RESTRICTED
WORLD TRADE G/C/M/14
30October 1996
ORGANIZATION(96-4576)
Council forTrade inGoods
15October 1996
MINUTES OFMEETING
Held inCentre William Rappard
on15October 1996
Chairman: Mr.S.Narayanan (India)
Theproposed agenda contained indocument G/C/W/60 wasadopted withtheinclusion ofone
itemunder "Other Business".
Page
1. Request forextension ofwaiver duetoexpire on31December 1996 2
pursuant toparagraph 2oftheUnderstanding inrespect ofWaivers
ofObligations under GATT 1994
- United States -Imports ofAutomotive Products
(G/L/103 andCorr.1, G/C/W/55)
2. Working Party onState Trading Enterprises 3
- Communication from theEuropean Communities (G/STR/W/33)
3. Review under Article 6oftheAgreement onPreshipment Inspection 5
- Statement bytheChairman
4. Report oftheWorking Group onNotification Obligations andProcedures 5
(G/L/112)
5. Report oftheTextiles Monitoring Body (G/L/113) 8
6. Implementation oftheAgreement onTextiles andClothing andRelated Matters 19
- Communication from Pakistan onbehalf ofanumber ofWTO Members
(G/L/92)
- Communication from theUnited States (G/L/95 andAdd.1)
- Communication from theEuropean Communities (G/L/97)
7. Format andContents oftheCouncil 'sReport totheSingapore Ministerial 26
Conference
- Statement bytheChairman
Thefollowing itemwasincluded under "Other Business"
8. Dateofnextmeeting 28G/C/M/14
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TheChairman welcomed delegations tothismeeting convened byWTO/AIR/448.
1. Requests forextensions ofwaivers duetoexpire on31December 1996pursuant toparagraph
2oftheUnderstanding inrespect ofWaivers ofObligations under GATT 1994
- United States -Imports ofAutomotive Products (G/L/103 andCorr.1, G/C/W/55)
1.1 TheChairman recalled thatthisitemwasfirstconsidered bytheCouncil atitsmeeting of
19September 1996. Itconcerned acommunication fromtheUnited States contained inG/L/103 and
Corr.1 inwhich anextension ofthewaiver wasrequested fromtheobligations under paragraph 1of
Article IofGATT 1994. Adraftdecision contained inG/C/W/55 wasalsocirculated inorder to
facilitate consideration ofthisitem. Herecalled thatJapan hadasked formore information onthis
waiver request asaresult ofwhich theCouncil didnotapprove thedraftdecision orrecommend its
adoption bytheGeneral Council atthattime.
1.2 Therepresentative oftheUnited States requested theextension ofthewaiver andsought aone
yearrenewalofthetariffpreferencescontainedintheUS-CanadaAutomotiveProductsTradeAgreement.
ThisAgreement hadbeensigned in1965andallowed theeconomic integration oftheUSandCanadian
automanufacturing industry which wasjoined geographically butarbitrarily anduneconomically divided
attheborder. UStariffs onallproducts covered bythiswaiver would beeliminated asof1January 1998
aspartoftheimplementation ofthetariffelimination schedule oftheUS-Canada FreeTrade Agreement
which hadbeenaincorporated intotheNAFTA. Thedetails ontheprovisions andcoverage ofthe
Agreement aswellastheexceptional circumstances thatjustified theneedforthewaiver wereprovided
intherenewal request submitted bytheUSandcirculated atthelastmeeting.
1.3 Japan hadsought clarification onseveral points including tradestatistics forthepastthirty years.
Hisdelegation hadresponded fullytothese points andhoped thattheJapanese delegation hadhadthe
opportunity tostudy theseanswers andwould beinaposition torelease itsreserve onthewaiver request.
HisGovernment asked Members tofavourably refer itsrequest totheGeneral Council forits
consideration atitsmeeting of7November.
1.4 TherepresentativeofJapannotedthathisdelegationhadrequestedtheUStoprovidetherelevant
datafortworeasons. First, itwanted tomake surethatthiswaiver, which hadbeenmaintained for
morethan30years, stillhadenough justification inviewofthechange inthewayautomobile companies
didbusiness today. Inthe1960s, when mostoftheautomotive products weretraded within different
plants belonging tothesame company, there mayhavebeensome justification toaccord duty-free
treatment inorder toallow suchtradetobecarried outsmoothly between plants situated onbothsides
ontheCanadian-US border. Today, however, automotive products including automotive partswere
being supplied throughout theworld. Itwasintheinterest ofautomobile companies topurchase auto
parts from anysupplier worldwide aslongastheymettherequired level ofstandard andprice. In
looking atthestatistics supplied, hisdelegation hadfound thatmore than97%ofautomotive products
imported bytheU.S.from Canada wereduty-free under theautopactin1970, confirming thekind
oftrade hehaddescribed. However thatpercentage haddropped inthelast25years toonly52%
which meant thatthesituation which originally might havejustified thewaiver haddrastically changed.
1.5 Second, theU.S.-Canada autopactafforded favourable treatment onlytoautopactmember
companies inCanada. Thismeant thatthose companies were abletoimport automobiles duty-free
notonlyfromtheU.S.butalsofromthirdcountries, while nonautopactcompanies, i.e.companies
other thanthebigthree andVolvo, eventhough established inCanada, were notallowed tobenefit
from suchafacility. Hisdelegation recognized thattheproblem ofdiscrimination wasperhaps only
partly related tothiswaiver. However, hestressed thatthematter wasofserious concern tohis
Government. Thatnotwithstanding, hisGovernment haddecided nottoblock consensus onthisissue.
Onereason wasthattherequest wasonlyforaoneyearextension ofthewaiver.G/C/M/14
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1.6 Therepresentative ofKorea while notobjecting totheextension ofthewaiver asked theUS
toprovide hisdelegation withthesame written information made available totheJapanese delegation.
1.7 TheCouncil tooknoteofthestatements, andrecommended thatthedecision contained in
document G/C/W/55 beforwarded totheGeneral Council foradoption.
2. Working Party onState Trading Enterprises
- Communication from theEuropean Communities (G/STR/W/33)
2.1 Therepresentative oftheEuropean Communities noted thathisdelegation hadalready drawn
attention tothisissue inthecontext oftheinformal heads ofdelegation process fortheSingapore
Ministerial Conference. Hisdelegation believed thattheappropriate body toconsider thematter in
more detail would betheWorking Party onStateTrading Enterprises through theintermediary ofthis
Council. Hepaidtribute tothevaluable work oftheWorking Party onState Trading Enterprises,
particularly intheareaofnotifications andinthedevelopment oftheillustrative listofstatetrading
enterprises. Hedrew attention tofundamental aspects oftheprovisions ofArticle XVII, particularly
inlightoftheimpending accessions ofsome 30countries totheWTO. Some ofthese countries had
longestablished andwidespread traditions ofoperating through statetrading enterprises. Itwould
beuseful thatthisorganisation sendasignal about theimportance ofstrengthening thedisciplines in
Article XVII. Inaddition, Members could alsobenefit from amore rigorous examination ofthe
underlying rules ofArticle XVII. Herequested thatthematter bereferred totheWorking Party for
further examination.
2.2 Therepresentative oftheUnited States noted thatimport andexport practises ofstatetrading
enterprises could anddidoperate inways which distorted trade, particularly inagriculture. Akey
problem ofstatetrading, andperhaps thelargest obstacle currently faced, wasthattheactivities of
state trading enterprises were notsufficiently transparent todetermine whether WTO rules and
commitments werebeing violated. Thiswasparticularly thecaseforstatetrading import orexport
monopoliesandhisdelegationsharedtheEC'sconcernabouttheactivitiesoftheseentities.TheWorking
Party wasdeveloping anewnotification format andalistofstatetrading enterprises based onthese
activities, mechanisms andprivileges. Ithadtobeensured thattheresult oftheseactivities ledtogreater
transparency. Itwould alsobenecessary intheCommittee onAgriculture, toscrutinize theroleof
thestatetradingentities,particularlyimportandexportmonopolies,intheimplementationofagricultural
tariff ratequotas andhowentities operated inagricultural export markets. Thelackofadequate
requirements fortransparency andtheneedforimproved disciplines ofstatetrading entities required
further attention intheWTO. Hisdelegation supported theEConbothprocedural andsubstantive
grounds.
2.3 TherepresentativeofArgentinanotingthathisdelegationconsideredtheECproposalappropriate,
provided suggestions tofurther enhance theproposal. Inhisviewnotonlystatemonopolies butalso
thedefinition included inparagraph 1oftheUnderstanding ontheInterpretation ofArticle XVII should
becovered. Inaddition toorganisations which enjoyed exclusive privileges, andtotheproblems linked
tomarket access forimports alsotheactivities intheareaofexports should beexamined.
2.4 Therepresentative ofMexico considered theECproposal veryimportant. However, atpresent,
hisdelegation could notsupport theECproposal. ThiswasthefirsttimethattheECproposal was
before thisCouncil andcareful examination wasrequired toassess itsexact repercussions.
2.5 TherepresentativeofAustraliasupportedthecentralprincipalinparagraph4oftheECproposal.
Sheagreed thatitwasimportant tominimize thewayinwhich importing statetrading enterprises could
impair market access rights, andcould therefore support anyeffort toimprove theoperation ofArticleG/C/M/14
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XVII. Herdelegation understood thattheECproposal wasnotaimed atrenegotiating Article XVII
butatstarting adiscussion within theWorking Party ontheadequacy ofthecurrent disciplines. This
seemed tobealogical flowfromtheimportant work already undertaken bytheWorking Party. She
noted thatherdelegation hadreservations about other aspects oftheECproposal. Unlike Argentina,
herdelegation sawtheroles andimpacts ofimporting andexporting statetrading enterprises quite
differently.
2.6 Therepresentative ofMorocco supported thepointofviewexpressed byMexico. Theproposal
raised many questions andrequired closer scrutiny andtimetoseeexactly whatthegoals might be,
before hisdelegation could giveitfullsupport. Headded thatthisproposal wasveryclose inseveral
aspects toanother proposal made oncompetition policy intheheads ofdelegation process.
2.7 Therepresentative ofthePhilippines, speaking onbehalf ofASEAN Members, supported the
views expressed byMexico. TheWorking Party wasmandated toreview thequestionnaires andthe
notifications made. Shebelieved thatanyrecommendations toreview Article XVIIwould bepremature
since theWorking Party hadnotyetcarried outitsmandate. However, herdelegation waswilling
toparticipate inconsultations ontheECproposal.
2.8 Therepresentative ofColombia, supporting thestatements ofMexico andMorocco feltthat
itwaspremature tostudy thisissue which required more preparatory work. Itwasnecessary to
understand better theaimoftheECproposal interms ofthenegotiations withcountries involved in
theaccession process. Intheviewofhisdelegation thematter might bepursued aftertheMinisterial
Conference.
2.9 Therepresentative ofJapan alsobelieved thatmore timewasnecessary tostudy thisissue.
Thework suggested went beyond themandate oftheWorking Party onState Trading Enterprises,
andfurther work wasnecessary before embarking onthisidea.
2.10 Therepresentative ofCanada understood thattheEChadmade aprocedural proposal tosend
thisissue totheWorking Party. While, likeother delegations, herdelegation hadsome reservations
about certain aspects oftheproposal andagreed thatparts oftheproposal wentbeyond themandate
oftheWorking Party, itwasprepared todiscuss these issues intheWorking Party.
2.11 Therepresentative oftheEuropean Communities found thatthere wasconsiderable interest
inhisdelegation 'sproposal andaneedtofurther examine itsimplications. Hesuggested thattheCouncil
should proceed onthebasisofhisprocedural proposal andinvite theWorking Party toexamine these
implications.
2.12 Therepresentative ofArgentina stated thathehadnotheard anydelegation raiseobjections
totheECproposalthattheproposalshouldbereferredtotheWorkingPartyonStateTradingEnterprises
forconsideration. Therefore, theCouncil should decide tosendthisdocument forconsideration to
theWorking Party onState Trading Enterprises.
2.13 TherepresentativeoftheEuropeanCommunitiesnotedthattheappropriatetimeforexamination
oftheECproposal would bethenextmeeting oftheWorking Party. Then, thepoints raised bya
number ofdelegations including whether ornotelements oftheproposal exceeded themandate ofthe
Working Party onState Trading Enterprises, could beexamined.
2.14 Therepresentative ofMexico stated that,judging fromthediscussion, hisdelegation considered
thattheissue should betaken upagain intheCouncil atanappropriate time. Therepresentative of
Japan agreed withMexico.G/C/M/14
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2.15 Therepresentative oftheEuropean Communities suggested thattheCouncil conclude this
discussion withaninvitation totheChairman oftheWorking Party toundertake informal consultations
ontheproposal withaviewtodetermining theappropriate timeandwayinwhich thematter could
betaken further.
2.16 Therepresentative ofMexico requested thatitbekeptonrecord thattheWorking Party on
StateTrading Enterprises hadspecific terms ofreference andalimited mandate andanysuchinitiative
wasoutside ofitsterms ofreference.
2.17 Therepresentative oftheEuropean Communities saidthatitwasdifficult toaccept whatcould
beaunilateral orperhaps evenaplurilateral interpretation ofthemandate oftheWorking Party on
State Trading Enterprises. Hebelieved thatitwould belegitimate fortheChairman oftheCouncil
toconclude thattheChairman oftheWorking Party could beinvited toconsider, through aprocess
ofinformal consultations, theimplications ofhisdelegation 'sproposal.
2.18 TheCouncil agreed torevert tothissubject atanappropriate time.
3. Review under Article 6oftheAgreement onPreshipment Inspection
- Statement bytheChairman
3.1 TheChairman recalled thatatthelastmeeting oftheCouncil, hehadmentioned thatArticle
6ofthePreshipment Inspection Agreement provided forareview oftheprovisions, implementation
andoperation ofthisAgreement bytheMinisterial Conference attheendofthesecond yearfromthe
dateoftheentry intoforce oftheWTO Agreement. Thereview would therefore havetobeconducted
attheendofthisyear. Hehadheldinformal consultations onthismatter inlightofaproposal to
create aWorking Party tocarry outthereview andtodelay thereview foroneyear. Ataninformal
meeting oftheCouncil on7October, itwasagreed thataWorking Party besetupunder theGoods
Council tocarry outthetechnical work ofthereview during thetwelve months following theSingapore
Ministerial Conference. Itwasalsoagreed thattheWorking Party would report itsfindings and
recommendations inDecember 1997. Hetherefore proposed thattheCouncil recommend thatthe
General Council acting onbehalf oftheMinisterial Conference inaccordance withArticle IV:2of
theAgreement establishing theWorld Trade Organization, setupaWorking Party under theCouncil
forTrade inGoods withthefollowing terms ofreference: "toconduct thereview provided forunder
Article 6oftheAgreement onPreshipment Inspection andtoreport totheGeneral Council through
theCouncil forTrade inGoods, inDecember 1997."
3.2 TheCouncil soagreed.
4. Report oftheWorking Group onNotification Obligations andProcedures (G/L/112)
4.1 TheChairman noted thatdocument G/L/112 contained theReport oftheWorking Group on
Notification Obligations andProcedures. ThisWorking Group hadbeenestablished pursuant toPart
IIIoftheMarrakesh Decision onNotification Procedures withamandate toreview allnotification
obligations established under theAgreements inAnnex IAoftheWTO Agreement andtomake its
recommendations tothisbody bytheendofthisyear. TheWorking Group hadsetoutitsdetailed
findings initsreport andhadmade certain observations andconclusions onthese findings which were
setoutinboldprintaswellasanumber ofrecommendations forfuture actions which were inbold
printandwere underlined.G/C/M/14
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4.2 Therepresentatives ofElSalvador andMexico suggested thattheCouncil should agree that
thelistofnotifications would beupdated.
4.3 Therepresentative ofTunisia, speaking onbehalf oftheAfrican group, pointed outthatthe
document wasavailable onlyinEnglish. Inorder nottohinder thework oftheCouncil, hisdelegation
wasready towork onthebasisofthisdocument inEnglish, butsome delegations might wanttoexpress
theirviews ontherecommendations ofthisWorking Group onlywhen thedocument wasavailable
inFrench.
4.4 TheCouncil agreed toconsider eachrecommendation, byparagraph number, foradoption
asfollows:
A. Paragraph 43:"TheWorking Group recommends thattheCouncil forTrade inGoods
request theCommittee onAgriculture toconsider themodified notification formats
contained inthedraft revision todocument G/AG/2, assetoutindocument
G/NOP/W/15 andthattheCouncil forTrade inGoods request theCommittee on
Subsidies andCountervailing Measures toconsider themodified notification formats
containedindraftrevisiontodocumentG/SCM/6,assetoutindocumentG/NOP/W/15.
Both Committees should consider themodified notification formats withaview to
achieving greater coherence andefficiency inthenotification system.
4.5 TheCouncil agreed torequest theCommittee onAgriculture andtheCommittee onSubsidies
andCountervailing Measures toconsider themodified notification formats assetoutindocument
G/NOP/W/15.
B. Paragraph 65:"Accordingly, theWorking Group recommends thattheCouncil for
Trade inGoods request theGeneral Council totakethenecessary steps toeliminate
thenotification obligations intheDecisions oftheGATT 1947 CONTRACTING
PARTIES relating toimport licensing procedures (L/3756 andSR/28/6). TheGroup
further recommends thattheCouncil forTrade inGoods refer theDecisions ofthe
GATT 1947CONTRACTING PARTIES relating toquantitative restrictions andnon-
tariffmeasures(BISD32S/92-93andBISD31S/227-228),MarksofOrigin(BISD7S/30-
33)andLiquidation ofStrategic Stocks (BISD 3S/51) totheappropriate bodies for
further consideration."
4.6 TheCouncil agreed toi)request theGeneral Council totakethenecessary steps toeliminate
theGATT 1947 CONTRACTING PARTIES notification obligations relating toimport licensing
procedures asdescribed inthefirstsentence ofparagraph 65;andii)toreferthenotification obligations
described inthesecond sentence ofparagraph 65relating toquantitative restrictions andnon-tariff
measures, andmarks oforigin totheMarket Access Committee forfurther consideration. Since there
wasnobody todealwithliquidation ofstrategic stocks ofaprimary product accumulated aspartof
anational strategic stockpile forpurposes ofnational defense, theCouncil agreed toretain thismatter
intheCouncil forfurther consideration.
C. Paragraph 72:"The Group recommends thatacomprehensive listing ofnotification
obligations andthecompliance therewith byallWTO Members bemaintained onan
ongoing basisandbecirculated semi-annually toallMembers. Inaddition, theCouncil
forTrade inGoods might consider anupdating ofthelisting ofnotifications received,
assetoutinAnnex IIItothisreport, prior totheSingapore Ministerial Meeting."G/C/M/14
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4.7 TheCouncilagreedthati)thecomprehensivelistingofnotificationobligationsandthecompliance
therewith bemaintained onanongoing basisandbecirculated semi-annually; andii)thatthislisting
ofnotifications received beupdated prior totheSingapore meeting.
D. Paragraph 76:"TheGroup, therefore, recommends thattheCouncil forTrade inGoods
considerthepreparationofgeneralguidelinesforthebodiesunderitspurview,providing
fortheregular review ofquestionnaires andformats andofthesituation asregards
compliance withnotification obligations."
4.8 Therepresentative ofArgentina agreed toadopt thisrecommendation withthefollowing
clarification onrecord: hisdelegation understood paragraph 76tomean that,inthecaseofsome
agreements, where theobligation would betodelay forasingle timeadetermined obligation, this
notification would notbeinterpreted, intheframework oftheAgreement, asamatter fordiscussion.
4.9 TheCouncil tooknoteofthestatement andagreed torevert tothismatter atafuture meeting.
E. Paragraph 79:"Accordingly, theGroup recommends thatactive consideration begiven
intheappropriate WTO bodies tothedevelopment ofaspecial programme ofassistance
todevelopingcountryMembersandparticularlytotheleast-developedcountryMembers
providing more intensive technical assistance, possibly withtheparticipation ofother
organizations,focusingonthedevelopmentofsystemsandstructuresrequiredtorespond
tonotification obligations."
4.10 TheCouncil agreed thatthisrecommendation should beforwarded totheCommittee onTrade
andDevelopment forfurther consideration.
F. Paragraph 82:"Accordingly, theGroup recommends totheCouncil forTrade inGoods
thatitrequest theMinisterial Conference ortheGeneral Council toconsider the
establishment,atanappropriatetime,ofabodywithamandatetoreviewthenotification
obligations andprocedures throughout theWTO Agreement. Alternatively,
consideration might begiven totheestablishment ofabody, orthe
extension/modification ofthemandate ofthecurrent Working Group, toconduct, at
anappropriate time, afurther comprehensive review ofthenotification obligations
andprocedures intheagreements inAnnex 1AoftheWTO Agreement. Itwas
suggested thatfuture work alsoencompass matters relating totheCentral Registry of
Notifications, electronic transmission ofnotifications andfurther work onthe
notifications handbook."
4.11 TherepresentativeofNewZealandcouldagreetoforwardingthisrecommendationtotheGeneral
Council withthefollowing statement fortherecord. Hisdelegation sawnobasis forextending the
currentWorkingGroup'smandate.Itwouldbehelpfultohaveapausetoallowmeaningfulconsideration
ofthenotifications thathadbeenmade. Hisdelegation considered thattheappropriate timeforrevisiting
theissue would betheendof1998, prior tothenextMinisterial Conference. Aworking group
established thencould address thenotification obligations across theentire WTO, notjustAnnex 1A
Agreements. Furthermore, withregard tothehandbook andtheCentral Registry ofNotifications,
hisdelegation didnotseeaneedforaseparate Body tooversee suchwork. TheCouncil could handle
suchmatters asappropriate. Hisdelegation suggested thatthehandbook, auseful contribution, be
managed aspartoftheroutine work oftheTechnical Cooperation andTraining Division.
4.12 TheCouncil agreed toforward alltheelements inparagraph 82totheGeneral Council for
further consideration. Itwasagreed thatthequestion ofhowtodealwiththereport oftheWorkingG/C/M/14
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Group inthereport oftheCouncil totheMinisterial Conference would beconsidered ininformal
consultations.
4.13 Therepresentative ofNorway stressed theimportance ofnotifications toachieve transparency,
which inturnprovided thebasis forstability andpredictability onwhich international trade was
dependent.
5. Report oftheTextiles Monitoring Body (G/L/113)
5.1 TheChairman stated thatthereport oftheTMB inthecontext ofthepreparation forthe
Singapore Ministerial Conference wascontained inG/L/113. Hedrew theCouncil 'sattention tothe
observations, orassessments itcontained, which were printed inbold. They referred tothe
implementation ofthedifferent provisions oftheATC suchasintegration (paragraphs 11to16and
21to27);quantitative restrictions under Article 2(paragraphs 34,35and41);safeguard actions under
Article 6(paragraphs 82to84); Article 7(paragraphs 99to101); compliance withnotification
requirements (paragraphs 19and102); andfunctioning oftheTMB (paragraphs 111to122). He
alsodrew attention tothefactthatthereport contained recommendations, which theCouncil should
consider. Such recommendations were tobefound inparagraphs 103,107and119ofthereport.
5.2 Therepresentative ofColombia stated thathisdelegation 'sfirstconclusion inhaving readthe
report oftheTextiles Monitoring Body wasthatitwasaverycomplete andexhaustive analysis ofthe
activities oftheTMB based onthemandate given tothatBody intheATC andtheaccumulation of
notifications which hadbeenputbefore it.Given thattheTMB wasabody which hadthecapacity
andthematerial toassess thewayinwhich theATCwasoperating, itsreport wasanimportant reference
document foranalysis inthisCouncil oftheapplication, implementation andfulfilment oftheprovisions
oftheATC. Because ofitsverynature itwasafactual account ofthewayinwhich theMembers
hadcomplied withtheirobligations andthewayinwhich thedifferent problems orcontroversies which
hadarisen hadbeenanalyzed andassessed. Asclearly appeared, theTMB hadcarried outanenormous
taskwithalargenumber ofmeetings held. Themagnitude ofthetaskundertaken deserved appreciation.
Itwasveryimportant tohighlight thefactthat,generally speaking, itwasquiteclearfromthisreport
thatmostofthegoals oftheATCwerebeing metandthatthemandate wasbeing carried out.Interms
oftransparency itcould besaidthataconsiderable effort hadbeenundertaken andMembers had,
generally speaking, mettheirnotification obligations inanexhaustive manner. Thereport didrecognize
thatthere hadbeen difficulties. TheTMB wasthefirsttoflagsuchdifficulties, forexample in
paragraph 117where reference wasmade todifficulties which veryoftenwereduetothelimited amount
oftimeavailable toreview dispute cases. Paragraphs 118and121referred tothedifficulty ofreaching
consensus. Hebelieved thatithadnever beenthought possible toachieve 100percentconsensus in
eachandevery matter. Theanalysis oftheimplementation ofcertain provisions, forexample, on
integration, hadgiven risetodivergences which wereclearly reflected inthereport. Thelikelihood
wasthatthiswould continue tobediscussed between exporting andimporting countries because not
onlydifferentopinionsbutdifferentconceptswerebeingadoptedbydifferentMembers.Quiteobviously
thelimitations andthedefects oftheATC werealsoreflected intheproblems thattheTMB hadcome
upagainst insolving problems ataparticular time. Hispersonal viewwasthattheTMB hadcarried
outataskwhich deserved dueappreciation. Itsdifficult taskwould continue inthefuture, butithad
given theMembers ofthisCouncil theopportunity ofhaving adocument which would certainly be
veryuseful fordrawing uptheCouncil report.
5.3 Therepresentative ofIndia stated thatitsdelegation wasgrateful totheTMB foritsreport
which would provide asignificant input intothepreparations oftheCouncil 'sreport onthe
implementation oftheATC. Thewealth ofinformation intheTMB'sreport wasrevealing ofthestatus
ofintegration ofthetextiles andclothing sector intoGATT, andhisdelegation wasgrateful totheTMBG/C/M/14
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forhaving documented thevarious notifications ithadreceived from Members. Apart from being
arepository ofnotifications, theTMB hadalsobeenentrusted withimportant functions, contained
inArticle 8.1oftheATC, suchassupervision oftheimplementation oftheATC, examination ofall
measures taken under itandtheirconformity therewith, aswellastaking allactions specifically required
oftheTMB bytheATC. Itwasapparent thattheTMB hadrelied extensively onnotifications by
Members toperform itstasks. With regard tointegration, theTMB hadreviewed thenotifications
submitted byCanada, theEuropean Communities, Norway andtheUnited States, andhadnoted that
these demonstrated thatthevolume ofproducts integrated bythese Members amounted toatleast
16percentofthetotalvolume oftheir1990 imports oftheproducts falling under ATC coverage.
TheTMB acknowledged thefactthatwiththeexception ofCanada inrespect ofoneproduct (work
gloves), theproducts integrated inthefirststage hadnotbeensubject toquantitative restrictions prior
totheirintegration intoGATT 1994. Hisdelegation wasgrateful totheTMB forbringing outthe
absence ofcommercially meaningful integration inthefirststage. However, itwaswellknown that
theconcept ofintegration related tothequantitative restrictions maintained bymajor importing countries
under theMulti Fibre Arrangement (MFA) andcarried overtothetransition byvirtue ofArticle 2.1
TheTMB'sreport created anunfortunate impression asthough thesewereonparwiththose Members
whichnotifiedanotionalintegrationprogrammejustbecausetheyhadretainedtherighttousetransitional
safeguards, buthadnoquantitative restrictions referred toinArticle 2.1.Ifsome ofthem hadsome
restrictions, theywereGATT consistent restrictions andnotMFA typerestrictions. Itwould appear
fromthelength oftherelevant sections ofthereport, thattheTMB hadspent more timeandenergy
indealing withnotional integration byMembers under Article 2.7(b) rather thansubstantive integration
bymajor importing Members under Article 2.7(a). TheTMB, initsview, haderred innotpointing
outthattheintegration programme ofArticle 2.7(b) Members wasanotional integration, thatthese
Members didnotmaintain quantitative restrictions carried overfromtheMFA andthattheproducts
selected forintegration hadnoimplication fortheaccess provided; unlike inthecaseofArticle 2.7(a)
Members. Hisdelegation would haveappreciated afairer treatment ofthesubject bytheTMB. In
addition, anotification bytheUnited States (G/TMB/N/63/Add.7) should, initsview, havebeenfound
bytheTMB tobeinconsistent withtheprovisions ofArticle 2.1.Thisreferred torestrictions imposed
onimports ofcategory 361products fromoneMember, which hadearlier beennotified totheTMB
bytheUnited States under Article 3.1.According tothisnotification, therewasacomplete embargo
onimports ofthiscategory fromtheexporting Member. TheATC dealtwithspecific limits, anddid
notallow trade embargoes. TheTMB should havepointed outitsinconsistency withArticle 2.1.
5.4 Healsopointed outthatafootnote (number 5)ofthereport stated that"The United States
laterwithdrew therestraint, andIndia requested thetermination offurther action inpursuance ofthe
decision taken bytheDispute Settlement Body toestablish aPanel toexamine thatmatter". Henoted
thattheUShadwithdrawn itsrestraint afterithadbeeninplace forabout oneyear,thatIndia'srequest
fortermination ofpanel proceedings onthismatter hadnotbeen linked withtheUSunilateral
withdrawing action andhadbeen"without prejudice toitsstand thattherestraint imposed isinconsistent
withtheATC". Further, thisrequest hadalsobeen"without prejudice toIndia'sstanding onvarious
factual andlegal issues outlined byIndia initsrequest forestablishment ofaPanel". Forthesake
ofaccuracy andcomprehensiveness, thefootnote could haveincluded thesetwoelements also. Itwould
alsohaveappreciated ifAnnex IIofthereport, which gavethedetails ofthevarious safeguard actions
taken, hadalsoincluded information astowhether theMember taking safeguard action claimed serious
damage oractual threat thereof orbothandwhether theTMB hadfound serious damage oractual threat
orboth. Inthiscontext, hedrew specific attention toparagraph 61andAnnex IIwhich referred to
India.
5.5 Turning totheTMB'sreview oftheUnited States 'notifications ofagreed restraints under
Article 6.9,henoted thattherelevant provisions oftheATC clearly entrusted theTMB withthe
responsibility todetermine whether these could bejustified inaccordance withtheprovisions of
Article 6.8.Thisprovision clearly stipulated thatthe"specific level" atwhich import oftheproductG/C/M/14
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inquestion fromtheMember orMembers concerned wasproposed toberestrained "shall notbelower
thantheactual level" ofexports orimports fromtheMember concerned during the12-month period
terminating twomonths preceding themonth inwhich therequest forconsultation wasmade. However,
theTMB hadbeenacquiescing withasituation inwhich thespecific limitnotified waslower thanthe
rollback level. Thiswasinconsistent withtheATCandshould havebeendulypointed outbytheTMB.
TheTMBwouldstandtogaintheconfidenceofMembersbyperformingeffectivelythetaskofexamining
theconsistency ofallmeasures taken under theATC withtheprovisions oftheAgreement. Arelated
pointwasthelackofanyexamination bytheTMB ofwhatwasreferred toasGuaranteed Access Levels
(GAL). Itwasnotcleartohisdelegation whatwastheviewoftheTMB ontheconsistency ofGALs
withtheprovisions ofArticle 6.Afootnote inthereport (no.7)appeared tohidemore thanitrevealed.
IftheGAL wasthetotalagreed restraint, thenhowwasitpossible fortheimporting Member notto
provide agrowth ratefortheGAL initsnotification? IftheGAL waspartofatotalrestraint, then,
under Article 6.8,thiscould notbelessthantherollback level. Itappeared thattheTMB hadnot
gone intothismatter, since prima facie, GALs appeared tobepartofapreferential access regime,
ratherthanatransitionalsafeguardregime,andassuchcouldnotbenotifiedandjustifiedunderArticle6.
Itwould bedifficult, tosaytheleast, toconceptualize theserious damage oractual threat thereof to
domestic industry when looking atthefigures notified asGALs. Inthiscontext therewassome concern
regarding thedeviation from theTMB'susual method offunctioning, which asstated byitself was
based on"notifications" byMembers. Itwasdifficult tounderstand theTMB'staking intoaccount
aMember 'sintention toimplement which wasnotthesame asnotifying. Thisinconsistency inthe
method offunctioning oftheTMB hadcertain consequences, which thisCouncil should takenoteof.
Also, (inparagraphs 75and76ofthereport) theTMB referred tohaving concluded thatthenotified
restraint wasjustified "inoverall terms". Hisdelegation didnotseereference inanyprovision of
Article 6tothese words, andtherefore, feltthattheconclusion reached bytheTMB inthiscontext
could notbebased ontheprovisions oftheATC. Similarly, there wasreference totheGAL being
increased "onrequest", which appeared tohavebeenaccepted asavalidargument consistent withthe
ATC bytheTMB. Hisdelegation could notfindanyprovision inArticle 6which would justify this
interpretation. Insum, themanner inwhich Article 6notifications hadbeenreviewed bytheTMB
didnotalways seemtohavetaken place within thedisciplines oftheATC. Thishadresulted inimplicit
continuation ofthebilateral approach, earlier called the"consenting adults" approach inthediscredited
MFA system. Herequested theCouncil totakenoteofthese views inthepreparation ofthereport
totheSingapore Ministerial Conference.
5.6 Healsoconsidered thattheTMB hadgonebeyond theprovisions oftheATC, inthatArticle 8.9
didnotenvisage anyrequirement ofMembers "tocomply" withTMB recommendations, especially
when readwiththeprovision ofArticle 8.10which enabled Members topursue unresolved matters
intheDSB. Theword which theTMB should haveused(inparagraph 82)was"endeavour toaccept".
5.7 Hisdelegation hadveryserious concern regarding thesubjective nature ofcertain language
inthereport. Tothebestofitsknowledge, there hadnotbeenanynotification byanyWTO Member
totheTMB withregard totheimplementation ofArticle 7.Norhadthere beenanycommunication
fromtheMarket Access Committee totheTMB onthematter ofcross andreverse notifications. Also,
theminutes ofthatCommittee hadnever beenreflected inthereports oftheTMB meetings circulated
toWTO Members. Intheabsence ofanydocumentary evidence, itwassurprising thattheTMB should
havemade theobservations itmade inparagraphs 99and100ofthereport. Article 7clearly and
explicitly used thephrase "aspartoftheintegration process andwithreference tothespecific
commitments undertaken bytheMembers asaresult oftheUruguay Round". Therefore, itwas
absolutely clearthattheobligation toprovide access interms ofsub-paragraph (a)ofArticle 7.1was
onlywithreference tothespecific commitments undertaken asaresult oftheUruguay Round. His
delegation wasfullyaware ofthenegotiating history ofthisArticle andhadactively participated in
theintense negotiations heldontheintervening night of14-15 December 1993. Itwould liketostateG/C/M/14
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categorically thattherewasnoobligation whatsoever togobeyond thecommitments undertaken during
theUruguay Round.
5.8 TheTMB'ssuggestion (inparagraph 117)foradditional timetoreach decisions ondispute
cases wasinconsistent withtheprovisions oftheATC. TheTMB surely hadtobeaware thatthe
time-frameshadbeennegotiatedintoArticle6,andhisdelegationdidnotfindtheproposedrenegotiation
ofthese provisions tobeacceptable. Thedanger ofaccepting suchaview, andtransposing ittoother
processes under theDispute Settlement Body, needed nottobeoveremphasized. Italsohadnoted
thattheTMB wasaware oftheneedforgiving reasons foritsdecisions, (inparagraphs 120and121),
andthiswasindeed welcomed. However, itcould notagree thatmore detailed reports might render
consensus more difficult toachieve orrequire additional time. Foralmost 50years inthisorganisation,
disputeshadbeenhandledwithoutthisunusualargumentbeingadvancedfornotgivingdetailedreasoning
forconclusions. Infact,hefeltthatthediscipline ofhaving toprovide reasons foradecision would
encourage TMB members tostudy thevarious elements seriously anddischarge theirduties strictly
inadpersonamcapacity.Hefirmlybelievedthatgreatertransparencyprovidedforgreateraccountability
andtherefore forgreater acceptability.
5.9 Finally, hisdelegation found thereference (inparagraph 122)totheconcept of"collegiality"
tobeunclear inthecontext ofthefunctioning oftheTMB. Itcould onlysearch forthemeaning of
thisintheTMB'sworking procedures; however, these didnotcontain anyreference tothisconcept.
What itwould liketheTMB todowastodevelop astrong commitment toitsresponsibility tosupervise
theimplementation oftheATCandtoexamine allmeasures taken under theATCandtheirconformity
therewith. Suchacommitment, hisdelegation believed, would enable theTMB todischarge itsduties
without fearorfavour andenhance itscredibility.
5.10 Therepresentative ofBrazil stated thathesupported allwhathadbeensaidintheintervention
oftherepresentative ofColombia. Hisdelegation wasalsothankful totheTMB forthereport, which
itthought hadresulted fromatrend which should befollowed bytheTMB inthedirection ofincreased
transparency intheareaoftextiles. Thereport contained much valuable information forWTO Members
andhewould indeed encourage theTMB tofollow thistrend. Hisdelegation 'sobservations were
minor ones, andrelated toparagraphs 99and100,concerning improvements interms ofmarket access.
ThefactthattheTMB wasdealing withissues ofmarket access might notbestrictly within thescope
ofitsmandate contained inArticle 8.1.Hisdelegation hadgreatly improved suchaccess andithad
notthought therecould beanyconcerns raised inthisregard intheWTO. Inspiteoftheseobservations
hisdelegation wanted todraw attention totheTMB'sownstatement that"anassessment ofTMB's
functioning cannot bemade without taking intoconsideration circumstances ofitsestablishment, the
initial workload itwasfaced withaswellastheimportance ofthissector ofinternational trade". He
thought thatthisindeed waswhatshould betaken intoaccount inassessing thework oftheTMB and
hewould liketothank itsChairman andthecurrent members forthereport theyhadproduced and
fortheincreased transparency intheareaoftextiles.
5.11 Therepresentative ofHong Kong stated thatHong Kong shared many oftheviews expressed
bytheprevious speakers. Hisdelegation wasinparticular impressed bythedetailed arguments and
clear analysis made bytherepresentative ofIndia andalsorecognized thattheTMB report wasan
important contribution tothisCouncil towards understanding themajor complexity ofthematters being
handled bythebodyandthedifficulties involved therein. Itrecognized thatthecontents ofthereport
wereessentially factual, however, itwasthought-provoking ifnotstriking howmuch theTMB was
aware of.Tociteexamples onintegration, theTMB wasaware thatforallexcept oneitemintegrated
byCanada under stage 1noneofthetextile andclothing products included intheintegration exercise
hadbeenrestrained under theMFA. Italsohadrecorded awareness withrespect todifferent views
bydifferent Members onfuture integration. Ontransitional safeguards, theTMB wasaware ofthe
implications fortrade ofrequests forconsultations made withaviewtointroducing measures. TheG/C/M/14
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TMB wasalsoaware andactually concerned (inparagraph 118), about theimplications ofunresolved
issues forthecontinued operation oftheAgreement. Itwasalso(inparagraph 121)aware thatits
recommendations lacked aclearexpression ofthecommon rationale. Hisdelegation hadearlier put
itsviews onTMB transparency andaccountability ontherecord andwewould notrepeat it.However,
thebestendeavours promised inthisparagraph didnotaugur wellforanymeaningful improvement;
theTMB onlysaidthatfurther efforts would bemade toprovide asmany details andexplanations as
possible infuture reports. There wasnocommitment totheeffect thatcommon rationale represented
arequirement andnotabestendeavour. Furthermore, theTMB saidthatamore detailed report might
render consensus more difficult. Theimplication could bethatcommon rationale ought toinvolve
suchdetail thatithadtobesacrificed forstriking andearly consensus. Onthis,hisconcern wastwo-
fold. First, rationale didnotnecessarily havetobeingreat detail. Itwasreasoning, logic, andmost
important ofall,judgement based onasound interpretation ofATC provisions which wasneeded.
Hisdelegation didnotwanttoseedetailed arguments andsubmissions byindividual Members involved
inaparticular dispute. Second, ifitwasachoice between early consensus, orreasoning toensure
thattheconsensus reached wasaccording toATC terms eventhough attheexpense oftimeandeven
involving theriskofnotbeing abletoarrive ataconsensus atagiven point intime, thenhewould
prefer nottogoforshort-term expediency butforlogicreasoning andcompliance withATCprovisions;
thisforthelong-term health oftheATC andindeed forthelong-term health oftheTMB itself.
5.12 Inconcluding, hestated thattherewereindeed anumber ofpositive elements intheTMB report
which spoke favourable ofitswork. Hisdelegation acknowledged thesolidwork including, especially,
workofadministrative nature andotheraspects, andalsodidunderstand anapparent pragmatic approach
toresolve problems which wasevident inthework oftheTMB. However, theCouncil wasnotto
praise theTMB report nortoburyit.Thereport should betaken intoaccount asandwhen thisCouncil
tooktheissue ofATC implementation totheSingapore Ministerial Conference. Perhaps themost
important message itperceived fromthereport wastheawareness thattheTMB hadoftheproblems
withATC implementation. TheCouncil, mandated bytheATC tooversee itsimplementation, had
theresponsibility totranslate suchawareness bytheTMB intoconcrete action.
5.13 Therepresentative oftheUnited States responded briefly tosome ofthecriticisms thathad
beenlevelled towards theTMB, most ofwhich hedidnotagree with. Itseemed clear tohimthat
theTMB'sanalysis ofArticle 2.7(a) and2.7(b) notifications hadbeenhandled inafactual andseparate
manner withnoimplication thatsomehow 2.7(b) Members werebeing heldtothesame standard as
2.7(a) Members. Withrespect tothecriticism oftheUSnotification ofrestrictions oncategory 361,
hisGovernment 'scontention wasthatthese restrictions certainly metthestandard under Article 3,
theyhadbeeninplace before theATC came intoeffect, andtheyhadbeenagreed bilaterally with
thecountry involved. There wasnoproduction atallinthatcountry andtheimports theUSwas
receiving from itwere alltransshipped from athird country. Ithadbeenagreed thatthebestway
tohandle thesituation wassimply toestablish aquota ofzero, given thefactthatthere wasnoeffect
atallonanydomestic production inthatcountry. With respect toIndia'scomment onthecontent
offootnote 5relating tocategory 435,hethought thattheTMB'sdescription wasanaccurate reflection
oftheevents thathadoccurred. Theparticular concern expressed bytherepresentative ofIndia had
innowayimplied thatthereference intheTMB report wasincorrect. Astowhether Annex IIof
thereport should haveincluded adescription ofwhether serious damage, actual threat orbothwere
being alleged, thiswasinhisGovernment 'sopinion notanimportant, andcertainly notanecessary
element thatshould havebeenincluded. With respect totheArticle 6.9reviews, inparticular the
criticisms thatwerelevelled ontheTMB reviews oftheGALs, GALs hadbeenpartoftheUStextiles
programme formany years. They hadbeennotified totheTMB inestablishing newrestraints under
Article 6andthere wascertainly noprohibition against theuseofGALs; infactGALs involved an
outwardprocessingprogrammeandArticle6explicitlynotonlypermittedsuchprogrammesbutrequired
thataMemberusingArticle6gavemorefavourabletreatmenttocountriesinvolvedinsuchprogrammes.
Itwasabsolutely necessary thattheGALs which theUSoffered tocertain countries remain inconformityG/C/M/14
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withArticle 6.With respect tothepoints raised onArticle 7andthemarket access requirements
contained therein, hisdelegation hadalready described itsposition ontheobligations ofWTO Members.
TheTMB comment that"incertain cases extra timewasrequired inorder toreach adecision" was
simply stating afact. Perhaps inanidealworld, suchathing would notbenecessary, butdespite best
efforts andcertainly good faithefforts, given thenature ofcases theTMB hadfaced, extra timewas
required andhedidnotthink thatthecriticism made onthispoint wasfair. Onecould seefromthe
length ofthereport what tasks theTMB faced. Thefinalpoint thattherepresentative ofIndia had
made heinterpreted assomehow indicating thattheTMB waswilfully notdischarging itsfunction,
which hisGovernment didnotagree with.
5.14 Therepresentative ofPakistan endorsed thestatements made byColombia, byIndia aswell
asHong Kong. Hisdelegation hadreadtheTMB report carefully anditsfirstconclusion wasthat
itconfirmed almost alltheconcerns voiced withregard totheoperation oftheTMB, aswellas,and
inparticular, ontheimplementation oftheATC. Thereport wasfactual byandlarge. Itconfirmed
thattherewereproblems withregard totheintegration programmes ofthemajor importing Members.
Italsoconfirmed thedifficulties thathadbeenexperienced intheoperation oftheTMB itself. Some
ofthose difficulties hadalready beenidentified byprevious speakers. Firstly, thereport hadrelied
onnotifications andsuchinformation asithadbeenprovided with. Butaccording toArticle 8.3of
theATC, theTMB wassupposed torelyonadditional andsupplementary information thatcould and
should beavailable toit.Incertain cases, theTMB orcertain ofitsMembers hadnotconcurred with
proposals toseeksuchadditional information relating tocertain cases. Thereport stated thatwith
regard toArticle 1.4ontherights ofthecotton-producing countries theTMB hadreceived no
notification. However, theTMB should itself havesought information from theimporting aswell
asthemajor cotton-producing countries whether consultations required under Article 1.4hadbeen
conducted. Thesecond areaofconcern wasthattheTMB hadcompletely overlooked amajor
development thathadtaken place, i.e.thechanges intherulesoforigin instituted byoneofthemajor
importing Members. Thischange hadaffected andwasaffecting theexport ofaverylarge number
ofexporting countries. Therefore, hefeltthatthisoversight wasamajor reflection ofthetendency
oftheTMB toseenoevil,hearnoevilandperhaps donoevilalso. Thethirdareaofconcern was
thattheTMB should havebeenabletoatleaststatethattransitional safeguards should beusedsparingly
andthattheuseofsafeguards 25times insixmonths against 14countries wasnotsuchsparing use
incertain instances.
5.15 Thefourth areaofconcern related tothereport 'sdiscussion ofmarket access andtheintegration
provided under Articles 2.7(a) and2.7(b). Ontheonehand there wasthephase-out oftheMFA
restraints which wastheprinciple objective oftheATC itself. Ontheother handthere wasanotional
market access ofcountries which hadnosuchrestrictions. Hisdelegation feltthatnocomparison could
bedrawn between thetwo. Itwasparticularly concerned byastatement inthereport (paragraph 100)
that"The TMB wasalsoaware oftheconcerns expressed bysome Members withrespect tothelack
ofsufficient improvement inaccess tothemarkets insome developing Members." Hebelieved that
thiswasanextra-jurisdictional remark bytheTMB, which hadnotbeenmade responsible tooversee
themarket access agreement oftheUruguay Round. There wasadifferent committee forthatpurpose
andthisgratuitous remark inthereport wasavalue judgment beyond themandate oftheTMB. The
sixth areaofconcern related totheargument thathadbeenadvanced against greater transparency.
TheTMB hadgiven unconvincing reasons foritsreluctance toprovide thelarger Membership with
fullinformation about therationale forsomeofitsdecisions which wereobviously lacking inobjectivity.
There was,forinstance, thecaseofanembargo against onecountry. TheUSrepresentative hadsaid
thatthiswasmutuallyagreed.However,undertheMFAuponwhichtheATCwassupposedtoimprove,
azeroquota hadbeenillegal. Hecould, therefore, notaccept thatazeroquota could nowbelegal
under theATC. Inanother casetheTMB hadendorsed, ineffect, aroll-back which hebelieved was
alsocontrary totheATC. Thirdly, theTMB hadaccepted inseveral cases bilateral solutions which,
uponreview, wereclearly notconsistent withtheletter andthespirit oftheATC. Hisdelegation didG/C/M/14
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notbelieve thatlonger time-frames assuggested bytheTMB wereeither consistent withArticle 6or
could provide solutions tothekindofproblems thattheTMB hadfaced.
5.16 Therepresentative ofCanada recalled thatherdelegation hadstated onanumber ofoccasions
thatitwould bebeneficial forthework oftheCouncil tohave before ittheTMB'sreport when
examining theimplementation oftheATC andinparticular thefunctioning oftheTMB. Inmaking
general comments onthisimportant report, shenoted theamount oftimethatTMB members hadspent
onTMB business since theATC entered intoforce andthenumber ofdisputes heard andnotifications
reviewed. This initself denoted acredible amount ofwork. Ontheimplementation ofATC
commitments, herdelegation considered thattheTMB hadproduced afactual, well-balanced report.
5.17 TheTMB hadnoted thatithadbeenabletoestablish standards forthereview ofnotifications
anddisputes which could provide guidance toMembers withrespect totheimplementation oftheATC.
Inmostcases Members hadbeenabletoabide byTMB recommendations, which boded wellforthe
ATC. Another point worth mentioning wasthefactthatwhile alarge number ofsafeguard actions
hadbeeninitiated in1995, theirfrequency haddropped offdramatically. Thisshebelieved wasat
leastpartly theresult oftheimpact ofTMB reviews ofearlier disputes. Ontheother hand, inanumber
ofcrucial areas, either consensus hadeluded theTMB orithadchosen nottopronounce onkeyelements
ofcases before itorofnotifications reviewed. Reference hadbeenmade todispute cases where the
Body could notreach agreement. Herdelegation wasequally concerned about theavoidance ofdecisions
onlateorabsent notifications. There might beareason forthese decisions, orlackthereof; theTMB
alluded tothefactthatdecisions might bereached onthebasis ofdifferent considerations andthat
amore detailed report could bemore difficult toachieve orrequire more time. Herdelegation, like
others, would liketoknow thereasons forthesedecisions, notoutofmerecuriosity, butbecause TMB
decisions were important notonlyfortheparties towhom theyweredirected, butalsoforallother
Members. Nodelegation wanted torepeat themistakes ofothers andshecounted ontheTMB toprovide
clear guidance.
5.18 TheTMB hadacknowledged theseproblems. Itmentioned aspossible factors thecircumstances
ofitsestablishment, thelarge number ofdisputes ithadfaced veryearly initslife,andthetighttime
constraints under which itoftenoperated. Inthisrespect, shehadtaken noteoftheTMB'scommitment
toimprove thetransparency ofitsoperations, itsdetermination tomake allefforts toovercome the
obstacles toreaching decisions byconsensus, todevelop itscollegiality, totrytomake itsdecisions
more understandable. Sherecognized thatinsome cases, itmight notbepossible fortheBody toreach
consensus, particularly when itwasoperating under tightdeadlines. Onecould onlyurgetheTMB
tomake greater efforts inthatdirection andhopethatitsmembers could overcome divergences ofviews
andenhance theTMB'sability toreach consensus decisions.
5.19 Therepresentative ofThailand, speaking onbehalf ofASEAN Members, thanked theTMB
fortheReport which would hopefully provide significant inputs totheprocess ofreviewing ATC
implementation. They appreciated theamount oftimeandefforts given bytheTMB members and
itsChairman incompleting thereport. Itprovided agood, well-documented andthorough review
oftheactivities undertaken bytheTMB during thepast21months. ASEANs didnotdenythatthe
TMB wasahard-working body, andhadtaken noteofitsworking schedules which required considerable
amounts oftimeandcommitments fromitsmembers. Already bynowtheBody hadbeeninsession
nolessthan64working days.
5.20 TheATC wasaprimary consideration oftheUruguay Round negotiations. Itrepresented a
10-year transition oftextiles andapparel tradefromtheso-called temporary GATT derogation, known
astheMFA, tobeing accorded thefullbenefits oftheinternational rulesandprocedures oftheWTO.
Thiswasanintegral understanding oftheUruguay Round negotiations. After 33years outside GATT
from 1961 to1994, thelimitofthistemporary programme hadfarexceeded theoriginal promise.G/C/M/14
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5.21 Atthisstageonewasfaced withquestions astowhether theATCwastobea10-year extension
oftheMFA oramodality toprovide foragradual andmeaningful return toGATT/WTO rules. As
aconcession, theexporting countries hadagreed towaitanadditional 10years forthistransition.
Thiswasnotandcould notbeconstrued asaconcession oftheimporting Members. The10-year
transition embodied intheATC wasthelongest extension ofthe"temporary" textiles programme,
allowing forthediscriminatory establishment oftraderestraints without theoffsetting discipline found
intheGATT which provides forcompensation orretaliatory withholding ofconcessions.
5.22 Thefunctioning oftheTMB should bequasi-judicial. Itsresponsibility wastosupervise and
review thefunctioning oftheATC. ASEANs expected thattheTMB, unlike theTSB, would bealert
toactions taken byMembers andensure thatthese were consistent withtheprovisions oftheATC.
Recommendations hadtobedelivered following therequired review orexamination ofeachaction
taken under theATC. Thereviews should bedictated bytheactions themselves rather bythe
convenience oftheparticipants. ASEANs wereequally aware oftheconcerns, criticisms andanxieties
expressed byseveral Members overthewayinwhich theATC hadbeenimplemented andofhow
itwasbeing supervised bytheTMB. With thisinmind, ASEAN wished tocomment ontheTMB
report andseekfurther clarifications onthefollowing points:
- onintegration, paragraphs 10-27: ASEAN shared similar views expressed bytheIndian
delegationofthemannerinwhichtheTMBhadtreatedthesubjectofintegrationunderSectionII
ofthereport. ASEAN noted thatthereport somehow created animpression asthough Members
notifying under Articles 2.7(a) and2.7(b) wereonpar(thisviewwasconfirmed bythetreatment
given bytheTMB onthese twodifferent types ofnotifications which werelumped together
inAnnex Iofthereport). These twodifferent types ofintegration could notbecompared.
Onewastheintegration ofquantitative restrictions maintained byimporting countries. The
otherwastheintegration relating totherighttousetransitional safeguards. Forthose Members
whowerenotfamiliar withthenuance oftheATCprovisions, suchpresentation could bevery
misleading. Also, itwasregrettable tonotethatthesame approach hadbeenusedbyone
delegation inanattempt toadvance itsargument thatmarket access commitments ofexporting
countries were flawed bysuchfundamental rights (with regard tothereserved right touse
transitional safeguards). Inprinciple, itwasnotappropriate totreatthese twotypes of
notifications inthesame manner;
- onadministrative arrangements, paragraphs. 36and38:Itwasmentioned inthereport that
theTMB hadreceived notifications, thenumber ofwhich wasundisclosed, involving
"administrative arrangements" applied bysome Members totextiles andapparel trade. These
arrangements might haveanimportant impact onthetrade ofanyindividual Member, but
perhaps itwould bemore important fortheTMB toreview these arrangements toensure that
theywereconsistent withtheprovisions oftheATCandmake notonlytherelevant examination
ofthese arrangements, butalsoanyobservations thatmight berequired;
- onsafeguard action under Article 6,paragraph 50:priortotheATC, actions taken toestablish
newrestraints werecontrolled bytheinitiating country. There wasnotimeframe forconcluding
consultations, orforestablishing restraints. Thiswasmore oftenthannotlefttotheexporting
country subject touncertainties interms ofnewrestraints. Onemajor difference between the
ATC andtheMFA wastheconcept oftimeframe clearly prescribed invarious provisions,
including Article 6.When referring totheimplementation ofArticles 6.9and6.10oftheATC,
itwasimportant tobeaware ofimportant distinctions between these twoprovisions. One
required aprompt review within thetimeframe specified intheAgreement. Theother did
not.Itwould behelpful forMembers tomention thetimeframe ofthese actions andreviews.G/C/M/14
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5.23 Paragraph 51omitted thementioning ofunilateral restraints thatmight havebeenreferred to
theTMB, butwhich were never reviewed, orperhaps never scheduled forreview withthe30-day
timeframe assetoutinArticle 6.10. Forexample, Thailand wascalled ontrade inCategory 670-L
on27April 1995. Noconsultations wereheldandtherequesting Member imposed restraints on25
July1995, retroactive to27April 1995. There wasnoTMB review ofthisaction although onewas
sought. Inanyevent, theaction wasrescinded on2October 1995. Thiswas69daysafterbeing referred
totheTMB, and159daysafterthecallwasmade. While theresult might beacceptable, theprocess
wasnot.
5.24 Paragraphs 64to74:Although therewasnospecified timeframe forreviewing agreed restraints
under Article 6.9,nevertheless, theTMB should haveindicated initsreport thetiming ofthesereviews
presented inparagraphs 64through 74.
5.25 Paragraphs 67to71:TheTMB reviewed theseagreed limits andbasically saidthattherestraint
agreed washigher thanthe"rollback" level. Thisgavetheimpression thatthekeyelement reviewed
wasthesizeoftherestraint relative toa"rollback" level andnotthequality oftherestraint orthe
justification pursuant totheprovisions oftheATC.
5.26 Paragraph 84:Theparagraph contained anobservation bytheTMB thatMembers "hadstrictly
observed theprocedural requirement ofArticle 6".Thiswasinteresting given thattherewereatleast
twoissues where theTMB itself could notreach anagreement. Onewastheissue ofprinciple raised
byThailand (seeparagraphs 88to89)andthesecond wastheissue ofimposing aunilateral restraint
retroactively. Iftheabove statement wascorrect, thenwhywereanumber ofissues undertaken with
regard toArticle 6nowsubject todispute cases under theDSB? Itmight beassumed thatuntilthese
issues were resolved theobservation ofadhering toprocedural requirements would havetobeheld
inabeyance.
5.27 Paragraph 100: What wasthemeaning oftheparagraph? What weretheconcerns andhow
were theyexpressed? IftheTMB could beaware oftheconcerns expressed bysome Members on
thealleged lackofsufficient improvements inmarket access insome developing countries, thenwhy
could theTMB notbeequally aware ofthemagnitude ofconcerns expressed byalarge number of
Members withrespect tothechanges intherules oforigin unilaterally imposed byoneMember?
- Onthefunctioning oftheTMB, paragraph 116: hadthese so-called standards beenputin
writing? Ifso,where werethese written standards ordidtheymerely amount toinstitutional
memory?
- InAnnex II:Itappeared thatthere were atleasttwoveryimportant elements missing from
Annex II.There should betwoadditional columns which indicated thetimeframe setforth
inArticle 6:(a)thedates onwhich therestraints wereimposed withregard toArticles 6.9,
6.10or6.11, and(b)thedates onwhich thereviews ofthese notifications werecompleted.
5.28 Therepresentative ofJapan expressed hisdelegation 'sappreciation ofthework oftheTMB
toproduce auseful and,initsjudgement, well-balanced report. Having listened tothearguments of
several previous speakers, hisdelegation feltitwasappropriate toregister itsviewregarding onlyone
point, i.e.thequestion ofthetransparency ofthefunctioning oftheTMB andtheTMB statement that
"more detailed report mayrender consensus more difficult toachieve and/or require additional time".
Several countries hadexpressed disagreement withthisstatement, however, Japan hadadifferent view.
Tohisdelegation thisseemed afactual statement. Several delegations hadexpressed theview that
particularly incaseofnoconsensus, explanations should begiven. However, suchexplanations also
required consensus intheTMB. There wasalsoaproblem ofproportionality. Forexample, there
might be9members whosupported oneopinion andonemember another; these 9members mightG/C/M/14
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haveoneargument tosupport theiropinion while theonemember could identify 9elements which
argued forhiscase. Tofullyreflect allofthese elements would notgiveanaccurate andfairreport
andmight notimprove theworking oftheTMB. Japan hadbeenandstillwasoftheviewthatbecause
ofthequasi-judicial nature andneutrality requirement oftheTMB there should beareasonable limit
toitstransparency. Japan alsobelieved thattheTMB wasandshould basically beadecision-making
andeffectively functioning organ oftheWTO andshould notbelikeanopenpolitical forum where
onecould fullyexpress one'sviews withtheaimtoinfluence theoutsiders.
5.29 Therepresentative ofCosta Ricastated thatthereport would contribute tothework carried
outontheimplementation oftheATC inthisCouncil. However, hisdelegation could notagree that
theTMB wastheonlybodywiththecapacity andthematerial toanalyze theapplication oftheATC.
HisGovernment, onthecontrary, fullyshared theviewexpressed byIndiaandonthisparticular issue,
andwasoftheviewthattheCouncil wastheBody responsible forexamining theapplication ofthe
ATC andinform theMinisterial Conference accordingly.
5.30 TheTMB report without anydoubt reflected theveryarduous work carried outbytheTMB.
Concerningtwospecificpoints,first,hisdelegationsharedthedoubtsofASEANasregardsthestatement
(inparagraph 84)thatMembers invoking thesafeguard provisions had,inallcases, strictly observed
theprocedural requirements. TheTMB hadstated thatitwasconcerned thatinafewcases ithad
notbeenabletoarrive ataconsensus decision onthematters brought toitandtherefore could not
fulfil itsmandate. Hecould agree withthisstatement andalsowiththeTMB'sviewthatthiscould
haveanadverse impact ontheMembers affected. However, while theTMB stated itsdetermination
totakeallnecessary steps toovercome suchdifficulties, itwentontosaythatsimilar circumstances
could notbeexcluded inthefuture. Such astatement caused deepconcern. Itwasaveryserious
matter thattheTMB recognized thatithadnotfulfilled itsmandate under theATC andthenalso
recognized thepossibility thatsuchasituation might occur again. Hisdelegation hoped thatthe
recognition onthepartoftheTMB thatitdidnotfulfil itsmandate should infactgohand inhand
withaclear-cut commitment thatitwould notoccur again. Itagreed withthose delegations whobelieved
thattheTMB hadinfactgonebeyond certain aspects ofitsmandate.
5.31 Therepresentative oftheEuropean Communities stated thatitconsidered thereport
comprehensive, full,balanced andlargely factual, andthatitwould allow anevaluation ofmany of
theissues surrounding thisdebate inaclearandobjective fashion. Sofarasintegration wasconcerned,
theECthought thatthereport didmake adequately cleararelatively common pattern inthevarious
notifications made under Arts2.7(a) and2.7(b). Onsafeguard actions theECnoted thestatement
thatthere hadbeennorequests forconsultations since July1996 andconsidered theremark bythe
TMB thatinmostcases Members could comply withrecommendations tobeapositive remark. They
didnotseethisasareflection ofdistorted legalobligations, justastatement offact,namely thatMembers
hadbeenable, following theirbestendeavours, tocomply infullwiththerecommendations made.
SofarasArticle 7andimprovements ofmarket access wereconcerned, theyconsidered thattheway
theTMB haddrawn upitsreport onthebasisofnotifications effectively meant thatthissideofthings
wasnotgoing tobecovered infull.However, theycould notagree withthecomment thatthisshould
notbecovered atall.Article 7.1wasclearandArticle 8.1entrusted supervision including onthese
aspects totheTMB. TheTMB should certainly beabletomake anappropriate comment onthispoint.
Sofarastheoverall assessment wasconcerned, theECnoted thedifficult beginning experienced by
theTMBbutoveralltheimportantroleofsupervisionandexamination,normallysubjecttonotifications,
hadoperatedinarelativelyworkman-likefashion,andtheECwelcomedthecommitmentsgiventowards
thepossibilities ofimproving transparency, bearing inmind thetime-frame which theATC required
theTMB towork under.
5.32 Therepresentative ofUruguay stated thatthediscussion hadclearly shown theimportance
ofthetextiles andclothing sector forparticipants andtheimportance oftheTMB intheATC. HisG/C/M/14
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delegation thought thatthereport presented bytheTMB contained much information andillustrated
therichness ofactivities aswellastheapplication andimplementation oftheATC initsalmost two
years ofoperation. Heshared some ofthecriticisms expressed anddidnotagree withwhat was
expressed bytheTMB incertain paragraphs ofitsreport. Other criticism seemed excessive inreferring
toproblems which wereduetoshortcomings intheATCitself. Inanalysing theroleoftheTMB within
theATC onemight askwhether itwasnecessary tohaveabody liketheTMB which haddifficulties
infunctioning butalsohadverymajor challenges before it.Onecould imagine apolitical body such
asthisCouncil tofullydiscuss textiles issues anddisputes could godirectly totheDispute Settlement
Body. Perhaps inthiswayonewould savemuch timeandeffort particularly ofmembers oftheTMB.
However, theproblem wasthattheATC didnotenshrine anysuchsystem. TheATC established
theTMB andunless onewasready toembark onsubstantial legislative andnegotiating activity which
didnotseem feasible onehadtocontinue tolivewiththeTMB. Thecourse ofaction therefore was
totrytoenhance itsfunctioning precisely through adiscussion suchasthisone.TheTMB wascertainly
notinfallible. Itwould havetolearn from itsmistakes andalsofrom thepresent typeofdiscussion
butoneshould notforget thatbytheverynature ofitsconstitution theTMB hadlimits toaperfect
performance.
5.33 TherepresentativeofColombiastatedthattheremarksmadebyUruguaywereofgreatrelevance.
Although theTMB regularly produced aseries ofreports onprogress made, thisCouncil hadnotfully
analyzed andassessed these. Given thedifficulty ofalegislative ornegotiating exercise mentioned
bythedelegate ofUruguay, perhaps oneshould consider establishing alinkandasystem of
communicationandinformationfromtheTMBtotheCouncilontheprocedures,activitiesanddifficulties
theTMB hadrunintointheapplication andfollow-up oftheATC. Areport suchasthepresent one
would deserve aspecial session which might alsoinvolve adialogue withmembers andeventhe
Chairman oftheTMB ondifficulties encountered.
5.34 TheCouncil tookthefollowing action ontherecommendations setoutinthereport:
5.35 TheCouncil tooknoteoftheobservations andconcerns inparagraph 102oftheTMB report
which readasfollows: “Theimplementation oftheATC cannot bemonitored fullyunless Members
comply withitsnotification requirements. Inthisrespect, theoverall picture isamixed one. Onthe
onehand, theMembers accounting forthemajority ofinternational tradeintextiles andclothing under
theATC complied withtheessential notification requirements oftheATC. Anumber ofnotifications
have, however, beenaddressed totheTMB aftertherespective deadlines foreseen. Inthisrespect the
TMB observed thatitstaking noteoflatenotifications waswithout prejudice tothelegalstatus ofsuch
notifications. Ontheother hand, asindicated inthecontext ofsome oftheprovisions discussed above,
theTMB noted withconcern thatanimportant number ofMembers hadnotprovided anynotification.
TheTMB observed thattheSecretariat hadsentreminders toMembers ontheirnotification obligations.
TheTMB expressed itsserious concern thattheabsence ofnotifications ortheirlatesubmission may
haveimplications fortheimplementation oftheATC. ”TheCouncil alsoagreed torecall toMembers
theparticular importance ofstrictly adhering tothenotification requirements under theATC.
5.36 Paragraph 107oftheTMB report related totheproposal ontheadpersonam nature ofTMB's
membershipandreadasfollows:“Whenadoptingitsworkingprocedures,theTMBinviteditsChairman
tosubmit totheCouncil forTrade inGoods thefollowing forappropriate action: “WTO Members
which, pursuant tothedecision oftheGeneral Council of31January 1995, appoint TMB members
under Article 8.1oftheAgreement onTextiles andClothing accept thatTMB members serve intheir
adpersonam basis andnotasgovernment representatives. Consequently, theyshallnotgiveTMB
members instructions, norseektoinfluence them, withregard tomatters before theTMB. Thesame
applies toalternates. ”Thisproposal wastransmitted totheCouncil forTrade inGoods inJuly1995,
andthematter isstillwiththeCouncil ”.TheChairman recalled thatthismatter hadbeenontheagenda
oftheCouncil 'smeeting of31July1995andthatinformal consultations wereheldbythethenChairmanG/C/M/14
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oftheCouncil inSeptember 1995 onthebasis ofthetextofadraftdecision circulated indocument
G/C/W/20dated15September1995andthetextwhichhehadjustreadout.Theseinformalconsultations
hadnotledtoaconclusion. TheCouncil agreed thattheChairman, inaccordance with the
recommendations oftheTMB, resume consultations onthismatter atanappropriate time.
5.37 TheCouncil tooknoteofthethirdrecommendation intheTMB report (paragraph 119)which
reads asfollows: "Inorder tofacilitate thework oftheTMB, dueconsideration should begiven to
theschedule ofmeetings oftheTMB intheWTO ’soverall schedule ofmeetings."
5.38 TheCouncil agreed thatthequestion ofhowtodealwiththeTMB report inthereport ofthe
Council totheMinisterial Conference would beconsidered ininformal consultations.
6. Implementation oftheAgreement onTextiles andClothing andrelated matters
- Communication from Pakistan onbehalf ofanumber ofWTO Members (G/L/92)
- Communication from theUnited States (G/L/95 andAdd.1)
- Communication from theEuropean Communities (G/L/97)
6.1 TheChairman recalled thatatthelastformal meeting oftheCouncil, on19September 1996,
therewasasubstantivediscussiononthecommunicationsregardingtheimplementationoftheAgreement
onTextiles andClothing thathadbeenreceived fromtheUnited States andtheEuropean Communities
aswellasfurther comments onPakistan 'scommunication sentalsoonbehalf ofanumber ofWTO
Members.
6.2 TherepresentativeoftheUnitedStates,respondingtopointspreviouslymadebyotherdelegations
atthemeeting on25July, saidthattherepresentative ofIndia hadobjected tobilateral agreements
reached under theATC. Hisdelegation didnotshare thisview. Article 6made explicit provision
forbilateral agreements. There wasnorestriction onWTO Members tooffer restraint levels, for
example, higher thanarollback level. Other articles oftheATC gavewidelatitude toMembers to
reach mutually satisfactory solutions toissues thatarose under theATC. Therepresentative ofPakistan
hadsaidthattheinterests ofcotton-producing countries hadnotbeenreflected intheimplementation
oftheATC. TheUSbelieved thatithadfaithfully implemented alltheprovisions oftheATC. It
hadnotreceived arequest forconsultations fromanyMember withrespect tothisprovision, norhad
anycountry taken theissue totheTMB. Therepresentative ofHong Kong hadstated thatrestraints
adopted bytheUnited States under Article 6hadaffected tradeworth $1.7billion. Thiswasahighly
misleading figure. Thetotaltrade ofthe11newrestraints thatwere presently inplace had,atthe
timethattheconsultation callhadbeenissued, amounted toonly$462 million. With theexception
ofthequota foronecountry, noneofthequotas imposed hadcome close tobeing filled.
6.3 Therepresentative ofPakistan, responding totheUSpoint onArticle 1.4oftheATC which
related toconsultations withcotton-producing countries, stated thattheUSdelegate hadsuggested that
requests forconsultations hadnotbeenreceived fromcotton-producing countries bytheUSandthat
theTMB hadnotreceived anycomplaint tothateffect. Additionally, theUSdelegate hadsuggested
thattheUShadfaithfully implemented theprovisions ofthisArticle. Hedisagreed withtheUSon
thispoint, andreferred tohisdelegation 'sremarks under theprevious agenda item. Article 1.4of
theATCstated that"Members agree thattheparticular interests ofcotton-producing exporting Members
should, inconsultation withthem, bereflected intheimplementation oftheprovisions ofthis
Agreement." Itwasclear from thiswording thattheonus ofconsultations wasontheMember
implementingtheprovisionsofthisAgreement,i.e.ontheMemberwhowasintegratingcertainproducts
intothenormal rulesanddisciplines oftheGATT. Thisobligation wasnotontheexporting cotton-
producing countries. Therefore, tothatextent atleasttheimporting countries hadnotfulfilled their
commitment which hadjustbeenreferred to.Hisdelegation hadalready stated, inthecontext oftheG/C/M/14
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TMB report, thatitwasdisheartening thatnonotice hadbeentaken oftheimplementation aspects with
reference tothisparticular issue.
6.4 Therepresentative ofHong Kong thanked theUSdelegation forresponding toapoint raised
byHong Kong onHong Kong'sassessment ofthepotential trade effect ofArticle 6action taken by
theUS.Hong Kong hadmade itclearatthetime, thatthefigure US$1.7 billion hadbeencomputed
based onHong Kong'sassessment ofthepotential effect ofArticle 6action anditwasonlynatural
toexpect thatonceaction hadbeentaken, theeffect ontrademight havealready beenfelt.Therefore,
inhisdelegation 'sviewitwasreasonable toassume thatthecurrent levelofUS$462million didnot
accurately reflect theleveloftrade affected either. TheUSdelegation hadpointed outthat,withfew
exceptions, quota levels inmany cases hadnotbeenused. Hong Kong'sresponse wasthatthefact
thatquota levels hadnotbeenfullyutilized wasnojustification forthequotas tobemaintained. On
thequestion ofintegration, itwasanongoing process -aprocess capable oftaking stock of
implementation, capable ofassessing theextent towhich theobjective orprogressive liberalization
hadbeenfulfilled andcapable ofimpacting ontheintegration programmes tocome. Theproposal
aimed torevisit thepastandtolookintothefuture. Itwasnatural toexpect thatthedeliberations
ofthisCouncil sofarwould alsohaveabeneficial effect onstagetwoofintegration which wascurrently
under consideration insome importing countries.
6.5 Regarding questions raised byCanada atthelastmeeting oftheCouncil concerning alarge
numberofinvocationsofsafeguardsunderArticle6byonemajorimportingcountryandtheirconsistency
withATC provisions, Canada 'sspecific question wasthat"wasitnotuptoWTO Members thatmay
haveconcerns inthisregard tobring issues before theTMB?" Inresponse, hequestioned whether
theuseofsafeguards wasamatter ofconcern toaverylimited number ofexporting countries orwas
itnotamatter ofprinciple importance inwhich allexporting countries hadalegitimate interest. Keeping
inmind theverylimited membership oftheTMB, didtheCouncil nothave theroletooversee
implementation oftheATC andtherefore theresponsibility toafford WTO Members theopportunity
toreview matters ofprinciple importance tothem. Inother words, Canada wastechnically correct
thatindividual WTO Members could bring issues of"sparing use"oftransitional safeguard measures
totheattention oftheTMB. However, theTMB wasnotconducive tothegeneric review oftheuse
ofthesafeguard provisions. Onthesecond partoftheCanadian question, Hong Kong'sanswer was
yes.Theassessment onsafeguards should becomprehensive. ItwasafactthattheuseofArticle 6
measures hadbeenmoderated in1996. Thismight beattributed toanumber offactors; theTMB
influence could wellbeacontributing factor, butdefinitive conclusions could onlybereached after
anassessment onbilaterally agreed arrangements hadbeenmade.
6.6 Inresponse tothefirstpartofCanada 'squestion onbilaterally agreed arrangements, inHong
Kong'sview thereview should notbelimited oreven focused onthetexts ofthearrangements
themselves. Indeed ifthatwaswhat Canada hadinmind, thenhisdelegation would agree thatan
examination ofthetextsshould beundertaken bytheTMB. Itwasatechnical job.TheCouncil 's
roleshould more appropriately beareview ofthecircumstances inwhich thebilaterally agreed
arrangements emerged, withemphasis onhowtheymight impact ontheimplementation, operation
ofthemultilateral trading system ingeneral andontheoperation oftheATCinparticular. Asregarded
thesecond partofthequestion, thereview proposal, waspropelled interaliabyconcerns thatprovisions
onbilaterally agreed arrangements under Article 6.9oftheATCmight giverisetoconflicts withother
ATC provisions. Theaimofthereview, therefore, should betoensure thattheATC rules and
disciplines werenotundermined incases where bilateral agreements wereadmissible under theATC.
6.7 Onthefunctioning oftheTMB, hereferred toastatement made byHong Kong on19September
1996 onwhat Hong Kong wished toachieve through areview ofthefunctioning oftheTMB. His
delegation supported allefforts toenhance theopenness oftheTMB andtoensure itsimpartiality while
promoting theaccountability oftheTMB initsdecision-making andtheacceptability ofTMB findingsG/C/M/14
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andrecommendations byMembers. Moreover, thedegree ofacceptance ofTMB recommendations
should beoneoftheimportant elements inanyassessment ofthefunctioning oftheTMB.
6.8 Finally, onrules oforigin, themain concern wasthecompliance byMembers withtheir
obligations which theyhadalready accepted under multilateral instruments. Bilateral consultations
wereadmittedly averyimportant channel asreflected interaliainArticle 8.4oftheATC. Different
delegations would seekdifferent possibilities toresolve different problems todifferent extents.
6.9 Therepresentative ofIndia recalled thatinthemeeting oftheCouncil on19September 1996,
theCanadian delegation hadraised fivequestions towhich itwanted responses. TheCanadian delegation
hadmentioned thatthesequestions arose outofthecommunication fromanumber ofcountries including
India onthesubject ofimplementation oftheAgreement onTextiles andClothing andrelated matters
(G/L/92) which hasbeendiscussed extensively inthisCouncil.
6.10 Onintegration,Canadahadaskedaboutthescopeofthereviewofthesecondstageofintegration.
Itwasnosecret thatalarge number ofcountries hadexpressed concern overthefactthatinthefirst
stage oftheintegration programme undertaken bythemajor importing Members, norestrained item
except foroneitembyoneMember hadbeenincluded. Thepaper submitted byalarge number of
countries including India, haddrawn attention tothisandsuggested thatthereview exercise might
consider itsimpact (i.e.theimpact ofnotincluding restrained items inthefirststage ofintegration)
forthelaterstages oftheintegration progress. Inthispaper, itwasalsomentioned thatthe"examination
might alsocover elements oftheintegration programme ofthose Members forthesecond stage, bearing
inmindthattheprogressiveliberalisationofrestrictionsisintheinterestofbothrestrainingandexporting
Members".
6.11 Onemajor importing country hadannounced itsintegration programme forthesecond and
thirdstages alsosome timeago.Though therewastimeavailable forcountries toannounce thesecond
stage ofintegration programme till31December 1996, India'sintention wastohighlight theneedfor
acommercially meaningful programme ofintegration atleastduring thesecond stage. Infact,the
reference tothesecond stage ofintegration inthepaper wasinthecontext oftheattempt made inthe
paper tosensitise major importing Members totheconcerns ofexporting Members, andtheobjective
wastoplead forcommercially meaningful integration, atleastatthesecond stage. Itwasfutile to
trytoadvance anarrow technical argument, ashadbeenattempted here, totheeffect thatthere was
timeavailable forimporting Members toannounce theirsecond stage ofintegration programme until
31December 1996 andtherefore thesubject should notberaised now. Infact,itmade sense totalk
about theneedforcommercially meaningful integration before thesecond stage ofintegration was
announced.
6.12 Regarding theuseoftransitional safeguards, thefirstquestion raised waswhether anyMember
hadraised thesystemic issue ofextensive useofsafeguard action byoneMember before theTMB.
TheATC provided thatallsafeguard actions including those forwhich there wasbilateral agreement
ontherestraint measures should bereviewed bytheTMB. TheTMB wasfullyaware oftheextensive
useofsafeguard measures byoneMember. Infact,theTMB report which wasnowavailable
documented thisextensively.
6.13 However, inanother context, theTMB hadtaken thestand thatitwould dealwithonlyspecific
measures andthatitwould notgiveanyruling onanymatter ofgeneral principle. Therefore, even
ifaMember weretogobefore theTMB andsaythatextensive useofsafeguard action wasinviolation
oftheATCprovisions, andthatsafeguard measures should beusedassparingly aspossible, theTMB's
stand waslikely tobeconsistent --thatitcould notsayanything onamatter ofgeneral principle and
thattheTMB would inanywayreview eachandevery restraint measure.G/C/M/14
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6.14 Inanycase, thereference inG/L/92 totheextensive useofsafeguard measures wasmore of
ageneral political argument inthecontext ofthestated objectives oftheATC thananarrow legalor
technical argument. Thisdocument specifically stated thattheCouncil review might consider the
invocation ofalargenumber ofsafeguard measure against theexport interest ofthedeveloping country
Members, andassess theimplications ofsuchactions foreffective implementation oftheintegration
process during theremainder ofthetransition period. Inhisdelegation 'sview, theCouncil wasthe
appropriate body toundertake suchareview.
6.15 Thesecond question raised under theheading of"theuseoftransitional safeguards" wasnot
clear. Thequestion asked was"Isitbeing proposed toassess theimplications ofthese actions only,
ortheoverall incidence ofsafeguard actions since theentry intoforce oftheATC, including those
thathavebeenwithdrawn orwerenotpursued asaresult oftheTMB review oftheearlier cases?".
Thecommunication inG/L/92 wasveryclear thatitwasanoverall review ofthesafeguard actions
thatwasbeing suggested. Therefore thefirstpartofthequestion where thephrase usedbyCanada
was"these actions only" wasnotclear, especially because thissentence hadnolinkage tothethought
expressed byCanada inthefirstparagraph ofitemB,relating totheuseoftransitional safeguard.
Infact,theTMB initsreport acknowledged thattheveryfactthatarestraint action wasinitiated affected
exports, eveniftherestraint action wassubsequently withdrawn orwasnotpursued asaresult ofthe
TMB review.
6.16 Ithadalsobeenasked,"couldwenotassesstheTMB'simpactinmoderatingtheuseofsafeguard
measures byrestraining Members in1996compared tothefirstyearoftheATC." Indiadidnotbelieve
thattheTMB hadbeenresponsible formoderating theuseofsafeguard measures byonemajor importing
Member. ItwasIndia'sassessment thatonemajor importing Member resorted toalarger number
ofsafeguard actions thanwhatwasconsidered necessary evenbythatMember asamatter oftactics.
Thisappeared tohavebeendonewithaviewtocreating animpression ofreasonableness bysuomoto
withdrawal ofcertain restraints andacceptance ofTMB findings insome cases. Thetruthofthematter
wasthatevenafterallthis,thenumber ofrestraints putinplace wasunduly large.
6.17 Thethirdquestion byCanada related tobilaterally agreed arrangements. There appeared to
beatotalmisunderstanding ofthepoint made indocument G/L/92. Thispaper clearly pointed out
thattheATC strengthened multilateral disciplines through stricter supervision bytheTMB. Inthe
limited context inwhich bilateral arrangements werejustified, thepaper clearly referred tothebilateral
arrangements concluded inthecontext oftheinvocation ofthesafeguard measure, andmentioned that
some ofthese arrangements werenotsubsequently justified bytheATC asrequired. What wasbeing
pointed outwasthattheATC provided forTMB review eveninrespect ofbilaterally agreed restraint
measures, andthatsome ofthebilaterally agreed measures hadnotbeenconfirmed bytheTMB to
bejustified inaccordance withtheprovisions oftheATC. Thissituation weakened theintegrity of
themultilateral rulesanddisciplines. Indiahadnodoubt thatthiswasaveryimportant point. Inreplying
tothisquestion, hisdelegation would simply saythatitsproposal wastoreview theimpact ofbilateral
arrangements, especially thosearrangements which hadnotbeenconfirmed bytheTMB tobeconsistent
withtheprovisions oftheATC, fortheintegrity ofthemultilateral rules anddisciplines.
6.18 Astothesecond question putunder theheading of"bilaterally agreed arrangements", ithad
beenmade clear many times thatIndia wasnotinterested inchanging anyoftheprovisions ofthe
Agreement. Canada 'sreference toArticle 6.9,wasmisleading. Article 6.9explicitly provided that
theTMB shalldetermine whether theagreed restrained measure wasjustified inaccordance withthe
provision ofthisArticle andthustherewasnoautomatic immunity granted tobilaterally agreed restraints
asCanada hadsuggested. Tointerpret Article 6.9tomean thatanything could beagreed tobilaterally
without scrutiny amounted tochanging theAgreement. Hepointed outthatArticle 2.17andArticle
5.2referred tobilateral arrangements intheverylimited context ofadministrative arrangements and
circumvention. Thecommunication inG/L/92 didnotdealwiththese twoArticles.G/C/M/14
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6.19 Regarding thefourth question onthefunctioning oftheTMB, hereferred toG/L/92 which
suggested "thatthereview exercise mayconsider ways toimprove working oftheTMB through, inter
alia,enhancing thetransparency ofitsprocess andbyensuring participation ofitsmembers strictly
onadpersonam basissoastoensure impartiality". Hisdelegation waspleased tonotethattheTMB
report admitted thattherewasneedtoincrease thetransparency oftheprocess. TMB members should
actinadpersonam capacity andshould beanimpartial body.
6.20 Canada hadasked whether itwasIndia'sintention togivedirectives totheBody, andtointerpret
theATC. Hewished torecall thatinrespect ofoneimportant element oftheTMB working procedures,
adecision wastaken bytheGeneral Council evenbefore theTMB wasconstituted. According tothe
WTO Agreement, theGoods Council wastooversee thefunctioning ofthemultilateral tradeagreements
inAnnex 1Awhich included theAgreement onTextiles andClothing. ItwasIndia'sconviction that
thisCouncil wascompetent todiscuss matters arising outofthefunctioning oftheTMB ifitsodesired,
anddecide uponappropriate remedial action. Itmight alsonotbeoutofplace tomention inthiscontext
thatinoneparticular matter theTMB itselfhadmade arecommendation totheCouncil andtheTMB
report referred tothis. DidCanada believe thatthisCouncil wasnoteven competent tomake a
recommendation totheTMB incaseitfeltthatsomething waswrong withsome aspect ortheother
ofthefunctioning oftheTMB? Forinstance, iftherewasadelay onthepartoftheTMB incirculating
notifications totheWTO Members. WasitCanada 'sbelief thatthisCouncil ortheGeneral Council
inwhich allWTO Members wererepresented could notconvey itsconcern totheTMB andaskitto
takecertain remedial measures? Healsowished torecall thattheWTO Agreement explicitly provided
thattheMinisterial Conference andtheGeneral Council shallhavetheauthority totakedecisions on
allmatters under anyoftheMultilateral Trade Agreements.
6.21 Canada hadalsoasked whether itwould notbeuseful inanyreview ofthework oftheTMB,
toexamine whathadbeenthedegree ofcompliance byMembers withTMB recommendations. Itwas
India'sunderstanding thatArticle 8.9oftheATC provided thatMembers shallendeavour toaccept
infulltherecommendations oftheTMB. Article 8.10provided thatifaMember considered itself
unable toconform torecommendations oftheTMB, itcould provide theTMB withreasons andthe
"TMB shallissueanyfurther recommendations" ifconsidered appropriate forthwith. ThesameArticle
alsocontemplated thatifevenaftersuchfurther recommendations, thematter remained unresolved,
either Member might bring thematter before Dispute Settlement Body. Hisdelegation requested Canada
topointoutcases where aMember hadnotfollowed theprovisions ofArticle 8oftheATC. Hewished
topoint outinthiscontext thatthere hadbeencases where, inIndia'sjudgement, representations of
Members under Article 8.10hadbeendealtwithinaroutine fashion. What seemed tobeimplied was
thataffected exporting countries should notexercise thedispute settlement rights available tothem
under Article 8.10andthatevenwhen theTMB failed toconfirm aunilateral restraint, theexporting
country should deem itasconfirmed bytheTMB andkeepquiet. Inbrief, whatwasbeing saidwas
thatinbothsituations, i.e.inasituation where aunilateral restraint wasconfirmed bytheTMB as
wellasasituation where itwasnotconfirmed bytheTMB, theaffected exporting countries should
have noremedy andshow "compliance" toTMB'srecommendations aswell asabsence of
recommendations.
6.22 Thefifthquestion raised related tochanges intheRules ofOrigin. Thequestion raised was
"have theWTO Members, whowishtoraisethisissue, sought recourse inthismatter either before
theTMB, theCommittee onRules ofOrigin orDispute Settlement Body". India wassurprised about
thisquestion, especially inthelightofCanada 'sassertion thattherevised rulesoforigin would have
anegative effect onCanada 'simports andCanada wasconsulting withtheMember inquestion. It
appeared tohisdelegation thatCanada wasquestioning India'srights toraisethismatter intheCouncil.
Hewished tosayemphatically thatthechanges intherules oforigin made byoneMember were a
violation ofnotonlytheAgreement onRules ofOrigin butalsotheATC. When theimplementation
oftheATC inthecontext oftheCouncil 'sReport totheSingapore Ministerial Conference wasbeingG/C/M/14
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considered, itwasbutproper thattheadverse effects ofthechanges effected byoneMember onthe
exports ofalargenumber ofcountries werehighlighted. Many developing countries adversely affected
didnothavethenecessary human orfinancial resources totakeupthematter intheDSBandinapanel.
Hisdelegation presumed thatitwasnotCanada 'sstand thattheaffected developing countries could
notevenraiseandseekadiscussion onthisissue intheCouncil withaviewtomaking appropriate
recommendations totheSingapore Ministerial Conference.
6.23 Thepaper submitted onbehalf ofalargenumber ofexporting countries (G/L/92) hadreferred
tothetenareas inthecontext oftheoverall functions oftheATC anditsfocal objectives. Itwasa
matter ofregret thatCanada should havetriedtoavoid thebasicissues raised inthispaper byresorting
tonarrow technical arguments.
6.24 Therepresentative ofCanada thanked thetwodelegations forhaving taken thetimeandeffort
toreply tothequestions hisdelegation hadasked. Hisdelegation hadtried, through those questions,
tounderstand whatwasbeing proposed because theTMB didhaveamandate withrespect totheATC
andhisdelegation wasnotsureabout thedegree towhich theproposals made byPakistan onbehalf
ofanumber ofMembers could haveimplications withrespect totheimplementation ofthevarious
provisions oftheATC. With respect tointegration programmes, henowunderstood thatwhatwas
being proposed wastoinfluence theintegration programmes ofthecountries thatwere maintaining
restrictions andthatpreferably thisshould bedonebefore thesecond stageofintegration wasannounced.
Withrespect totheuseoftransitional safeguards, Canada 'squestion waswhether countries hadraised
theissue before theTMB andhehadunderstood from theresponses thattheanswer wasno.With
respect totheimplications ofsafeguard actions, hehadunderstood fromtheresponse fromHong Kong
thattheoverall incidents ofsafeguard action andperhaps theimpact oftheTMB decision onthe
safeguard mechanism would beelements thatshould beexamined. HewasnotsurethatIndia shared
thatpoint ofview. With respect tobilaterally agreed arrangements, heunderstood theresponse to
beaconfirmation thatthere wasnointention toindicate thatthese agreements wereprohibited bythe
ATC butthere wassome concern about arrangements thathadnotbeenconfirmed bytheTMB. He
wasnotsure, however, whether thisconcerned arrangements thatwould bepending before theTMB
orarrangements onwhich theTMB wasnottaking adecision. Canada wasnottrying toseektogive
anautomatic immunity tobilateral arrangements buttounderstand exactly whatwasbeing dealtwith
here. Inthisrespect, hisdelegation remained puzzled about whatthereview ofthese arrangements
might provide totheTMB. Forexample, iftheTMB hadcome toaparticular conclusion oncertain
arrangements andtheCouncil inreviewing these arrangements -hewasusing Article 6arrangements
asanexample butthiscould begeneralized -should come toadifferent conclusion; whatwould this
dointerms oftheoperation ofthesystem?
6.25 With respect tothefunctioning oftheTMB, there appeared tobesome support forthe
recommendation thathadbeentaken noteofearlier onenhancing theadpersonam capacity ofTMB
members andhethought thatitwould beaverypositive move. Similarly, hisdelegation hadcommented
ontheneedforgreater transparency sothatMembers could understand theimport ofTMB decisions;
hisdelegation looked forward toseeing howthiscould bedone. However, hehadconcerns regarding
theimplications ofsuchaction ontheAgreement interms ofitslegal structure andinterms of
compliance. Thepurpose wasnottoenter intoadebate onArticle 8butsimply totryandunderstand
theresult ofTMB actions. Many delegations hadspoken about thelackofaction oftheTMB, but
insome cases ithadacted. Hisdelegation would beinterested inknowing theresult ofthese actions.
6.26 Withrespect torulesoforigin, Members hadevery righttotakeanissuetodispute settlement
ortocomplain about acertain issue. However, hisdelegation hadbeentrying tounderstand thefacts
ofthecase, anditwould appear thatnodelegation hadsofarhadbrought thisissuebefore theTMB.
TheCouncil wasasked tolookatthisissue, among others, thathadnotbeenbrought before theTMB.G/C/M/14
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Thiswasapointthatwould beuseful forMembers tobearinmindintheirconsideration oftheCouncil 's
aswellastheTMB'sreport.
6.27 Therepresentative ofPakistan stated thatthepaper submitted byhisdelegation alsoonbehalf
ofanumber ofcountries included tenelements. Thebasic thrust ofthepaper wastoseekareview
oftheimplementation oftheATC initstotality andindoing thatitwashisdelegation 'sintention to
raiseanumber ofsystemic issues aswellasissues which haveimpacted andwere likely toimpact
trade flows inthecoming years.
6.28 Onthe"Functioning oftheTMB" thepaper hadmentioned thatthereview exercise would
consider ways toimprove theworking oftheTMB. Fortunately, theTMB report wasavailable, and
hewished todraw attention toafewelements which hademerged. Inparagraph 53,forinstance,
itstated thatwhile reviewing theUSaction oncategory 352/652, theTMB hadfound thatserious damage
asenvisaged inthese provisions hadnotbeendemonstrated, butcould notreach consensus onthe
existence ofactual threat ofserious damage. Thesame conclusions hadbeenarrived atinparagraph
70regarding USaction withrespect toDominican Republic, ElSalvador, Honduras, Turkey and
Colombia. Thissituation hadbeenrecapitulated inAnnex 2which listed allthesafeguard actions taken
andtheTMB'sreview ofthemaswellthesituation emerging outofthereviews oroutofthebilateral
agreements thatmight havebeenconcluded withreference tothatproduct. ItwasclearthattheTMB,
astheIndian delegation hadsaid,didnotaffirm thatthisrestriction wasjustified under theprovisions
oftheATC. Despite that,there were agreed restraints, withrespect tothesame product forthe
Dominican Republic, ElSalvador, Honduras, Turkey andColombia. Thisraised thesystemic issue
whether intheabsence ofinformation bytheTMB these were restrictions orbilaterally agreed
arrangements consistent withtheprovisions oftheATC? Thatwasthebasic question which the
communication sentbyPakistan alsoonbehalf ofanumber ofMembers hadtriedtoraise.
6.29 Thesametypeofargument applied tobilaterally agreed arrangements. There thepaper sought
tohaveadiscussion onhowtopreserve theunity andintegrity ofmultilateral rules anddisciplines.
Infactthatwastheoverall debate, theoverall consideration thathisdelegation wasexpecting inthe
Council andfrom where hisdelegation wasexpecting appropriate recommendations toemerge. He
assured theCanadian delegation thattheintention wasnottoseekmodifications oftheprovisions of
theATC, butbasically toensure thatthemultilateral rules anddisciplines were notundermined.
6.30 Onthematter ofrules oforigin, Canada hadraised thequestion "have theWTO Members
thatwishtoraisethisissue sought recourse onthismatter either before theTMB, theCommittee on
Rules ofOrigin, ortheDispute Settlement Body". Technically, aMember could takethisissue to
theTMB, theRules ofOrigin Committee and/or theDispute Settlement Body. Thatwasnottheissue
thatthecommunication from Pakistan hadsought toraise. Pakistan hadsuggested thattheCouncil
initsoverseeing function takenoteofthese changes andconsider theimplications ofthese changes.
ItwasclearintheAgreement onRules ofOrigin thattherewasaprinciple thatRules ofOrigin should
notbeusedasatrade policy instrument. Inmodifying therules oforigin ashadbeendone, these
rules oforigin were being usedasatrade policy instrument, inwhich casecould onenotconclude
thatthere hadbeenaviolation oftheAgreement onRuleofOrigin andasaresult disruption oftrade
under theATC. Therefore, thepurpose ofraising thisissue inthecommunication wastoseekthe
intervention oftheCouncil which wasahigher body thanthatoftheTMB soastoensure thatthese
changes which hadintroduced uncertainty andunpredictability regarding thefuture utilisation ofaccess
were notmaintained.
6.31 Therepresentative ofCanada stated thathisdelegation appreciated thethought thathadgone
intopreparing G/L/92. However, there weresome elements initthatwereofconcern. Onewasthe
inference thatachange inrulesoforigin wasbydefinition disruptive. Onehadtobecareful inmaking
inferences. With regard tobasic objectives andfunctioning, onehadtobecareful thatthereviewG/C/M/14
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exercise didnotresult intherenegotiation oftheATC. Anumber ofdelegations hadraised theissue
ofthediscriminatory nature oftheexisting quotas andtheabsence ofmeaningful integration. Some
comments hadbeenmade regarding thewayinwhich integration should takeplace, mainly amixture
ofrestraint andnon-restraint products, sensitive, non-sensitive, different product types, more emphasis
toclothing etc.. Hisdelegation recognized theintentions andthethoughts behind these suggestions
which didnotmean tosaythatitagreed onehundred percent withthem. However, ifthehistory of
theUruguay Round negotiations wasexamined, there hadbeenvarious proposals thathadbeenput
forward todealwiththese issues, buttheyhadnotbeenretained.
7. Format andContents oftheCouncil 'sreport totheSingapore Ministerial Conference
- Statement bytheChairman
7.1 TheCouncil agreed totheChairman 'sproposal thattheformat oftheCouncil 'sreport would
follow themodel suggested inthestatement oftheChairman oftheGeneral Council made on16April
1996 concerning the"Reporting Procedures fortheSingapore Ministerial Conference". Thiswould
mean thatthereport would contain afactual partandapartwith possible conclusions and/or
recommendations.
7.2 TheCouncil suspended themeeting inorder todiscuss informally howthereports ofits
subsidiary bodies should behandled.
7.3 Following theresumption oftheformal meeting oftheCouncil, theChairman stated thaton
thebasisoftheinformal consultations held,thebroad guidelines andapproach would bethatinrespect
ofthetwelve Committees whose reports wereexpected tobesubmitted totheCouncil onaconsensus
basis, theideawould betotakenoteofthose reports andannex themtotheCouncil 'sreport, andforward
them along withthereport oftheCouncil totheGeneral Council. Thiswould bewithout prejudice
totheability ofMembers toraisepoints withregard tothereports, andalsotheability oftheCouncil
torecord observations, tomake recommendations, andtotakedecisions ifconsidered necessary. With
regard tothefactual report fromtheIndependent Entity under theAgreement onPreshipment Inspection
andthereport from theWorking Group onNotification Obligations andProcedures, theChairman
proposed thattheybetreated inthesame wayastheother twelve reports. Asconcerned theTMB
report, theChairman proposed toconsult informally onhowtodealwithit.
7.4 TheCouncil agreed totheChairman 'sproposals.
7.5 Therepresentative ofAustralia stated thathisdelegation wished topropose thatthefollowing
recommendation beincluded intheCouncil 'sreport:
"The Council forTrade inGoods recommends that:
(a) industrial tariff negotiations, including intropical products begin intheyear2000atthesame
timeasfurther negotiations inAgriculture andServices;
(b) theMarketAccessCommitteein1997bemandatedtoundertakefurtherwork,includinganalysis
andinformation exchange ontechnical issues which would allow Members tounderstand the
issues involved insuchnegotiations andtoidentify theirinterests inrespect ofthem."
7.6 Hementioned thattheproposal wasfirstraised intheHeads ofDelegations process on
10June1996, andhisdelegation hadcirculated apaper withlanguage veryclose tothetexthehad
justreadout.Australia hadthencirculated anidentical paper tothisCouncil on23July1996(G/L/96).
Therefore, Australia 'sproposal wasnotanewone,ithadbeenraised previously inanumber offora,
andithadbeenthesubject ofextensive discussion. Hepointed outthathisdelegation hadspecifiedG/C/M/14
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thattropical products beincluded inindustrial tariffnegotiations, because during consultations several
Members hadwanted anassurance thatAustralia hadintended forthem tobeincluded. Australia
hadalsotaken advantage ofthelanguage developed attheQuads meeting inSeattle onwork thatcould
beundertaken inthecontext offurther negotiations, andhadincorporated some ofthatinitsproposal.
7.7 Therepresentative ofKorea stated thatwhile hisdelegation appreciated theAustralian effort
forfurther liberalization ofindustrial products, ithaddifficulty inaccepting theAustralian proposal,
recalling thatMembers were onlyinthesecond yearoftheimplementation oftheUruguay Round
tariff cutsonindustrial products. Hiscountry 'sschedules hadbeentranslated intonewlawsand
amendments oflawsandoverall adjustments tothenewsystem were being made. Industrial tariffs
were notpartofthebuilt-in agenda. When acomprehensive andnewround ofnegotiations wasto
beagreed upon inthefuture, tariff reductions inindustrial products could verywellbeincluded in
suchapackage. Inview oftheabove, hisdelegation wasoftheview thattheundertaking tostart
preparatory work in1997 fornegotiations ontariff cutsonindustrial products asof2000 wasnot
appropriate andjustifiable, andtherefore, unacceptable. Furthermore itwaspolitically impossible
fortheKorean Government topersuade people andtheparliament ontheneedtobegin preparatory
work fornegotiations in1997.
7.8 Therepresentative ofMorocco could notsupport theAustralian proposal. Hisdelegation
believed, likeKorea, thatglobal negotiations onindustrial tariffs wasnotanissue which waspartof
thebuilt-in agenda. Also, hisdelegation believed thattheefforts which hadbeendeployed, particularly
bydeveloping countries, hardly twoyears agoattheclose oftheUruguay Round, hadnotyetbeen
sufficiently well-digested toenvisage aneweffort atthisstage.
7.9 Therepresentative ofCanada stated thathisdelegation supported Australia 'sproposal. Canada
hadmade aproposal much along thesame linesasAustralia, forawork programme totakeplace in
theMarket Access Committee toaddress further liberalization, including acceleration ofUruguay Round
tariffreductions, expansion ofmembership inexisting zero-for-zero arrangements, etc..Hisdelegation
shared Australia 'sview ofthenecessity ofhaving suchawork programme intheMarket Access
Committee, where infactthepapers byAustralia andCanada would bediscussed thisweek. With
respect tothepoint thatreductions inindustrial tariffs were notaddressed onthebuilt-in agenda, it
wasanoversight much asthefactthattheMarket Access Committee wasnever contemplated inthe
Uruguay Round arrangements.
7.10 Therepresentative oftheEuropean Communities stated thatthere wasalacuna inthebuilt-in
agenda, since itdidnotaddress thequestion ofindustrial tariffnegotiation. Hisdelegation could not,
however, takeaposition onthisproposal. Hesought clarification onthenature ofAustralia 'sproposal.
Wastheproposal thattheCouncil should recommend thatindustrial tariff negotiations, including in
tropical products, begin intheyear2000orwastheproposal thatareference bemade intheCouncil 's
report tothefactthatAustralia hadmade thisproposal? Iftheformer wastruethenhisdelegation
hadtostatethatithadnoposition onthesubstance oftheproposal. Itraised wider implications which
suggested thatanydecision onthismatter would needtobetaken atahigher levelthanthisCouncil.
TheCommunity wasinfavour offurther liberalization intheareaofindustrial tariffs, andhadgiven
indications inthepastabout work currently being undertaken intheareaofinformation relating to
apossible information technology agreement. Hisdelegation wasalsointerested inpursuing other
ideasforfurther liberalization intheareaofindustrial tariffs. Hehadonequestion ofdetail concerning
sub-paragraph (b)ofthedraftrecommendation: wastheideathatfurther work should begin in1997,
orsimply thatthemandate should takeeffect andbedrafted in1997?
7.11 Therepresentative oftheCzech Republic expressed general support totheidea. However,
hisdelegation hadsome doubt onthetiming ofthecommencement ofpreparatory work andasthe
Community hadalready said,onthelevelatwhich thisprocess should betriggered.G/C/M/14
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7.12 Therepresentative ofEgypt stated thathisdelegation could notsupport theAustralian proposal.
7.13 Therepresentative ofPoland stated thathisdelegation appreciated verymuch theimportance
oftheAustralian proposal inthecontext offuture liberalization ofinternational trade, butashadbeen
expressed earlier, hisdelegation hadtoseethisproposal inthecontext ofvarious complex aspects
ofthepresent andfuture Polish tariff policy. Soatpresent hisdelegation hadnoofficial position on
thisissue.
7.14 Therepresentative ofNewZealand stated thathisdelegation supported Australia 'sproposal.
Given thattheround ofnegotiations onagriculture andservices hadbeenagreed tointhebuilt-in agenda,
itwasfully appropriate anddesirable thatthere wasaparallel proposal onanindustrial round of
negotiations. Thiswould allow forbalanced benefits toallMembers.
7.15 Therepresentative ofMexico stated thathisdelegation hadsome sympathy fortheAustralian
proposal, particularly onpart(a)oftheproposal. Onpart(b)hisdelegation would stillhavesome
doubts astowhether itwasappropriate tostartpreparatory work in1997. Hisdelegation would have
tolookatitmore carefully, andthisinthelightofother developments ontheso-called built-in agenda.
7.16 Therepresentative ofAustralia stated thatinresponse tothequestion raised bytheCommunity,
part(b)should readthat"theMarket Access Committee bemandated toundertake further work in
1997"; i.eAustralia would hope thatsuchwork would begin in1997. TheCommunity hadalso
asked about thenature ofAustralia 'sproposal, andinfactthesuggestion wasthattheCouncil ona
consensus basis sendareport toMinisters inSingapore which recommended thatindustrial tariff
negotiations begin intheyear2000. Heagreed withtheCommunity thatthiswasadecision thatwould
havetobetaken atahigher levelthanthisbody. Several delegations hadcorrectly andusefully pointed
outthatfurther industrial tariffnegotiations werenotinthebuilt-in agenda, which, wasprecisely why
Australia wasmaking thisproposal. AsAustralia hadargued atother meetings, thiswasanoversight,
andhisdelegation believed thatforthepurpose ofbalance itwould beadvisable tobegin industrial
tariff negotiations inparallel withthose inservices andagriculture. Finally, several delegations had
referred tothesubstantial commitments ontariffs thattheyhadundertaken intheUruguay Round
negotiations, andtheyhadreferred totheimplementation ofthose tariffcuts. Hewished tostress that
theproposal didnotsuggest anacceleration ofUruguay Round tariff cuts. Hehoped thatitwasquite
clearfromthewords inAustralia 'sproposal thatAustralia wassuggesting thattariffnegotiations begin
intheyear2000, andnotbefore then.
7.17 Therepresentative ofJapan stated thathisdelegation wished toreserve itsposition regarding
thisproposal.
7.18 TheCouncil tooknoteofAustralia 'sproposal andofthestatements made.
8. Dateofnextmeeting
8.1 TheChairman stated thatthenextformal meeting oftheCouncil wasscheduled for1November
1996. Informal consultations would beconvened, asappropriate, intheintervening period and
delegations would beinformed accordingly. Headded thatmost likely thelastpossible dateforan
informal meeting oftheCouncil would be25October inorder tobeinaposition toadopt theCouncil 's
report attheformal meeting scheduled for1November.
8.2 TheCouncil tooknoteofthestatement.