RESTRICTEDWORLD TRADE
ORGANIZATIONWT/GC/M/42
16 June 1999
(99-2426)
General Council
Special Session
20 May 1999
MINUTES OF MEETING
Held in the Centre William Rappard
on 20 May 1999
Chairman:  Mr. A. Mchumo (Tanzania)
Subjects discussed: Preparations for the 1999 Ministerial Conference
(a) Continuation of discussion of substantive issues arising from the
Ministerial Declaration of May 1998, including proposals by
Members, with the following suggested focus:  "Proposals on
paragraphs 9(a) – 9(d) of the Ministerial Declaration"
(b) Role of the General Council in the preparation of negotiating
guidelines and procedures for the negotiations on services
(a) Continuation of discussion of substantive issues arising from the Ministerial Declaration of
May 1998, including proposals by Members, with the following suggested focus:  "Proposals
on paragraphs 9(a) – 9(d) of the Ministerial Declaration"
1. The Chairman recalled the broad understanding that the second phase should be driven
primarily by proposals from Members.  As he had stated on earlier occasions, these proposals would
need to be the primary focus of the Special Sessions if Members were to move the process forward.  It
would be helpful if delegations aimed, at this stage in the process, to submit brief, specific and action-oriented proposals, accompanied as necessary by the appropriate rationale and background.  Given the
short amount of time available between now and Seattle, this kind of focus would be necessary if
Members were to avoid undue pressures as they approached the November deadline.  He sought the
cooperation of all delegations in this regard and urged that they try not to revisit issues and concerns
of a general nature that had been raised previously.  He also urged Members to try and avoidrepetitions or declarations that were not related to specific proposals.  Delegations could, of course,
circulate in writing any general statements of view which they believed needed to be registered in this
process.  Finally, he suggested that the proposals tabled at this meeting, and other specific proposals
that delegations might wish to submit for circulation in the coming weeks, be taken up for detailed
consideration at the informal meeting scheduled for 7-8 June.  He recalled that since the previousSpecial Session in March, proposals had been submitted by Korea, Hungary, Hong Kong China,
Norway, Australia, the European Communities and the United States.
2. The representative of Hungary, referring to his government's submission on Article XVII of
GATT 1994 (WT/GC/W/172), said that state trading enterprises, through their operation, could erect
significant non-tariff barriers to trade.  Despite some decrease of the incidence of state trading in
world trade over the years, it was still applied on a wide range of products by numerous Members asWT/GC/M/42
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well as by several countries in the process of acceding to the WTO.  This latter factor, together with
the significant new concessions (agricultural market access) and obligations (new and strengthened
rules in the field of the subsidization and restriction of exports) brought about by the Uruguay Round,
underlined the necessity to review the adequacy of the present rules governing the activities of state
trading enterprises in order to ensure that concessions were not nullified or impaired, norcommitments circumvented.  The potential for trade distortion and the likelihood of the existence of
non-tariff barriers was arguably the highest when state trading enterprises benefitted from monopoly
export/import rights.  The need for granting such rights was seriously called into question as they did
not seem to be indispensable for attaining their stated objectives, e.g. security of supplies,
administration of tariff-rate quotas, income support for domestic producers, price stability, health
related concerns, economic efficiency, and guarantee of an adequate price and quality for consumers.
In addition, some of the stated objectives of STEs, e.g. improvement of the terms of trade andachievement of economies of scale, were not permitted to be pursued through equivalent measures,
such as export restrictions and VERs, by Members where exclusive state trading did not exist.
Hungary believed that the present rules applying to STEs seemed inadequate, lacked the necessary
precision that would ensure that their enforcemen t was feasible, and did not take into account the
implications of the new disciplines introduced by the WTO in the agriculture area.  In the particularcase of STEs the ensurance of compliance with WTO rules could not be limited exclusively to the
improvement of transparency, however important it might be, since it was rather unlikely that any
given government would notify that with or without its active involvement a state trading enterprise
within its jurisdiction engaged in activities that were contrary to the relevant rules of the WTO, e.g. by
restricting imports to offer protection for domestic farmers in addition to that provided by tariffs.  Atpresent, the burden of proof regarding non-compliance was on the aggrieved party and, in the absence
of strengthened rules, it would almost never be  in the position to successfully challenge those
practices that were not in conformity with the relevant WTO rules.  Hungary therefore proposed in
WT/GC/W/172 that participants review Articl e XVII of GATT 1994 and related WTO provisions
with the aim of ensuring non-discrimination and the balance of concessions and obligations, includingthrough the elimination of de jure  and de facto monopoly import/export rights.
3. The representative of Hong Kong, China, referring to his government's proposal on regional
trade agreements (WT/GC/W/174), said that some Members might have the mistaken impression that
Hong Kong, China was implacably opposed to regionalism on doctrinal grounds or even had
something against particular RTAs, neither of which was true.  While RTAs were an exception to the
MFN principle, and it was important not to undermine that principle, his delegation recognized that
meaningful regional economic integration, in combination with progressive multilateral tradeliberalization, led to a convergence between regionalism and multilateralism.  He acknowledged that
many parties to RTAs were among the strongest proponents of multilateral trade liberalization within
the WTO, and that the motivation for regional economic integration could be complex and its
achievement difficult.  Hong Kong, China had nothing against any RTA, either in principle or in
particular, and had indeed already unilaterally accorded each WTO Member the de facto status ofFTA partner even if this had been reciprocated only in rare cases.  Its initiative on RTAs had been
motivated purely by systemic concerns, and focused on the uncertainty which characterized the
current legal framework in the GATT and GATS – an uncertainty which was in no one's interests.
Members had thought a breakthrough had been made with the establishment of the Committee on
Regional Trade Agreements.  However, the Committee had turned out to be no more than aprocedural innovation and the underlying problems had never been addressed.  As a result, out of the
162 RTAs in existence only one had been found to be clearly in conformity with the multilateral rules.
While that was no one's fault in particular, it should be a concern for everyone.  As long as the legal
framework for RTAs remained as imprecise as was the case, Members would be unable to make
progress.  It had to be intensely frustrating for parties or potential parties to RTAs to have this fog oflegal uncertainty surrounding important planks of their trade policy.  The CRTA had not been
successful in tackling such issues.  Although it had been tasked with consideration of such issues and
making recommendations to improve the situation, it had not come up with a single recommendation,WT/GC/M/42
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nor looked like doing so.  In its 1998 report to the General Council, the CRTA had acknowledged that
progress in the process of examination of RTAs was slowed, inter alia , by a lack of consensus on the
interpretation of certain elements of the rules relating to RTAs.  A new, higher-level, political
initiative was needed and long overdue.  At the Singapore Ministerial Conference there had been the
beginnings of realization that something should be done, and the Declaration recognized theimportance of analysing whether the system of WTO rights and obligations as it related to RTAs
needed further clarification.  His delegation pr oposed going further now and that in order to
modernize the legal framework for RTAs, to provide gr eater security and predictability, to sustain the
primacy of the multilateral trading system, and further to promote the complementarity of RTAs with
it, Ministers at Seattle should agree that existing WTO rules and decisions relating to RTAs should be
clarified and, where appropriate, reinforced.  He expressed his appreciation to Korea and Australia for
their submissions on this subject and associated his delegation with their views.
4. On industrial tariffs, he recalled that many Members had already indicated the view that this
issue should form an integral part of the new round of multilateral trade negotiations.  As a staunch
supporter of free and open trade, his delegation fully supported and called for comprehensive
negotiations on industrial tariffs in the new round of broad-based and balanced multilateral trade
negotiations.  Referring to his delegation's submission on industrial tariffs (WT/GC/W/175 andCorr.1), he said that successive rounds of multi lateral trade negotiations had succeeded in lowering
significantly tariffs on industrial products, although tariff reductions did not spread out evenly both
across economies and sectors.  Tariff peaks in certain sectors and tariff escalation were commonly
found and remained a general problem.  Low and nuisance tariffs, such as those below 2-3 per cent
generated considerable administrative procedures and burden to customs authorities as well as traders,and hampered the efficient flow of trade.  In order to achieve quick and meaningful results in a likely
short round an agreement on the approach to industrial tariffs should be reached at the third
Ministerial Conference so that negotiations could start immediately.  Hong Kong, China
recommended that Ministers at Seattle agree to launch a new round of comprehensive tariff
negotiations on industrial products and set an ambitious target to achieve a level of tariff cuts wellabove that agreed in the Uruguay Round.  The negotiations should start immediately next year and
conclude by the end date of the new round to be agreed by Members.  The agreed tariff
reductions/eliminations could then be implemented in a progressive manner within, say, three years
from the conclusion of the negotiations.  His delegation advocated a simple, transparent approach
with no a priori exclusions, including appropriate me thods to eliminate tariff peaks, tariff escalation
and nuisance tariffs.  There should also be an expansion of the scope of tariff bindings among all
Members.  Negotiations should include all Members, and the interests and needs of developing andleast-developed country Members should be fully taken into account.  Hong Kong, China was
prepared to discuss its proposal further with other Members and work with them on other possible
ways to reduce/eliminate tariffs, including achieving early results on APEC's Accelerated Tariff
Liberalization initiative.  Finally, he welcomed proposals in this area by the EC, Australia and
Norway and their support and call for comprehensive negotiations on industrial tariffs, covering allsectors with no a priori exclusions.  His delegation shared similar thoughts on the
reduction/elimination of tariff peaks, tariff escalation and nuisance tariffs.  It supported in principle
Australia's views on the formula approach and noted with interest the latter's suggestion to tackle
sectors of particular interest to developing-country Members, such as textiles and clothing.  He looked
forward to having a more substantive discussion on these proposals at the next informal GeneralCouncil meeting.
5. The representative of Norway said that the broader Norwegian views on the forthcoming
WTO negotiations were based on a comprehensive domestic process of identifying Norwegian
interests which spanned much wider than the built-in agenda.  With its open economy, Norway was
heavily dependent on trade and on strong multilateral rules governing trade, and was thereforecommitted to the further strengthening of the multilateral trading system.  His government supported
the idea that the WTO should embark on a comprehensive new round of negotiations based on theWT/GC/M/42
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principle of a single undertaking.  Such an approach to the forthcoming negotiations was the best way
of securing a balanced outcome of the negotiations with something for everyone.  He stressed the
importance of taking into account the interests of  the developing countries.  Norway's views on
agriculture, and especially the importance of ensuring that non-trade concerns were given due
consideration in the forthcoming negotiations, were well known.  Norway was interested in broad-based negotiations in the field of services with no sectors excluded and would pay particular attention
to maritime services, telecommunications, IT-related services, offshore services and environmental
services.  His delegation strongly supported the idea that the WTO should embark on broad-based
market access negotiations for industrial products, including fish and fish products.  No sector should
a priori be excluded.  Norway also considered electronic commerce a clear area which should be
covered by the multilateral trading system, and supported the development of a multilateral discipline
providing increased transparency in government procurement within the WTO.  A possiblemultilateral discipline in the field of competition would promote objectives such as efficient use of
resources and well functioning of markets.  He expressed his delegation's strong commitment to the
process of considering proposals for adjustments in the existing regulatory framework of the WTO-
agreements, including the DSU review.  One important objective as part of the preparations for the
third Ministerial Conference was to take on the immediate challenge of defining how environmentalconcerns might be taken into account in fields which would be subject to negotiations.  Increased
transparency around the formulation of multilateral trade policies and due considerations of
qualitative aspects of trade, such as health, environment, consumer interests, as well as rural
considerations, were necessary elements to enhance the legitimacy of the system.
6. A closer look also had to be taken at how the WTO could further improve the dialogue with
civil society in matters pertaining to trade generally, and the run-up to new WTO negotiations
particularly.  He recognized that WTO Members were at different levels of development, and as a
result to a varying degree able to draw the full benefits from open markets.  This fact had to be taken
into account in the elaboration of relevant provisions of special and differential treatment, and the full
implementation of existing S&D provisions.  Efficient provision of technical assistance for thepurpose of human resource development and capacity building at the domestic level were other
important elements.  He said that without addressing this core challenge the marginalization of many
developing countries, in particular the least-developed, in the international trading system could not
be countered, and the cohesiveness of the organization would be at stake.  His delegation believed that
some of the important answers to the challenge before all could be found by taking a broad approach
to the upcoming negotiations, through a comprehensive round based on the principle of a single
undertaking, carried out within a reasonably short period of time.  The Seattle Ministerial Conferenceshould also recognize the role of the ILO as the competent body for core labour standards although
the WTO should complement the ILO, the World Bank and other relevant international organizations
in ensuring a good dialogue on social standards issues.  Referring to his delegation's submission on
market access for industrial goods (WT/GC/W/185) he proposed that the General Council in its
recommendations to the 1999 Ministerial Conference include the following elements:  the launching
of comprehensive tariff negotiations on all industrial products, aiming at substantial tariff reductions
across the board and addressing tariff escalation, tariff peaks and nuisance tariffs.  The negotiations
should include non-tariff barriers as well as promotion of trade facilitation measures in order to secure
real market access.  The negotiations should open up for tariff elimination in specifically identified
sectors.  Due consideration should also be given to identifying ways and means to create moretransparent and predictable tariff systems.  Also, th e effects on sustainability of further liberalization
of trade in industrial goods should be considered  and/or reviewed.  Furthermore, the concerns of
developing countries, and LDCs in particular, must be taken duly into account.  Referring to Norway's
submission on trade and environment (WT/GC/W/176),  he suggested that the following be included
in the recommendations to the Seattle Ministerial Conference as part of the objectives and generalprinciples for the upcoming negotiations:  increasing the responsiveness of the WTO system through
integration of environmental concerns in the various sectors, and by fostering cooperative action
between the WTO and other international organizations, with a view to promoting sustainableWT/GC/M/42
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development.  The effect on sustainability of further liberalization should also be reviewed.
International organizations such as UNEP, F AO, UNCTAD, and ISO should, where appropriate, be
invited to attend meetings of negotiating bodies and to provide contributions.  In addition, he
proposed two separate subjects for negotiation – specific accommodation for trade-related instruments
pursuant to MEAs and voluntary eco-labelling.  The aim of negotiations in these areas should be toclarify existing provisions and elaborate new disciplines.
7. The representative of Australia, referring to his government's proposal on domestic support in
agriculture (WT/GC/W/177), said that a key element of the Agreement on Agriculture was a structure
which encouraged a move away from trade and production-distorting domestic subsidies and support.
However, the first steps in this process had been tentative.  The next step would be to deliver major
reductions in domestic support and to change finally the way in which governments supported their
farmers.  Eliminating all trade and production-distorting forms of support was an essential element ofthe agreed WTO objective of establishing a fair and market-oriented agricultural trading system.
Distorting forms of support were not necessary to achieve the many legitimate objectives that
governments set.  Targeted, transparent and fully decoupled policies were the best way to achieve
non-trade objectives and ensure that efficient agricultural producers, both current and prospective,
were not damaged, and that the adjustment costs were not passed from one group of Members toanother.  Introducing a proposal on agricultural market access (WT/GC/W/184), he said that gaining
better access to markets for exports was a primary concern of all WTO Members, and nowhere was
market access a more pressing concern than in the agricultural sector.  By virtually every measure,
access for agricultural goods was significantly more restricted and subject to greater levels of
interference than for other goods.  The paper submitted by Cuba, the Dominican Republic,El Salvador, Honduras, Nicaragua and Pakistan (WT/GC/W/163) had already identified concerns and
problems in this area that struck a resonance for many other Members.  High tariff levels, tariff
escalation, tariff peaks, restricted access under tari ff rate quotas, problems relating to tariff-rate quota
administration and non-tariff barriers and problems caused by the use of the special safeguard
mechanism, were all problems that had also been identified by Australia, the Cairns Group and mostother Members.  It was important to provide equitable results for all Members by ensuring in the
agriculture negotiations that access opportunities were expanded for every agricultural product, and
that all the ways in which Members used border and other measures to limit access were addressed.
There was no justification other than protectionism for having access for agricultural products at
lower levels and under worse conditions than that for industrial and other non-agricultural goods.
8. Turning to his government's proposal on industrial tariffs (WT/GC/W/182), he said that
Australia and others had been arguing for some time that a new round of multilateral tradenegotiations should include comprehensive negotiations on industrial tariffs.  These arguments had
been well put in Hong Kong, China's proposal on indu strial tariffs (WT/GC/W/175 and Corr.1).  His
delegation wished to underline two points:  first, that  industrial tariff negotiations were in the interest
of both developed and developing countries because they could deliver balanced gains in a short time-
frame;  and second, that such negotiations would improve the likelihood of better outcomes from themandated negotiations in services and agriculture.  More and more Members were now willing to
consider positively the case for industrial tariff negotiations.  In view of the progress made thus far,
Australia's proposal looked at how best to achiev e balanced and wide-ranging gains from industrial
tariff negotiations.  It proposed developing a framework for comprehensive negotiations on
industrial/non-agricultural tariffs that would compri se formula elements, sectoral approaches and
bilateral request/offer negotiations.  Using these approaches, all of which were familiar to Members
from the Uruguay Round and other negotiations, would allow Members to set ambitious objectives for
the next round of negotiations.  In order to produce a balanced package of outcomes, Members could
not afford to neglect any approach to negotiations.  Australia believed that the WTO should begin
soon to look at the issues involved in industrial tariff negotiations, so that when these negotiationsbegan, at the same time as the mandated negotiations on agriculture and services, Members would
have agreed on the necessary modalities and would be prepared to work quickly to achieve balancedWT/GC/M/42
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gains in a relatively short time-frame.  As regards his government's proposal on regional trade
agreements (WT/GC/W/183), he said that the WTO wa s not dealing adequately with the growth in the
number of regional trade agreements.  The Committee on Regional Trade Agreements had failed to
conclude a single examination due to the lack of clar ity in the existing rules.  Governments, in their
legitimate efforts to promote economic development through regional integration, were unsure of themeaning and application of these antiquated WTO rules.  This striking failure of the WTO to
understand and implement its own rules was one of the reasons why Australia wanted to see a new
understanding on regionalism as one of the goals of a new round of multilateral trade negotiations.
His delegation's proposal drew strongly on those by Japan, Korea, and Hong Kong, China, and
proposed that there be two complementary bodies of work on regionalism.  The first would clarify the
rules governing the relationship between the multil ateral trading system and regional integration
initiatives, and the extent to which WTO Members could derogate from the basic principle of MFN.The second would consider ways to improve the procedural aspects of the WTO's work on RTAs.  It
was important that the negotiating package to be agreed at Seattle include a decision to clarify the
rights and obligations of WTO Members in establishing RTAs.  This work should be completed at the
same time as other major negotiations on services and agriculture and, his delegation hoped, in
industrial tariffs, to ensure that future commitments and concessions were not undermined bycontinuing weak and unclear rules on preferential trading arrangements.
9. The representative of the European Communities said that his delegation had consistently
advocated that a global and comprehensive approach to tariff liberalization with no product exclusions
in a new round was the only way of ensuring that all products and all interests of all Members were
addressed.  In reference to the Community's paper on market access for non-agricultural products(WT/GC/W/178), he said that the tariff band harmonization approach set out in the paper met all these
objectives.  Tariff peaks would be eliminated or at least flattened, tariff structures would be
harmonized, all tariffs would be caught and the additional requirement to achieve a specific trade
weighted/simple average tariff (the lower of the two) provided the possibility of substantial
liberalization for specific products or product groupings as well as the means of addressing particularproblems of tariff escalation which were not alleviated by the general reduction.  Clearly, the more
detailed parameters of these concepts, i.e. the tariff band ideas and the setting of final average tariffs
as an objective, would have to be worked out in the coming months.  He stressed that the proposal
contained in-built special and differential treatment for developing as well as the least-developed
countries.  For the least-developed countries, his delegation continued to urge its partners to make
commitments to a tariff and quota free access for products from these countries and that this should be
an up-front commitment at Seattle from all developed countries.  He called on the more developed ofthe developing countries to seek to associate themselves with this initiative.  This would be a
deliverable at Seattle.  For developing countries generally, the paper suggested that tariff preferences
were still the preferred approach and that the aim should be to provide significant preference margins
on an autonomous basis for products of particular export interest to developing countries.  A third
objective related to the issue of simplifying tariff structures.  In concluding, he indicated that theCommunity would be submitting eight specific proposals in the near future on increasing market
access for least-developed countries, trade in services, government procurement for good and
services, intellectual property, trade and the environment, trade facilitation, trade and investment, and
trade and competition.  He reiterated his delegation's support for a global and comprehensive
approach to new negotiations and said that these should  not be limited to the built-in agenda or to too
narrow a series of ideas in order that there should be the maximum benefits for the maximum number
of Members.
10. The representative of the United States said that the US paper in WT/GC/W186 outlined a
basic structure for a Ministerial mandate on agriculture, including overall objective for the
negotiations, a basic framework to pursue this objective and the need for benchmarks during thenegotiating process.  This structure provided a solid, yet flexible, basis to organize further work on
agriculture.  The paper proposed that the objective for the agricultural negotiations be to expand tradeWT/GC/M/42
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opportunities by ensuring further deep reductions in protection and support, while encouraging non-
trade distorting approaches for supporting farmers and the rural sector and strengthening the rules
governing trade in agriculture.  The existing framework in the Agreement on Agriculture, with
binding commitments in market access, export competition and domestic support, provided the basis
on which to pursue further reform, noting that this framework should be supplemented by additionaldisciplines, as needed, to address new challenges facing the agricultural sector.  Initial US views on
the issues to be addressed in each area had been set out in documents WT/GC/W/107 and
WT/GC/W/115.  She noted that several Members had made proposals regarding the disciplines in one
or more of the three areas, and indicated her delegation's intention to submit more detailed proposals
on issues that needed to be addressed in the coming weeks.  Additional measures that unjustifiably
distorted international trade in agriculture should also be addressed and subjected to rules and
disciplines, including possibly outside of the Agri culture Agreement.  She proposed the following
benchmarks for the negotiation process:  submission of specific proposals for specific disciplines in
each area under negotiation beginning immediately after the Ministerial Conference, and a date-
certain commitment for tabling comprehensive of fers.  She encouraged Members to view the
US proposal from two perspectives:  the basic stru cture and the detailed proposals for implementing
that structure.
11. The representative of Zambia, speaking also on behalf of Pakistan, Jamaica, Kenya, Uganda,
Tanzania and Sri Lanka, said that a non-paper on implementation issues from these delegations would
be circulated shortly1 and that he would refer to the main problems that had arisen in implementation,
and the steps to be taken to resolve them and make the system more responsive to the trade, financial
and development needs of developing countries.  Today, almost all developing countries were inagreement with the objectives of the multilateral trading system of pursuing open and liberal trade
policies.  As a result of the unilateral measures which these countries had taken to liberalize trade
since the conclusion of the Uruguay Round, the levels of tariffs in most of these countries were today
significantly lower than they were a few years back.  The bulk of quantitative restrictions which were
applied previously to imports, either for providing protection to their nascent industries or for balance-of-payments reasons had been removed.  Most of these countries were further pursuing vigorous
policies for promotion of investment, by gradually re moving restrictions that were applied previously
to foreign direct investment.  Unfortunately, the expectation that the adoption of these policies would,
by assisting countries in promoting export oriented  growth, lead to their greater integration in the
world trading system and economy had not materialized.  The optimistic forecasts in the
macroeconomic studies made at the conclusion of the Uruguay Round, i.e. increased incomes from
trade gains also had not materialized.  A large number of developing countries were finding that theirexports were not growing, or in those cases where they were increasing, that they were doing so at
much slower rates than in earlier years.  As a re sult, far from being integrated into the world economy,
they were facing the prospect of marginalization.  The worst affected in this regard were the least-
developed countries, which depended heavily on foreign trade in a few commodities for a large
proportion of their gross domestic product.  The non-paper pointed out that the increasingmarginalization of developing countries in internati onal trade and their inability to take full advantage
of the multilateral trading system could be attributed broadly to six different but closely related
factors.  These were:  (i) backsliding by developed countries in the implementation of the
liberalization commitments assumed by them in the agricultural and textile sectors – two sectors in
which the macroeconomic studies had estimated that the gains would be highest;  (ii) increasing resortto contingency protection measures – such as safeguard actions, anti-dumping and countervailing
measures – by developed countries against imports from developing countries;  (iii) a growing trend
on the part of the developed countries towards legalism and the tendency to interpret the provisions in
the WTO agreements according to their letter and not spirit;  (iv) non-implementation of provisions
relating to special and differential treatment;  (v) the decline in demand and in prices for the majorcommodities exported by developing countries as a result of the downturn in the world economy
                                                     
1 Subsequently circulated as JOB(99)/3169.WT/GC/M/42
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following the Asian financial crisis, the recession in Japan and structural problems in the Russian
economy;  and (vi) the difficulties which developing countries, particularly the least-developed among
them, were encountering in adopting the legal and institutional framework required for the effective
administration and implementation of the complex set of substantive and procedural rules which the
multilateral trading system had created because of the financial constraints and lack of adequatelytrained personnel.  Against this background, the non-paper argued that the main thrust of the future
work programme should be directed at achieving the main objectives of WTO in the field of trade and
economic development by taking positive measures to integrate closely the developing countries in
the multilateral trading system through, inter alia :  (i) building capacity through the provision of
technical assistance so that they were able to derive full advantage from the framework of the rights
and obligations that the system created;  (ii) removing existing asymmetries and anomalies in the rules
which put them in a position of serious disadvantage  in competing in international markets;  (iii)
finding solutions to problems and issues in the implementation of existing agreements;  and (iv)
ensuring that the countries whose economies were adversely affected as a result of the decline in
commodity prices were appropriately compensated.  The non-paper described in detail how the above
proposals could be attained by improving the implementation of the rules of various agreements.  The
various proposals for action that were made in the non-paper were without prejudice to the sponsoringcountries' individual positions.
12. The representative of Japan fully endorsed the proposals on regional trade agreements from
Australia, Korea, and Hong Kong, China.  As his delegation had stated at the March General Council
meeting, in order to ensure the primacy of the multilateral trading system and the complementarity of
regional trade agreements with the multilateral system, it was important from the systemic viewpointto clarify the key concepts in Article XXIV of GATT.  This should be seen particularly in the light of
recent developments in this area and which had altered the circumstances existing when the GATT
had been drafted.  On industrial tariffs, Japan welcomed the proposals that had been tabled at the
meeting.  The next negotiations should be comprehensive in order to allow for a balanced approach
that would take into account the interests of all Members, and Japan supported negotiations onindustrial tariffs.  In order to reach agreement w ithin a limited time-frame, negotiations on industrial
or non-agricultural tariffs should be considered on the basis of a formula approach, combined with
zero-for-zero initiatives in certain sectors as well as harmonization initiatives.  At the same time, it
was important to consider the specific conditions surrounding different sectors which would be the
subject of the negotiations.  As regards the forthcoming negotiations on agriculture, forestry and
fishery Japan believed that truly fair trade rules should be established.  The rules also had to be
impartial to both importing and exporting countries, as well as to any developed and developingcountries.  The following points should be secured in such rules:  (i) appropriate consideration of the
importance of the multifunctionality of agriculture and food security, smooth implementation of
domestic agricultural policy, as well as the cultural aspects of agricultural production;  (ii) assuring a
proper balance of rights and obligations under WTO rules between exporting and importing countries;
(iii) making an international order to allow for the co-existence of various types of agriculture, fullytaking into account such differences as the natural circumstances and the history of each country.
Referring to the issue of multifunctionality of agriculture, he said that through production activities in
harmony with the natural environment, agriculture contributed to the creation of the rural landscape
and to the realization of multifunctionality in activities other than agricultural production, such as land
conservation and the maintenance of the ecosystem.  Thus, the multifunctionality of agriculture wasinevitably linked to domestic agricultural production, whereby agricultural production and domestic
support for the purpose of realizing the multifunctionality of agriculture were not entirely separable.
Moreover, the benefits of the multifunctionality of agriculture could not be easily facilitated under
free market pricing.  In order to maintain and realize the multifunctionality of agriculture by
sustaining a certain level of agricultural production, it was necessary to develop a specific kind ofdomestic support linked with production and to combine such support with proper border measures.
On food security, he said that Japan was the largest net importer of agricultural products in the world,
and that its self-sufficiency rate was extremely low.  In order to assure food security in Japan, it wasWT/GC/M/42
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essential to place domestic agricultural production as the basis for food supply and also ensure its
maintenance and enlargement as much as possible.  To maintain a certain level of agricultural
production in an importing country, it was necessary to uphold a specific kind of domestic support,
fully taking into account the actual conditions of a country's agricultural production.  Moreover, the
combination of such domestic support with proper border measures was also necessary for thispurpose.  Furthermore, in order to assure food security in net food-importing countries, such as Japan,
properly combining the stable importation and public stockholding with the basis of domestic
agricultural production was important.  In particular, regarding importation, securing the right
quantity for domestic demand was not sufficient:  price stability was also important.  From this point
of view, exporting countries' export restrictions or prohibition measures, in addition to export taxes,
should be more disciplined under WTO rules.  On the issue of disciplines on exporting countries,
Japan believed that in regard to the trade of agricultural products, it was characteristic that theexportation of many items depended on individual countries.  Therefore, the international market
price of those products was exposed to the constant risk of violent fluctuation created by an exporting
country's export performance.  Under such circumstan ces, not only from the viewpoint of the balance
of WTO rights and obligations between exporting and importing countries, but also with regard to
food security in importing countries, it was necessary that exporting countries' export restrictions orprohibition measures, in addition to export taxes, be more disciplined under WTO rules.
13. Regarding agricultural market access, he said th at present levels had been agreed upon as a
result of repeated negotiations and by taking into consideration various factors affecting every item in
each country.  Moreover, out-of-quota tariffs on items tariffied under the Agreement on Agriculture
had been established on the basis of a price difference between home and abroad.  When discussingtariff levels, consideration should be given to the above circumstances, to the maintenance of a certain
level of agricultural production and to the multifunctionality of agriculture as a whole.  As for the
level of market access, it was necessary to consider the experience gained through the implementation
of the Agriculture Agreement and through the demand and supply situation of importing countries.
With regard to domestic support, in order to maintain and realize the multifunctionality of agriculturethrough a certain level of agricultural production, a specific kind of domestic support linked with
production was necessary.  In discussing domestic support, it was necessary to fully take into
consideration such viewpoints.  On export restrictions and export taxes, he said that as a result of the
Uruguay Round agricultural negotiations, all non-tariff border measures, including quantitative
restrictions and variable charges, had in principle been replaced by tariffs.  Addressing the issue of
export subsidies he said that while export subsidies had a strong trade-distorting effect, obligations
concerning their exercise were more lax than the commitments on domestic support.  This situationwas again problematic for the balance of WTO rights and obligations between exporting and
importing countries and, from this point of view, export subsidies should be more disciplined under
WTO rules.  Concerning state trading, consideration should be given to the role played by state
trading enterprises in the domestic food and agricultural policy.  Finally, on the issue of the next
agriculture negotiations, it would be necessary to fully take into account the various elements and, inparticular, consumers' concerns, as well as the needs of developing countries.  He indicated that his
delegation expected to submit specific proposals on agriculture shortly.
14. As regards forestry products, Japan believed that truly fair trade rules, which were impartial
for both importing and exporting countries, should be established.  Such rules should not hinder a
country's efforts in achieving sustainable forest management and in securing the public benefit offorests.  An appropriate rule should be established so that efforts from domestic forest owners towards
sustainable forest management, including that focused on the public benefit of forests maintained
through proper commercial operations, were not undermined.  One of the biggest challenges was to
take appropriate measures against global environmental issues and to achieve sustainable forest
management.  He called for the need to pay due consideration to minimizing the negative effects ofthe wood products' trade on sustainable forest management.  It was therefore important to address
sustainable forest management concurrently with such market access issues as import tariffs and logWT/GC/M/42
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export restrictions in the forthcoming negotiations.  On the issue of disciplines addressing exporting
countries, the log export restriction measures retained by most major wood exporting countries, such
as the United States, Canada and Malaysia, should be addressed in the next negotiations from the
viewpoint of ensuring balanced rights and oblig ations between exporting and importing countries.
Concerning the framework of negotiations it was impor tant to address trade measures on exports, in
addition to those on imports, in terms of maintaining balanced rights and obligations between
exporting and importing countries.  Global environmental issues and the achievement of sustainable
forest management should not be omitted either.  As these issues seemed to be unique to forest
products rather than generic to industrial products, a purpose-built framework was probably necessary
in the negotiations.  With regard to market access, he said that considering that Japan was the largest
importer of wood products in the world benefiting from a low average tariff rate, it would be
necessary to establish the tariff rate for Japan in a manner suitable for securing the public benefit of itsforests and for tackling the difficulties faced by its domestic industry.
15. As regards fishery products, he said that fishery resources were exhaustible natural resources,
which could be depleted without proper management.  His delegation believed that trade rules that
contributed to the conservation and sustainable utilization of fishery resources should be established.
It was necessary to establish a framework in the next negotiations, under which Members could dulytake into consideration the conservation and sustainable utilization of fishery resources.  Considering
that much of the world fish stocks were already over-exploited and that about 40 per cent of world
fishery products were being traded, future trade of  fishery products should supplement or strengthen
fishery conservation measures, or, at least, should not undermine conservation efforts.  If trade
liberalization was pursued without establishing pr oper fishery conservation measures, the unregulated
exploitation of fish stocks and the subsequent trade of products would likely cause the depletion of
stocks.  In particular, Japan, being the largest fish importing country accounting for approximately
30 per cent of total world fish trade value, had to bear this point in mind.  Currently, international
fishery conservation frameworks such as ICCAT (International Commission of the Conservation of
Atlantic Tunas) were taking trade-restrictive measures for conservation purposes.  Also, somecountries were taking unilateral trade measures for similar reasons.  Addressing the issue of food
security and the multifunctionality of fishery, he said that in order to stabilize the supply of world
fishery products, each nation should be responsible for a rational utilisation of fishery resources in its
200-mile zone, thereby providing fishery products to its nationals in a stable manner.  This point
should also be fully considered when formulating fishery trade rules.  The multifunctionality of
fishery, such as the sustenance of remote communitie s, should also be considered.  On market access
his delegation believed that when discussing international trade measures, including tariffs,consideration should be given to the various factors, including the extent to which each nation was
responsible for a rational utilization of fishery re sources, how to secure a stable supply of fishery
products and the multi-functions of fishery in each country.  He said that Japan's tariff levels on
fishery products had been reduced to 4.1 per cent on average as a result of past repeated negotiations.
If a reduction in tariffs on fishery products encouraged illegal fishing operations by vessels such asthose flying a flag of convenience, which ignored international conservation measures, thereby
causing an over-exploitation of fishery resources, su ch a reduction could not be justified.  Regarding
fishery subsidies, consideration should be given to the positive aspects of the subsidies, such as
reducing over-capacity, developing fishery management schemes and enhancing stock.
16. The representative of Malaysia, speaking on behalf of the ASEAN Members
, supported the
Australian proposals in the areas of domestic support and market access in agriculture.  As his
delegation had stated previously, the reason why protection remained high in agriculture was that the
most trade-distorting agricultural support measures had not been substantially reformed.  The ASEAN
Members believed that the present disciplines on domestic support had not been as influential as
originally envisioned to usher in the desired changes in domestic support policies.  The reduction indomestic support had already been eroded by too much flexibility in production baselines and the
continued application of some trade-distorting meas ures which were generally relevant only to a fewWT/GC/M/42
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countries.  The ASEAN Members looked forward to the next round of negotiations as an opportunity
to achieve meaningful disciplines on domestic support through the elimination of all trade-distorting
support measures.  Despite the progress achieved in bringing down border protection during the
Uruguay Round, overall tariffs, tariff peaks, and tariff escalation would continue to be applied on a
wide range of agricultural products after the full implementation of the Uruguay Round concessions.He said that the ASEAN Members were especially concerned that highest frequencies of tariff levels,
as well as non-tariff barriers including SPS measures which continued to proliferate, covered a wide
range of products of interest to developing countries, in particular the processed agricultural products.
Thus, although agricultural product processing was a major export industry of developing countries,
their exports of processed agricultural products were largely concentrated in the first stages of
processing, while more advanced processed products accounted for only a small portion of their
agricultural exports.  The ASEAN Members hoped that the next round of market access negotiationswould be able to redress this situation.
17. The representative of Hungary, speaking on behalf of the CEFTA countries
, referred to the
Community's proposal on market access for non-agricultural products (WT/GC/W/178) and said that
since the beginning of the preparatory process CEFTA countries had been advocating that only a
comprehensive and balanced new round of negotiations, allowing for necessary cross sectoral trade-offs, could ensure meaningful results reflecting the interests of all countries.  At the informal
intersessional meeting on 27 January, the CEFTA countries had stated that negotiations on industrial
tariffs should constitute the third leg besides services and agriculture of all broad-based market access
negotiations in the new round.  They agreed with other delegations that liberalization of industrial
tariffs should be based on a global and comprehensive approach with the aim of substantial furthertariff reduction across all the sectors and that ways should be found to diminish tariff peaks and tariff
escalation.  The proposal was a useful contribution which, if implemented, could achieve results
which Members had failed to achieve in past tariff negotiations.  It was particularly important that no
sector be exempt a priori from the negotiations.  Indeed, one of the greatest advantages of the proposal
was the harmonization effect.  Instead of yet again increasing or maintaining differences in thestructures, binding levels, peaks and escalation of different national tariffs, this proposal would ensure
that tariffs were used for protection only to a limited extent depending on the level of development of
the country concerned, thus improving fair and predictable conditions in world trade.  The proposed
tariff band approach should be further elaborated and studied carefully.  He shared the view that this
proposal should be complemented by a non-tariff initiative dealing with issues such as customs
valuation, rules of origin and product safety standards.  The CEFTA countries were sympathetic to the
EC proposal regarding least-developed countries and believed that an up front commitment from alldeveloped countries for tariff and quota free access for products from least-developed countries could
be implemented even before the end of the new round.  The CEFTA countries also welcomed the
industrial tariff reduction proposal put forward by Hong Kong China, Australia and Norway.
18. The representative of Uruguay said that wh ile Hungary's proposal to study Article XVII of
GATT 1994 as well as other provisions referring to state trading enterprises was interesting, his
delegation did not agree with some of the points mentioned in Hungary's paper.  He welcomed the
proposals that had been made on regional trading agreements.  There was little doubt that future
discussions on this topic would focus on the need to develop more precise rules in this area.
However, the difficulties in concluding examinations of RTAs in the Committee on Regional Trade
were not the result of any shortcomings in the rules but rather the result of a group of Membersrefusing to accept that existing regional agreements  were compatible with these rules, including the
obvious ambiguities that these rules contained.  These countries were opposed to moving ahead until
the rules had been renegotiated.  This was unacceptable, particularly since regional agreements had to
be reviewed every two years starting from the approval of the first report.  Uruguay believed that the
reports under consideration by the Committee had to be approved or at least considered on the basis ofexisting rules, accepting the ambiguities within th ese rules.  It was impossible to accept that the
review of regional trading agreements could be held hostage until the end of the next round.  If thisWT/GC/M/42
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were the case, the activities of the CRTA would have to be suspended until the negotiations had been
completed.  On industrial tariffs he said that his country would have to coordinate its final position
with its partners in ME RCOSUR.  Nevertheless, his delegation believed that the body negotiating
tariffs should consider and negotiate all tariffs together, i.e. industrial and agriculture tariffs at the
same time.  In this respect, the Community's tariff band proposal was applicable to agricultural goodsand should be considered in this light.
19. Uruguay wished to see a relatively short round and to this end efforts must be made to shorten
the time-periods and take formal and procedural decisions in Seattle which would make it possible to
hold a shorter round.  In the case of the Uruguay Round, many months had been lost in the
preparation and the negotiation of specific plans for each of the areas.  His delegation proposed that
the Seattle Ministerial Declaration contain a negotiating plan for each of the issues to be covered in
the next round of negotiations which would allow for negotiations on all the areas to start immediately
and on an equal footing.  On agriculture, his delegation endorsed Australia's proposals and reiterated
that there was no reason for agriculture not to be given the same treatment as other goods.
Consequently, any rule or any exception which applied to industrial or agricultural goods should
apply equally to all goods and on a reciprocal basis.  On the issue of non-trade concerns, these were
already being considered in a number of WTO bodies and other international organizations.  If thisissue were to be taken up in the next negotiations this should be done in the framework of a special
negotiating group which would consider positive externalities both in agricultural activities as well as
in industrial areas.  Industrial activities for developing countries had positive externalities which were
extremely important, perhaps as much as or more so than agriculture in other countries, and should be
dealt with on an equal footing.
20. The representative of New Zealand noted that a number of proposals had been circulated on
the need to clarify GATT/WTO rules relating to regional trade arrangements.  As a country that was
both a participant in a regional trade arrangement as well as interested in ensuring that regional and
multilateral trade liberalization were mutually supportive, New Zealand saw merit in examining
aspects of these rules in the context of new negotiations.  The fact that the Committee on RegionalTrade Agreements had recognized the lack of agr eement on the interpretation of these rules further
supported this course of action.  On industrial tariffs, the achievement of significant progress had to
be a high priority, particularly given that in some industrial sectors very little progress had been made
in the Uruguay Round and tariffs remained significant barriers to trade - particularly for processed
products.  In the Uruguay Round, the level of ambition had been set too low, with constructive
initiatives to eliminate tariffs coming very late .  As regards the parameters for future tariff
negotiations Members should focus firmly on a zero tariff outcome wherever possible.  This objectivewas realistic and might be best served by the early elaboration of a balanced package of zero-for-zero
initiatives reflecting the interests of the membership  as a whole, with residual modalities to address
remaining tariff lines, as well as such matters as tariff peaks and tariff escalation.  He welcomed the
recognition of the importance of zero-for-zero initiatives as a key component of the negotiations in the
proposals tabled by Norway, Australia, and Hong Kong, China.  The work carried out within APECon the Accelerated Tariff Liberalization initiative was relevant in this context.  Early agreement to
implement tariff reduction and elimination targets in a range of product areas would create a more
positive environment overall for a successful tariff negotiation.  His delegation would be elaborating
further on these ideas at future meetings.  On agriculture, he recalled at the 12 April informal General
Council meeting, his delegation had underlined its full support for the three initial building-blockproposals derived from the Cairns Group Vision statemen t that were tabled at that meeting, i.e. the
overall objective for the negotiations (WT/GC/W/166), special and differential treatment
(WT/GC/W/167), and export subsidies (WT/GC/W/168).  He referred to the additional proposals on
domestic support (WT/GC/W/177) and market access (WT/GC/W/184) which had been tabled.  On
domestic support, he referred to Pakistan's proposal (WT/GC/W/161) which stated that "a collectivelong-term goal is to ensure that countries compete on a commercial basis on quality, prices and
service, rather than on government subsidized programmes.  It would be unjustified to expectWT/GC/M/42
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suppliers to compete with federal/local treasuries.  Substantial reductions in domestic support are
therefore necessary as required under the Agreement.  Unless these commitments are fulfilled the
divide between the developing and developed countries in the agricultural sector will be further
widened." He noted that not all developed countries provided vast quantities of trade-distorting
domestic support to their agricultural sector, but endorsed the sentiment that subsidies paid todomestic producers perpetuated distortions in domestic markets which were then exported on to
others.  These policies imposed high costs on economies like New Zealand, and those of other
countries that did not use trade-distorting subsidies.  As noted in the background section to document
WT/GC/W/177, the levels of support to agricult ure in OECD countries amounted to a total of
US$280 billion in 1997 alone.  The overproduction these subsidies encouraged had massive effects in
distorting trade and agricultural policies.  It was clear that achieving the objective of fair trade in the
agriculture sector would only be possible if there were major reductions in domestic support, resultingin the elimination of trade-distorting subsidies.  The Agreement on Agriculture itself allowed
countries to provide a range of non-trade distorting support measures to secure various legitimate
objectives, such as those related to infrastructure, disaster relief and the environment.  The elimination
of trade-distorting subsidization would in no way constrain the ability of any country to pursue these
objectives.  The continuation of trade-distorting domestic support policies was not consistent with thelong-term objective of agricultural reform, agreed a decade ago, and reflected in the preamble to the
Agriculture Agreement.  Nor were such policies sustainable for the countries that applied them.  His
delegation believed that there was a responsibility on the part of the WTO membership to address this
issue decisively in the forthcoming negotiations.  On agricultural market access, greatly improved
market access opportunities for both agricultural and non-agricultural goods must be achieved in newnegotiations.  The high levels of protection afforded to agricultural goods when compared to non-
agricultural goods served to further underline the pressing need for reform in the agriculture sector.
The current range of market access barriers that agricultural products faced, including prohibitive
tariffs for many goods, non-tariff barriers and such measures as special safeguards, not only reduced
the choices available to consumers, but posed a threat to the sustainable development of exportingcountries.  The only response to this range of problems was to work to ensure that deep cuts were
achieved to tariff levels, that tariff peaks and tariff escalation were addressed and eliminated, that
access opportunities under tariff quotas were expanded significantly, and that the rules relating to
other aspects of market access for agricultural products were reformed to place trade in agricultural
goods on to the same basis as trade in other goods.
21. The representative of Chile said his delegation placed particular importance on the up-coming
negotiations on agriculture.  He expressed support for the proposals on domestic support
(WT/GC/W/177) and market access (WT/GC/W/184) as presented by Australia which were consistent
with the Cairns Vision Statement (WT/GC/W/156).  His delegation reiterated the importance of fully
incorporating agriculture into the multilateral tradin g system, placing it on the same basis as trade in
goods.  It was imperative that the forthcoming negotiations aimed to continue the process of
substantial and progressive reductions in domestic support and protection with the objective ofestablishing an equitable and market oriented agricultural trading regime.  With respect to the
proposal on domestic support, it was essential that the forthcoming negotiations adopted more strict
criteria vis-à-vis  the use of domestic support which would help produce substantial reductions in the
subsidies which distorted production and eliminate those that had a major impact on trade.
Experience had shown that domestic support that was production distorting and which also had anadverse effect on trade, constituted a serious obstacle to all attempts to establish rules which would
bring about further liberalization of agricultural products.  This should be redressed by eliminating
those subsidies which had already met the purpose of facilitating the present reform process and
should be replaced by measures decoupled from production and further facilitating the necessary
reforms to adapt to a more liberalized context.  As  regards the proposal concerning market access, the
very raison d'être  of the negotiations was to establish more fair and equitable rules which were
market-oriented and which would further facilitate trade liberalization.  Thus, greater market access
was essential and the negotiations should lead to greater liberalization of trade as well as find moreWT/GC/M/42
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transparent rules in order to achieve this goal.  In this regard it was essential that Members established
a regime which would reduce the levels of protection maintained through high tariff peaks, tariff
escalation, and non-tariff barriers and special safeguards.  These were all elements which did not
facilitate greater trade liberalization and in this regard Chile believed that the administration of tariff
quotas in some cases prevented the achievement of the objectives for which they were originallycreated.  Instead of facilitating greater market access they were sometimes used to restrain market
access.  It was not sufficient merely to adopt certain measures, but to also limit their use through more
stringent rules which prevented their having an effect running counter to the one expected.  His
delegation wished to see a comprehensive round of negotiations.  The inclusion of non-agricultural
tariffs in the forthcoming negotiations was of fundamental importance and his delegation fully
supported the proposals put forward in this regard.  These negotiations should also encompass all non-
agricultural products without exception, substantially bringing down average tariffs, tariff peaks andtariff escalation, eliminating low tariffs (nuisance tariffs), simplifying tariff structures and
consolidating and binding the whole tariff universe.  His delegation believed that, in the long term,
free trade for all products should be achieved, both agricultural and non-agricultural.  Finally, his
delegation would look closely at the proposals containing negotiating modalities which would ensure
tariff reduction of a substantial nature, horizontally, globally and comprehensively.
22. The representative of Switzerland said any new rules to be elaborated regarding RTAs in the
next negotiations should only apply to regional trade agreements negotiated after the entry into force
of these rules.  RTAs that had already been concluded should be excluded from the scope of the new
rules by virtue of the elementary principle of law which should be reflected in any negotiating
mandate on this subject.  As regards industrial tariffs, Switzerland agreed that this matter should beincluded on the agenda for the next round of negotiations.  Indeed, in order to ensure greater success
in a new round, it was essential for each participant's interest to be met, and the only way this could be
achieved was through a single broad round of negotiations.  This meant that a tariff aspect for
industrial goods had to be included.  Despite the reductions which had been made since the last round
of negotiations, average tariff levels were still far too high for industrial goods.  Furthermore, tariffpeaks and tariff escalation constituted important brakes on trade.  It was therefore essential to
determine a negotiating mandate as open and broad-reaching as possible regarding the dismantling of
industrial tariffs.  Priority attention should be given at this stage to the determination of the goals of
these negotiations.  He noted that the views of Switzerland in this area converged with those of
Australia, the European Community and Hong Kong, China on certain essential aspects, i.e. that no
sector of industrial products should be excluded, and that the negotiations must allow for a substantial
reduction in tariff peaks and tariff escalation.  He endorsed the goal of binding all industrial tariffs asproposed by Australia and underlined that it was premature to state that the negotiations under way on
information technology products would not be settled between now and Seattle.  Once Members had
reached an understanding on the goals, it would be possible to elaborate the appropriate negotiating
methodology.  Although this stage had not been reached yet, his delegation would be ready to
participate in certain sectoral aspects as a complementary element to the discussions on industrialtariffs.
23. The specific needs of developing countries, and in particular the least-developed countries, as
had been stated by Zambia, must be taken into consideration in the forthcoming negotiations.  Like
the Community, his delegation believed that the developed countries and the more advanced amongst
the developing countries should commit themselves at Seattle to an improvement of market accessconditions for products from least-developed countries.  He supported Australia and the Community
in the view that negotiations on industrial products should also encompass non-tariff measures.  It was
important to ensure that the benefits stemming from reductions in customs duties were not cancelled
by unjustified non-tariff measures.  He expressed his delegation's reservations with respect to the
Australian proposal to transform specific duties into ad valorem  duties, and would revert to this
matter at an appropriate time.  Concerning trade and environment, he welcomed the proposal by
Norway.  Protection of the environment was an issue which was included amongst the daily concernsWT/GC/M/42
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of all governments, and there was no longer any substantial opposition to the protection of the
environment and the opening up of markets to trade.  In the Committee on Trade and Environment,
discussions had shown that WTO rules were not in conflict with protection of the natural environment
and that the multilateral trading system could contribute to sustainable development.  The work of the
Committee on Trade and Environment had also shown that it was still possible to carry out furtherprogress in this regard.  Like Norway, Switzerla nd believed that the promotion of sustainable
development should be included amongst the goals of the forthcoming negotiations.  If necessary, the
environmental aspect should be included in the different negotiating areas to ensure that trade
liberalization and the protection of the environment remained complementary rather than antagonistic
goals.  It was essential to ensure coherence between WTO rules and MEAs and the forthcoming
negotiations should fully clarify the relationship between the two.  The issue of voluntary eco-
labelling programmes was a particularly sensitive one in the context of initiatives taken to satisfy the
need for legitimate concerns of consumers to be better informed.  His delegation believed that it was
important to inform consumers in a precise manne r and that such information had to be provided
according to certain modalities which respected WTO's fundamental rules.
24. The representative of Argentina expressed full support for the proposals by Australia on
domestic support (WT/GC/W/177) and market access (WT/GC/W/184).  The proposal on domestic
support aimed to achieve an equitable and market-oriented agricultural trade framework, i.e. a system
of trade equivalent to the one which governed trade in other goods.  In this respect, his delegation
proposed the elimination of all trade-distorting forms of domestic support for agricultural products.
On market access, he reiterated his delegation's view that the proposal was included in the overall
objective of establishing an equitable and market-oriented agricultural trade system.  To this end, itwould be necessary immediately to eliminate distortions in agricultural trade.  The case of special
safeguards which allowed tariffs applied in this sector, already far more restrictive than those applied
to industrial goods, had a variable protection element which was linked both to prices as well as to
volume.  Members had to submit a clear mandate to be adopted by Ministers in Seattle, that from this
phase in the reform of agricultural trade, all measures which affected market access for agriculturalproducts, both processed and non-processed, should be the same as those rules which governed trade
in other goods.  With respect to the proposal by Hungary on state trading enterprises (WT/GC/W/172)
his delegation believed, like Hungary, that the present rules were inadequate as an instrument to bring
about disciplines in these enterprises and to avoid potential trade-distorting effects which might be the
result of their activities both in the area of imports as well as exports.  WTO rules were based on the
assumption that economic factors aimed to maximize benefits, i.e. with two products of the same
quality the lower priced product would be chosen.  If for political reasons a decision was taking to optfor the more costlier product then, as a result, the competition would put it out of the market.  In the
case of state trading enterprises the situation was different.  If an enterprise enjoyed certain monopoly
privileges, access to subsidized or guaranteed credits by the State, or if it could simply rely on a
certain facility of endorsing a government budget de ficit for example, one could presume that it was
not acting according to the best trade rules.  His delegation's support for the Hungarian proposalshould be seen in this light.  Finally, he recalled that his delegation had stated on several occasions its
disposition towards the launching of a new round of multilateral trade negotiations which should lead
to an integrated package of trade concessions and improvements in trade rules.  It should be a package
of concessions linked by a single undertaking and not simply partial agreements some of which would
be worked out through the negotiating process.  The continuation of negotiations on agriculture andservices were clearly provided for in the respective agreements.  These negotiations were part of
commitments entered into at the end of the Uruguay Round and part of the very delicate balance of
concessions which had made it possible to conclude the Uruguay Round.  These were binding
obligations that had been agreed by all and which did not require any type of validation.  It was
difficult to accept that certain limitations could be placed solely in the agricultural sector.  It had to beborne in mind that for other countries a certain level of protection was not dispensable in order to
defend industrial sectors or certain industrial sectors and sectors of service.  If the concept ofWT/GC/M/42
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multifunctionality were applied in a similar manner in other sectors, then it would be difficult to
actually have a new round.
25. The representative of Iceland welcomed the proposals regarding industrial/non-agricultural
goods in a new round from Australia (WT/GC/W/182) and Norway (WT/GC/W/185).  During the last
few years efforts had been made, albeit unsuccessfully, to reach a consensus on tariff reductions forcertain groups or types of industrial goods, such as information technology products.  Members
should approach the task of radically reducing tariffs on industrial goods in a broad based and
comprehensive way with the objective of reaching an agreement on an overall reduction of tariffs on
all industrial and other manufactured goods, incl uding fish and fish products.  On trade and
environment, his delegation welcomed Norway's pr oposal.  This was an issue that was not only of
growing relevance to the WTO but also one that had a long standing support from the world
community.  In this context, it was worth recalling Chapter 2 of Agenda 21 adopted in June 1992.This chapter called for national and international action to promote sustainable development through
trade and to make trade and the environment mutually supportive.  Norway's proposal was an
important step to meet this call and offered the added value of identifying specific issues that offered a
win-win strategy for trade, environment and sust ainable development.  Although his delegation
supported issues identified in the proposal by Norway he noted that it did not contain a complete listof those trade and environment issues that needed to be addressed in the coming round of
negotiations.  Among additional issues that must be addressed were the implications of subsidies on
trade, environment and sustainable development.  His delegation and others had recently highlighted
the benefits of removing fishery subsidies.
26. The representative of Brazil welcomed the many proposals that had been tabled, which would
be examined carefully by his delegation.  He hoped that other delegations would examine equally
carefully the proposals submitted by Australia in the context of the Cairns Group Vision Statement.
His delegation fully shared the many positive comments made regarding the two proposals by
Australia on domestic support and market access in agriculture, and fully shared the perspective of the
proposals.  His delegation had noted Uruguay's proposal to include agricultural tariffs in the overallnegotiations, and could also agree with Uruguay on the systemic issues regarding regional trade
agreements.
27. The representative of Australia said his delegation had listened with interest to Japan's
statement on agriculture, and looked forward to seeing Japan's paper on this issue.  If Japan's
comments on multifunctionality were to be the starting point for the negotiations, one could start to
see the well-defined battle lines for the next round of negotiations.  He hoped that those who
professed to have a real interest in the health of the multilateral trading system would be approachingthe negotiations in a fair and reasonable manner.  Multifunctionality was being defined so broadly as
to include much that one had not come across before, including concepts like "culture", and if this
were to apply to the industrial and services sectors there would be no world trade at all, and no need
for any new round of negotiations.  His delegation would be interested in hearing the views of
Japanese manufacturing and services exporters on extending the notion of multifunctionality to thosesectors.  Japan had already indicated at the present meeting that it saw multifunctionality extending to
the industrial sector, since two industrial products – fisheries and forestry – had been mentioned, and
he wondered if one was going to see this concept extending also to Japanese automobiles and other
manufactured goods.
28. The representative of Canada said that Canada fully supported Australia's proposals on
domestic support and agricultural market access, wh ich were consistent with the Cairns Group Vision
Statement.  In the agriculture negotiations, Members must address the continued barriers to fair and
market-oriented agricultural trade, a key element of which was a meaningful and equitable expansion
of market-access opportunities.  Serious attention should also be paid to domestic support, particularly
those forms that distorted production or trade.  His delegation was encouraged by the number ofWT/GC/M/42
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proposals made at the present meeting and would come back with reactions to these at the next
meeting.  Canada particularly welcomed the tabling of the several proposals on industrial tariffs and
believed it would be important to include such negotiations in the negotiations to be launched at
Seattle.
29. The representative of Turkey recalled that his delegation had stated its preliminary views on
the mandated negotiations on agriculture and services, and on a number of implementation issues, at
previous meetings.  At the present meeting, he wished to take up a number of issues under
paragraphs 9(b) and 9(d) of the Ministerial Declarat ion.  On trade facilitation, the ongoing exploratory
work of the Council for Trade in Goods was very helpful, and a WTO agreement establishing new
disciplines to simplify procedures and reduce non-tariff barriers would, in principle, further facilitate
and increase the efficiency of trade between Members.  His delegation saw merit in developing
multilateral rules in this area, which would be beneficial to both exporters and importers, and couldreduce non-tariff barriers considerably by minimizing documentation requirements, procedural delays
and lack of transparency in the application of government rules and regulations.  Such rules would
also further strengthen the already existing disciplines contained in other WTO agreements.  One way
to achieve this would be to identify areas where adoption of new rules would be complementary to the
existing WTO multilateral rules and in the process would help the overall enhancement of tradefacilitation.  This issue was one of the core businesses of the WTO, since it was geared to promoting a
common interest for trade.  While Turkey supported a multilateral arrangement on trade facilitation, it
also recognized that this might not be an easy task for many countries.  The development of such
disciplines should take into account the specific needs of developing countries, and binding
commitments by many developing countries on trade facilitation would need to be complementedwith meaningful technical assistance and capacity building.  Furthermore, a preparatory period for
implementation would need to be recognized for developing countries.  On trade and investment, the
work of the Working Group had highlighted the relationship between trade and investment for
economic development.  Turkey recognized the growing importance of foreign direct investment
(FDI) as a source of economic development, and an important instrument in expanding internationaltrade.  The benefits from FDI were numerous, including, inter alia , diffusion of management skills
and entrepreneurship, better information about international markets, and transfer of technology and
know-how.  Investment inflows would also improve the export potential and might have a positive
effect on the balance-of-payments position of host countries.  In countries with low savings ratios,
FDI could contribute to filling the gap, thus possibly leading to increased investment and higher
economic growth.  FDI was expected to grow as production processes became further integrated, and
a comprehensive multilateral arrangement on investment would provide a sound legal environment toenhance investment flows and contribute to economic development.  His delegation therefore
supported the inclusion of a framework of rules for FDI in the scope of comprehensive trade
negotiations.
30. Regarding trade and environment, the Committee on Trade and Environment had been
engaged in discussions with a view to identifying the relationship between trade measures andenvironmental measures in order to promote sustainable development.  The Committee's work had
been useful in that it had brought environmental and sustainable development issues into the
mainstream of WTO work.  However, the scope of discussions on the relationship between trade and
environment should remain within the mandate and competence of WTO.  The WTO was not
sufficiently equipped to become involved in revi ewing national environmental priorities, nor to set
environmental standards.  Any future commitment on trade and environment should only take place
on the basis of a comprehensive and further careful analysis of the relevant issues.  Indeed,
environmental concerns should not be used for protectionist purposes.  As regards transparency in
government procurement, the Working Group had carried out its exploratory and analytical work in
accordance with the mandate contained in the Singapore Ministerial Declaration.  The nature of thework thus far had been primarily educational, and this process would continue during the course of
1999.  The Working Group had an important task - to develop a common understanding amongWT/GC/M/42
Page 18
Members on the nature of the basic principles of transparency in government procurement.  Turning
to regional trade agreements (RTAs), he said that, parallel to the trade liberalization under the
GATT/WTO, regional economic integration among Members had substantially increased.  The
Committee on Regional Trade Agreements had had 62 RTAs before it for examination at the end of
1998, and had not been able to complete its work on any of them mainly due to a lack of consensus onthe interpretation of the so-called systemic issues originating from Article XXIV of GATT 1994.  The
Committee had been working on systemic issues for more than two years, and there was unfortunately
still no consensus among Members in this area.  The provisions of the Understanding on the
Interpretation of Article XXIV of GATT 1994 had also not been found satisfactory by some Members
for interpreting certain elements of Article XXIV.  While there was a need to move forward on the
discussion of systemic issues, it was clear that it would take time to reach consensus.  At the same
time, the examination of RTAs should not be sl owed down.  The General Council should therefore
submit a recommendation to the third Ministerial Conference that the examination of the RTAs before
the Committee should continue under the existing WTO rules.  Such a recommendation was necessary
for the credibility of the multilateral trading syst em.  As Switzerland had stated, existing rules should
be applied to the issues on the current agenda, and any rules adopted in the future should apply to
issues raised in the future.  In principle, rules were not retroactive – this was self-evident, but neededto be highlighted.
31. The representative of Costa Rica fully supported Australia's proposals on agricultural
domestic support, as well as the Cairns Group Vision Statement.  He reiterated Costa Rica's position
that the future agriculture negotiations should result in the complete elimination of export subsidies
and all forms of domestic support that distorted international markets.  High levels of domesticsupport commitments, abuses in their application ev en within the limits of the commitments, together
with continued use of export subsidies hindered greater and real liberalization in this sector and, as a
consequence, thwarted the final objective of the reform programme initiated during the Uruguay
Round.  The elimination of subsidies and other forms of distortion was, therefore, a logical
consequence of the necessary integration of the agricultural sector into WTO rules. In its proposal,Australia had pointed out that high levels of dom estic support promoted overproduction and were the
fundamental cause of certain problems which arose in  world markets.  Costa Rica wished to add that
overproduction had negative effects on the environment, and therefore its elimination or reduction
would contribute to the strengthening of sustainable development policies.  This had been well
demonstrated in a paper circulated by 14 Members to the Committee on Trade and Environment
(WT/CTE/W/106), which highlighted both the benefits to the environment which would result from
the elimination of trade restrictions and distortions, specifically export subsidies, as well as theenvironmental costs of export subsidies, including the direct adverse effects of land-use in countries
granting export subsidies and the indirect effects through repercussions in countries receiving
subsidized products and in other exporting countries.  Costa Rica supported this submission and the
arguments which it contained.
32. The representative of the United States said that her Government was in the process of
reviewing with domestic stakeholders its own proposals on agriculture as also those submitted by
other Members.  It was significant that so many different Members had already tabled proposals on
agriculture, which clearly demonstrated the importance of the upcoming negotiations to the
membership.  The United States had initiated an intensive domestic consultation process to receive
advice on the many issues that had to be addressed in the agriculture negotiations.  For example, inaddition to five public hearings on the broad WTO Ministerial agenda, it was holding an additional
12 field sessions were being held solely on agriculture.  There was no question that the agricultural
reform process begun in the Uruguay Round should cont inue.  In looking at the previous negotiations,
and what the Members' obligations were and what they intended to follow up with, it was clear that
eliminating export subsidies was one key element and that continuing to open markets and controllingtrade-distorting domestic support were others.  Members needed to seek to improve and expand
market-access opportunities by, among other things, lowering bound tariff rates to eliminate the gapWT/GC/M/42
Page 19
between applied and bound rates, simplifying comp lex tariff regimes, for example the use of
compound rates, providing greater certainty and transparency in the operation of tariff regimes,
establishing new disciplines on tariff-rate quota administration and on the import activities of state
trading enterprises, and limiting the use of the special agricultural safeguard.  In addition to
eliminating all remaining export subsidies for agricultural products, Members should clarify andstrengthen rules on measures that could circumvent export subsidy disciplines, such as disciplining
activities of state trading enterprises, distortive uses of export taxes and disguised export subsidies, for
example pricing policies.  In continuing to discipline and reform domestic support, Members should,
among other things, continue the reduction of trade-distorting domestic support, and, in so doing, also
ensure that the "green box" exemptions continued to be the primary objectives of minimizing the link
between support and production and allowing Members to provide non-distortive support through
appropriately specified policies.  These were some of the issues that were of top priority for herGovernment, and her delegation would continue to follow up on some of them in the future.
33. The representative of Malaysia, speaking on behalf of the ASEAN Members
, said that their
countries would shortly circulate two proposals in the context of paragraph 9(a)(i) of the Ministerial
Declaration.2  These proposals concerned: (i) compliance with the "Enabling Clause", which
essentially proposed that there should be close monitoring by an appropriate body within the WTO oncompliance by Members with the "Enabling Clause", to  ensure that preferential treatment accorded by
developed countries to developing countries under this provision was generalized, non-discriminatory
and non-reciprocal in nature; and (ii) the responsibility of Members vis-à-vis  measures taken by state-
level, regional or local governments or authorities within their territories, which essentially proposed
that all Members should adhere to the basic obligation on all in Article XVI:4 of the WTO Agreementto ensure the conformity of their laws, regulations and administrative procedures with their WTO
obligations.  Such an obligation should be adhered to at all levels of government regardless of the
level of promulgation.
34. The representative of Singapore welcomed the proposals by Australia, the European
Community and Hong Kong, China on industrial tariffs and supported negotiations in this area.  Such
negotiations should aim to achieve a fair and balanced package, comprising products of interest to all
Members.  Although the Uruguay Round had resulted in the global reduction of tariffs by around
40 per cent, these had not been evenly spread across products or sectors, and a substantial number of
high tariffs still remained.  In addition, more than half of the peak tariffs, especially those in
developed countries, remained hidden behind low average tariff rates.  Furthermore, tariff escalation
and the widespread use of specific, compound and nuisance tariffs still characterized the trading
system, and resulted in many developing countries being unable to expand their value-addedindustries.  Singapore believed that high tariffs, tariff peaks, tariff escalation and non-transparent
specific duties were restrictive and distorted trade and investment flows, and that these distortions
should be the subject of further negotiations.  Members could select a combination of the formula,
sectoral, and request-and-offer approaches that would achieve a tariff cut well above the one agreed in
the Uruguay Round.  The modalities chosen should maximize benefits to Members across the board.There should be no a priori exceptions and the negotiations should eliminate tariff peaks, escalation,
high tariffs and nuisance tariffs.  An end-date of three to four years would allow all Members to reap
the benefits of these negotiations in a timely fashion.  To achieve this end-date, effective negotiations
should begin immediately at the launch of a new round of multilateral trade negotiations.
35. The representative of Indonesia also welcomed the proposals on industrial tariff negotiations,
to which Indonesia attached importance.  It shared  the view that these negotiations should aim to
achieve a fair and balanced package, comprising products of interest to all Members.  Tariff
escalation, which discouraged industrialization efforts in developing countries, and widespread use of
specific, compound and nuisance tariffs still characterized the trading system.  Like Singapore,
                                                     
2 Subsequently circulated as WT/GC/W/187 and WT/GC/W/188.WT/GC/M/42
Page 20
Indonesia believed that this had resulted in many developing countries being unable to expand their
value-added industries, and agreed that high tariffs, tariff peaks, tariff escalation and non-transparent
specific duties were restrictive and distorted trade and investment flows.  Members should not limit
the approach to these negotiations to any certain formula, but should rather agree on an appropriate
approach that would achieve an eventual target of a level of tariff cuts well above the one agreed inthe Uruguay Round.  There should be no a priori exceptions and the negotiations should eliminate
tariff peaks, tariff escalation, high tariffs and nuisance tariffs.  Indonesia looked forward to having a
discussion on this issue as soon as possible.
36. The representative of Egypt recalled that in the first phase of the preparatory process, a
number of delegations had indicated their wish to have a dialogue among Members, and regretted that
such a dialogue on the issues and proposal submitted had not yet been held.  His delegation hoped that
the General Council would move soon to a more structured discussion on the issues.  As regards thelaunching of a comprehensive round of negotiations, Egypt's position remained unchanged, and he
would not repeat it.  In initial comments on the proposals submitted thus far, he said that the proposals
on agriculture were useful, with some elements that  Egypt could support.  Egypt believed that the
specificity of the agricultural sector had to be recogn ized.  It was difficult to treat agriculture in the
same way as industrial goods.  His delegation supported the elements in different proposals in relationto the increased importance of market access in this  area, and to the importance of eliminating tariff
escalation and tariff peaks, and reducing domestic support and export subsidies.  However, the
concerns of food security and of the net food-importing developing countries should be taken into
account.  On services, his delegation supported several elements of Korea's proposal in relation to
electronic commerce, autonomous liberalization in the context of GATS Article XIX:3, and the issueof emergency safeguards.  However, while the proposal mentioned that no service sector should a
priori be excluded, this should be qualified by indicating that this be in accordance with Article XIX,
i.e. that due respect should be given to national policy objectives and that there should be appropriate
flexibility for developing countries for opening fewer sectors and types of transactions in accordance
with their development situation.
37. On industrial tariffs, his delegation believed there was no obligation to negotiate reductions.
The existing obligations lay specifically in the areas of agriculture and services.  The focus of
attention of Members should be directed to implementation-related issues, and other concerns could
be addressed once the difficulties faced in implementation had been addressed in a satisfactory way.
The proposal by Hong Kong, China indicated a target level of tariff cuts well above that achieved in
the Uruguay Round, and his delegation believed this was an exaggerated ambition against which he
would caution.  Similarly, the time-frame envisaged by Hong Kong, China as well as by Australia wasalso exaggerated in its ambition.  Norway's submission on market access had made reference to trade
facilitation, and Egypt believed that trade facilitation was an issue that should be dealt with separately
to see whether there were convincing arguments for negotiations in that area.  As regards Australia's
suggestion that negotiations on industrial tariffs should be part of a single undertaking with
negotiations in other areas, he believed it was premature to address the issue of what would constitutea single undertaking in the context of future negotiations.  On trade and environment, his delegation
had some difficulties with a number of the issues in Norway's proposal.  The proposal addressed the
negative environmental impact of liberalization wi thout indicating Norway's view of the manner in
which this impact should be addressed.  Norway had also proposed an environmental assessment of
future agreements, and he wondered why assessments of  agreements already in force for a number ofyears was not proposed.  Furthermore, he wondered why no reference had been made to an important
issue in this area, namely the transfer of environmentally-sound technologies.  As regards labour
standards, Egypt's position that this was not an issue to be addressed in the WTO remained
unchanged, and it would continue to insist on this.
38. The representative of Guatemala said that agricultural goods had clearly been disadvantaged
thus far under multilateral trade rules.  Negotiations on agriculture had not been easy, but it was timeWT/GC/M/42
Page 21
for these products to achieve better and real market access opportunities, corresponding to the
conditions for other goods.  Tariffs should be the only mechanism for protection, and it was necessary
to reduce tariff escalation and peaks, and completely eliminate non-tariff barriers.  All types of trade-
distorting domestic support should be eliminated, and only those with no trade-distorting effects
should be permitted.  It was essential also to eliminate the use of export subsidies, since this wasanother distorting element that made it possib le for governments to intervene beyond their own
borders.  In many cases, there had been a shift in exports from developing countries which had been
prejudicial, particularly to those economies which did not have the resources to compete against
subsidized exports from other countries.  The continued application of the principle of special and
differential treatment was vitally important for the integration of developing economies in
international trade.  Finally, her delegation wished to support Australia's statement.
39. The representative of Thailand said that Thailand shared the view that the existing high levels
of industrial tariffs needed to be redressed.  Although the Uruguay Round had resulted in substantial
overall reduction in industrial tariffs, there were sectors where tariffs remained unjustifiably high,
such as fish and fish products, and textiles.  Furthermore, tariff peaks and tariff escalation continued
to be obstacles to trade, in particular to the export interests of developing countries.  This tariff
landscape should be the object of further negotiations.
40. The representative of Cuba associated his delegation with Zambia's statement.  His delegation
fully supported the view that the benefits that developing countries had hoped to achieve as a result of
the trade liberalization of the Uruguay Round had not materialized.  It was essential to respond to the
fundamental problem of increasing marginalization so that it would be more acceptable to think in
terms of new global negotiations encompassing all the issues.  Given the present situation in theimplementation area, his delegation wondered how a conducive atmosphere could be created for
launching new negotiations that would involve developing countries entering into new commitments,
when their previous commitments had not brought expected results. His delegation agreed with the
reasons underlying these problems set out in Zambia's statement, and also that it was essential to take
positive measures to improve developing-country market access, trade opportunities and technicalassistance.  Technical assistance should not just take the form of seminars, but be aimed also at
enhancing negotiating and technological capacities.  Positive measures were also essential to redress
the imbalances and asymmetries in existing rules, an d it was important, in this connection, to take into
consideration the proposals circulated by many developing countries in the area of implementation.
An important issue raised by Zambia concerned the fall in commodity prices, particularly at this time
of economic crisis.  This issue should be considered by the WTO with the aim of helping to find
solutions.  His delegation would closely study the proposals tabled at the present meeting and providedetailed comments at a subsequent occasion. In the area of agriculture, while some aspects of the
proposals tabled were positive, the needs of the net food-importing developing countries had to be
kept in mind and existing commitments met.  Regarding services, his delegation agreed with Egypt's
statement that the existing commitments should be borne in mind and that more precision was needed
on what would constitute the notion of wider negotiations in this area.  As regards industrial tariffs,his delegation agreed with Egypt that is was too ambitious to think of further tariff reductions when
the reductions under the Uruguay Round had yet not given the expected results.
41. The representative of Hong Kong, China, re ferring to comments that some Members were
opposed to moving ahead with current examinations of RTAs until the rules had been clarified, and
that the examination process was being held hostage by those who wished to change the rules, said he
wished to reassure Members on this point and to dispel this misconception.  His delegation was fully
content to proceed with the current examinations, and indeed was doing so objectively on the basis of
the existing rules.  The difficulty with the current  examination process, however, lay not in any lack
of willingness to cooperate among Members, but rather  in the imprecision of the existing rules, which
often made it difficult for Members to draw agreed conclusions as to the conformity of RTAs with themultilateral trading system.WT/GC/M/42
Page 22
42. The representative of India said that his delegation had already presented preliminary
proposals on special and differential treatment provisions under some agreements and on problems in
the area of implementation, and would shortly be submitting certain agreement-specific proposals
highlighting India's concerns in these areas.  On regional trading arrangements, India shared the
concerns expressed by Hong Kong, China in WT/GC/W/174 regarding the lack of clarity in theprovisions of Article XXIV, and the detrimental effect of this on the multilateral trading system as a
whole.  India was also concerned at the lack of pr ogress in the debate on systemic issues, which was
having an effect on the review process.  It was therefore in the interests of all Members to speed up
this exercise.  His delegation strongly supported Hong Kong, China's proposal that the existing WTO
rules and decisions relating to RTAs be clarified and, where needed, appropriately strengthened. In
this regard, his delegation also associated itself with the views of Korea, Australia and Japan.  On the
mandated negotiations in agriculture, India wished to caution that any negotiations would have to takeaccount of the problems faced by predominantly rural economies with large proportions of their
populations dependent on agriculture, such as in India.  Such countries would need a certain degree of
flexibility, particularly in the area of domestic support, to be able to effectively address problems such
as those relating to food security.  As regards other issues that were being suggested for inclusion in
the next round of negotiations, the views of his delegation were well-known.  India was committed tothe consideration of implementation issues, and to  the mandated negotiations and reviews.  India
continued to have serious reservations as regards the inclusion of the Singapore issues, and other new
areas, including industrial tariffs, in the next round of negotiations.  In part, these reservations were
linked to the lack of progress in the redressal of problems in the implementation area, which were yet
to be addressed and dealt with in a meaningful manner.
43. The representative of Norway thanked Hong Kong, China for its proposal on regional trade
agreements and agreed that the work of the Committee on Regional Trade Agreements had not
proceeded as smoothly as hoped.  As to the reasons for this lack of progress, his delegation agreed
with the gist of the argument expressed by Uruguay, rather than putting all the blame on
Article XXIV.  The text proposed for recommendations to Ministers was interesting, but notnecessarily comprehensive enough to cover all aspects of this issue.  A crucial element, as mentioned
by Switzerland, would be a paragraph establishing the fact that new rules in this field could not be
applied retroactively, but only applied to new agreements negotiated after the conclusion of
negotiations on such rules.  On agriculture, his delegation had a lot of sympathy for Japan's position,
but it was important to stress that Article 20 of the Agriculture Agreement struck a very fine balance
between the interests of food importing and exporting countries, and it was important to ensure that
this balance was not distorted.  As regards Egypt's queries on Norway's proposal concerning trade andenvironment, he said that the notion of environmental reviews was based on the discussions that had
taken place in the Committee on Trade and Environment and also at the high-level symposium on
trade and environment, where it had been broadly agreed that it was very difficult to say, in a general
manner, whether there would be positive or negative environmental effects of liberalization.  Review
assessments therefore had to be made on a case-by-case basis, and the manner in which one shouldproceed after the review again depended on the case at hand, so it was necessary to have as much
information as possible on each individual situation.  As regards the proposal for environmental
assessments of new negotiations and the lack of a reference to existing agreements, he said this was a
question of priorities – when entering new agreements, it seemed natural and logical to prepare
assessments for them.  However, Norway had nothing against having assessments for existingagreements. As regards the question of transfer of technology, this was a good point and his
delegation would return to it at another meeting.
44. The representative of Australia associated his delegation with the statement by Hong Kong,
China regarding regional trade agreements.  His delegation had also been puzzled by statements that
examination of these agreements was being held up because some delegations were insisting that the
discussion on systemic issues had not been resolved.  While his delegation had for a long time been
one of those pushing for a clarification of WTO disciplines in this area, it had also participatedWT/GC/M/42
Page 23
constructively in trying to conclude examinations, including one involving Australia that was
currently being examined.  His delegation would therefore certainly dispute the assessment made by
some in that respect.  He also wished to commen t on Norway's expression of sympathy with Japan's
views on agriculture, and noted that Japan had made an interesting statement regarding the positive
effect of subsidies in the fisheries sector on the conservation of stocks.  Fish was not classified as anagricultural product, but his delegation would be extremely interested in any data Japan could produce
on how fishing subsidies and consequent overfishing had a positive effect on the conservation of a
scarce resource.
45. The representative of Venezuela indicated his Government's continuing support for the trade
liberalization process.  As his authorities were still undertaking domestic consultations, as well as
within the ANDEAN community, his delegation would of fer reactions to some of the proposals tabled
at the present meeting, including those on tariff cuts in the area of non-agricultural products, atanother meeting.  However, his delegation wished to indicate its difficulty with the notion of
commitments within the multilateral trading system re lating to the inclusion of disciplines regarding
trade and environment, as well as labour issues, which were mentioned by some delegations.  In the
area of issues which might be included in the scope of the round, his delegation wished to reiterate
that a developing country perspective should be maintained, which was to say that in no way shouldone see the disappearance of flexibility in the implementation of corrective policies aimed at
improving productive capacity and that many policies which could be drawn up in the preparatory
process might be designed by developing countries to reach their goals in the market economy and
applied as part of their multilateral commitments.
46. The representative of Mexico endorsed Egypt's statement regarding the environmental
reviews mentioned in Norway's proposal on trade a nd environment. Mexico believed that there was
no legal basis for such reviews.  Norway had stated that the work in the Committee on Trade and
Environment had been useful in this regard, and also that the discussion at the high-level symposium
on trade and environment had pointed in this direction.  However, he wished to recall that the
Committee was not a negotiating forum, while the symposium was an event that had no implicationsfor the collective work of Members.  In addition, it was not clear in Norway's proposal whether these
reviews would have to be agreed to multilaterally, in which case it might take a long time to define
how a review would be conducted.  There was also a reference in Norway's proposal to these reviews
being conducted at the national level, and he wondered what would happen if an issue, sector or group
of products had positive results in one country, while in another country, due to methodological or
factual differences, there was the opposite result of such a review, and whether the latter would be
able to oppose liberalization in that area.  His delegation did not understand the purpose of theproposed reviews, and particularly their real implications in terms of the upcoming negotiations.
47. The Chairman said that the discussion had been very useful, and thanked all the delegations
who had contributed proposals for this meeting, as well as all delegations for the constructive spirit
with which they had engaged in the discussions.  This had been an important and positive meeting in
many ways.  The number of proposals that Members were submitting, and the focused way in whichthey were being  presented, was encouraging for the work ahead.  Members should be well placed to
have an intensive discussion at the informal meeting on 7-8 June, and to make the solid progress that
must be made in the next two months.  Clearly there was still much to do, and not much time to do it
in, but the present meeting had shown a positive momentum which all could build upon.
48. The General Council took note of the statements.WT/GC/M/42
Page 24
(b) Role of the General Council in the preparati on of negotiating guidelines and procedures for
the negotiations on services
49. The representative of Uruguay, speaking under "Other Business", said that the 1998
Ministerial Declaration clearly established a leadership role for the General Council in the
preparations for the third Ministerial Conference.  In September 1998, the General Council had
launched the present preparatory process, and it had been agreed that the second phase of this process,
running from March to July 1999, would be driven by specific proposals from Members to the
General Council.  This notwithstanding, at the two most recent meetings of the Council for Trade in
Services, written proposals regarding the preparation of possible negotiating guidelines and
procedures for the forthcoming services negotiations had been submitted by some delegations.  While
these were indeed valuable contributions, his delegation wondered whether these submissions shouldnot be presented and analysed in the General Council.  At the Services Council meetings, his
delegation had stated its understanding that the preparatory process was to be carried out under the
guidance of the General Council.  Uruguay believed that the Services Council should first have a
mandate from the General Council in order to undertake the preparation of guidelines and procedures
for the next services negotiations.  This seemed all the more necessary since proposals in the GeneralCouncil were being made not only on services but also on a broad range of issues, including
agriculture.  Uruguay wished to see the General Council reconfirm its mandate for the preparation of
guidelines for the forthcoming services negotiations.  He recalled that this matter had been raised by
some delegations at the informal General Council meeting in April, but had not been sufficiently
clarified in the ensuing discussion.
50. The representative of Japan noted that in its report to the General Council in 1996 in
preparation for the Singapore Ministerial Conference (S/C/3), the Services Council had recommended
"that Ministers reaffirm the importance of progressive liberalization of trade in services as mandated
in Article XIX and other relevant provisions of the GATS.  The requisite work to facilitate such
negotiations … shall include, inter alia ,:  – the Council should begin consideration of guidelines and
procedures for negotiations mandated under Article XIX at an appropriate time."  This report had
been noted, and its recommendations approved, by the General Council, and Ministers at Singapore
had also subsequently noted the report and endorsed its recommendations, which provided the basis
for the Services Council to conduct the necessary wo rk in this regard.  While Japan agreed that the
General Council had a leading role in the preparations for the third Ministerial Conference, the
Services Council was working in a complementary manner and its work, which would be completed
by the end of July and communicated to the General Council, would be a useful and valuablecontribution to the General Council on this question.
51. The representative of Bolivia fully shared Uruguay's concerns.
52. The representative of Hong Kong, China fully supported Japan's statement.  There was a
practical need to undertake work on the services negotiating guidelines and procedures, and there was
no conflict in this technical and detailed work being done in the Services Council.  Indeed, the workin the Services Council and the General Council should be mutually supportive and complementary.
The General Council would decide finally what was put to Members and what the negotiating
guidelines on services would be.  However, this should not prevent the Services Council from making
a contribution.
53. The representative of Brazil said that Uruguay's concerns were fully justifiable.  For reasons
of consistency and equilibrium in the way all the issues, including agriculture, were addressed in the
preparatory process, the role of the General Council on services should be reaffirmed.  While the
work in the Services Council had been productive, it should be brought appropriately by interested
delegations to the General Council for further discussion.WT/GC/M/42
Page 25
54. The representative of Mexico said that Article XIX:3 of GATS did not specify the body in
which the negotiating guidelines were to be established, although it did specify that for the purposes
of establishing such guidelines the Services C ouncil should carry out an assessment of trade in
services.  What the Services Council had to do was therefore clear, i.e. carry out an assessment of
trade in services, and to do this before negotiating guidelines were established.  In Mexico's view, the"appropriate time" for consideration of the negotiating guidelines referred to in the Services Council's
1996 report was after this assessment of trade in services.  Furthermore, these negotiating guidelines
should be considered in the General Council process.
55. The representative of Argentina said that the substantive preparations for the Seattle
Ministerial Conference were being discussed in the General Council, and it was inappropriate to
address specific sectors in some other preferred fora.  There were considerable political overtones in
the preparatory process, involving all the issues on the table, and the General Council should thereforereconfirm its primary role in this process.
56. The representative of Switzerland said that his delegation did not see a contradiction between
the processes under way in the Services Council and the General Council.  It would not be rational for
Members to begin to make the same presentations and hold the same discussions in the General
Council when a debate on negotiating guidelines and procedures was already under way in theServices Council.  There was no question here of putting into doubt the responsibility of the General
Council and its competence and primacy in the prepar ations for the Ministerial Conference.  It would
be superfluous to reaffirm something that could not at all be questioned.  Switzerland did not believe
that the balance of interests of Members would be affected by the work being undertaken in the
Services Council.  The overall balance of interests would clearly be ensured at the end under the aegisof the General Council, and any subject for future negotiations taken up in other committees and
councils would eventually be brought to the General Council.  He urged delegations to avoid
attaching too much importance to this procedural issue.
57. The representative of Egypt said he shared  the views of Uruguay and others who had
expressed similar views.  This matter could indeed affect the balance at the end of the day, because
anything agreed in the Services Council and sent up to the General Council should not be reopened.
This matter should therefore be addressed in a comprehensive way in the General Council.  The role
of the General Council could not be open to question, and the whole preparatory process should be
concentrated in the General Council.
58. The Chairman said that the General Council unquestionably had a primary role in the
preparatory process.  At the same time, other committees and councils could play a complementary
role.  He suggested that he might need to undertake consultations with chairpersons of other WTObodies to see how their role and that of the General Council in the preparatory process could be
reconciled.  However, the primary role of the General Council was very clear.
59. The representative of Australia said that this question was one that should be resolved by the
membership as a whole.  A number of delegations had discussed this issue at various times, and there
was a clear view of the importance of bringing this work into the General Council.
60. The representative of Japan said that the Singapore Ministerial Conference had given a
mandate to the Services Council to begin consideration of the negotiating guidelines and procedures,
and one could not change or cancel this mandate.  The question to be addressed was what Members
were going to do in the General Council in relation to the work that was going to be undertaken under
this mandate.
61. The representative of Mexico said that the General Council should remain the guiding body in
this process so that all delegations, large and sma ll, would have an opportunity to follow it.  ThisWT/GC/M/42
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would be difficult if the work were to be fragmented among several bodies.  Like Australia, Mexico
believed that any decision on this matter was for Members to take.
62. The representative of Uruguay said that, in his delegation's view, there was only one process
in the preparations for Seattle, which was being ca rried out in the General Council.  Uruguay shared
Australia's and Mexico's views that any decision regarding this matter had to be taken by Members,and believed it had already been taken by Ministers in May 1998.  Uruguay also shared Mexico's view
that Article XIX of GATS did not specify where the work on the negotiating guidelines should be
undertaken.  He asked again that the General Council reaffirm its competence in this regard, and that
the issue of negotiating guidelines on services be examined in the General Council.
63. The representative of Bolivia associated her delegation with the statements by Brazil, Mexico,
Argentina and Australia.  Ministers in May 1998 had clearly established a specific process for the
preparations for the third Ministerial Conference under the direction of the General Council.  Allpreparatory work had therefore to be undertaken in the General Council.
64. The representative of Japan drew attention to paragraph 2 of the 1998 Ministerial Declaration,
in which Ministers had reaffirmed the commitments and assessments that had been made at
Singapore.  The 1998 Ministerial Declaration had therefore not changed the mandate given to the
Services Council in Singapore to, among other things, consider negotiating guidelines and proceduresfor the services negotiations.  Members had been participating in the work of the Services Council
with a clear understanding of the mandate resulting from the Singapore Ministerial Conference.  No
one had previously raised any objection to the understanding regarding the Council's mandate, and it
was odd now to hear different interpretation of the Council's mandate.  In accordance with the
Singapore mandate, the Services Council should conduct an assessment of trade in services and,thereafter, begin consideration of the negotiating guidelines and procedures.  This work would then be
submitted to the General Council for its consideration and review.
65. The representative of Cuba associated his delegation with Uruguay and others who had stated
that the work on establishing the services negotiating guidelines and procedures should be undertaken
in the General Council.
66. The representative of the United States said it was quite clear from a reading of paragraph 9
of the 1998 Ministerial Declaration that the prepar atory process for the next Ministerial Conference
was established as a single process under the General Council, and that was where it should stay.
Members should not get involved in a process of fragmenting the work by allowing subsidiary bodies
to get out in front on a particular issue or to wait for subsidiary bodies to complete work on a
particular issue.
67. The representatives of Australia and Mexico  associated their delegations fully with the
statement by the United States.
68. The representative of Japan said that delegations appeared to be overlooking the last sentence
of paragraph 8 of the Ministerial Declaration in which Ministers had reaffirmed their commitment to
respect the existing schedules for reviews, negotiations and other work to which they had already
agreed.
69. The representative of Hong Kong, China said th at it was clearly the General Council's role to
examine all matters and make recommendations to Ministers, and no one was suggesting that the
Services Council take over this role.  However, the Services Council had a mandate to undertake work
on negotiating guidelines and procedures, and was therefore in a good position to provide an input
into the General Council so that the latter could have a more informed debate and focus on other
matters as well.WT/GC/M/42
Page 27
70. The representative of the European Communities suggested that Members not continue this
discussion further at this stage, and that this might be an issue that might warrant informal
consultations by the Chairman.
71. The representative of Australia, referring to Ja pan's most recent statement, said that in his
view the last sentence of paragraph 8 of the Ministerial Declaration referred to agreements reached in
the Uruguay Round and not Singapore.  He agreed  with Hong Kong, China that subsidiary bodies
could do useful work in helping to prepare the ground for decisions to be taken in the General
Council.
72. The representative of Colombia said that th e context in which Members had to analyse the
preparations for Seattle was the framework provided by the 1998 Ministerial Declaration without
saying that the General Council had to wait for reports from any other subsidiary body.  A clear
distinction had to be made between what was agreed at Singapore as regards information analysis andexchange, and what was agreed at the Geneva Ministerial Conference with regard to preparations for
the third Ministerial Conference, for which the General Council was the competent body.
73. The representative of Japan said that his delegation interpreted the last sentence of
paragraph 8 differently than Australia.  As regards Colombia's statement, he wished to recall that the
Singapore mandate for the Services Council concerned not only an information exchange exercise butalso an assessment of trade in services and consideration of negotiating guidelines.
74. The General Council took note of the statements.
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