing theminutes oftheCouncil 'slast
meeting which readasfollows: "With respect toinformation gathered from non-governmental
organizations, there wastheviewthatthestudy should include decisions taken orprocedures already
decided upon inthese organizations andnotopinions, views oradvice thatmight begiven bythese
organizations". Similarly atthelastmeeting, there wereanumber ofdelegations whohadindicated
thatitwaspremature totalkof"rules" inthiscontext. Infacttheproposal fromtheEUwasthatthe
study should below-key. Only oncealltheinformation hadbeengathered bytheendofMay1997
should Members decide onhowtoproceed further.
2.5 Therepresentative ofMexico stated thathisdelegation welcomed thestatement inparagraph 3
ofdocument G/C/W/70 that"trade facilitation isaconcept thatcancover abroad range ofactivities".G/C/M/18
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Thatwould behisunderstanding fromthetitleintheSingapore Ministerial Conference which referred
to"Trade Facilitation" ingeneral eventhough thetextinparagraph 21oftheMinisterial Declaration
didreferto"simplification oftrade procedures". Healsoshared thepoint made byIndia regarding
information tobeobtained from non-governmental organizations. Information tobeobtained from
these organizations should beinstruments elaborated bythese organizations ontrade facilitation and
nottheirviews ontrade facilitation. Thiswastoensure thatMembers were inconformity withthe
WTO guidelines onnon-governmental organizations. Finally, hedidnotthink thatSection IIIof
document G/C/W/70, referring to"Provisions intheWTO (Uruguay Round Agreements andtheGATT
1994)relatedtotradefacilitation"wasanecessarypartofthispreliminaryinformationgatheringexercise.
If,however, adelegation feltdifferently, thenithadtobemade clearthatthislistwasnotexhaustive.
2.6 Therepresentative ofSenegal stated thathiscomments concerned partCofSection IIof
document G/C/W/70 on"Regional Organizations andFreeTrade Agreements orCustoms Unions".
Hehadnoted thattherewerenoAfrican organizations which hadbeencontacted. Africa wasacontinent
suffering from problems related totrade facilitation interms oftrade within Africa aswellaswith
other continents. Organizations suchasthenowdefunct Economic Community ofWest Africa had
apparently doneuseful research work intheareaoftradefacilitation. Itsworkwasnowbeing continued
bytheWest African Economic andMonetary Union, which should havebeencontacted. Another
Organization which should havebeencontacted wastheEconomic Community ofWest African States
(ECOWAS), based inNigeria.
2.7 Therepresentative ofHong Kong clarified thathisdelegation wasnotsuggesting thattheWTO
ought tomake rulesinafieldwhich hadessentially todowiththepromotion oftrade. However, there
wasanareainthefieldoftrade facilitation where theWTO could induecourse consider whether
multilateral trade policy rules inthetraditional sense could beperhaps better framed soastoreduce
impediments totrade. Hetookthepoint thatthiswasanexercise which would probably startata
laterstage, andwasnotsuggesting thattherehadtobeanydetailed analysis now; currently Members
were inafact-finding mode.
2.8 Inresponse toaquestion from therepresentative ofArgentina, theChairman stated thatthe
Secretariat would prepare afullbackground document bytheendofMay1997 asagreed toatthe
lastmeeting oftheCouncil, taking intoaccount thecomments made atthismeeting.
TheCouncil tooknoteofthestatements.
3. RecommendationsfromtheWorkingGrouponNotificationObligationsandProcedures(PointB
andparagraph 4.6,Point Dandparagraphs 4.8and4.9ofG/C/M/14)
(i) Gatt1947CONTRACTING PARTIES Resolution onLiquidation ofStrategic Stocks
(BISD 3S/51) (paragraph 65ofG/L/112)
3.1 TheChairman recalled thattheWorking Group hadrecommended initsreport (G/L/112,
paragraph 65)thattheGoods Council refercertain GATT 1947CONTRACTING PARTIES 'Decisions
toappropriate WTO bodies forfurther consideration inorder todetermine whether theywereobsolete
orredundant inthecurrent situation. With respect totheResolution ontheLiquidation ofStrategic
Stocks (BISD 3S/51) thereappeared tobenoexisting suitable bodywhich could dealwiththismatter,
andtheCouncil, atitsmeeting of15October 1996 (G/C/M/14, paragraph 4.6)agreed toretain this
Resolution forfurther consideration.
3.2 During aninformal meeting oftheCouncil, heldon14January 1997, thismatter wasdiscussed
andthethenChairman hadindicated inhisconcluding remarks thatthissubject needed additional study
andfurther reflection among Members. Informal consultations wereheldonthismatter inorder toG/C/M/18
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reach abetter understanding onanappropriate course ofaction. Itappeared fromthediscussions that
although thisResolution hadbeeninvoked onlyonce, itwould beappropriate tomaintain itinforce
because certain Members attached importance tothespecific right forconsultations provided forin
paragraph 2ofthisResolution. Itwould alsoseem thatremoval ofthenotification obligation under
thisResolution which wasrequired onlyifaspecific action wastaken, would notlighten theburden
ofnotification obligations forMembers norleadtoastreamlining ofthenotification requirements as
such. Inlightofthepoints mentioned, heproposed thattheResolution bemaintained.
3.3 TheCouncil soagreed.
(ii) Preparation ofgeneral guidelines forthebodies under theCouncil 'spurview, providing
fortheregular review ofquestionnaires andformats andofthesituation asregards
compliance withnotification obligations (paragraph 76ofG/L/112)
3.4 TheChairmanrecalledthattheWorkingGrouphadalsorecommended(G/L/112,paragraph76)
thattheCouncil consider thepossibility ofpreparing general guidelines forthebodies under itspurview,
providingfortheregularreviewofquestionnairesandformatsandofthesituationasregardedcompliance
withnotification obligations. TheCouncil, atitsmeeting of15October 1996, hadagreed torevert
tothismatter atasubsequent meeting. Thesubject wasfurther discussed attheCouncil 'sinformal
meeting of14January 1997 where itwasfeltthattheCouncil should continue tokeepthissubject
under consideration anddecide attheappropriate timeastohowtoproceed further. From further
informal consultations onthissubject itwould appear thatthere wasageneral feeling thatitwould
notbedesirable toattempt preparing general guidelines relating toquestionnaires orformats for
notifications pertaining tothevarious Committees; itmight, however, beuseful todevelop general
guidelines withrespect totheregular review ofthesituation asregarded compliance withnotification
obligations.
3.5 Tothiseffect, heproposed thattheCouncil invite theSecretariat toprepare forconsideration
atafuture meeting, anon-paper identifying elements which might beincluded insuchgeneral guidelines
andwhich could havetheeffect ofimproving compliance withnotification obligations.
3.6 TheCouncil soagreed.
4. FreeTrade Agreement between Slovenia andEstonia
4.1 TheChairman drew attention tothenotification fromtheparties totheAgreement contained
indocument WT/REG37/N/1. ThetextoftheAgreement hadbeen circulated indocument
WT/REG37/2.
4.2 TheChairman proposed thattheCommittee onRegional Trade Agreements carry outthe
examination ofthisagreement inaccordance withthefollowing terms ofreference:
"toexamine, inlightoftherelevant provisions oftheGATT 1994, theFreeTrade
Agreement between Slovenia andEstonia andtosubmit areport totheCouncil for
Trade inGoods."
4.3 Itwasunderstood thattheunderstanding readoutbytheChairman oftheCouncil forTrade
inGoods under item7oftheAgenda ofthemeeting oftheCouncil forTrade inGoods on
20February 1995, ascontained indocument WT/REG3/1, would apply mutatis mutandis tothis
examination. Itwasalsounderstood that,during theexamination, dueaccount would betaken ofthe
intrinsic differences between customs unions andfree-trade areas.G/C/M/18
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4.4 TheCouncil forTrade inGoods soagreed.
5. EC-Korea 's"Frugality Campaign"
5.1 Therepresentative oftheEuropean Communities, speaking under "Other Business", stated
thathisauthorities were deeply concerned thatthe"frugality campaign" which hadbeenrunning in
Korea since mid-1996 hadintensified. Itwasbeginning tohurtseverely theinterests ofEuropean
exporters. Hisauthorities wereaware thatcivicgroups suchasKorea 'smedia andindustry wereplaying
amajor partinthiscampaign, butwere alsoconcerned about theposition oftheKorean authorities
andfeltthattheyhadadegree ofresponsibility. Theyhadclaimed thatthecampaign attacked excessive
consumption, notimports, andhadindicated thatKorea would nottakemeasures inconsistent with
itsinternational obligations. Butpublic figures, atalllevels, continued tomake unhelpful statements
which wereclearly intended toblame imported consumer goods forKorea 'scurrent account deficit.
Astudy ofthedeficit 'sstructure showed thistobeutterly false.
5.2 Onadifferent level, butequally alarming, werefrequent cases of"administrative harassment"
carried outdirectly bygovernment agencies (e.g. customs slowdown; increase infrequency of
enforcement inspections; more restrictive reinterpretations ofvague Korean laws onlabelling;
publication ofmisleading statistics byGovernment agencies; apparently systematic taxinspections on
owners offoreign cars).
5.3 Hisauthorities wereverydoubtful about thecompatibility ofcertain ofthese statements and
actions withKorea 'sWTO obligations. TheGovernment 'sstance wasalsodifficult toreconcile with
theWTO 'sobjectives, suchas"expansion ofproduction andtradeingoods andservices". Accordingly,
hisauthorities werestudying whatfurther action might beappropriate, bothregarding individual cases
andgenerally regarding anti-import aspects ofthewider campaign.
5.4 Hisdelegation believed thatKorea hadaresponsibility toreassure itstrading partners thatthe
impression thatitwashostile toimports andhesitant about two-way trade wasmistaken. Since all
WTO Members benefitted fromanopen, equitable andnon-discriminatory multilateral trading system,
andhadaresponsibility todefend it,aclearpublic statement fromtheKorean Government disowning
allanti-importaspectsofthecivic"frugality"campaignwasnownecessarytodispeldoubtsaboutKorea's
commitment torespect infullitsWTO obligations. Clear instructions topublic officials nottotarget
importers orconsumers offoreign goods alsoseemed necessary.
5.5 TherepresentativeoftheUnitedStatesstatedthathisauthoritieshadobservedatroublingpattern
inrecent Korean statements asserting thattheconsumption ofimports werethedirect cause ofKorea 's
current account andtradedeficits. TheUnited States andotherWTO Members weresensitive toKorea 's
desire torespond tothesemacro-economic trends andcurrent tradeimbalance. However, thearbitrary
useofstandards, documentation requirements, customs delays, regulatory andlabelling requirements,
taxaudits orother measures todeterimports notonlyconflicted withWTO principles andobligations,
butwould becounter-productive tothecompetitiveness oftheKorean economy overthelong-term.
5.6 Recent statements byKorean government officials suggesting thatitwasacitizen 's"patriotic"
dutynottoconsume imports hadreinforced theperception ofananti-import biasinKorea. Korea
attributed many ofthese statements totranslation errors orexaggeration ofgovernment officials by
themedia. However, theespousal ofso-called "frugality measures" wasnotlimited tojunior bureaucrats
inKorea. Infact,some ofthemosttroubling remarks hadbeenvoiced bysenior Korean government
officials -including attheMinisterial level.
5.7 Korean officials hadalsoexplained thatitwasinappropriate forthegovernment toencourage
private enterprises toaltertheir"patriotic" behaviour toreduce consumption of"luxury" items. HisG/C/M/18
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authorities wereconcerned thatthese actions lended themselves totheimpression thatKorea wasnot
committedtoopenpublicmarketpolicies,themultilateraltradingsystem,oritsinternationalobligations,
despite itsmembership intheWTO andrecent accession totheOECD. Thisperception wasreinforced
bymemories ofsimilar practices observed inKorea during thelate1980s. UStraders noted withconcern
thatexports toKorea incertain sectors (i.e.autos andcertain consumer goods) werereturning tolevels
observed inthelate1980s, when similar "frugality" measures were lastpursued inKorea.
5.8 Hisauthorities hoped thatKorea would respond totheconcerns expressed atthismeeting, and
recently intheOECD (Trade Committee), andissueanunequivocal public assurance thatanti-import
behaviour wasinconsistent withKorea 'sinternational trade policy objectives.
5.9 Therepresentative ofKorea stated thathisdelegation hadtaken noteofthestatements made
bytherepresentatives oftheEuropean Communities andtheUSontheso-called "frugality campaign"
inKorea. There appeared tobeover-sensitivity andover-reaction onthepartofthese twodelegations
onthisquestion. Ofcourse, theKorean market withitsannual import scale ofmore thanhundred
sixty billion USdollars mustbehighly attractive toanytrading nation. Taking oneexample, since
theintroduction ofthereal-name banking system inKorea in1993 anexcessive amount ofcashhad
become available among consumers which inmany cases hadledtoanincrease oftheconsumption
ofluxury items. Thissituation possibly hadledcivicgroups ornon-governmental organizations to
stage theso-called "frugality campaign". Itwasasocial phenomenon which wasalsotobefound in
other countries. TheKorean government, onmany occasions, hadmade itclearthatitwasnotinvolved
insuchcampaigns. Korea, asaresponsible WTO Member, hadbeenabiding byitsobligations and
commitmentsandwouldcontinuetofurthertradeliberalizationandeconomicderegulation.Heseriously
doubted thatsuchmeasures ascustoms slowdown, more restrictive reinterpretations ofvague Korean
lawsonlabelling, publication ofmisleading statistics byGovernment agencies andsoforth existed
atall.Healsodoubted thatsuchallegations could everbevindicated. Itwasunfair andunacceptable
tohisgovernment thatthose delegations implied thattherewasgovernment involvement insuchnon-
existent actions ormeasures, andheclearly denied suchallegations.
5.10 Therepresentative ofIndia stated thatitwould beextremely risky iftheWTO functioned on
thepremise thatindividual opinions orsome non-governmental organizations promoting acertain view
inaparticular country should bedisciplined ormanaged through thisOrganization. Increasingly, the
world perceived thisOrganization asanintrusive oneevenwhen itcame tonegotiated rules which
were binding oneverybody.
5.11 Itwaslikely thatinevery society, atsome time, depending onitsownculture andhistory,
suchattitudes would develop astheyperhaps haddoneinKorea. Forexample, intheUnited States,
before negotiating theopening oftheIndian textile andclothing market, hehadseenmajor advertisement
campaigns "BeAmerican buyAmerican". Hehadbeentoldthatitwasaprivate campaign, andthat
thegovernment hadnothing todowithit.HehadalsoseenaEuropean Commission paper on
"commercial defense" forECmarkets, inwhich ithadbeenarticulated howECproducers would be
protected against imports. Ofcourse, thereference wastoanti-dumping measures which theECmade
useofextensively. AslongasnoWTO rulewasviolated, andaslongasthere wasnogovernmental
involvement, itwould bedifficult toexpect governments concerned tocontrol public opinion inthe
country.
5.12 TheCouncil tooknoteofthestatements.
6. Dateofthenextmeeting
6.1 TheCouncil tooknotethatitsnextmeeting wasscheduled for14April 1997.