RESTRICTEDWORLD TRADE
ORGANIZATIONG/C/M/48
6 June 2001
(01-2781)
Council for Trade in Goods
MINUTES OF THE MEETING
Held in the Centre William Rappard on 18 April 2001
Chairperson:  Ambassador Istvan Major (Hungary)
I. TRIMS AGREEMENT:  REQUESTS FOR EXTENSION OF THE
TRANSITION PERIOD PURS UANT TO ART ICLE 5.3 ....................................................2
II. REVIEW OF THE OPERATION OF THE TRIMS AGREEMENT UNDER
ARTICLE 9 ...................................................................................................................... .........3
III. STATUS OF NOTIFICATIONS UNDER THE PROVISIONS OF THE
AGREEMENTS IN ANNEX 1A OF  THE WTO AG REEMENT........................................3
IV. CUSTOMS VALUATION AGREEMENT:  REQUESTS FOR A WAIVER
UNDER ARTICLE IX OF TH E WTO AGRE EMENT........................................................3
V. REQUEST FOR A WAIVER BY SWITZERLAND – PREFERENCES FOR
ALBANIA AND BOSNIA-HERZE GOVINA (G/C /W/257) .................................................4
VI. REQUEST FOR A WTO WAIVER – NEW ACP-EC PARTNERSHIP
AGREEM ENT ...................................................................................................................... ....5
VII. MARKET ACCESS MATTERS ...........................................................................................10
VIII. REQUEST BY COSTA RICA, INDIA, INDONESIA, PAKISTAN, PERU AND
HONG KONG, CHINA:  CTG'S OVERSIGHT FUNCTION PURSUANT TO
ARTICLE IV OF THE AGREEMENT ESTABLISHING THE WTO –
TRANSPARENCY REGARDING NEW RESTRICTIONS ON TEXTILE ANDCLOTHING PRODUCTS COMMENTED UPON BY THE TEXTILES
MONITORING BODY (G/C/W/260/REV.1).......................................................................11
IX. OTHER BUSINESS.............................................................................................................. ..15
_______________
The meeting of the Council for Trade in Goods was convened by WTO/AIR/1526.  Regarding
the proposed agenda contained in document G/C/W/126, the representative of Ecuador asked the
Chairman to explain the circumstances and background to the inclusion of item 6 on the agenda.   The
Chairman  stated that at the previous meeting of the CTG the (previous) Chairman had concluded the
debate on the EC-ACP waiver issue by stating that there was a need to keep this issue open until thenext meeting in April and that future efforts should be made through consultation under the guidance
of the next chairman, so that by the next meeting Members could take a decision regarding the start ofthe examination of the waiver request.  This had been  agreed by Members, and on this basis item 6
was  included in the present agenda.G/C/M/48
Page 2
The representative of Ecuador  said that the Chairman had  complied with what was agreed at
that meeting, namely that consultations be conducted in accordance with what the former chairman
felt was necessary.  However at no point in the minutes of the last meeting did  it say that the item had
to be included in today's agenda.  The Chairman had carried out the consultations beyond the deadline
set for items to be put on the agenda for this meeting.   He understood that there had been no requestfrom a delegation to have it on today's agenda and asked why it was included.
The Chairman replied that a decision could only be discussed or taken if an agenda item was
put on the agenda.  There seemed a clear agreement by all Members of the Council to discuss it,
although it was ambitious to hope to reach a final decision during this present session.  In his view an
exchange of views in the CTG would be a useful exercise, but he also realized that consultations
would continue in order to come to a consensus.
The representative of Ecuador said that in order to be able to have an item on the agenda for a
decision to be taken, prior consultations should have given a clearcut sign that a decision was feasible.
In this case, those consultations came to a result in which the interested parties were very far from
reaching any solution.  If the objective set by the former chairman was that a decision should be takenon the basis of a positive outcome of the consultations, then he saw no reason for this item to be on
the agenda.  The consultations and the Chair's appreciation of the outcome of those consultations did
not, in terms of the Rules of Procedure, provide grounds for having this item on the agenda.
The representative of Paraguay supported Ecuador.  He believed the consultations held did
not give rise to consensus regarding the taking up of this item.  He believed the Chair should continue
with consultations and reach an understanding to avoid a bitter debate in the CTG which was not in
the interests of the WTO.  He proposed proceeding with informal consultations and get a general
consensus before this matter was taken up.
The representative of the Czech Republic said Members needed a decision from this Council
to continue consultations.  His delegation was not involved in the consultations, and he wanted to hear
the Chair's evaluation of the situation to know what was going on.  The item should remain on the
agenda and should be deliberated.
The meeting was then suspended in order to allow the Chairman to hold informal
consultations on the issue.  When the meeting resumed, the proposed agenda contained in G/C/W/261was adopted.
I. TRIMS AGREEMENT:  REQUESTS FOR EXTENSION OF THE TRANSITION
PERIOD PURSUANT TO ARTICLE 5.3
The Chairman recalled that at the CTG meeting on 14 March 2001, the general feeling was
that he should continue with the consultation process, on the basis of the General Council decision of
8 May 2000 on TRIMs transition issues.  His consultations over the last few weeks had provided a
picture of the positions of the key delegations involved and he believed it would be fruitful to
continue the process.
The representative of the Philippines was ready to discuss his country's difficulties in
implementing the TRIMS Agreement, as well as its development, financial and trade needs.  The
representative of Malaysia said that since no decision had been taken on the Chairman's proposal of
"two plus two", he urged him to continue with c onsultations on the basis that the "two plus two"
option should be available to all.G/C/M/48
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The representatives of Hong Kong, China and Venezuela  supported continued consultations
on the "two plus two" proposal and emphasized the multilateral nature of handling requests under
Article 5.3 of the TRIMs Agreement.
The representative of Pakistan endorsed the proposal for continued consultations and
understood that there was a divergence of views about the "two plus two" formula.  The representative
of Thailand hoped trading partners would not backtrack on the progress made now and supported
further consultations.
The representative of the United States agreed that further consultations were required and
said that her delegation had received a response from Romania to its questions.  The representative of
Canada supported further consultations.
The Chairman announced that he would continue the consultation process.  It was so agreed .
II. REVIEW OF THE OPERATION OF THE TRIMS AGREEMENT UNDER
ARTICLE 9
The Chairman said that he had held a round of informal consultations on the terms of
reference for the joint WTO/UNCTAD study to be pr epared to assist delegations to carry out the
review called for in Article 9.  The Secretariats were now drawing up the draft terms of reference for
the study.  He intended to consult delegations again with a view to finalizing a draft so that the WTOand UNCTAD could set to work.  He had included in consultations all delegations who had spoken on
this subject at previous meetings.  He would be pleased to include any other delegations interested in
future consultations.  Once he had a basis for agreement on the terms of reference, he intended to
circulate a draft for consideration and decision by the CTG on a lapse of time basis in order to allow
work on the study to get underway.  The CTG agreed to this approach.
He also recalled that delegations were invited to submit papers on the scope and format of the
review under Article 9 of the TRIMS Agreement.  No submissions had been received to date and he
proposed reverting to this item at the next meeting.  It was so agreed.
III. STATUS OF NOTIFICATIONS UNDER THE PROVISIONS OF THE
AGREEMENTS IN ANNEX 1A OF THE WTO AGREEMENT
The Chairman said that, as indicated in document G/L/223/Rev.6, the Council adopted in
1996 a recommendation by the Working Party on Notification Obligations and Procedures to maintain
on an ongoing basis.  The comprehensive listing of notification obligations under the provisions of the
Agreements in Annex 1A of the WTO Agreement,  and compliance therewith.  The update in the
document before Members contained all notifications made up to 31 December 2000.
The Council took note of the information contained in document G/L/223/Rev.6 and of
statements by the representatives of Romania and the Czech Republic  concerning corrections to be
made to the document.
IV. CUSTOMS VALUATION AGREEMENT:  REQUESTS FOR A WAIVER UNDER
ARTICLE IX OF THE WTO AGREEMENT
The Chairman stated that in the case of the Republic of Cameroon, the request was contained
in G/C/W/245 and Addenda 1 and 2, and the draft decision granting this waiver could be found inG/C/M/48
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G/C/W258.  The Council agreed to the request  and recommended that the draft decision be
transmitted to the General Council for adoption.
The Chairman also noted the requests by (i) Pakistan, in document G/C/W/246, concerning
the retention of established minimum values under paragraph 2 of Annex 3 of the Customs Valuation
Agreement.  Pakistan was engaged in ongoing consultations with interested Members on its request;
(ii)  Haiti, contained in document G/C/W/256Rev.1, requesting a waiver for a 3-year extension for the
application of the Customs Valuation Agreement;  and (iii) Madagascar, contained in document
G/C/W/259, requesting a waiver concerning the retention of minimum values.
The representative of Madagascar said his delegation wished to retain minimum values on
certain products within the framework of the implementation of the Agreement of Customs Valuation,
which had been applied since 17 November 2000.  Legislation regarding the implementation of this
agreement had been notified to the Secretariat and distributed as G/VAL/N/1/MDG/1, dated 9 April
2001.  The request fell within the framework of the reservation notified at the time by the Government
of Madagascar concerning the retention of minimum values on a limited and transitional basis:  "The
Government of Madagascar pursuant to paragraph 2 of Annex 3 of the Agreement of theimplementation of Article 7 of the General Agreement on Tariffs and Trade 1994 reserves the right to
retain officially established minimum values on a limited and transitional basis when it applies this
agreement."  The request referred to second-hand cars, parts and spare parts currently used for
automobiles, second-hand tyres and aluminium waste for a period of three years, and for which
minimum values had already been officially established.  The retaining of minimum values had beenmade necessary because of the fact that these products were sensitive and had an important impact on
income and the economy.
The Council took note of the requests and the statement made and agreed
 to revert to this item
when it would consider draft decisions for Madagascar as well as Pakistan and Haiti.
V. REQUEST FOR A WAIVER BY SWITZERLAND – PREFERENCES FOR ALBANIA
AND BOSNIA-HERZEGOVINA (G/C/W/257)
The representative of Switzerland said that since the beginning of April 2001, Switzerland
granted an autonomous preferential import regime for products originating in Albania and Bosnia-
Herzegovnia.  This measure formed part of a comprehensive programme in the framework of thestability pack for South-Eastern Europe and was limited to a period of 3 years.  The preferential
treatment applied to Albania and Bosnia-Herzegovina was the same as the one applying to imports
from least-developed countries within the generalized system of preferences.  Pursuant to the scheme,
Switzerland granted not only duty-free access for all industrial products, but also an exemption from
customs duties on most agricultural products.  A li st of the products covered by the scheme was
annexed to the request for a waiver.  Prior to the entry into force of this new regime, Albania and
Bosnia-Herzegovina had benefited from preferences applied by Switzerland to developing countries
within the GSP.  By granting now the same preferential treatment as that applied to least-developed
countries, the product coverage would be further extended, in particular with regard to agricultural
products, textiles and clothing.  Economic incentives, such as preferential market access, wereimportant means of contributing to political stability and economic development.  Having in mind the
important aim of the preferential import regime, applied to Albania and Bosnia-Herzegovina, he
considered it appropriate to request the WTO General Council that the provisions of paragraph 1 of
Article 1 of the GATT 1994 should be waived to the extent necessary to permit Switzerland to apply
this regime.
The representative of Canada supported the Swiss waiver request and urged all Members to
provide their waiver request as early as possible and in advance of the date the waiver request cameG/C/M/48
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into effect, so that a decision could be made before it came into effect.  This was supported by
Australia.
The representative of Argentina supported the Canadian delegation on this matter of
distribution of requests coming in late but had no inst ructions concerning the approval of this waiver.
He wished to state that it seemed surprising to ca talogue different countries and grant certain tariffs
according to an arbitrary placing in certain categories to the detriment of certain other suppliers to the
Swiss market in this case.  He did not share this ge neral point of view and wished to reserve his rights.
The representative of the European Communities, Malaysia , Hungary , Slovenia , Peru , te
Czech Republic, Turkey  and Norway  expressed their support for the Swiss waiver request.
The representative of the United States supported Switzerland's efforts to further open its
markets through the provision of duty-free or other preferential treatment to Albania and Bosnia-
Herzegovina.  These efforts were in keeping with the goals of the stability pact for South-East Europe,
which was designed to help integrate the region's countries into the European and transatlantic
mainstream, building multiethnic democracies in South-East Europe and opening borders to trade andinvestment, whilst creating a spirit of common security.  Her delegation would have questions in
writing, so was not yet able to join a consensus, but hoped to move on the approval of the waiver
request.
The Council took note of the statements and agreed
 to revert to this item at its next meeting.
VI. REQUEST FOR A WTO WAIVER – NEW ACP-EC PARTNERSHIP AGREEMENT
The Chairman recalled that at the last meeting on 14 March 2001, there was a detailed
discussion of this item.  At the end of the discussion, his predecessor had noted that efforts should be
made through additional consultations under his guidance ahead of the meeting today.  Since the last
meeting of the CTG, he had held broad-ranging consultations among all interested Members on the
issue of the examination of the waiver request , as called for under Article IX:3b of the WTO
Agreement.  His consultations had revealed that the well-known views of delegations had not changed
since the meeting of the previous month.  He was prepared to continue consultations to seek a way
forward.
The representative of the European Communities said that at the last meeting his delegation
had stated that they saw no valid reason why the examination of the request for a waiver to provide
tariff preferences for ACP partners should not begin.  Many speakers disagreed, adding that they
needed to know more and that in their perspective all the elements of the new regime, in particular
that applying to bananas must be known before examination of our waiver request could begin.  Hedisagreed strongly with that view, and saw no valid reason under the WTO Agreement why that
examination should not begin.  Following the recent agreement reached between the United States and
the European Union, texts were available today's meeting to provide further clarification of the exact
shape of the EU banana regime in the short, medium and long term.  The EC had explained to
interested parties, principally in Brussels, the agreement in more detail.  The agreement was verymuch in the public domain.  To characterize briefly the trade regime, as regards bananas it would be
based, before moving to a tariff-only system in 2006, on three transitional tariff-rate quotas, managed
under the past performance method.  No recourse w ould be made to the first-come, first-served
method.  He was aware that some delegations might not like certain features of the new regime but it
was an impossibility to try and please everyone at the same time with a new regime of this kind.Some might feel it was even WTO-incompatible, but the WTO provided adequate means for
addressing those situations.  In the light of these new elements which were in the public domain andG/C/M/48
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would be notified formally to the appropriate forum, there was no valid reason under the terms of the
WTO Agreement why the waiver examination should not begin.
The representative of Paraguay said that once again the Partnership Agreement between the
European Union and the ACP countries had been submitted to the Council for Trade in Goods, and
once again he wished to state on behalf of the Republic of Paraguay that he refused the waiver for the
implementation of this Agreement because it was discriminatory and inconsistent with GATT/WTO
rules.  The multilateral trading system created by the GATT and subsequently incorporated into the
WTO was clearly explained in Article 1 of the GATT, the Most-Favoured-Nation Clause, which
stated that "any advantage, favour, privilege or immunity granted by any contracting party to any
product originating in or destined for any other country shall be accorded immediately and
unconditionally to the like product originating in or destined for the territories of all other contracting
parties".  Recognition was given to historical preferences as set out in the annexes to the GATT 1947,
which had their importance at the time when the GATT was established;  but with the course of
political change and globalization over time these historical cases had become legal exceptions or
preferences with the acceptance of the "Enabling Clause".  The accepted exceptions to the Most-
Favoured-Nation Clause in multilateral trade were customs unions and free-trade areas aimed atincreasing free trade for the closer integration between the economies of the countries parties to them.
However, notwithstanding this authorization of such  agreements for the constituent territories, they
must not become obstacles, especially with respect to WTO developing country Members:  a regional
agreement based on proximity or shared common interests must not become a barrier or protection
against other WTO Members.  This was all the more true when this discriminatory barrier was appliedagainst a small number of developing countries who were left out:  thus markets were closed to them
because they were no longer competitive, not because of their products themselves or their quality,
but because of the customs advantages or quotas granted to other developing countries.
This was the case of the ACP-EC Partnership Agreement.  Regional agreements for a
common market or free-trade area aim at the integration of these similar economies so as to operate as
a single market.  However, this was not true in the EU/ACP case.  The aim was not a single market,
nor a union of similar economies aimed at forming a single unit within the multilateral trading system,
but rather prerogatives, advantages and privileges granted by the 15 developed countries forming the
EU to 71 countries, 55 of them WTO Members, as free, non-reciprocal concessions;  and all these
prerogatives, advantages and privileges were denied to a small number of developing countries,
without offering them any alternative or other advantages as the European Union did with otherdeveloping countries, perhaps because they were bigger and more powerful than Paraguay.  This was
unjust and unfair discrimination, and that is why his delegation would deny the requested waiver.  He
did not deny that giving these facilities to the ACP countries which need to be helped was a generous
gesture by the EU;  but if these prerogatives, advantages and privileges constitute an insurmountable
barrier for other developing countries, it ceased to be generosity and became discrimination.Regionalism and multilateralism were compatible provided there was no blatant exclusion of other
countries, such that a minority of developing countries was unable to compete without being granted
the same treatment or without any other altern atives being found for them.  With regard to
discrimination, he quoted the words of the Presid ent of the Interamerican Development Bank (IDB),
Mr. Enrique Iglesias, the Uruguayan Minister of  Foreign Affairs who launched the Uruguay Round of
GATT, a man of recognized competence and experience in economic and trade matters.  He stressed
that "the big regional blocs or markets, such as the European Union and the United States, should
understand that trade barriers hinder the free movement of goods and services and foster inequality
with regard to more vulnerable countries.  If th e idea of setting up defensive blocs persists, instead of
areas in which trade integration and openness are promoted, a global system that is based oneconomic and social imbalance will be in the making".  This would be to the detriment of the weakest,
the developing countries, such as Paraguay.  In its replies to the Working Party on the fourth ACP-
EEC Lomé Convention (document L/7296 (Restricte d) of 10 October 1993), the then EEC, now the
European Union, categorically stated that "multilate ral trade liberalization is the cornerstone to theG/C/M/48
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EC's external trade policy".  This was the most categorical statement by the EU concerning
multilateralism.  But at the same time, it was fostering economic blocs such as those Members were
currently discussing in the form of the Partners hip Agreement, which undermined the multilateralism
that the EU advocated.  The result was majority discriminatory blocs of developing countries which
blatantly harmed a minority group of developing countries.  If the EU's actions matched its words, itwould have to extend the facilities and openings granted to the ACP countries to all developing
countries too, and then Paraguay would applaud its generosity and understanding towards the
developing countries.  However, this Partnership Agreement was totally discriminatory.  Setting aside
the EU's affirmation of multilateralism, when the then EEC representative in this Working Party was
asked, "Are there any plans to extend the benefits provided to ACP countries under the Lomé
Convention to non-ACP developing countries?" he replied in the negative:  "the Lomé Convention is
a complex agreement between the European Community and 69 developing countries which includesrights and obligations by all sides not only in the trade area but in a range of other development areas.
The Lomé Convention itself is restrictive concerning the possibility of enlarging it to other developing
countries outside its zone of application".  Was this multilateralism on the part of the EU or
discrimination?  In the same document the EC stated, "however, that does not mean that the European
Communities is prevented by the Lomé Convention from extending trade benefits to non-ACPcountries".
Paraguay had been waiting a long time to have a dialogue with the EU on the granting of
some trade benefits.  In the case of the four previous Lomé Agreements, working parties were set up
to study the implications of the Lomé Agreements, especially with respect to other developingcountries.  Hence, the text of the Lomé Conven tion between the EEC and ACP countries was notified
to the GATT in July 1975 and the GATT Council established a working party to study it and report to
the Council.  Again, at its meeting on 10 March 1981 the GATT Council set up a working party to
study the second Lomé Convention signed on 3 October 1979.  For the third Convention, signed on
8 December 1984, the GATT Council of Representatives set up a working party on 4 March 1987 toexamine the Convention in light of the GATT, and the working party met on 18 November and on
22 July 1988 to give its report.  A working party was also established to study the fourth Lomé
Convention, signed on 15 December 1989:  on 12 Ma rch 1993 the GATT Council of Representatives,
before granting the waiver, set up the working party with the following mandate:  "To examine, in the
light of the relevant provisions of the General Agreement, the Fourth ACP-EEC Convention signed at
Lomé on 15 December 1989 and to report to the Council."  It was this same procedure that Paraguay
was requesting the Council for Trade in Goods to fo llow before granting the waiver, in order to study
the compatibility of the agreement with the WTO rules.   34 interested parties took part in the working
party on the Fourth Lomé Convention, and in its report, as in the earlier cases, the working party
stated :  "Another Member was concerned with GATT conformity and the need to ensure that the
rights of other contracting parties were not impaired.  He also cautioned against creating a restrictive
and exclusive trading bloc."  The preamble to the WTO Agreement stated:  "Recognizing further thatthere is need for positive efforts designed to ensure that developing countries, and especially the least-
developed among them, secure a share in the growth in international trade commensurate with the
needs of their economic development";  and furthermore, in order to meet these objectives, through
reciprocity and mutual advantages, to reduce tariffs and other barriers and seek "the elimination of
discriminatory treatment in international trade relations".  It was this discrimination in the EU/ACPAgreement that he opposed, because he believed in the elimination of discriminatory treatment.
At the WTO Ministerial Meeting in Geneva in May 1998, Ministers expressed their great
concern "over the marginalization of least-developed countries and certain small economies":
Paraguay is a small economy and a land-locked country, and is the object of terrible discrimination.As a developing country, he requested that the same procedure be followed now as previously and
that a working party be set up to examine in depth whether this "Partnership Agreement" which was
already being implemented before the request for a waiver has been studied and for that reason, was
violating the constitution of the WTO itself, and was discriminatory for a group of developingG/C/M/48
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countries not part of the ACP.  Members would thus be able to have a report, like that of the Working
Party on the Fourth Lomé Convention of 4 Oc tober 1994 (GATT document L/7502), which would
allow examination, not of the details of the damage, but whether there was discrimination contrary to
Article 1, and secondly whether the Agreement was co nsistent with the so-called Enabling Clauses
adopted after the Tokyo Round, which authorized the exemptions under GATT Article XXIV.4 to thetreatment as between developing countries in the form of reciprocal advantages such as regional
bilateral agreements.  Paraguay was a land-locked developing country with a small economy, which
was trying to develop in order to improve the welfare of its people, combat poverty and ensure strong,
lasting foundations for democracy and freedom in the country.  However, it was prevented from
increasing its traditional exports and finding new export opportunities for other products that it now
produced.  It faced a discriminatory barrier of customs tariffs and quotas which denied it access to EU
markets.  Shortly after the First Lomé Agreement was signed, a number of multinational firms in themeat sector which exported to Europe, or more precisely to the countries that made up the EEC,
withdrew from Paraguay in 1978 in order to set up in other countries which had free access to the
EEC for such products.  Paraguay was grateful for the major contribution made by the EU in the area
of technical cooperation and other facilities individually within the MERCOSUR framework.  But it
was asking for access to its markets, in other words "trade not aid".  It also asked the ACP members toshow understanding towards another developing country which, while it did not belong to the ACP
clan, also had a right to "special and differential treatment for developing country members",
especially when 19 of the 55 ACP countries which were WTO Members were economically more
developed than Paraguay itself, with a much higher per capita income.  To conclude, Paraguay would
concur with this Partnership Agreement if all th e facilities it provided for the ACP countries were
extended to all developing countries, so that it woul d really be an instrument to support the integration
of developing countries into world trade and for strengthening multilateralism.
The representative of Gabon said her delegation was impatient to make headway and wished
the request to be considered to see whether it was consistent with the WTO Agreement.
Documentation was available today and there was no further barrier to the acceptance of
consideration of this request.  This request was not a first within the WTO;  there were precedents for
it and the ACP group was asking the Council to agree to consider the request.  The EU-United States
Agreement was a positive development which should enable Members now to agree to consider this
request.
The representative of the United States said her delegation had tried over the last year to find
a constructive way forward so that the EC could obtain an Article 1 waiver for its ACP preferences.
Now that the United States and the EU had reached an understanding concerning in particular one
element of the waiver request, the banana issue,  her delegation was committed to working with the
EC to ensure that the request was reviewed by the CTG under normal procedures and to ensure that
the WTO process worked effectively for that purpose.  It was important that the review commence sothat Members could engage in a substantive debate .  The US had already started to draw up specific
questions and would circulate them and provide them to the EC.  She remained committed to working
with other delegations to reach a consensus to begin the examination.
The representative of Costa Rica said his Government had received a copy of the agreement
between the United States and the EU on 11 April 2001 which constituted progress towards a
solution.  Nevertheless, from the point of view of procedures this agreement seemed to delay the
overall process.  The agreement of 11 April substantially amended the EC waiver request and for this
reason there was a need to wait for those requesting a waiver to resubmit the documentation with all
the necessary corrections.  Once all the information was available, including the regulation from theEC Council of Ministers and the implementing legislation from the Commission, Members could
begin the review.G/C/M/48
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The representative of Honduras felt that since there had been no change in the situation this
issue should be taken up at the next meeting in the hope that full documentation would be on the table
and consideration of the issue could begin.  There were many positive points in the US-EC
understanding in question although it was not ripe for discussion in the CTG as not all the documents
were available.
The representative of Ecuador said that since the last meeting no new elements had been
submitted to the CTG and this meant that the CTG could not proceed to examine the request.  The EC
had not finished putting forward the description of their banana regime and the question of the
bilateral agreement between the EC and another WTO Member did not constitute a reform of the
banana import regime.  This agreement seemed to  imply the need for reforms in the EC regime.
Looking at EC Regulation 216/2001, he thought it necessary to start all over again because there
would be changes in this Council regulation, and th e basis for consideration of the waiver request
would have changed.  Because the EU and the ACP countries had not yet complied with paragraph 1
of the Understanding in Regard of Waivers of Obligations under GATT 1994,  the Chairman should
continue consultations.
The representative of Guatemala hoped that the agreement between the EU and the United
States was one positive step forward.  Official notifications to the WTO of the documents referred to
by the EC had not yet been made and within the EC they had not as yet been adopted.  She continued
to have the same position as in previous meetings, i.e. that the CTG did not have all the necessary
documentation to discuss this issue and therefore consultations should proceed as suggested by theChairman.  This position was supported by the representative of Nicaragua.
The representative of Panama said that the EC and the ACP countries at the last meeting and
again today had put forward a package of docum ents containing the EU Council decision.  The
document contained in G/C/W/254 was not sufficient to comply with the documentation requiredbecause it left aside very important issues concerning the nature and scope of the preferences.  This
had been acknowledged repeatedly by delegations who were proposing this examination.  The banana
regime was a single issue and yet a great deal of information remained to be submitted.  In addition,
he had official knowledge for the first time that th e Council regulation, apparently in keeping with the
WTO agreement, was to be amended.  Consequently he felt that there was nothing which would imply
a step forward since the last meeting on the issue of preferences and since there was to be an
amendment in the package of documents before the CTG, all the necessary texts were not available.In conclusion, he supported the initiative that consultations be pursued and to see if Members could
complete the necessary formalities and proceed to the review.
The representative of Mauritius noted with satisfaction that political will had prevailed and he
welcomed the solution on the banana issue and look ed forward to working in the same constructive
spirit on the post-Lomé waiver request.  He noted the commitment by the US to move forward
positively on the waiver request and would be interest ed to know the questions they would be raising
with the EC.  Like the EC, he believed there was no reason to delay proceeding with the examination;
he requested that this issue remain on the agenda.
The representative of Senegal supported the request for a waiver as well as the statements
made by the EC, Gabon and Mauritius.  There was a need to move forward to give the WTO more
credibility within the multilateral trading system.  The Cotonou Agreement was set within the
framework of a transition period and only an in-depth consideration of this issue could reveal whether
it was WTO-consistent or not.  This review ought to take place as quickly as possible, andunderstanding and goodwill were needed and a constructive approach on all sides.
The representative of the Czech Republic remained convinced that the substantive work on
this waiver request should start in this Council.  The substantive work must start as soon as possible asG/C/M/48
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it was difficult to accept a situation where a Member submitted a request to the body which, due to the
positions of some Members, was not able to start work on the request.  This item should remain on the
agenda.  The representative of Canada also hoped the review could begin as soon as possible;  his
delegation would have had questions of clarification of certain points of coverage.
The representative of Madagascar said that Madagascar was a party to the Cotonou
Agreement, which was vital to its development policy.  The waiver request had to be examined as
delaying the process meant being hostage to interests foreign to the ACP.  The US-EC banana
agreement seemed to show progress.  He asked Members to accept this request and he associated
himself with Mauritius and the Czech Republic for this item to remain on the agenda.  The
representative of the Côte d'Ivoire firmly supported the ACP position as expressed by Gabon.  He
failed to understand this attempt to block matters, which seemed like delaying tactics.  The
representative of St. Lucia commended the political will displayed by the US and EC in coming to a
solution, despite the fact that St. Lucia had not yet been able to assess how its exports would beaffected.  Developing country solidarity in support of other developing countries attempting to make
the transition into the multilateral trading system where a group of 71 countries enjoy a marginal trade
share, not equalling that of many single other developing countries was needed.
The representative of Ecuador, reacting to the suggestion made by Mauritius and the Czech
Republic, stated that his delegation could not go along with the suggestion that this item be kept for
the next meeting.  He did not deny the right of Members to have an item put on the agenda when they
asked for it, but for the time being he could not support that this be automatically included on theagenda for the next meeting.
The representative of the United States said that in response to the views of delegations that
the matter should not go forward, she felt that in light of the understanding with the EC it was
important for the substantive review to be initiated.  She believed that the CTG should proceedimmediately to begin the review in general while allowing the EC a brief opportunity to update its
documents on bananas.  In response to Mauritius, her delegation would make the questions to the EC
available to the entire Council.
The Chairman said that an effort should be made through additional consultations under his
chairmanship, so that by the next meeting Members could be in a position to make a decision
regarding the start of the examination.  It was so agreed.
VII. MARKET ACCESS MATTERS
Sub-item (A):  Committee on Market Access - Periodic Report of the Committee
The Chairman referred to the periodic report of the Committee contained in document
G/MA/112.  The Council took note of the report.
Sub-item (B):  Harmonized System - Requests for extensions of waivers
The Chairman noted that Nicaragua and Sri Lanka had made requests for extensions of
waivers which were going to expire on 30 April 2001.  These requests had been made in the context
of the transposition of these Members' schedules into the Harmonized System.  Pursuant to Article 9
of the WTO Agreement, these requests for waivers were before the Council for Trade in Goods and
draft decisions had been circulated to assist the Council in its consideration of these requests.  Therequest from Nicaragua had been circulated in do cument G/L/442 and a corresponding draft decision
in document G/C/W/227.  The Chairman proposed that the Council approve an extension of theG/C/M/48
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waiver for Nicaragua until 30 October 2001 and recommend that the draft decision be forwarded to
the General Council for adoption.  It was so agreed.
The request for Sri Lanka had been circulated in document G/L/440 and the corresponding
draft decision in document G/C/W/250.  The representative of the United States noted that her
delegation had requested to Sri Lanka on items related to this waiver request.  The Chairman proposed
that the Council approve an extension of the waiver for Sri Lanka until 30 October 2001 andrecommend that the draft decision be forwarded to the General Council for adoption.  It was so
agreed.
Sub-Item (C):  Zambia – Renegotiation of Schedule LXXVIII – Request for an
Extension of the Waiver
The Chairman drew the attention of Members to the request by Zambia circulated in
document G/L/443 for an extension of a waiver granted to it in connection with the renegotiation ofits schedule,  and to a corresponding draft decisi on in document G/C/W/252.  He suggested that the
Council approve an extension of the waiver for Zambia until 30 October 2001 and recommend thatthe draft decision be forwarded to the General Council for adoption.  It was so agreed.
Sub-Item (D):  Decision on the Introduction of the Harmonized System Changes in
WTO Schedules of Tariff Concessions on 1 January 1996 – Extension of the time-limit
The Chairman recalled that the General Council had adopted successive decisions suspending
the application of the provisions of Article 2 of GATT 1994 until 31 October 2000 for the purpose ofenabling Members to implement the amendments of 1996 to the Harmonized System nomenclature.
The draft decision contained in document G/C/W/255/Rev.1 now proposed to extend this time-limit
until 30 April 2002, the purpose being to give Members more time to proceed with consultations orpossible negotiations under Article XXVIII.
The representative of India said that one element of this draft decision was that this might be
the last collective waiver that is granted to Members on HS96.  This last time-extension was without
prejudice to the process of collective waivers that may be followed for HS2002.
The Chairman proposed that the Council take note  of the statement made and that the Council
approve the extension of the waivers, and recommend that the draft decisions granting an extension of
these waivers be transmitted to the General Council for adoption.  It was so agreed.
VIII.  REQUEST BY COSTA RICA, INDIA, INDONESIA, PAKISTAN, PERU AND HONG
KONG, CHINA:  CTG'S OVERSIGHT FUNCTION PURSUANT TO ARTICLE IV
OF THE AGREEMENT ESTABLISHING THE WTO – TRANSPARENCY
REGARDING NEW RESTRICTIONS ON TEXTILE AND CLOTHING PRODUCTS
COMMENTED UPON BY THE TEXTILES MONITORING BODY(G/C/W/260/REV.1)
The Chairman recalled that at its meeting on 15 November 2000, in the context of the CTG's
consideration of the report of the Textiles Monitoring Body for 2000, a discussion took place among
some Members regarding a bi-lateral restraint agreed between the US and Turkey on Turkey's exports
of one clothing category to the United States.  The CTG took note of the statements made at thatmeeting and agreed that the Chairman would conv ene informal consultations with the Members who
had spoken in an attempt to clarify the content and scope of the additional consultations on this item.
These consultations took place on 1 February 2001, but were not successful in achieving this goal.G/C/M/48
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Subsequently, this matter was included in the agenda for the CTG meeting on 14 March 2001 at the
request of India, Pakistan and Hong Kong, China.  At the meeting there was an extensive exchange of
views on the specific issue and on the broader subject of the TMB's responsibility for supervising the
implementation of the ATC and the CTG's role in overseeing this process.
The representative of Hong Kong, China had made a statement at the last CTG meeting on
this subject and before Members on this occasion was a joint communication from several delegations
which set out their systemic concerns and proposal s (G/C/W/260).  In the vi ew of Hong Kong, China,
this issue should have been resolved over a year ago when the TMB came to a clear conclusion that
the new restraint measure concerned had not been demonstrated to be in conformity with the
provisions of the ATC, but regrettably the Members concerned had so far chosen to ignore the TMB's
conclusion.  At the last CTG meeting, the delegate from the US had stated that the measure wasconsistent with the ATC, but no specific justification had been provided.  This contrasted with the
vigorous vigilance the US had applied in other fora, for example examining the request by certain
Members for extension of the transitional period pursuant to Article 5.3 of the TRIMs Agreement.
The co-sponsors in the paper reconfirmed the existing obligations of Members under the ATC and the
role of the CTG in overseeing the implementation of the ATC.  As the adoption of the three proposalsset out in the communication would not result in any additional burdens on Members, he urged all
Members to support the proposals.
The representative of Indonesia said that the main thrust of the paper was to propose that the
CTG request all Members to promptly provide full details of any new restrictions to the TMB together
with their justification, as well as inviting the Members concerned to clarify and rectify the measures
that had already been subject of the TMB review and comments.  Being an exporter of textiles and
clothing, Indonesia was seriously concerned over the restrictions introduced which were inconsistent
with the ATC.  These measures seriously undermined the integrity of the agreement, and should be
removed in order to implement all commitments fully and faithfully.  It was imperative for allMembers to ensure adherence by all Members to the provision in the ATC and an effective
monitoring mechanism was essential.  His delegation believed that its proposal would quickly
facilitate TMB in carrying out its mandate.
The representative of India said that the paper before the Council was self-explanatory.  From
her delegation's perspective, there were two very serious systemic implications.  The first was for the
functioning of the ATC, the second for the impairment of the TMB's role in carrying out its mandateto supervise the implementation of the ATC and to examine the conformity of all measures taken
under the ATC.  The CTG had heard from the US at a previous meeting that the measure was
consistent with the ATC.  Also on record at the TMB was the fact that this was a measure under an
ATC provision that required notification.  However the US had not been forthcoming on the details of
its statement, and it was the TMB's assessment that, after a full review of the ATC's provisions, themeasure was not in conformity with US obligations under the ATC.  This was a serious matter.  She
urged that the CTG invite the Members concerned to clarify and rectify promptly the measures that
had already been the subject of TMB review and comments.  Members were required to comply with
the TMB's recommendations and conclusions within 30 days after their having been made;  any delay
had serious repercussions.  Secondly, she urged Members to provide full details of any newrestrictions that they might have introduced to the TMB, along with the specific provisions of the
ATC, justifying their introduction.  Finally, the CTG should re-emphasize the need, particularly for
the restraining Members, to ensure the conformity of all measures with their obligations under the
ATC.  This was not something new;  under the Singapore Ministerial Declaration, Members had
already recorded the need to ensure proper functioning of the ATC and its full and faithfulimplementation.  The CTG, at the conclusion of its first major review, had also emphasized the CTG's
role in overseeing the functioning of the ATC.G/C/M/48
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The representative of Korea said that the necessity of proper notification of new restrictions
or changes in existing restrictions on textile and clothing products within the timeframe provided in
the ATC could not be over-emphasized.  It was essential to guarantee the supervisory role of the TMB
in the implementation of the ATC.  His delegation also had the same systemic concern that the
function of the TMB had been impaired by the failure of the parties concerned to notify the Body withproper information to review a measure.  To maintain confidence in multilateral disciplines, it was
desirable that concerned Members provide appropriate explanation or justification of a measure which
was identified by the TMB not to be in conformity  with the provisions of the ATC.  Finally, Korea
supported the proposal of some Members regarding the CTG's oversight role to ensure the successful
implementation of the ATC.
The representative of Brazil shared the view that transparency in notifications was important
and fundamental to ensure that measures taken on textile and clothing products covered by the ATC
could be carefully and adequately monitored and scrutinized.  He supported the initiative of the
co-sponsors of the paper.
The representative of the United States said she did not see any basis for discussing this
matter in the CTG.  She appreciated the written explanation of their position by the Members in
question and had reviewed it.  The paper appeared to set out two complaints, one concerning the
bilateral understanding between the United States and Turkey and another apparently concerning
systemic issues alleged to flow from that agreement.  Both of these complaints had been discussed in
the Textiles Monitoring Body.  The TMB had considered the information available to it, completed itsanalysis of the matter, including the systemic issues  raised by certain Members, and issued its report.
The views of the various Members on the substance of this matter were well-known and had not
changed.  In response to the paper presented to the CTG, she said firstly that the agreements cited by
the exporting Members represented a mutually satisfactory resolution of issues concerning the parties.
Second, the paper suggested that the agreement raised serious and urgent systemic concerns.  Taking astep back from the discussions in the CTG so far, one observation was inescapable:  if some Members
considered that one of the most urgent and significant systemic concerns with the ATC was a
mutually satisfactory resolution of trade problem s between two Members that had no effect on the
trade of other Members, one could safely say that the agreement was functioning relatively well.  As
was said at the last meeting, the matter did not really belong in the CTG at this time.  As Members
were aware, the TMB was required to prepare a report on the implementation of the ATC for the CTG
by mid-July 2001, so that the CTG could conduct the next major review of the ATC.  Thus, therepresentatives from the concerned Members would have an opportunity to present their concerns in
the context of the preparation of the report and when the next mandated oversight by the CTG
occurred pursuant to Article 8 of the ATC, all Members would have an opportunity to raise what they
believed might be systemic issues in the implementation of the ATC.  Such a discussion, if
undertaken, would need to be a comprehensive one and include consideration of several kinds of newtextile measures and requests being put forward by other Members including some of the Members
who had submitted their views on this particular matter.  Her delegation did not support the request
made today.
The representative of Turkey said that his delegation was of the view that this issue should be
taken into consideration within the framework of Article 8 of the Agreement on Textiles and
Clothing, when the CTG would oversee the implementation of the Agreement.  He believed that the
agreement between Turkey and the United States, which had the objective of further liberalizing
trade, was consistent with Turkey's rights under the ATC.
The representative of Hong Kong, China said that although Article 8.11 of the ATC provided
for a major review before the end of each stage of the integration process, under the WTO Agreement
there was no provision that confined the CTG's overseeing role on the implementation of the ATC, or
the functioning of the TMB, only to the major review.  It was legitimate for the co-sponsors andG/C/M/48
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others who had spoken in support of the communicat ion to put forward their proposals for discussion.
So far, regrettably, they had not heard any justification from the United States or Turkey, on a matter
that was clearly observed by the TMB not to be in  conformity with the ATC, as to why they thought
that it was consistent.
The representative of India said that regarding three points made by the United States, she had
understood the US delegate to comment that this measure was the result of an agreement which was a
mutually satisfactory solution between Turkey and the US, and which might not have a bearing for
other delegations.  While she appreciated the fact that the US and Turkey had reached a solution, she
thought that in keeping with the multilateral nature of the WTO and the underlying basis of the ATC
itself, any mutually agreed solution could not be contrary to the obligations of either party under the
ATC or WTO Agreements.  Therefore, the US position on this was inconsistent with the normalbusiness of the WTO.  Second, she understood the US to state that, regarding the systemic concerns
expressed, the measure did not affect the trade of others.  Whenever there was a breach of obligations
by any Member, there was a presumed nullification of benefits of others in any event, and systemic
concerns were meant to cover such situations as well.  Third, Turkey and the US had urged that this
issue be taken up with several others during the review which would come up at the end of the year.She had looked at Article 4 of the WTO Agreement, which did not limit the CTG's oversight role to
just that review;  its oversight role was unlimited and it could be done at any instance.  The US had
been alleging in the TMB that it was a measure that had been taken under the ATC provisions.  She
would appreciate knowing in the CTG under which provisions of the ATC it had been taken, and how
it was consistent with their obligations.  In case it was not consistent, there were numerous options,such as an Article IX waiver.
The representative of Malaysia said he shared the same concerns expressed by the
co-sponsors of the paper who were asking for transparency.  Members who preached transparency in
one forum should also practice it in all other organs of the WTO.  Members who preached the need tocarefully examine and seek questions and answers from other Members should also be equally
benevolent when it came to other issues.
The representative of the United States noted the concerns of some delegations.  She had still
not heard, before the comprehensive review that  the CTG would undertake, how there had been a
breach of benefits and how the US-Turkey arrangement was contrary to the interests of others.  The
delegations were aware of what the mutually satisfactory resolution included as far as the type ofproduct under question, and she requested details of how this arrangement was a breach of benefits to
other delegations.  She had never said that delegations could never raise this issue in the CTG, but had
said that the ATC provided an opportunity to discuss concerns about the implementation of the ATC.
The representative of Hong Kong, China understood that there was a disagreement with the
United States on whether this item should be kept on the agenda for the next meeting.  One possibility
was for the Chairman to undertake informal consultations on this subject.
The representative of India said on the issue of breach of benefits, the TMB record and the
fact that her delegation along with others had repeatedly raised this matter was sufficient witness to
the fact that her delegation was deeply concerned and had made known its specific concerns in
writing.  It was inconceivable that the US could allege that they had not heard of their concerns.  The
co-sponsors had not proposed that the CTG conduct its review in advance of the requirements of
Article 8.  What had been proposed was a normal review of a measure and Article 4.5 of the WTO
Agreement did not limit the CTG's role just to a mandated review under Article 8.  There were anumber of issues which had been raised by the US which it might be appropriate for the Chairman to
clarify and seek to resolve through consultations.G/C/M/48
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The Chairman proposed that the CTG take note of the statements made.  Because it seemed to
him that there was a difference of opinion as to whether this item should be kept on the agenda of the
next meeting, he announced his intention to hold consultations with the delegations directly
concerned.  It was so agreed.
IX. OTHER BUSINESS
Under other business, the next meeting of the CTG was scheduled for Thursday 5 July 2001,
and the agenda would close on Friday, 22 June 2001.
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