RESTRICTEDWORLD TRADE
ORGANIZATIONG/STR/M/9
14 January 1998
(98-0106)
Working Party on
State Trading Enterprises
MINUTES OF THE MEETING OF THE WORKING PARTY
HELD ON 14 NOVEMBER 1997
Chairman:  Mr. Jacques Teyssier d'Orfeuil (France)
Page
A. Adoption of the Agenda 1
B. Review of notifications submitted by Members pursuant to the 1
request for notifications in G/STR/N/1, 2 and 3
C. Revision of the 1960 questionnaire on state trading enterprises 4
- Progress report by the Chairman
D. Development of an illustrative list showing the kinds of relationships 4
between governments and enterprises and the kinds of activities engagedin by these enterprises
- Progress report by the Chairman
E. Coverage of the definition of "state trading enterprise" 4
F. Report to the Council for Trade in Goods 6
A. Adoption of agenda
1. The representative of the United States said that under "Other Business" his delegation
wished to raise the matter of Members' interpretation, as reflected in written answers to questions on
certain notifications, of the definition of "state trading enterprise";  he also wished to raise Mexico's
notification in G/STR/N/1/MEX.
2. The Working Party adopted the agenda contained in WTO/AIR/717.
B. Review of notifications submitted by Members pursuant to the requests for notifications in
G/STR/N/1, 2 and 3
3. The Chairman recalled that according to paragraph 5 of the Understanding on the
Interpretation of Article XVII ("the Understanding" ), the Working Party was tasked to review the
notifications and counter-notifications on state trading submitted by Members, and in the light of this
review, the Council for Trade in Goods may make recommendations with regard to the adequacy of
notifications and the need for further information.G/STR/M/9
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4. He recalled that the Council for Trade in Goods, at its meeting on 20 February 1995, had
established a deadline of 30 June 1995 for new and full notifications by Members on their state
trading enterprises ("STEs"), and that subsequently the Working Party had agreed to maintain 30 June
as the date for further (updating) notifications.  On 10 May 1996 a request for updating notifications -
which were to be based on the full notifications due in 1995 - had been circulated in document
G/STR/N/2.  A further request for updating notifi cations covering the most recent 12-month period
had been circulated on 17 March 1997 in document G/STR/N/3.  These most recent updating
notifications, required of all WTO Members, had been due by 30 June 1997.
5. He said that as of the date of circulation of the airgram convening the present meeting
(29 October 1997), a total of 68 Members (counting each of the EU Member states individually) had
submitted a "new and full" notification in response to the 1995 request.  In the area of updating
notifications, 42 had been received for 1996 and only 15 for 1997.  He noted that of the 68 "new and
full" notifications, 13 had been considered also as updating notifications due to the lateness of theirsubmission.  While the number of new and full notifications had increased, the failure of a number of
Members to make timely updating notifications remained disappointing.  While the Understanding
provided for the submission of counter-notifications where a Member felt that a notification by
another Member was either incomplete or incorrect, no counter-notifications had been received thus
far.
(1) New and full notifications under G/STR/N/1
6. The Chairman noted that the airgram divided the review exercise into two sections:  one
dealing with new and full notifications made under G/STR/N/1, and the other with updating
notifications made under G/STR/N/2 and 3.  He sugge sted that the Working Party conduct the review
in the same manner as at previous meetings, i.e. with a focus on two main elements:  (1) whether the
notification responded adequately to the information requested in the questionnaire;  and (2) whether
more information was needed in order to permit - in the language of paragraph 2 of the
Understanding - "a clear appreciation of the manner of operation of the enterprises notified and the
effect of their operations on international trade".
(i) Liechtenstein  (G/STR/N/1/LIE)
7. The Chairman noted that the communication in this document indicated that due to the
customs union between Liechtenstein and Switzerland, the state trading notifications from
Switzerland should be taken to cover also Liechtenstein.
8. The representative of Switzerland stated that Liechtenstein would make its own Article XVII
notification.  Switzerland would contribute its part  so that in the future, both notifications would be
sent to the Secretariat during the same period in order to make possible a simultaneous review of the
two notifications.
(ii) Zambia  (G/STR/N/1/ZMB)
9. There were no comments or questions on the notification from Zambia.
(2) Updating notifications under G/STR/N/2 and 3
(i) New Zealand  (G/STR/N/3/NZL)
10. The representative of the European Communities asked New Zealand to provide a timetable
for the implementation of the proposed changes indicated in the notification, as these had been
mentioned already in New Zealand's 1995 and 1996 notifications.G/STR/M/9
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11. The representative of New Zealand said that the proposed changes to the legislation
governing state trading enterprises still had not been passed by the New Zealand parliament and that
an updated notification would be made as soon as that had been done.  Regarding the three enterprises
which had statutory export monopolies - the New Z ealand Dairy Board, the Kiwifruit Board and the
Apple and Pear Marketing Board - no change to their export monopoly powers had been proposed.
However, the proposed legislation covered a range of changes to many provisions in the Act,including the removal of certain latent powers of the Meat Producers Board, heretofore not used, to
acquire product for export.
(ii) Romania  (G/STR/N/2/ROM)
12. The representative of the United States asked Romania to clarify the role of the National
Agency for Agricultural Products (ANPA), and to explain whether the other firms that had been spun
off from ROMCEREAL had any special rights or privileges.1
(iii) South Africa  (G/STR/N/3/ZAF)
13. The representative of South Africa said that in listing the control boards on page 2 of the
notification, his authorities had made no attempt to interpret whether they conformed entirely to the
definition of state trading enterprise.  He said it could be argued that those that did not engage in trade
did not have to be notified, and noted that six control boards had already been removed:  on canning,
cotton, lucerne seed, oilseeds, wheat and wool.
(iv) Turkey  (G/STR/N/3/TUR)
14. The representative of the United States referred to the Soil Products Office (Turkish Grain
Board) and to TEKEL, and asked Turkey to explain what specific changes had occurred with respect
to these two entities' special rights and privileges.2
15. The representative of Turkey said that the exclusive or special rights or privileges relating to
trade that had once been accorded to public enterprises and state monopolies had been removed as of1 January 1996.  However, TEKEL still enjoyed a monopoly on imports and distribution on the
domestic market of alcoholic beverages.  A written response would submitted in due course.
16. There were no comments or questions on the following notifications:
- Argentina  (G/STR/N/2/ARG)
- Canada  (G/STR/N/2/CAN)
- Chile  (G/STR/N/2/CHL)
- Norway  (G/STR/N/3/NOR)
- Peru  (G/STR/N/3/PER)
- Switzerland  (G/STR/N/3/CHE)
- Thailand  (G/STR/N/3/THA)
- United States  (G/STR/N/3/USA)
17. The Chairman invited delegations having raised questions at the present meeting to submit
these in writing directly to the Member concerned, with a copy to the Secretariat for circulation.
Written answers to those questions should be submitted directly to the enquiring country, with a copy
                                                     
1The questions were subsequently circulated in writing in document G/STR/Q1/ROM/1.
2The questions were subsequently circulated in writing in document G/STR/Q1/TUR/4.G/STR/M/9
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to the Secretariat, as soon as possible.  He emphasized the need for Members to whom written
questions had been addressed to respond in writing to those questions without delay.
C. Revision of the 1960 questionnaire on state trading enterprises
-  Progress report by the Chairman
and
D. Development of an illustrative list showing the kinds of relationships between governments
and enterprises and the kinds of activities engaged in by these enterprises
-  Progress report by the Chairman
18. The Chairman suggested that the two items be taken together.  He recalled that at the meeting
in July 1997, the previous Chairman had said in his progress report on the questionnaire that he
sensed a real commitment among participants in the informal meetings to resolve outstanding
differences, which centred on the type of statistical information that should be requested in the
questionnaire.  Since July, there had been one informal meeting on this matter, at which a fourthrevision of the draft revised questionnaire had been considered.  This text contained two options for
two of the tables in the section on statistical information.  While good progress had been made at that
meeting - the only issue remaining unresolved was that of the tables - the question of the statistical
information to be required in the notification was of central concern to many delegations, and further
discussion in this area was essential.  He would continue informal consultations with the aim ofresolving this  problem.  He expressed the hope that a revised questionnaire could be put to the
Working Party for consideration soon, and that it might then be adopted by the Council for Trade in
Goods in time to serve as the basis for the 1998 notifications on state trading.
19. Regarding the illustrative list, which had also been discussed at the recent informal meeting,
the United States had submitted further views on how to approach the development of such a list.These elements, along with those in the written proposals from New Zealand and the United States
(G/STR/W/31 and 32) and the text in the S ecretariat background paper (G/STR/2), would be
consolidated into a single text under the Chairman 's responsibility, with a view to developing a
working draft of an illustrative list and thus advanc ing work on this important task.  This text would
be considered at the next informal meeting.
20. The Working Party took note of the statements and agreed
 that the Chairman would continue
to hold informal consultations, open to any interested delegation, on the revision of the
1960 questionnaire and on the development of an illustrative list.
E. Coverage of the definition of "state trading enterprise"
21. Speaking under "Other Business", the representative of the United States said his authorities
had found that some of the responses to written questions implied that STEs which no longer had
monopoly import rights were no longer STEs.  In the US view, monopoly import or export rights were
not the only special rights and privileges that were covered by the definition of state trading
enterprise.  With respect to Mexico's notificati on (G/STR/N/1/MEX), he said that his authorities'
preliminary research indicated that CONASUPO might be covered by the definition of state trading
enterprise.
22. The representative of Mexico said that there seemed to be some confusion about
CONASUPO.  Several years ago, the import of powdered milk into Mexico had been done through
CONASUPO on the basis of prior import permits.  For this reason CONASUPO could, at that time,have been considered an STE, as it was a single import channel.  However, this had changed.  At
present, on the basis of Uruguay Round tariffication commitments on all agricultural products, there
were no prior import authorizations for any agricultural product.  Under the tariffication procedure it
was not possible to guarantee a single channel for any enterprise.  While Mexico maintained anG/STR/M/9
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import tariff quota for powdered milk, any out-of-quota imports could be effected by paying the
corresponding tariff.  To be able to resort to the in-quota tariff, a certificate was necessary.  Mexico
granted such certificates for powdered milk on the basis of historical precedent, which was a normal
WTO practice.  CONASUPO was the only enterprise to have such historical precedents, and thus had
been granted the import certificates.  The granting of such certificates on the basis of historical
precedents was not an exclusive or special right or privilege de jure  or de facto  under Article XVII or
the Understanding.  Should Members consider this practice to be a right or privilege, Mexico would
notify CONASUPO, but would expect to see notifications from all other Members who followed this
practice.
23. The representative of New Zealand said that there did not seem to be any confusion about the
situation of CONASUPO;  clear answers had been provided in Mexico's Trade Policy Review and had
just been reiterated.  The issue, clearly identified by Mexico, was whether the granting of licenses for
imports within a tariff quota solely to one enterprise, whether on a prior historical basis or any other
basis, conferred a special right or privilege.  In New Zealand's view, it did.  Some Members had
notified as STEs enterprises which, like CONASUPO, were granted the entirety of import certificatesunder tariff rate quotas (TRQs), such as the Canadian Dairy Commission.  What was needed was a
determination of what constituted a special right or privilege.
24. The Chairman said that this question could be revisited in the course of discussions on the
revised questionnaire and the illustrative list.25. The representative of Canada noted that Canada had considered the Canadian Dairy
Commission to be a notifiable STE on the basis of its sole right to import butter within the tariff
quota, even though there was no restriction on the number of companies that could import at the
higher rate of duty foreseen outside the tariff quota.  Ultimately, any company receiving a right toimport - whether or not on the basis of  historical precedent - within a tariff quota did have a special
privilege.  In the case of CONASUPO this was acutely defined, as it was a monopoly privilege
granted to what was, in Mexico's view, formerly an STE.  However, the question was broader than
just Mexico's notification;  definitions should be aimed at advancing the work of the Working Party
rather than broadening it beyond all utility.  He endorsed the Chairman's suggestion to return to thismatter in discussions on the illustrative list.
26. The representative of the United States said that his delegation agreed with Canada and New
Zealand that CONASUPO appeared to benefit from a special or exclusive right or privilege given that
it previously had an import monopoly on powdered milk and now was granted the sole right to importunder the TRQ.  He agreed that this issue should be examined more closely in the context of the
illustrative list.
27. The representative of the European Communities supported the previous statements to the
effect that when the right to import within a tariff quota was given to only one entity, a reference to
the possibility of imports outside the TRQ - in some cases operationally impossible - might not be
very conclusive.  The Community agreed that in su ch a case there was a clear presumption that the
entity in question was a notifiable STE.
28. The representative of Mexico expressed the hope that the more the details of CONASUPO
were examined the more it would become clear that it was not an STE.  If that proved not to be the
case, Mexico was ready to revise its notification.  He said that the burden of proof was not on Mexico
to show that CONASUPO was not an STE;  the claim that it was, should be based on a specific
provision of Article XVII and not on perceptions.  In his view two issues needed to be clarified:
whether in general terms the granting of in-tariff quota rights was in itself a special right or privilege.Canada apparently considered that it was, and he was ready to consider this.  The other issue was
whether a defining element was the number of entities which enjoyed the privilege.  In Mexico's view,
the privilege did not depend on the number of entities, but rather on the possibility to import withinG/STR/M/9
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the tariff quota.  From a legal point of view, the number of entities - be they public or private - had
nothing to do with whether the granting of such rights was or was not a special right or privilege.
29. The representative of the European Communities said that generally, the administration of
these tariff quotas provided that any private firm , upon requesting an import license in the framework
of the TRQ, could obtain it, provided certain c onditions were met.  There was a big difference in
principle between this and the system described by Mexico, where one entity or several entities weredesignated beforehand for these imports.
30. The representative of Mexico said that the problem of granting tariff rate quota licenses was
an issue for the Committee on Agriculture and not fo r this Working Party.  He noted that there were
cases (the EC, for example) in which the in-tariff quota had been granted only to a few enterprises
which commercialized the import product during the last three years, and asked if this was to be
notified as state trading.
31. The representative of Argentina said that the discussion did not seem to be in its right place
and suggested that it be taken up under the item covering the revised questionnaire and the illustrative
list.
32. The Chairman suggested that this discussion be continued on an informal basis in the context
of the consultations on the revised questionnaire and the illustrative list.  He said that it was not within
the Working Party's mandate to undertake activities of any other WTO body and that the review ofMexico's notification should not lead to a discussion which was of a systemic nature.
33. The Working Party took note of the statements.
F. Report to the Council for Trade in Goods
34. The Chairman recalled that paragraph 5 of the Understanding on Article XVII instructed the
Working Party to report annually to the Council for Trade in Goods.
35. The Working Party adopted its report which was subsequently circulated in document
G/L/198.Date of next meeting
36. The Chairman proposed that the next meeting be held early in 1998.  A date would be fixed in
due course.
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