RESTRICTEDWORLD TRADE
ORGANIZATIONG/C/M/65
22 November 2002
(02-6489)
Council for Trade in Goods
MINUTES OF THE MEETING OF THE COUNCIL FOR TRADE IN GOODS
1-2 OCTOBER 2002
Chairman:  H.E. Ambassador Supperamaniam
The meeting of the Council for Trade in G oods was convened by airgram WTO/AIR/1904.
Document G/C/W/419 c ontained the proposed agenda for the meeting.  Prior to the adoption of the
agenda, the Chairman recalled that at its m eeting on 13 June, the Goods Council suspended the
discussion of agenda Item 8 regarding the EC's request for a WTO waiver – new EC special tariff
arrangements to combat drug production and trafficking  and agreed to revert to this item at the
appropriate time. As this item was included on the agenda of today's meeting, he proposed that the
June meeting should be considered closed.  The Council agreed and on this basis the agenda wasadopted.
I. TRADE FACILITATION WORK PROGRAMME: ARTICLE V OF THE
GATT 1994 (G/C/W/408) .........................................................................................................2
II. TRADE FACILITATION NEEDS AND PRIORITIES OF MEMBERS,
PARTICULARLY OF DEVELOPING AND LEAST DEVELOPED
COUNTRIES (G/C/W/393)....................................................................................................24
III. TRADE FACILITATION: TECHN ICAL ASSISTANCE AND CAPACITY
BUILDING (G/C/W/378, G/C/W/380)..................................................................................27
IV. REVIEW OF THE OPERATION OF THE TRIMS AGREEMENT UNDER
ARTICLE 9 (G/C/W /307 AND ADD .1) ................................................................................37
V. NEW PANAMA CANAL TRANSIT TOLLS – COMMUNICATION FROM
ECUADOR (G/C /W/418) .......................................................................................................39
VI. REQUEST FOR A WTO WAIVER – NEW EC SPECIAL TARIFF
ARRANGEMENTS TO COMBAT DRUG PRODUCTION AND
TRAFFICKING – REPORT TO  THE GENERAL  COUNCIL.........................................41
VII. MARKET ACCESS MATTERS ...........................................................................................42
(i) Committee on Market Access - Periodic Report of the Committee (G/MA/116 and
Corr.1) ........................................................................................................................ ..............42
(ii) Introduction of harmonized system 1996 changes into WTO schedules of tariff
concessions – requests for a waiver..........................................................................................42
(iii) Transposition of schedules into the harmonized system – requests for an extension of
the waiver..................................................................................................................... .............42
(iv) Zambia – renegotiation of Schedule LXXVIII - request for an extension of the waiver ...........42G/C/M/65
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VIII. PREPARATIONS IN CONNECTION WITH PARAGRAPH 18 OF THE
PROTOCOL ON THE ACCESSION OF THE PEOPLE'S REPUBLIC OF
CHINA .......................................................................................................................... ...........43
IX. OTHER BUSINESS.............................................................................................................. ..43
I. TRADE FACILITATION WORK PROGRAMME: ARTICLE V OF THE GATT 1994
(G/C/W/408)
1.1 The Chairman stated that, in line with the work programme adopted by Members in the CTG
of 22 March 2002, the Council for Trade in Goods would carry out its work on trade facilitation in
2002 in the course of four formal sessions. Following two preceeding meetings earlier this year, heldin May and July, the Council was now meeting for a third session which, like the previous ones, had
three core agenda items: (1) Article V of the GATT 1994; (2) Trade facilitation needs and priorities of
Members, particularly of developing and least-developed countries; and (3) technical assistance and
capacity-building. With regard to  the first item, the Chairman recalled Members' agreement that
whilst this session would focus on GATT Article V, delegations would also be free to addressquestions relating to Articles VIII and X. Any delegation wishing to intervene on those articles would
therefore be given the opportunity to do so under this agenda item as well. This might be particularly
the case with regard to Article VIII, as several delegations had noted at the last session that they had
not had time to study some of the presented papers due to their late submission. He noted that some
might also wish to revert to Article X. For this reason, the airgram also listed all the previouslysubmitted communications that related to these two provisions. He informed Members that the
Council had received communications from delegations  on GATT Article V. Submissions relating to
this Article had been received from the European Communities (document number G/C/W/422),
Korea (document number G/C/W/423) and Cana da (document G/C/W/424). In addition, the
Secretariat had prepared another one of its background notes, this time addressing Article V, whichhad been communicated to Members in the airgram as document G/C/W/408. Before opening the
floor for comments on agenda item one, he invited the Secretariat and representatives of the European
Communities, Korea and Canada to introduce their respective communications.
1.2 The representative of the Secretariat noted that the current paper addressed GATT Article V,
in line with the core focus of Members present discussions under the first agenda item. She explained
that it formed the last part of the series of Secretariat papers prepared on the three Articles of specialimportance for Members' deliberations on trade facilitation. After two previous papers on GATT
Articles X and VIII, the present note therefore now took up Article V, freedom of transit. As in the
case of the previous papers, the current note had been prepared to address the request for such
background documentation expressed by Members in the course of a trade facilitation meeting earlier
this year.
1.3 In doing so, the paper maintained the strictly  factual approach set out in the two preceding
communications. It also kept the structure Members would remember from the other notes, namely a
first part introducing the Article's provisions and their negotiating history, followed by a legal analysis
of their coverage and an outline of the basic obligations arising therefrom. What was different in thispaper as compared to the other ones was that it did not contain a section on relevant  GATT and WTO
jurisprudence, simply because there had not yet been  a case involving Article V. Violations of this
article had been claimed several times, with some of them even having led to the initiation of dispute
settlement procedures, but without ever resulting in the issuing of a panel report. As a substitute for
such panel rulings, the paper took a brief look at some of these incidences, as they might be of acertain interest as an indication of actual situations where violations of Article V had been asserted.G/C/M/65
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1.4 The representative of the European Communities noted that the Communities' paper had
reached delegates only very recently. Given that Members had not had much time to look at this
submission, the EC representative would present the Communities' paper in a very simplified manner
and just highlighting its main elements. Before doing so, he wanted to thank the Secretariat for its
background paper, which he considered to be very useful, and which had influenced the Communities'thinking. It had also confirmed a number of assumptions his delegation had had about Article V, as
well as certain other concerns.
1.5 He noted that Article V, as others had pointed out, had been drafted some time ago, and set
out some general principles regarding transit. It had a very general principle to guarantee freedom of
transit, a very general commitment to non-discrimination and equally general language urging
Members to avoid unnecessary delays and not to impose unreasonable charges or regulations ongoods in transit. Given the number of problems identified in transit trade by delegations and number
of industry and business sectors involved, the Communities' first observation was that there was some
scope for trying to see if Article V could be made more specific, more operational; to see if these very
general principles needed some additional guidance to ensure that they were being properly
implemented, as had been the case for Articles VIII and X. The EC paper highlighted the importanceof transit in today's economy. All traders needed arrangements which were as simple and transparent
as possible, especially land-locked developing countries, which were almost totally dependent on
efficient transit for their effective market access. The Communities had some studies that illustrated
this amply. He noted that it would be useful if the Secretariat could help delegations in compiling
some kind of bibliography of existing literature on this issue.
1.6 The EC paper highlighted several issues which had been brought to its attention by its trading
partners or by its own operators, and which the Communities thought to merit attention. The first one
was excessive documentation and data requirements for goods in transit. Sometimes these
requirements exceeded those applicable to final destination imports, and were more onerous andburdensome than these, which seemed somewhat illo gical and hard to justify. Secondly, multiple and
varying data, documentary and procedural requirements applied by different agencies involved in
different aspects of a transit operation. Transit was a form of customs treatment but it was not only a
customs operation, it involved transport policy, health and safety issues and many other aspects. The
third problem drawn to the EC attention was the non-use, or limited use, by many Members of
existing international or regional transit agreemen ts or standards that existed to simplify transit
operations.  A fourth area of difficulty seemed to be the existence of de facto  discrimination against
particular types of transport used in transit operations and the discrimination against non-national
transport operators, even in situations where commitments made under the GATS would seem not to
permit that kind of discrimination between different transport modes or operators, depending on their
nationality. A fifth area that the Communities had identified as potentially problematic were the
unwarranted restrictions imposed by some Members on the types of goods permitted to transit.Another area where the EC saw scope for improvem ent would be simplified procedures for transit,
based on the application of risk assessment and authorised trader or consignee systems. Two or three
other major areas of interest to the EC in trying to improve Article V were excessive fees and charges
applied to transiting goods, as well as rather cumbersome, or disproportionate bonds and securities
levied on goods in transit. The Secretariat paper interestingly raised the possibility that currently therewere no commitments in Article V to discipline, or even define, the nature of permissible fees and
charges.
1.7 Another further area the Communities thought to be problematic and where it considered
useful to look at further was cooperation between authorities, either at the border between customsauthorities who were applying customs techniques on goods and transit, or more broadly, between
countries who were collectively responsible for the operation of regional transit systems or corridors.
The EC saw a real need for more cooperation in the operation of those corridors. The last area the
Communities had drawn attention to in its paper and which was also very present in the minds ofG/C/M/65
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many delegations, was the question of transport infrastructure. In an earlier submission to the CTG,
Paraguay had made a number of observations on the problems particularly encountered by landlocked
countries due to insufficient infrastructure either in the country itself or in the countries of transit.
The WTO obviously was not the place to directly address infrastructure issues, but there was a role
for it to play. The EC representative remarked that he would return to this question later under itemIII, to discuss some of the technical assistance and development elements in the area of transit.
1.8 The representative stated that it was the EC’s conviction that at least some of the problems it
had identified could be resolved through efforts to update and improve GATT Article V, and in
saying this, the Communities were taking the same approach it had taken as regards GATT Articles X
and VIII. In all of these cases, the Commun ities saw scope for better implementation, clarification,
and in some areas, a greater degree of specificity and expansion of the current rules to make themmore operational.  He added that many of the proposals the Communities and other delegations had
made in respect of GATT Articles X and VIII would also apply either automatically, or could be
made applicable to GATT Article V. Among the actions the Communities would suggest were the
following:
1.9 First, the EC saw scope for a commitment to  reduce and simplify, to the maximum possible,
all documentation and data formalities applicable to goods in transit. It was the approach of the
principles of proportionality, simplification and least trade restrictiveness the Communities had found
useful in the discussions on GATT Article VIII. At the very minimum, delegations should agree that
procedures and requirements applicable to transit should be less onerous than those applicable to fardestination imports. Secondly, the Communities thought that Article V’s general principle to avoid
unnecessary delays and restrictions on transit could be made stronger and more operational by the
international community’s agreement to use, as far as  possible, existing international standards, which
could be applicable to transit operations. Thirdly, the Communities did see merit in considering
adopting modern customs procedures for transit where they were not applied on the principles ofproportionality, least-trade restrictiveness, risk assessment, authorized traders or consignees, and,
where possible, the use of information technology, recognizing of course that some of these more
sophisticated methods for handling goods might not always be possible for all countries to apply
immediately, particularly if they faced important resource constraints.
1.10 The EC paper also suggested that delegations n eeded to look further at how to ensure to drew
the correct distinction between requirements applied to transit for legitimate health, safety, security orother reasons, and disproportionate or unwarranted restrictions. This was not an easy area to pin
down, but one option for further studying would be to  try to specify what would be reasonableness in
terms of requirements. One could also draw up a list of what would be regarded as legitimate
restrictions to the freedom of transit, which was otherwise guaranteed under Article V. Clearly, the
Communities thought there was ample scope for trying to operationalize the very general language inArticle V on permissible fees and charges. The Communities thought there was scope for making
more precise the concept of what would be reasonabl e fees and charges, and that it would be possible
to determine what would be a legitimate service rendered, for which a fee or charge could be levied.
In the papers by EC and other delegations on GATT Article VIII, delegations had proposed ways to
make requirements on fees and charges more specific and more operational. The Communitiesthought that the same approach could be applied to fees and charges applied for transiting goods. The
Secretariat paper noted interestingly that there was a real lack of clarity on the question of fees and
charges for transit. The paper even suggested that, depending on how one interpreted Article V and its
history, there might be no requirement at all that transport charges had to be reasonable or applied on
a MFN basis. It seemed to the EC that Members should look for more transparency, more efficiency,and proportionality on fees and charges, and for the identification of what kinds of fees and charges
would be regarded as legitimate.G/C/M/65
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1.11 Another area where the Communities thought delegations should try to find some solutions
within the context of Article V, would be measures to promote greater cooperation between national
authorities, operating transit goods or transiting regimes including greater harmonization of their
respective requirements and standards, and the promotion of regional transit regimes. The
Communities knew that this was one of the intentions of drafters of the Havana Convention. Therehad been a aim at that time to promote cooperation between authorities in the handling of transit,
including cooperation for regional transit arrangements, but this had never been followed through in
GATT Article V. The EC considered it possible in the coming months to work on a number of
guidelines or principles, to further develop their regional transit regimes or the like. That was a
concept which was familiar in the TBT context, where there was guidance on the development of
mutual recognition agreements, and which could serve as guidance for cooperation and guidance
between Members on transit agreements. The Communities had also highlighted a number ofscooping issues in the paper. First of all, as regards modes of transit, the Communities raised a
question regarding pipelines, whether Members were confident that goods were carried via pipelines,
and whether the disciplines of Article V adequately reflected that. The EC did not have an answer to
that question but considered it a relevant issue. The Communities noted that other papers had
suggested distinctions between transshipped and non-transshipped goods, which had been suggestedto look at further.
1.12 The Communities also suggested that delegations needed to look more closely at the
relationship between GATT Article V and the Services Agreement, in particular as to what extent
freedom of transit for vessels and vehicles as guaranteed by Article V was constrained by the GATS,especially by the absence of any scheduling commitments for those transit modes. This was
something that needed to be looked at by the C ouncil for Trade in Services. Another scope issue the
EC had picked up from the Secretariat paper related to paragraph 6 of GATT Article V. In his
understanding the Secretariat paper questioned whether Article V in fact applied to goods which had
been in transit and then arrived in a destination country, although it seemed to be a complex issue. Hewould welcome more clarity on this point. Finally, the EC paper devoted attention to ways of bridging
the development gap in the area of transit. In its previous submission on GATT Article VIII, the EC
had set out a number of concepts which were important in trying to support the development
objectives of trade facilitation, in particular to see how Members might better address a number of
development concerns raised by some delegations in a WTO framework. In its current paper, the
Communities were to some extent reiterating some  of those ideas. The Communities had flagged the
relevance of developing appropriate special and differential provisions in the area of Articles V, VIIIand X in any possible future rule-making exercise. Those could include a possible differentiation in
commitments, particularly for least-developed countries, but not necessarily exclusively for least-
developed countries, especially where any future commitments entailed notable resource constraints.
1.13 The Communities thought that Members needed to  find some solutions regarding special and
differential treatment principles. Secondly, transitional periods were clearly an important part of the
picture. Thirdly, Members also needed to identify means to develop the quality, quantity and
coherence of development aid and assistance in the area of transit and possible other areas. What the
Communities had looked at in this exercise was the question of developing infrastructure in exporting
developing countries, transiting countries and some importing countries. In its submission on ArticleVIII, the EC had made so me concrete proposals as to how the development aid component of the
work on trade facilitation could be organized in the future, to complement and support any
commitments that Members might take in this area. As for infrastructure and the development
dimension, work needed not only to involve inte rnational organizations and donors but also the
private sector's investment in this area. These were all issues Members needed to work on further inthe CTG, and where the Communities needed to hear the views of delegations. It was an area as
important as the work on GATT Articles V, VIII and X.G/C/M/65
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1.14 The Communities thought that the three articles needed to be looked at as a whole, given that
many of the provisions which needed to be operationalized in Articles X and VIII, would be equally
applicable to transiting goods, in part because tran siting was, amongst other things, a form of customs
treatment. Therefore the kinds of ideas and principles delegations had been looking at for Articles
VIII and X, would be directly applicable to Article V.
1.15 The representative of Korea stated that, as the volume of long-range international trade had
drastically increased, traders faced various difficulties in customs procedures for transit traffic,
particularly in the form of different customs policies and procedures, excessive procedural
requirements, including redundant documentation and inspection, and the imposition of undue
financial burdens.
1.16 While Article V of the GATT set out basic principles regarding transit traffic, there were not
yet concrete guidelines on how the principles stipulated in Article V, in particular the prohibition of
unnecessary restrictions and charges, should be applied. Goods in transit were not intended for
commercial consumption in the transit country. Therefore, Korea was of the view that goods in transit
should not be subject to excessive documentary requirements, unreasonably high fees or charges forservices, or excessive physical inspections. In this regard, Members should provide for simplified
customs procedures and seek ways for increased cooperation among themselves to facilitate transit
traffic. Considering the current global trade enviro nment, Korea would like to suggest some ideas to
improve GATT Article V. Firstly, it was essential to secure cooperation among Members when goods
in transit passed through a number of sovereign territories before reaching the final destination,because they usually passed through different systems of customs procedures for each territory. Such
cooperation should include an institutionalized mechanism among customs authorities for
coordination and harmonization of transit policies and the sharing of information on goods in transit
to reduce the burden on traders in terms of documentation, costs and time involved in repeated
physical inspections. Secondly, documentary requirements for and physical inspection of transittraffic should be further simplified with the understanding that transit traffic usually posed lower risks
than final destination goods did. Documentation data sets that reflected risk elements in terms of
transit should be standardized internationally. Thirdly, notification measures could serve to facilitate
closer coordination among Members and enhance tran sparency of customs procedures. By way of an
example he referred to the notification by Members of any changes of fees and charges for transit
traffic, which would be helpful. Finally, it might be useful to have different requirements for goods in
transit without transhipment than for goods in transit with transhipment, and it would be advisable todevise appropriate customs measures for each of these cases in order to minimize the burdens on
traders engaged in transit traffic, while still maintaining a reasonable degree of safety and order for
the countries through whose territory these goods passed through.
1.17 Korea believed that proper technical assistance and capacity building measures should be
provided to support developing country Members to implement some of the above-mentioned
suggestions. To facilitate transit traffic, technical assistance should be expanded to support developing
countries in their efforts to integrate their regulations, modernize their infrastructure and service
facilities for transit and automate their transit systems. Best practices of a model transit system, which
developing countries could easily introduce, should be developed. Longer implementation periodsaccording to the features of the system could be considered as special and differential treatment.
Finally, the Korean delegation welcomed any comments and Members’ further elaboration of the
ideas suggested in its submission.
1.18 The representative of Canada stated that her delegation’s paper had provided a number of
ideas on how GATT Article V on freedom of transit could be clarified and improved. Canada
believed that improvements to, and clarification of this Article would improve its effectiveness in
addressing freedom of transit issues. In addition, it could assist in furthering the capacity of
landlocked countries to trade and to fully integrate into the international trading system. In its earlierG/C/M/65
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papers on GATT Articles VIII and X, Canada had flagged some possible areas for technical assistance
in support of its proposals.  In the specific case of Article V, Canada would want to look to a wider
discussion, which might better place proposals for technical assistance and capacity-building into an
appropriate context, which might link to more specific proposals arising from earlier discussions on
Articles VIII and X. In this regard, Canada continued to support fully the integrated approach ofdeveloping WTO commitments on trade facilitation and ensuring technical assistance and capacity-
building where required, to assist in implementin g such commitments. Canada believed there was a
need to examine the applicability of GATT Articl e V to the current environment and to the modern
procedures and practices that had ensued since its inception. There was also a need to review it in
respect of other arrangements, which were now the focus of various international agreements
governing procedures for the treatment of goods in  transit. Canada suggested several elements of
clarification and improvement to GATT Article V.  In formulating these suggestions, Canada had
drawn on various international agreements containing provisions relating to international customs
transit procedures.
1.19 The provisions of Article V might be enhanced by clarifying certain procedures, including the
following: developing new provisions to limit any undue documentation requirements on arrival or onany intermediate or subsequent stops in the customs territory while in transit, and on departure of
goods in transit; better facilitating trade;  limiting customs formalities on arrival or subsequent stops
within the customs territory and on departure to the minimum necessary to ensure compliance with
customs law in the territory of the contracting party. Such documentation should be as simple as
possible, taking into account necessary control measures. Canada would see providing for the possibleuse of surety bonds in cases where customs might require security to be furnished for goods in
customs transit that were passing through its territory. This might also potentially address those
instances where the customs transit operations terminated and the goods in transit were subsequently
entered for importation. Canada would see the provision of the use of risk management principles to
permit special procedures for those traders and/or their authorized consignee who had demonstrated agood record of compliance with customs requirements for goods in transit through the customs
territory.  This might include special arrangements under which customs formalities were reduced by
agreement between customs and the trader and/or the authorized consignor or consignee, similar to
the proposals made by Canada in its submission on Article VIII. Canada would see the promotion of
the simplification of customs regulations concerning traffic in transit. The Havana Charter originally
included provisions to promote international agreement relating to the simplification of customs
regulations concerning traffic in transit, as well as the equitable use of facilities required for suchtransit and other measures designed to promote the objectives of this Article.
1.20 There was also reference to promoting the international instruments relating to customs
transit, including the possibility of accession to various instruments relating to customs transit where
possible.  Paragraph 5 of GATT Article V currently called for most favoured nation treatment fortraffic in transit, building on the general provisions of most favoured nation treatment outlined in
Article I. There was, however, no explicit accounting of the complementary principle of national
treatment on internal taxation and regulation as contained under GATT Article III. The extension of
national treatment to goods in transit would add more certainty to this Article. Additionally, as
highlighted by the EC representative, Canada saw the need to provide a clearer definition of fees andcharges and the fact that these should be commensurate with the level of services provided. In
summary, Canada saw that the provisions of Article V would benefit from clarification and
improvement. The Canadian paper had highlighted areas where various provisions of Article V might
be improved, including by taking account of international developments in the transit field. The
Canadian paper had also made some suggestions to that effect. Canada looked forward to discussionswithin the CTG on this Article.G/C/M/65
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1.21 The representative of UNCTAD introduced hi s organization's contribution, as contained in
document UNCTAD/LDC/MISC84, which had been made available to the meeting in three languages:
English, French and Spanish. He said that since GATT was adopted, world trade had increased 50
fold. Trade relations had multiplied beyond a handful of the original contracting parties to the broad
community of nations of both developed and developing countries, but international trade was not
only marked by the exchange of increasingly large volumes of goods. The way in which trade was
conducted had itself changed dramatically. Today's market was more demanding in terms of speed,reliability and flexibility. Exporters could earn better prices on contracts which specified prompt
shipment or even shipment in a given month, while prices might be discounted if the contract specified
longer shipment. Just in time delivery was a concept not only applying to manufactures. It pertained to
commodities as well, particularly those which had undergone some degree of processing before
exports and were sold as input to manufacturing. Freedom of transit through the territory of
contracting parties via the most convenient route for international transit, which had been considered
vital for trade promotion and expansion by the drafters of Article V fifty years ago, had becomeindispensable in today's increasingly competitive ma rkets. Exporters who failed to meet tight delivery
schedules were likely to lose their traditional markets and had little prospect of penetrating new
markets.
1.22 Although Article V of GATT addressed contracting parties individually, and commitment by
individual contracting parties to uphold the principle of freedom of transit was essential, in practice the
movement of goods to and from markets could not occur efficiently without a common set of rules
among neighbouring countries, because without such agreement there would be chaos. Transporters
would be forced to adjust to totally different practicable and legal requirements in each country they
passed through with repeated wasteful delays. In the effort to harmonize, simplify, and standardizeprivate rules and documentation, the European countries, acting under the auspices of the United
Nations Economic Commission for Europe had adopted no fewer than fifty international conventions
covering a broad range of transport and related issues, such as the correlation of transport
infrastructure, harmonization of road traffic regulations, career liability and so on. A great deal of
progress had been achieved in Europe and North America in terms of development and maintenance ofadequate infrastructure, as well as reform of regu latory managerial systems. But much remained to be
done in developing countries, notably, the least-developed and landlocked developing countries where
transit trade was seriously being constrained by inadequate infrastructure, imbalance of trade,
inefficient transport organization, poor utilization of assets and proliferation of government controls.
1.23 It would be a mistake to say that nothing had been done to promote freedom of transit in
developing countries. On the contrary, in Africa, Asia and Latin America, regional and sub-regional
economic cooperation had attached great priority to transit transport cooperation. Sub-regional
organizations such as the Southern Common Market  (MERCOSUR), the Associ ation of South-Eastern
Asia (ASEAN), the Economic Community of We st African State (ECOWAS) and the Common
Market for Eastern and Southern Africa (COMES A) implemented a broad range of common policy
measures and instruments which facilitated transit trade. In the ECOWAS region, for example, priority
areas for intervention which had achieved considerable success, include harmonized load limits. There
were also COMESA carrier licensing and transit plates, harmonized road transit charges, custom
regional bond guarantee system, the road customs transit declaration document and third party motor
insurance. However, there was urgent need for increased support by bilateral and multilateral donors
to support the ongoing work of trade facilitation in developing countries, in order to give meaning tothe freedom of transit principle. Assistance to improve physical infrastructure and overcome non-
physical barriers was particularly urgent for least-developed and landlocked countries. In this context,
the international community should encourage foreign direct investment for the development of
infrastructure, as well as increase ODA, which had declined in the last century, for infrastructure
development in support for policy, legislative, regula tory and institutional forms. Since purely private
financing schemes might not be feasible in many least-developed and landlocked developingG/C/M/65
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countries, the international community was invited to support new modalities for financing.
UNCTAD had advocated new modalities for financing such as regional venture funds, equity
participation in local financing institutions, core financing, bank-to-bank loans, and increased support
for the overcoming of non-physical barriers.
1.24 The representative of the WCO presented his organization's paper on Article V of GATT 1994
and stated that this was part of the WCO contri bution to explain how the WCO instruments supported
the WTO in implementing its rules. As it had been explained in the WCO earlier submissions on
Articles X and VIII, the legal provisions and principles in the WCO instruments were compatible with
and complementary to the three GATT Articles. The GATT Articles set out the rules for trade
facilitation, while the WCO instruments, including the revised Kyoto Convention, provided the basis,
practical guidance and information for the implementation of those articles. GATT Article V set outthe rules for freedom of transit on the basis of the MFN and non-discrimination principles. The WCO
instruments provided technical and operational means to implement this GATT Article and to further
facilitate transit insofar as the issues could be addressed by customs.
1.25 Apart from standards for normal transit procedures, the WCO had developed additional
facilitative procedures within the Revised Kyoto Convention. One example was the simplified
procedure for authorised consigner and consignees based on risk management and compliance of
traders. Another example was the simplified documentation and data requirement for transit
declaration. However, freedom of transit required political commitment and cooperation of other
agencies. Customs alone could not ensure smooth transit. This was another area that demonstrated thecomplementarity between the WTO rules and the WCO instruments. Transit necessarily involved
regional cooperation because of the geographical proximity of the parties concerned.  Hence, the
WCO encouraged regional cooperation in developing and implementing transit procedures. In this
connection, the WCO regarded customs cooperation as a useful means for capacity-building in this
area.
1.26 In a wider context, the WCO foresaw pursuing three main capacity-building activities: Firstly,
the WCO provided various instruments that would enable customs to base their practices on
internationally agreed standards. Secondly, the WCO offered a forum for international cooperation at
global and regional levels.  From past experience, the WCO knew that the most important part of that
kind of meetings was the informal exchange of experience among participants with a similar
background to get a clue of possible solutions to their problems. And thirdly, the WCO deliveredtechnical training and assistance. The WCO representative said that he had made available a separate
document, which was a compendium of WCO capacity-building tools that identified and described the
wide range of capacity-building tools currently available through the WCO Secretariat. Whilst these
three categories of capacity-building activities were  valuable, they reflected the traditional approaches
to capacity-building.
1.27 From past experience, the WCO had learned that a comprehensive package for overall
customs reform, supported by prerequisites such as infrastructure, management procedure and
integrity, was necessary for improving even narrow portions of customs responsibilities, such as
transit.  With this need for considering broad-ranging support in mind, the WCO was looking at waysto develop a comprehensive framework that would re sult in more sustainable efforts.  As the WCO
representative had stated at the July meeting, th e WCO Council had decided last June that the WCO
would make a contribution to the WTO by developing a customs capacity-building strategy. As a part
of this exercise, the WCO would develop and s ubmit a survey to all WCO developing country
members within a month, in order to obtain re sponses from them. The WCO hoped that the survey
would enable the identification of national, regional and global trends and patterns regarding capacity
needs of its members and thereby give the WCO a snapshot of the dimensions of the problem. This
would provide the WCO with a baseline to deve lop a more comprehensive tool. He concluded byG/C/M/65
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expressing his hopes that this brief introduction would help delegates understand the two sets of
papers the WCO had submitted to the meeting.
1.28 The representative of Paraguay stated that there was no doubt that the problem of transit had
been studied very little in the WTO, although it had been studied in depth in other organizations, such
as in the United Nations and UNCTAD. It had been considered since 1976, particularly with reference
to the landlocked countries.  He thought that this was an opportunity to start studying this problem of
transit, which was not only a problem for landlocked countries, but was a general problem, since trade
had expanded to such a degree that very often goods had to go through two or three countries.
Therefore, it was something of interest not only to la ndlocked countries, but of general interest to all
countries involved in international trade. He expre ssed his special thanks to the delegations of the EC,
Korea and Canada for their submissions, which he considered being very important, and which couldthrow light at this issue, which had been very little debated and little known in this organization.
1.29 Turning to the EC submission, he remarked th at the EC approached these issues in a much
broader manner than it had been previously the case. He noted that Paraguay concurred with most of
the points covered in the EC paper. Paraguay believed that the EC was right in the way it presented theissue. Landlocked countries were condemned to force transit through other territories and Paraguay
was familiar with the difficulties.  However, much progress had been made in regional agreements. In
the case of Paraguay, this had been particular the case through MERCOSUR. On the other hand, there
was always room for improvement. One could get broader, wider agreements. There should be a
political will from the countries concerned. Paraguay was of the view that the comprehensivesubmission by the EC was very valuable in continuing to study this issue. He drew delegations’
attention to a conference dealing with land-locked countries organised by the UN Kazakhstan, as well
as to a regional Latin American meeting on this issue. He noted that Paraguay had offered to host the
meeting in Asuncion with the participation of  the countries involved, namely the MERCOSUR
countries, and the ANDEAN countries, particularly Chile, Peru and Bolivia. Paraguay had beenworking very closely with UNCTAD and the World Customs Organization to be able to achieve more
comprehensive agreements. Paraguay shared the view that GATT Articles V, VIII and X raised similar
issues and had to be treated together. But one should engage in an in-depth study as to how to make
Article V more operational and clearer.
1.30 He noted that the suggestions which had been made so far were very timely. Paraguay would
make a contribution in due course. Paraguay had raised the question of landlocked countries,particularly as regards infrastructure in many other fora, such as in the course of the Monterrey
Conference, where Paraguay had made a few suggestions to the bodies that finance infrastructure,
namely the World Bank and regional organizations, so that loans would enable landlocked countries to
complete their infrastructure, roads, and other means of communications. These loans should be
provided with a preferential interest rate and longer time-limit. The conditions for these loans shouldbe more favourable than those normally required by  these institutions. This way, their infrastructure
could be improved, landlocked countries would be able to afford more facilities, which would allow
trade to flow more freely when transiting through these countries.
1.31 One of the points of great interest to Paraguay, which was addressed in the EC submission as
well as in the papers by Canada, Korea and the WCO was the issue of special and differential
treatment for developing countries. The European Union had provided an example in its agreement
with the ACP countries, many of which were landlocked. They all enjoyed special and differential
treatment. Paraguay welcomed the initiative the EC had taken towards these countries and Paraguay
hoped that it would be extended to cover other countries as well. As regards technical cooperation andassistance, Paraguay was of the view that this was a very important basic element. Developing
countries needed to address this issue in order to be  able to move forward in technologies, in dealing
with formalities, and also in the legal aspects invo lved in transit. Therefore Paraguay welcomed the
opportunities offered by developed countries and international organizations. Therefore, Paraguay hadG/C/M/65
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approached the Canadian delegation in Geneva to see if it was possible to have technical cooperation.
Paraguay was now waiting for Canada’s response. In this context, the representative of Paraguay
emphasized two points. First, Paraguay was ready to work intensely with those who had made
proposals to seek improvement and the best poss ible implementation of Article V of GATT 1994.
Secondly, landlocked countries such as Bolivia, Paraguay, and other Latin American countries werevery anxious to see what could be done within multilateral and regional arrangements, to grant greater
facilities to landlocked countries. Paraguay believed that there was the political will to do so.
1.32 The representative of Hungary thanked the Secretariat for a very useful background paper, as
well as the EC, Korea, Canada, UNCTAD and the WCO for their submissions. Due to the late
submission of the submissions by  Members, Hungary had only some preliminary comments. Hungary
agreed with the view that improving the implementation of Article V of the GATT was an importantcomponent of trade facilitation.  To ease transit was of high interest to Hungary which was a
landlocked country. Experience had shown that transit cooperation could be improved through further
clarifying or strengthening the provisions of Article V of the GATT. The problems identified in
different papers seemed to be relevant and the proposals to clarify and improve GATT Article V were
very interesting.
1.33 The Hungarian representative referred to some elements of the EC and Canadian submissions,
which she considered particularly useful and interesting. The first issue was contained in point 5.A of
the EC paper, referring to ensuring non-discrimi nation between modes of transport in relation to
transit procedures. Hungary strongly supported the idea that the carriage of oil and gas and otherproducts via pipelines or other means might also fall within the scope of transit. Hungary believed that
there was a need and scope for reassessing GATT Article V to take account of the special nature of
this form of transit. The idea of clarifying the interface between the freedom of transit for third
country vehicles and buses guaranteed by GATT Article V and  the fact that under GATT, the right to
provide a transport service in or across the territory of a third country depended on specificcommitments having been made by a third country, seemed to be very interesting. She also mentioned
that the idea for the extension of national treatment to goods in transit contained in Canada's
submission was very interesting. Her delegation was ready to clarify this point further. She further
mentioned the importance of maintaining the necessa ry control functions of transit operations and of
the idea of promoting regional transit regimes. Finally, the Hungarian representative noted that
practically all views and proposals expressed in these papers seemed to be relevant. The Hungarian
delegation was ready to discuss these issues further in a more focussed and constructive manner.
1.34 The representative of Pakistan expressed his view that the presented submissions had been
very comprehensive. They touched upon various aspects related to freedom of transit as provided for
in Article V of GATT 1994.  Although he was not in a position to give specific responses because the
issues were very complex, Members had a mandate and Pakistan was fully committed to fulfilling it.Having listened to the representative of Paraguay, he noted that Pakistan was sympathetic to the
concern of landlocked countries. His delegation understood their problems and was willing to look
very positively to the proposals made under that particular element of the broader subject of freedom
of transit.
1.35 Commenting on the papers from the EC and Korea, the representative of Pakistan noted that
the observations by these two delegations were very general in nature. Pakistan would have wished to
see more concrete examples as to where the problems would lie. Going through the text of Article V,
he found its language to be very mandatory. All six paragraphs stated that there shall  be freedom – the
word "shall" had to be taken note of. He was therefore wondering which those particular areas were,where more justice could be done to Article V by way of further improvements or clarifications,
especially with reference to its implementation. From a national perspective, Pakistan was committed
to various UN Conventions on transit trade. It was a practising country in terms of transit trade and
had bilateral and quadrilateral agreements with various countries in terms of transit trade, dating backG/C/M/65
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more than three or four decades. He noted that none of his comments should be interpreted as
Pakistan having any principal objections to what had been proposed in this respect. He thought
however that it would be worthwhile to share his delegation’s experience with Members.
1.36 The representative sought guidance from Members on an issue from a very practical and
pragmatic point of view. On the one hand, his delegation did theoretically understand the problems of
landlocked countries, as well as the problems in terms of countries availing the facilities of transit
trade and of countries providing the facilities of transit trade. Talking from a country's perspective
which provided a transit facility, he picked up on a point of the European Communities' paper. When
it referred in paragraph 4 (a) to non-standardised documentation requirements, excessive
documentation and physical checks, and onerous customs requirements, the adjectives it used were
quite general. On the other hand, when delegations were talking about entering into multilateral rulesor disciplines on a particular subject, they had to bear in mind that Article V had a language that was
fairly mandatory and obligatory for Members. Therefore, how could delegations reconcile these very
general observations by particular Members with the actual language they already had?
1.37 Turning to non-standardised documentation requirements or excessive documentation and
physical checks, he noted that his delegation would just give its general comments, based on its
experience. There were issues of pilferage and sm uggling through transit, including the smuggling of
women. There were security concerns, especially in the present day world, which Pakistan did not
need to remind the Members of. Security concerns were becoming very important and very relevant.
Therefore, Pakistan was wondering how delegations reconciled the observation that a countryproviding transit trade was subjecting another country's cargo to onerous customs requirements or too
much documentation and physical checks with the fact that there were those limitations, which took
Pakistan to paragraph 3 of the Article V, which said that any contracting party might require traffic in
transit through its territory to enter at the proper custom house, except in cases of failure to comply.
Members therefore had an exception in this area. He was wondering how delegations were going toreconcile this exception, keeping in mind the issues of smuggling pilferage and alike. On the other
hand, it was a fact that countries were subjecting other countries’ cargo to excessive documentation
and inspecting. This led delegations to a situation where they might have to carry out a very objective
assessment as to what was to be done.
1.38 He noted that while his delegation was very grateful to the three Secretariats who had
provided delegations with background notes which gave them a lot of ground to work on, he wouldlike to see these papers supplemented by certain concrete examples as to where the problems really
were. The mere general observations that Members had these problems, did not really justify the need
to change the existing text, which already was obligatory and mandatory by way of its very stringent
language. However, Pakistan was willing to work very positively and constructively with reference to
any proposal tabled, especially keeping in view the problems encountered by landlocked countries, or
those mentioned by the representatives from the European Communities and others. But Pakistan
would wish to see something more concrete. He concluded by highlighting that Pakistan was willing
to engage in further discussions on this very important subject.
1.39 The representative of Ecuador remarked that this was a topic of importance for international
trade and in the context of trade facilitation. Ecuador had asked that item 5 be placed on the agenda,
which related to Panama Canal Transit Toll. This was a concrete example and Ecuador would like to
point out to the delegate of Pakistan where he could analyse international traffic, which involved a
large part of traffic from Europe to the Pacific, from the Eastern Coast of the Americas to the Western
Coast. Ecuador just wanted to make this point as a contribution to a further understanding of theseissues.
1.40 The representative of Colombia felt that all the previous interventions contained important
and interesting ideas and lines of action on this very complex issue. As a preliminary remark,G/C/M/65
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Colombia wanted to stress two elements. The first concerned existing regional agreements on freedom
of transit and the role of infrastructure.  As stated in the Secretariat paper, there was no jurisprudence
regarding Article V, which Colombia could use as a background to identify the areas or aspects which
required analysis towards facilitating trade by mean s of identifying the problems arising in the transit
of goods through various countries before they reached their final destination. Colombia thereforeconsidered it necessary to have further input through national and regional experiences obtained
through the implementation of transit agreements. These were agreements that had been in operation
for some time. The WCO had initiated a survey in developing countries, which would undoubtedly
provide delegations with valuable information.  There was a need to work in coordination in order to
avoid a duplication of efforts. As already menti oned by other delegations, infrastructure problems
were not really to be dealt with in the WTO. However, Members needed to draw up a strategy, so that
delegations could link up this variable with their studies, and could get a complete diagnosis when thetime came to draw up technical assistance and capacity-building programmes.
1.41 The representative of Bolivia expressed her delegation’s gratitude for the proposals presented,
and particularly thanked the Ambassador of Paraguay. Bolivia fully agreed with his intervention.
1.42 The representative of Lithuania stated that his delegation attached great importance to the
topic of trade facilitation and especially to Article V, as inadequate infrastructure and weak regulatory
and institutional environment could undermine the efficiency of transit systems. Lithuania believed
that clarification and improvement of Article V was needed not only to resolve transit-related
problems encountered by some countries, but also to promote trade itself. He further elaborated themain reasons for that. Firstly, as a country which strongly relied on the export of its production,
Lithuania had a direct interest in smooth transit procedures facilitating Lithuanian exports going
through other countries. His delegation had already several times expressed Lithuanian concerns
regarding one country's discriminatory measures, which were imposed on its goods in transit, leading
to a real obstacle for further trade.  Lithuania thought it would be possible to avoid such problemsunder improved Article V requirements regarding transit. Secondly, being a country through which a
lot of transit took place, Lithuania also had an interest in clearer procedures, as it would make
Lithuania more attractive and predictable for other countries' transit. Thirdly, recent discussions on
the problems regarding transit measures imposed between WTO Members showed the actual need for
and importance of clarifying certain transit-related issues. Therefore, the delegate of Lithuania
reiterated once again his country’s support for talks under the existing mandate on trade facilitation to
improve GATT Article V.
1.43 The representative of the United States welcomed the current discussion. Having heard some
of the specific concerns and objectives of those countries with a particular interest in transit issues,
she noted that the United States would be making a submission on Article V as well. While the United
States was still studying Article V and the potential for clarifying and improving its provisions, theUS would like to make clear its interest in the CTG’s work on trade facilitation, including work on
GATT Article V. The work on GATT Article V underscored the broad opportunities presented by
commencing negotiations on trade facilitation. As it was the case with GATT Articles VIII and X, the
work towards a rules-based approach to trade issues, would enhance stability and certainty in an area
which was critical for some members, and important for all Members.
1.44 The representative of New Zealand noted that she had been a bit hesitant to take the floor as
New Zealand had not had much of an opportunity  to reflect on the papers. Her comments would
therefore be fairly general. Turning to the EC pape r, she remarked that it reminded all delegations that
over the last three years of WTO work on trade facilitation, Members had worked hard to establish animportant body of evidence on the benefits of trade facilitation, as well as of the problems Members
currently faced in this area. This was a very helpful reminder of the value of Members’ previous
work. From the perspective of a country like New Zealand, which was not landlocked, Article V and
transit were still of great interest and importance. New Zealand considered transit issues veryG/C/M/65
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important when thinking about how its exports could be facilitated. In particular, New Zealand was
mindful that a number of countries, which were in the process of acceding to the WTO, were
landlocked countries or countries where transit issues were very relevant. Several of the papers
presented at the current meeting had noted that Article V reflected at least some WTO and GATT
principles.
1.45 As a general approach to work on trade facilitation, New Zealand supported the proposals and
ideas presented on how Members could improve these Articles by extending a fuller range of basic
GATT and WTO concepts and principles, such as those reflected in the TBT Agreement, to ensure
that measures were least trade restrictive. The approach of trying to transpose some of these WTO
principles to the existing articles helped prov iding countries with clearer guidance on how to
implement and operationalize the basic objectives of these articles. New Zealand noted that this sortof approach provided for the policy space countries needed to pursue their national security interests
and other objectives in curtailing criminal activity. In conclusion, she noted that New Zealand
considered it very important to look at all the proposals and ideas presented, not only regarding
Article V, but also as regards Articles VIII and X. There was a common approach underlying a lot of
the ideas. Members should try to transpose some of  the basic WTO principles and concepts that had
been developed since the three Articles were originally written, in order to make them more
operational.
1.46 The representative of Singapore stated that her delegation had only very preliminary
comments on the papers. Singapore shared UNCTAD’s view that transit trade was very important in
the context of today's pattern of international trade. Singapore was a country that relied very much on
exports and re-exports. Therefore, transit was of importance to Singapore. Singapore was of the view
that the general thrust of transit traffic was to facilitate and smooth the way for trade passing through
a country. Transit goods were not destined for the transit country, which was why there should be
facilitation of transit traffic. It was in this context that Singapore strongly supported some of thespecific measures proposed in the papers by the EC and Canada, such as the suggestions regarding
fees and charges, provisions to limit undue docu mentation requirements, to limit intermediate or
subsequent stops in the transiting customs territory; or the provision of risk management principles, as
all of these goods were simply passing through the territory.
1.47 In borrowing some ideas from the ASEAN framework agreement she referred to common
frontier posts or border points to facilitate transit trade and ensure adequate facilities at these posts.Some thought could perhaps go into having an agreement on the types and quantity of road vehicles
for transit transport. She noted that this was of co urse only specific to the road vehicle mode and in
relation to road vehicles, as well as to harmonized road traffic regulations and transport permit
requirements. A lot of work was already being done on this issue in various regional agreements, and
this could be something Members might want to look into as well. New Zealand appreciated thelimitations and concerns referred to by Pakistan as a practical experience of a country that was
providing transit facilities. Some thought could be given to the scope of transit traffic, whether it
encompassed things like dangerous or sensitive goods or even issues like migrant smuggling, which
might be outside the scope of transit traffic altogether.
1.48 The representative of Japan thanked other delegations that had submitted papers for the
meeting. Although Japan had not submitted a document this time, Japan was interested in this
important issue in the view of expanding trade and investment flow and strengthening the world
trading system. As already mentioned by Paraguay, Japan provided financial support to the UN-based
meetings on landlocked and transit developing countries, which were chaired by the JapaneseAmbassador to the United Nations. Japan was ready to participate in the negotiations on trade
facilitation, including transit issues. It was also considering the possibility of support to the UN
Ministerial Conference on the same issue to  be held next summer. His delegation hoped that several
initiatives, including the WTO and UN meetings, would help improve the situation.G/C/M/65
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1.49 The representative of Chile noted that he did not want to miss this opportunity to make a few
brief comments regarding the documents circulated. Chile had a comment regarding the Secretariat's
paper on Article V’s scope and application. Regarding the document’s section referring to a debate
between Chile and the European Community, he suggested changing the drafting of the document, asit did not really reflect Chile’s position. The Spanish version of the document gave the misleading
impression that what was stated was said by the Secretariat rather than the EC.
1.50 Secondly, Chile agreed with the assessment given by the EC and Canada as regards new
means of transport, such as pipelines, water pipes and alike. Chile was of the view that Article V
referred to air transport as well. A lot had been said about landlocked countries, and, the problems that
they have as the delegate of Pakistan expressed. Chile has had similar transit problems and obstaclesin foreign airports.
1.51 In response to a request for clarification on the first point regarding the Secretariat paper, he
referred to a reference on page 9, which in Chile's view, created the impression that what was stated
there was stated by the Secretariat, rather than the European Communities, noting that is was only aminor point.
1.52 The Chairman observed that there would therefore not be the need for clarification from the
Secretariat.
1.53 The representative of India noted that a number of issues had been flagged which merited
detailed consideration. Therefore, it would not be fair to offer comments on the them at this stage, as
her delegation would require more time to go through the various elements that had been outlined.
However, some general observations were in order.  India recognized the benefits of trade procedures
being simplified and modernized to help promote cross-border trade. In pursuance of this, India wasautonomously involved in modernizing its customs procedures and engaged in extending cooperation
to countries and granting transit concessions, in fact much greater concessions than were required
under the international protocol on landlocked countries. She pointed out that while skipping through
the papers she had been struck by some of the observations that had been made in the UNCTAD
submission, which she would like to highlight. The first one related to the aspect of infrastructural
problems which developing countries faced, and the reforms that would be required to modernize and
harmonize regulatory institutional and managerial systems, which at their present stage ofdevelopment were beyond their capacity. She thought that these were some aspects delegations would
need to focussed on before Members went on to clarify or improve GATT Article V which, in the
view of her delegation, was mandatory enough, since it already alluded to non-discrimination and
other principles. Article V was serving Members well. India had a number of bilateral arrangements,
which seemed to be working well.
1.54 India had also taken note of the fact that the WCO was engaged in this work and was doing it
on a country-to-country basis, which was a very useful and helpful step. She felt this work undertaken
by the WCO should be encouraged. She added that, while WCO was working in this area, the
different security requirements, as well as the different modes of transport could also be analyzed bythem in the context of Article V.  As regards the different modes of transport, India would, for
instance, like to mention how the container movement by railways could probably be more secure
than movement by roads. The WCO could identify such areas as well as the different types of goods.
1.55 Turning to other issues related to Article V, she flagged that from the perspective of
developing countries, the fact that developing countries faced a number of challenges like
safeguarding customs revenue and reducing the incidences of illegal resources was coupled with a
basic lack of resources and infrastructural weakness, which was also a major handicap. Therefore, it
would be very difficult for developing countries to have certain binding rules in this area. DelegationsG/C/M/65
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had made a lot of study and analysis needed to continue in this particular area. Commenting on the EC
paper, she noted that the EC had mentioned risk assessment, which India considered difficult to reach
when countries had substantially different requirements of tariffs, which threw up different challenges
for border enforcement agencies. Therefore, India felt strongly that trade facilitation measures such as
those highlighted in Articles V, VIII and X should be left to the Members to be implemented in an
autonomous manner, in accordance with their perceived needs and requirements. She further said that
on trade facilitation, she could not help but point out that there were other areas which would
contribute as much, if not more, to the cause of trade facilitation. In this regard, she mentioned the
kind of implementation problems that some countries, like India, were facing in the area of trade
facilitation, and the fact that Members still had not managed to finalize the Work Programme on
Rules of Origin, which were very important aspects of trade facilitation. These were other issues that
India wanted to flag for Members' consideration. India would like to revert on the specific proposalsmade at this meeting on a subsequent date.
1.56 The representative of Switzerland thanked the three Secretaries for their very useful papers as
well as the delegations of the EC, Canada and Korea for their papers. She noted that transit was a very
interesting and complex issue as it dealt with freedom of transit of goods, means of transport, anddrivers. The challenge would be to address these three issues. For the moment, Switzerland had no
answer on how to do that. Switzerland had not had ti me to make a submission on Article V, but would
do  its best to do so very soon.
1.57 The representative of Malaysia remarked that like others, this was the first time his delegation
was seeing these documentations, which was why he might not be able to draw any conclusions or
make any analysis at this stage. Like other delegations, Malaysia would like to reserve its right to
come back to them, while making some general points at this point. Malaysia shared Pakistan's view
that Article V as it stood, was a pretty strong Article. There were a lot of mandatory requirements and
Malaysia did believe that it would actually fit into the situation of the day, given the mandatory natureof these articles. Reflecting about why there had been very few problems in terms of the application
of Article V, the Malaysian representative argued that Article V in its current form was strong enough
to deter countries form doing things that were not in line with Article V. Malaysia thought that was an
important point to make.
1.58 The issue of transit goods was not as simple as it seemed to be. If one looked at a product that
was coming in from a port and had to move through a country to another destination, there was thequestion of security, which was a big issue today, as well as a question of fraud, which might occur
along the way. It was even a question of tax evasion, if the security part was not taken care of.
Therefore, Malaysia thought that Members had to look at it in the bigger perspective of what the
customs difficulties were in terms of dealing wi th transit goods. Commenting on Singapore's point on
regional cooperation ASEAN and elsewhere, he noted that this might be one way to make goodstransit more effective. However, Malaysia would not believe at this point of time that there was a need
to change Article V. Malaysia  believed it was strong enough to take into account the various
difficulties that had been raised in papers presented.
1.59 Finally, as a point of clarification, he asked the EC representative to explain point B on page 5
of its submission, where it was stated that there should be some interface or some understanding
between Article V and what was being done in the general domain in services. He would be grateful if
the EC delegate could provide further explanation as to why this issue had been brought up.
1.60 The representative of the European Communities remarked that it was his understanding that
even those delegations, who had provided papers, could also comment and ask questions on the
submissions of others, and it was in that spirit that he wanted to take the floor because he had a
number of comments and reactions on the very useful comments and submissions that had been made
by other delegations. In addition, he also wanted to react to some of the comments on the EC paper.G/C/M/65
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1.61 Turning to the proposals made by Canada and Korea, he noted that the Communities very
much shared these suggestions. The EC's own thinking was in the same direction. He observed that
the Canadian paper almost exclusively focussed on customs issues relating to transit, expressing his
view that Article V was not exclusively addressing customs  matters. The Communities would beinterested to know in what ways, if at all, Canada would envisage addressing the non-customs
regulatory requirements applicable to goods in transit. On the submission by Korea, he noted that it
emphasised on international harmonization of data documentation and standards. The EC would be
interested in a further elaboration on how realistic the harmonization of transit procedures was at the
international level. Referring to the UNCTAD paper,  he highlighted the document’s finding regarding
the difficulty of applying a one-size-fits-all solution to all regions of the world irrespective of the level
of development. The EC thought that delegations needed to look more at the question of the feasibilityof international harmonization in this area, as opposed to the use of international standards and rules
adapted to specific regional circumstances. The Communities would be interested in any reactions
from Korea or other delegations on that point.
1.62 Moving on to some remarks made by other delegations, the EC representative commented
that Paraguay's intervention had been extremel y interesting. The Communities looked forward to
Paraguay's own submission on this subject. Paraguay had referred to the work the European
Communities was doing with ACP countries in terms of assistance to develop regional or sub-regional
transit regimes and corridors. The EC was interested to know to what extent something anything
similar might be envisaged in the MERCOSUR c ontext. The Communities were willing to discuss
this further bilaterally, but at the outset, it was worth noting that the EC had just launched an
important technical cooperation programme with ME RCOSUR in the customs field, which had quite
an important transit component. Secondly, in th e inter-regional FTA negotiations with MERCOSUR,
the EC would be proposing a chapter on trade facilitation and transit procedures, aimed at assisting
greater regional integration in the MERCOSUR area. This was an area the EC was very committed toworking on with Paraguay and other MERCOSUR countries.
1.63 Commenting on the intervention made by Pakistan, the EC representative expressed his
interest in the statement made. It was always useful to have analysis from colleagues with direct
customs policy expertise. Both Pakistan and Malaysia had questioned the need to do anything about
Article V, stating that it already was mandatory. This was true, the Article was mandatory in the areas
it covered. The Communities were not suggesting that the mandatory nature was at fault.  What theCommunities thought was lacking were: a) Specificity in order to know how to make those mandatory
provisions actually operational; The fact that a WTO provision was mandatory was by no means a bar
to trying to make it more effective, and more operational and create guidance for its proper
implementation. This was a legitimate issue flagged for example in the work in the WTO regarding
implementation or special and differential treatment. The EC noted that there were genuine problemsthat had been raised over the last 2 years, not solely by the Communities, but by some developing
countries, as well as by economic operators who had practical experiences with the problems; b)
Inadequacy of Article V due to a number of missing elements, which had been referred to by New
Zealand in their own intervention. He noted that Article V contained nothing on transparency.
Furthermore, the concept of proportionality was not there. The Communities thought that there was areasonable case for trying to operationalize certain GATT Articles regarding transparency and
proportionality, just as delegations had all found it useful to give more specificity to areas provisions
of the TBT or SPS Agreements. On the other side, the Communities were quite conscious of the need
to maintain appropriate levels of control and security, as stressed by Pakistan. This was also why the
EC in its paper underlined the need for a compleme ntary relationship between trade facilitation and
the reward for compliance on the other hand, and the improvement of controls on the other. There was
no trade-off between the two, but in stead modern facilitation methods enabled better controls and
security to be applied.G/C/M/65
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1.64 Turning to the WCO paper, the EC representati ve noted that he had found it to contain two
important arguments. First of all, the need for the political will of Members to introduce
improvements to transit rules and requirements. Secondly, the Communities were very sympathetic to
the way in which the WCO had articulated the possible relationship between the WTO and WCO in
this area of trade facilitation and GATT Article V, with the WTO as the framework settingorganization and the WCO as an organization whic h could supply, supplement and develop detailed
procedures and standards which would give guidance or benchmarks for the broader WTO
framework. This was a model which had been found reasonably successful in areas like customs
valuation. On the UNCTAD paper, which the EC representative had found very interesting,
persuasive and well-argued, he noted that he had detected emphasis on two complementary elements.
One was the need for improvements to infrastructure. Here, the UNCTAD paper had quite rightly
made the point in sobering terms that there was a real need for more attention and for greater levels ofdevelopment aid in order to build up transit and transport infrastructure, and the need for greater flows
of private investment. The Communities agreed completely with that and believed that all Members
needed to pay serious attention to that. Secondly, the UNCTAD paper referred to the importance of
establishing "a conducive regulatory environment", which was where the WTO had a more specific
role to play. If Members wanted to encourage the creation of this conducive regulatory environment, aWTO framework was one way to do that. The WTO itself was not the delivery organ for aid, but
could leverage greater flows of both development aid and private investment if there were clearer
standards, commitments to give Members guidance as to what needed to be done to translate Article
V into practice. It was very important to give more predictability and guarantees to the private sector,
which was going to be a major source of future in vestment. For these reasons, the EC considered the
UNCTAD paper very interesting. It was also a very useful paper in identifying the need to tailor
solutions at a regional level.
1.65 One of the points the EC had taken from this paper and fully supported was the need for
systematic and regular consultation between the affected private sector, operators, and regulatoryauthorities. In that context, the EC representa tive recalled that one of the EC proposals on how to
improve Article X was to include provisions that would ensure that in the process of developing
customs and related regulations, authorities would systematically publish their proposals in advance
and consult with effective operators on them, in order to find solutions to everybody’s benefit. The
EC very much welcomed the ideas set out in the WCO and UNCTAD papers. The discussion had
shown that there was a real need for finding the right way to organize the debate on this subject in the
future. It was clear that this was a very complicated area, which went well beyond customs, andbeyond the scope and purview of the WTO as an institution. Delegations would have to think how the
CTG could organize the discussions in the future to better identify and develop how the WTO's
contribution could be strengthened. It really boiled down to better coherence between the role of the
WTO and the role of other regional bodies. He noted that his delegation did not have specific
proposals to make on this matter at the moment, but it was something that needed to be looked atcarefully, so that Members could clearly identify what was in the purview of WTO work, and how
one would interface that with the intervention of other organizations.
1.66 The representative of Korea noted that his delegation was very pleased to share the views of
the importance of transit traffic in contributing to the trade facilitation. The Korean purpose to submit
this written proposal was just to add the building block to improve the trade facilitation through
Article V of GATT. While emphasizing all factors to be included for consideration during the process
of these discussions, Korea made a great emphasis on the first element concerning cooperation.
Cooperation was one of the most important factors because it contributed to, not only developing
countries, but all the procedures of which entailed trade. Korea had a slightly different view to thatexpressed by the Indian delegation, that because of some lack of resources for infrastructure, these
operations should be conducted on a voluntary basis. Korea was of a slightly different opinion
because this cooperation was a very important factor and it entailed a kind of harmonization in this
sense where for example, information sharing, or simplification or standardization or transparencyG/C/M/65
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through notification. Also harmonization of transit policies was important factor and Korea was just
adding a kind of idea, how to cooperate and in which degree we had to cooperate in these areas was a
most important factor to be considered in the future  process of this negotiation in this sense. Korea
thought that was not concrete or very binding coordination of transit policies but Members had to
maintain or consider what kind of degree of cooperation which they should entail a kind ofcompelling, not voluntary, a kind of minimum standards for cooperation was to be considered.
1.67 The representative of Canada, noted in response to the questions posed by the European
Communities that the Canadian proposal had focused to some degree on the customs procedures side
on this Article because Canada saw that there were links between this Article with the other Articles
delegations had been discussing such as GATT Articles VIII and X. There were a lot of links all the
way through. The remaining part of the Canadian paper highlighted the need to promote theinternational agreements, including the customs regulations that govern goods in transit. Canada was
not only talking about the means of transport that were carrying the goods, but also about the goods
that were on those means of transport transiting through the various countries. In addition, Canada
would like to build on the current provisions in GATT Article VIII and supported the use of
international instruments relating to transit and customs transit. Finally, the Canadian delegationwould also like to see a possible extension of national treatment to goods in transit.
1.68 The representative of Malaysia reminded the EC delegation that he had raised an issue at the
end of his intervention on the question of interface between Article V and the GATS. The first
sentence of sub-section b of section 5 would state in its first sentence that specific problems had beencited by Members regarding  refusal to allow transit of  non-national transport operators. Malaysia did
not want Members to go out of this room thinking that Article V actually obliged countries to allow
non-national transport operators to operate automatically by virtue of Article V. If specific
commitments had been made in terms of transport under the GATS, depending on the specific
commitments and the limitations, those non-national operators would have to work based on thelimitations set out on the schedule of commitments. Malaysia was therefore wondering why the EC
had brought this issue up and why they had mentioned that it could be brought to the attention of the
Council for Trade in Services. Malaysia  needed some clarification on that.
1.69 The representative of the European Communities stated that the point his delegation wanted
to make was to raise the question, whether there was not an inherent contradiction between the
freedom of transit guaranteed to vehicles and vessels in terms of Article V and the fact that, unlessMembers had made specific commitments on transport under the GATS, there was no right of entry
into a country for a non-national transport provider. It was simply a question the Communities would
welcome some institutional or legal clarity on. Perhaps the GATS had in some ways trumped or over
ridden an element of transport service liberalisation foreseen in GATT Article V. The EC was
however in no way arguing that Members should increase their GATS commitments via the backdoorof GATT Article V. That was certainly not the intention, but there was a question mark in the heads of
the EC delegation about the articulation between GATT Article V, which said there would be freedom
of transit not only for the goods, but also for the carriers of the goods, and the fact that such freedom
did not necessarily exist under the GATS.
1.70 The Chairman opened the floor for comments on Articles VIII and X.
1.71 In introducing Colombia's proposal on Article VIII (document G/C/W/425), the representative
of Colombia said that within the globalisation process of the economy unquestionably procedures
relating to foreign trade operations had taken on more importance in the light of the larger flows of
world trade the trading operations of a country had an influence on the commercial transactions of
another country and in a certain way this could affect the performance of the trading partners.  The
large number of administrative requirements and procedures might affect the competitive position and
become a means to exercise trade discrimination and protectionism.  Within the framework of theG/C/M/65
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multilateral trading system progress and disciplines in trade policy and transparency were evident in
Colombia's domestic legislation, but there was still a large grey area regarding rationalisation of the
way in which some of the administrative requirements and procedures were handled.  These continued
to be dealt with as a matter of autonomous policy and that was why Colombia attached considerable
importance to Article VIII within the issues proposed in the Doha Declaration on trade facilitation.  Itwas relevant and important that international standards be adopted which should guarantee
simplification, predictability, transparency, non-discrimination and support for foreign trade. They
were aware of limits that existed in human and physical resources in Colombian customs and trading
authorities and reiterated the importance of having adequate technical assistance. The element of
graduality was fundamental to make progress, and Colombia's view was that medium and long term
priorities should be set.  Amongst the medium term priorities it was important to have programmes
that would make procedures more automatic and there had to be acceptance of the WCO conventions,the Istanbul Convention, the Brussel's Convention and others which included mechanisms for gradual
adoption of commitments, including selective elements in the inclusion of regulations and the
possibility of stating reservations. She also supported for the medium term the adoption of a single
window mechanism at the border with an efficien t computer back-up which would decrease the length
of customs formalities and reduce the costs to clear goods for entry or exit.  On the long term frontthere had to be a more systematic application of processes used in customs administrations at border
crossings, in warehouses and places of entry and exit.  It was necessary to have technical assistance
and capacity building.
1.72 She supported statements made by other Members who stressed the importance of bringing
improvements to Article VIII of the GATT, particularly in paragraph 1c. The ultimate purpose should
be to draw a multilateral agreement on the interpretation and implementation of Article VIII of the
GATT to guarantee compliance with the objectives set down since 1947: these referred to the
reduction of the complexity of import and export formalities and the simplification of procedures and
requirements to import and export goods.  She suggested that a work programme be drawn up whichwould include activities such as the drawing up of a glossary of terms used in Article VIII, an
inventory of measures adopted by Members under Article VIII of the GATT and in particular an
inventory of the documents and procedures used in foreign trade operations and the fees that apply to
all these cases. She suggested also an analysis  of the relationship between the provisions and
commitments in Article VIII of the GATT and the WTO multilateral Agreements.  Furthermore the
Work Programme would include a review of internationally agreed standards for simplification of
documentation and procedures. Account should be taken of information available to countriesregarding their experiences in simplifying procedures.  The Work Programme should also consider a
broad based technical assistance and capacity building programme for developing countries which
would resume each country's particular needs.  Finally she proposed that the information available to
countries as well as international organisations be taken into account relating to the experience that
had been achieved through a systematisation of customs related to any electronic transmission of data.All of these activities would give an opportunity to receive inputs for the preparation of an agreement
on the interpretation and implementation of Article VIII with the following elements, definitions,
general principles, specific provisions on duties and charges, document requirements and information
required in import and export procedures, customs procedures relating to imports and exports,
minimum international standards for facilitation procedures amongst WTO Members and finally achapter devoted to special and differential treatment.
1.73 The representative of the European Communities welcomed the communication from
Colombia and shared most ideas expressed in its paper. The relationship between work on WTO
provisions and technical assistance efforts carried out in parallel was essential. He was interested bythe elements in the Work Programme proposed by the Colombian delegation. Some of those elements
should be looked at in more detail between now and Cancún.  There were other elements that would
be for the post-Cancún phase and elements (such as the proposal to revise the international standardsG/C/M/65
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for documentation) which would be presumably done outside the WTO in the relevant international
bodies, but towards which the WTO could give some impulse.
1.74 The representative of Paraguay said that streamlining measures adopted by countries, and the
cut in custom's tariffs collected in custom's operations, would not be successful if it was not done
together with identifying and eliminating unnecessary procedures and requirements. The WTO should
do away with excessive documentation and paperw ork and make procedures more automatic, use
information technology more efficiently, and increase transparency.  He advocated the establishment
of the single window principle at border points and in the regional integration process in Mercosur
Paraguay had some experience in this area.
1.75 The representative of the United States welcomed Colombia's paper on Article VIII and
looked forward to commenting on it at a subsequent meeting.1.76 The Secretariat, in response to a question by Thailand requesting some information said that
as regards Other Duties and Charges, information was given by Members in tariff schedules  The
WTO consolidated tariff schedules database was comprehensive and accessible.  She mentioned WTOdocument TN/MA/S/4 which contained information on the tariff profiles of Members including  Other
Duties and Charges.  Since the representative of Thailand also asked for a comparison, there was no
more specific information on the motivation of why Members had decided to introduce such a duty or
charge.
1.77 The representative of the OECD made a stat ement on the progress of OECD work on Articles
VIII and X focusing  on the elaboration of analytical tools th at each country could use to assess their
own cost and benefits from introducing trade fa cilitation measures. The OECD had been looking at
regulatory processes in Member countries and expanding this analysis with non-OECD countries to
get some insights of country approaches to ensure that domestic regulation was conducive to marketopenness and respect of WTO principles.  In this context, the OECD Trade Committee undertook to
make a comparative analysis between the proposals which had been tabled in the CTG with respect to
Articles X, VIII and now V and the conclusions that had been drawn from our past work on country
efficient regulatory approaches.  On the possible ways for implementing Article X, the OECD Trade
Committee looked at some 40 OECD and non-OECD countries and had seen that many of the
proposals had been implemented in various ways both within and outside the OECD.  In parallel to
this work, there had been other work ongoing in the OECD Trade Committee on a template to assesscosts and benefits of possible trade facilitation measures.
1.78 The representative of Pakistan expressed his thanks to the representative of the OECD for her
presentation and the outline on the paper she had promised to submit by the next meeting. He was
wondering whether it would be possible for the OE CD Secretariat to have the documents circulated
before the meeting, so that delegations could already have taken a look when coming for the nextmeeting.  The next meeting would cover all three Articles of the core agenda, and it would facilitate
Members' preparation if they could benefit from th e good work the OECD Secretariat had done in this
area.
1.79 The representative of the OECD replied that the analysis on Article X could be available in
about two weeks. At the moment the document was in the process of internal clearance. Once that
clearance process was completed, she would send it to the Secretariat. The other two documents
should be ready by the 6th of November, when they could be send to Members.G/C/M/65
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1.80 The Chairman clarified that the OECD papers would be made available for Members, but not
circulated as CTG documents as such. The papers were supposed to be for information for
delegations.
1.81 The representative of Singapore noted that, as mentioned by the representative from Pakistan
and in accordance with the Work Program, the next meeting would serve as a forum for an overall
discussion on all three GATT Articles, as well as on the other two agenda items on needs and
priorities and technical assistance. As a tool for delegations, Singapore would like to suggest theSecretariat to prepare a kind of compilation of all of the various proposals that have been submitted.
There were quite some suggestions floating, with even more to come. Like in the past, when the
Secretariat had done a sort of compilation on all the trade facilitation proposals pre-Doha, Singapore
thought that such a kind of compilation could be a tool for Members to see where things clearer and to
help them identify their needs and priorities. It should be a tool to support the discussions. Sheconcluded by expressing her hope that all delegations would be open to this idea.
1.82 The representative of the Secretariat remarked that if it was a request to compile all the
proposals which has been made so far, it would mean a call for a compilation of suggested measures
regarding GATT Articles V, VIII and X, because there had not been any submissions by Members on
trade facilitation needs and priorities, and the only submissions relating to technical assistance and
capacity building consisted of three donor countries outlining their current programmes in this area,
without presenting any specific proposals. The Secretariat would therefore like to clarify whetherSingapore’s request was a request for a compilation of Members proposals regarding Articles V, VIII
and X, or whether they had something else in mind.
1.83 The representative of Singapore replied that what her delegation had had in mind was
essentially a compilation of the proposals regarding to three GATT Articles, but as the Work
Programme called for the last meeting to address al three agenda item, Singapore was open for
suggestions from other delegations on this matter. There might however be no time for the Secretariat
to also prepare a document on technical assistance before the December meeting. Therefore,delegations might wish to focus on the three GATT Articles for the time being.
1.84 The representative of the Secretariat informed Members that a report will be prepared on the
overall work of the CTG on trade facilitation in th e course of 2002, which would be submitted to the
General Council in December. This report would not only cover the proposals and discussion
regarding the three GATT Articles, but also address the other two agenda items, including those
issues where there had not been any submissions from Members. The representative therefore
wondered whether it could interpret Singapore’s request as a request relating to proposals regardingGATT Articles V, VIII and X and sought final clarification on that point.
1.85 The representative of Singapore stated that her delegation would like to see a compilation of
the three Articles.
1.86 The representative of Colombia supported the idea put forward by Singapore. A compilation
of the proposals on the three Articles would be very useful for Members as it would facilitate the
understanding on the issue. This was an issue of utmost importance for Colombia. Such a compilation
would help Colombia’s authorities to gain a better understanding of the scope and coverage of the
work being done on this issue multilaterally. It was also welcomed as a means of finding the best wayand most didactic way to analyse this issue, which was why such a document would be most
welcome. The Secretariat could use a comparative format. The Secretariat’s ideas would be most
welcome. Colombia would like to see this document be available not just at the next meeting, but
some time prior to that, so that capitals could st udy this document. There was enough input for theG/C/M/65
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Secretariat to prepare some sort of compilation, which could be very useful particularly for
developing countries. As regards the reports to ge neral Council, Colombia raised some concern that
those reports were generally rather specific, and did not always give capitals the substance needed to
give an opinion. If there were more inputs and if there was enough time, it would also be interesting to
get something on the programm related to technical assistance.
1.87 The representative of the United States thanked the Chairman for having provided a list of
some of the issues Members had discussed at the current session. She wished to reiterate that with
respect to Article V, the United States expected to continue the discussion at the next meeting where
the US would have further comments.
1.88 In response to the requests of Singapore and Colombia, the Secretariat agreed to circulate a
compilation of the proposals made with regard to the three articles.1.89 The Chairman summarized by noting that several proposals had been presented by some
delegations on how Article V could be clarified and improved. Some of these delegations had pointed
to a number problems encountered in relation to transit, especially in the case of land-locked
countries, such as different customs policies, formalities and procedures being practised or excessiveand non-standardised documentation requirements. Reference was also been made to insufficient
cooperation among the relevant authorities as well as to the non-application of regional and
international transit instruments. Another problem highlighted was inadequate or lacking capacities
and infrastructure inhibiting some Members' ability to participate effectively in international trade.
1.90 While highlighting these problems, some of the delegations also made proposals to address
them. The suggested measures included the promotion of increased cooperation among the relevantauthorities, the use of international instrument s relating to transit and the simplification and
standardisation of documentation requirements and of customs formalities. There was also a proposal
to ensure non-discrimination between modes of transport, individual carriers and types of
consignment. There was also a suggestion to differentiate between trans-shipment and non-
transhipment. In addition, there were proposals to use surety bonds and to apply risk assessmentmethods to allow for faster clearance of goods. Some delegations suggested the need to clarify some
of Article V's terms to enhance transparency regarding fees and charges.
1.100 As regards the implementation of these proposals, different views were expressed as to the
desirability and feasibility of binding rules. While some Members underlining the importance and
benefits of such rules, others questioned the need for additional binding rules, pointing at the many
problems faced especially by developing countries as regards implementation such as weak
infrastructure, lack of resources and the need to safeguard custom's revenue. Some Members
expressed their preference for trade facilitation measures to be undertaken autonomously. Reference
was also made to the need to reconcile freedom of transit with security concerns. All delegationsagreed on the need for special and differential tr eatment as well as for technical assistance and
capacity building in this area.
1.101 On Article VIII, Colombia submitted an additional proposal. The proposal had identified a
number of medium and long-term priorities, as well as a specific work program intended to address a
number of problems encountered in the area of fees and formalities relating to importation and
exportation, with the objective to enhance simplification, predictability, transparency and non-discrimination. Reference was also made to the importance of technical assistance and capacity
building.
1.102 He concluded by noting that Members had had a useful and constructive discussion on this
agenda item.G/C/M/65
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1.103 The Council took note of the statement made.
II. TRADE FACILITATION NEEDS AND PRIORITIES OF MEMBERS,
PARTICULARLY OF DEVELOPING AND LEAST DEVELOPED COUNTRIES
(G/C/W/393)
2.1 The Chairman recalled that paragraph 27 of the Doha Ministerial Declaration called upon the
CTG to identify the trade facilitation needs and prio rities of Members, in particular of the least-
developed countries. As noted by many delegations at previous meetings, this identification closely
related to the other elements of the Doha trade facilitation mandate, namely the review and possible
clarification and improvement of GATT Articles V, VIII and X, and the provision of adequate technicalassistance and capacity building.  Furthermore, the identification of Members' trade facilitation needs
and priorities could also facilitate the discussion on technical assistance and capacity building. At the
last meeting, frequent reference was made by Members to receiving inputs from delegations on this
matter, especially from developing and least deve loped ones, in order to advance the discussions.
Several delegations indicated that their capitals we re working on identifying their needs and priorities,
and that they hoped to be in a position to share their findings with other delegations at this meeting. To
support delegations' deliberations on this matter, and to facilitate the preparation of such national
experience or needs assessment papers, the Secret ariat had prepared a compendium on information
already available at the Secretariat, as requested by Members (document G/C/W/393).
2.2 The representative of Paraguay said the Paraguay-Paraná Waterway encompassed only the
Paraguay and Paraná rivers but not the River Plate which, being the final stretch of the sea, would have
to join the waterway regime at some point, failing which the system would lead only to the gateway to
the sea and not through to the sea itself.  The main aims of the Waterway Treaty were to convert a
natural waterway into a permanen t river transport system, navigable around the clock with a constant
depth of ten feet.  Certain aspects of the dredging of the river to achieve the desired depth had elicited
criticism from environmentalists with the result that work was now at a standstill in one part for fear of
doing environmental damage in Brazil.  The Para guay-Paraná Waterway was also the backbone of the
MERCOSUR regional economic integration project. Products could go in and out, particularly
agricultural products of high volume which were not so valuable where water transport was cheaper
than land transport.  Another project, one of the most important projects, was the bi-oceanic corridor,
a connection by land, from the Atlantic to the Pacific going through Paraguay territory.  This wouldfacilitate and make it easier for Paraguay's trade to reach the Pacific and from the Pacific to the East.
Paraguay was working on trying to find an improvement of all communications since the
disadvantage of being land-locked had to be transf ormed into an advantage turning Paraguay into the
heart and the centre of South America.  There should be more understanding from the regional and
global banks so as to develop the project for better infrastructure which was of vital importance forland-locked countries.  These facilities should have the effect of cancelling out the disadvantage of
being land-locked and help Paraguay to serve as a transit so goods coming from the Atlantic could go
to the Pacific. Paraguay would like to be able to continue dialogue with countries with which it was
addressing these issues and also receive technical cooperation and help in the training it required.
2.3 The representative of Pakistan said his delegation had indicated its desire to share its national
experiences and to identify its needs and priorities in terms of the Doha mandate. His capital was still
engaged in this process, which required a lot of inter-ministerial meetings in order to bring up a
coherent document, which indicated the many trade facilitation measures that the government of
Pakistan had undertaken over the last decade.  Regarding some of the measures that the governmentof Pakistan had undertaken, it had made a major breakthrough by doing away with the post of Chief
Control of Imports and Exports Offices, and with import licensing, which was a big trade facilitation
measure. Pakistan had done away with export registration requirements, established single windowG/C/M/65
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operations at ports and an export terminal which, when required, operated 24 hours a day.  There had
been government procedures which either reduced or eliminated the direct contact of government
functionaries with the private sector or with their clientele. Pakistan had embarked upon a programme
of computerisation and established web sites in order to disseminate as much information as possible
on tariff matters or government regulations regarding imports and exports for the benefit of local orPakistani importers and exporters and the outside world. Such measures illustrated Pakistan's national
experiences in trade facilitation. Given the number of national experiences documented by various
Members, the documents from the symposiums and the workshops held, and the submissions of other
international organisations, he wanted to know what particular direction the CTG was heading to.
How was the CTG going to focus its work on the objective of the Doha mandate in terms of the
identification of needs and priorities vis-à-vis  technical assistance and capacity building?  He did not
see much merit in having a never ending exercise of defining and prioritising needs.
2.4 The Chairman said the identification of needs of developing countries, and the sharing of
national experiences was done to learn lessons from these experiences and to see what kind of
difficulties some countries were facing, for exampl e, in relation to implementing obligations required
in the context of this trade facilitation exercise . The CTG should proceed with the identification of
needs and priorities in relation to all three Articles. The Council, having discussed all three provisions
thoroughly, and having identified what should be done, could then look at the technical assistance and
capacity building that was required. By way of an example he noted that, if there should be a need to
strengthen an article or even to incorporate new rules, the question need to answered as to what
should be done in terms of technical assistance and capacity building. The CTG could try to drawlessons from countries which had gone through this exercise in the trade facilitation area and the
projects they introduced, as well as from the difficulties they faced in the early stages.
2.5 The representative of Brazil said that at the Fifth Ministerial Conference in Cancun Ministers
would give additional guidance on how to proceed.  The mandate up to Cancun had three elements:
the first was the review and as appropriate clarification and improvement of Articles V, VIII and X,
an exercise which was on course;  the second was this issue of identification of needs and priorities of
Members, particularly of developing countries and least developed countries. This was not limited to
technical assistance and its response to "identification of needs and priorities of all Members".  He
suggested that Members should identify any issue which they felt needed work which could assist in
trade facilitation.  And the final element was technica l assistance itself so if there was consensus on
adopting new obligations then one element would have to be an examination of what would be thetechnical assistance requirements to ensure that all Members were in a position to take such
commitments. But Members should also look at technical assistance for current obligations and not
only in the light of future commitments.
2.6 The representative of the European Communities agreed with the approach taken by Brazil
and noted that for Pakistan, the stress was on certain security issues involving transit, which was a
priority for Pakistan.  India had made the point that encouraging risk assessment was good, but had to
be done in a way which took account of the trade situation of the country and the existence of tens of
thousands of small traders. When it came to looking at this issue in relation to any possible future
rule-making, needs and priorities were not only about technical assistance to implement a rule, but
also about flexibilities taking into account specific circumstances. The problem had been from the
beginning that the CTG had taken language out of the Doha Declaration and turned it into three
separate agenda items, when time had shown that it was not necessarily the most satisfactory way to
organise the discussion.
2.7 The representative of the United States agreed that there appeared to be separate elements but
in fact they needed to go in tandem: identify ing priorities and needs would be easier and become
narrowed down as Members looked at clarifying the various Articles of the GATT. The United States
was preparing a submission on the potential approaches to addressing the various challenges andG/C/M/65
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opportunities presented to developing countries by commencing negotiations on trade facilitation and
was continuing meanwhile to consult informally with various developing countries.
2.8 The Chairman recalled that there had been a number of Members announcing submissions on
this matter. At the last meeting, several delegations  had indicated that their capitals would be working
on this and that they would be submitting inputs to the Council for deliberation. He expressed his
hope that these countries would be able to forward some submissions at the next meeting, as this
would greatly facilitate Members' deliberations and help focus the discussions.
2.9 The representative of Malaysia noted that from his delegation's perspective, there might be
some relationship to possible rules that might emerge at the end of the day, but that was still an open
question. Looking at trade facilitation needs and priorities, it was a question that could be seen as astand alone issue. There had been a discussion on trade facilitation for many years now and looking at
the Secretariat document (G/C/W/393) one could see that there were needs and priorities irrespective
of a possible rule-making exercise. The trade facilitation symposium, for example, had listed a
number of needs without even discussing whether there could be rules in the area of trade facilitation.
One had to look at needs and priorities irrespective of possible rules that might come up. He waswondering if there was a sequential approach to this  matter. Malaysia shared Brazil's view that one
could look at a current stage where there was a rule and see what kind of needs and priorities
Members would need. At some point in time Members would have to reach a stage where something
needed to be done, based on the needs and priorities a lot of countries had put forward.
2.10 The representative of Pakistan said there was no dearth of intellectual input into this exercise,
but asked about its objective in mind. Was the CTG identifying the trade needs and priorities of
Members vis-à-vis only the three articles that were subject to review and clarification, or could they
go beyond the three articles? Secondly, Brazil had made clear that the exercise was for all the
membership, not only for developing countries. For what reason did Members either confinethemselves to certain elements or approach broader questions such as structural development, i.e.
building up telecommunication or road networks?
2.11 The Chairman expressed the hope the Council would receive some of the announced
submission by Members at the next meeting. He noted  that overall, the discussions had been focussed.
By early next year, Members would have to narrow  down the elements that they wanted to focus on.
Apart from whether there should be binding or non- binding rules, Members should focus on what to
do in relation to these three articles. The mandate said "clarify and strengthen" and so Members
themselves ultimately would have to decide whether there was consensus or otherwise to agree on
proceeding with certain elements in another manner.
2.12 The representative of Brazil cited as a priority for Brazil the conclusion of the harmonization
programme on rules of origin. This was an agreement adopted by the Uruguay Round which stated
clearly in the preamble that its intention was to facilitate the flow of trade and yet Members were
years behind schedule.
2.13 The representative of India said her understanding of the Doha Mandate was that the study
process would continue until Cancún with the purpose of analysing and coming to some sort of
identification of needs and priorities not limited only to Articles V, VIII and X. Her delegation had
other priorities including customs valuation, which had a direct link with trade facilitation and rules of
origin. The implementation of Articles V, VIII and X, in their present form was functioning quite
well.
2.14 The representative of the United States said the CTG could focus its work more efficiently by
trying to share experiences on the specific problems presented with the movement, release andG/C/M/65
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clearance of goods.  The sharing of these experiences could provide learning experiences that would
enable Members to identify their priorities and needs in this area, including technical assistance.
2.15 The representative of UNCTAD reminded dele gates that UNCTAD was convening an Expert
Meeting on Trade Facilitation on 25, 26 and 27 November in Geneva which would review the
problems and potential for the application of current trade facilitation measures by developing
countries.   Experts could look at the issues related to the implementation of trade facilitation, as well
as the issue of the development dimension of trade facilitation.
2.16 The Council took note of the statement made.
III. TRADE FACILITATION: TECHNICAL ASSISTANCE AND CAPACITY BUILDING
(G/C/W/378, G/C/W/380)
3.1 The Chairman noted that as agreed, Members would take up the last trade facilitation-related
agenda item, which addressed technical assistance and capacity building. He recalled that Ministers had
committed themselves at Doha "to ensuring adequate technical assistance and support for capacitybuilding" in the area of trade facilitation. In the previous discussions, Members had underlined the
importance they attach to this matter. The necessity of receiving such assistance had been highlighted by
practically all developing countries, with several of  them outlining the many difficulties encountered in
their endeavours to facilitate trade. Members had been briefed and updated by a number of delegations
on the technical assistance and capacity building activities they were undertaking, and others hadannounced the preparation of similar briefings, so  that Members would be in a position to get an
overview of the types of assistance currently available and to allow for better coordination amongst the
various providers of such assistance. He noted th at a Member, namely Japan, had prepared a written
communication on its trade facilitation-related tech nical assistance activities, embodied in document
C/C/W/420. He invited the Japanese delegation to present their paper.
3.2 The representative of Japan informed that the paper was Japan's contribution paper to the CTG
discussions on this agenda item. The document was inspired by the papers previously presented by New
Zealand and Canada at earlier CTG meetings. It ai med at supporting the ongoing discussions on trade
facilitation in the Goods Council. He  noted that the document contained a list of trade-related technical
assistance programmes from the fiscal year 2000 to  2001. The Japanese paper solely contained the
technical assistance programmes carried out by the Japanese customs, which did not mean that it
intended to limit or widen the scope of WTO work of  trade facilitation. The paper simply copied the
format of the previous two papers by New Zeal and and Canada. The Japanese technical cooperation
programmes focussed mainly on ASEAN and the Asian Pacific countries, but also covered other regions
and countries. Especially African countries had been targeted in recent years. Design and
implementation of these technical assistance progra mmes had usually been made in cooperation with the
targeted recipient countries and other expert institut es, such as the WCO in customs matters, with which
Japan was in close cooperation. Subject to budgetar y constraints, Japan was willing to continue
providing technical assistance in this field.
3.3 As stated in the previous two meetings, Japan had examined the possibility of holding a joint
WTO-Japan International  Cooperation Agency seminar on trade facilitation in 2003. At this occasion,
Japan also wanted to introduce the APEC decision to hold trade policy dialogue meetings next February,
as well as APEC’s decision to hold a technical assistance programme, which might be a two days
seminar held next June. Both meetings would be open only to APEC Members economies. Based on
Japan's experience, the Japanese delegation would like to stress the importance of establishing WTOrules in the field of trade facilitation in order to provide effective and operational technical assistance.
This would create transparent and universal goal s for the provision of technical cooperation andG/C/M/65
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encourage the political will to pursue the improv ement of trade procedures. Japan welcomed any
comment on the Japanese technical cooperation polic ies and any response from developing countries.
3.4 The Chairman noted that Members had also been  briefed by the Secretariat on their technical
assistance activities in the area of trade facilitation, as well as on experiences gained in the course of
their execution. The Secretariat had further inform ed Members of the state-of-play of its current
planning exercise for the Technical Assistance Plan  for 2003. Several Members had expressed interest in
a follow-up to this briefing, and Mr. Sergio Delg ado, from the Technical Cooperation Division provided
Members with a short update on further developments in the area of WTO technical assistance activities
since the last briefing.
3.5 The representative of the Secretariat noted that is  was not an easy task to inform Members of the
wide range of ongoing activities. In this initial briefing, he wanted to touch upon two main points, after
which he would be available to answer any questi ons. The first issue was the preparation of the WTO
Technical Assistance Plan for 2003 with some reference to how trade facilitation activities were being
handled there. The second point related to the Doha Development Agenda Database on trade-related
technical assistance and capacity building activities.
3.6 Turning to the 2003 Technical Assistance Plan, he informed Members that after his last briefing
in July, when the Secretariat had been concerned about not having received enough assistance requests
and therefore had urged Members to submit such requests, the Secretariat had been flooded with
requests. Technical assistance requests for 2003 had been received from 118 Members and Observers,with a total of over 1,000 specific requests either fo r specific activities or for general support. It was
clear from previously held activities and from the experience gained in 2002 that the maximum of
activities the WTO Secretariat could take on in one year was around 400 activities. Against this
background, Members might realise and understand the dilemma, problem and challenge posed to the
Secretariat by having received over 1,000 specific reque sts for technical assistance. The Secretariat had
proceeded to contact every single delegation that  had submitted requests, covering both Members and
Observers, and to enter into consultations with them , either with the delegations in Geneva or, in the
case of non-resident Members, by phone or e-mail communication. The Secretariat had come to the
conclusion that the principle that should guide its activities was a priority based programming. These
priorities had to be given to the Secretariat by Memb ers, which was the main subject of the Secretariat’s
consultations with Members and observers throug h the regional units of the Technical Cooperation
Division. In these  consultations the Secretariat had tried to learn from Members about their priorities fortechnical cooperation activities. Where the number of national requests on a given subject had exceeded
the Secretariat’s capacity to deliver, these national requests had been grouped into regional activities, to
the extent possible.
3.7 The activities that would be listed in the Tec hnical Assistance Plan were specifically focused on
identified needs, preferences and priorities, establ ishing partnerships, building strategic alliances with
other agencies, bilateral donors, and aid providers.  Those requests that Secretariat was not able to
respond to due to its resource constraints would be forwarded to other donors. As mandated by the Doha
Ministerial Declaration, the Secretariat had tried to establish strategic partnerships and alliances, and
was in in-depth consultations with bilateral donors,  international organisations, regional development
banks, the regional economic commissions of the UN,  and the OECD. Those organisations and entities
had a lot of expertise and might be able to address some of the requests the Secretariat was not able to
take up. The Secretariat would certainly closely fo llow this process and inform Members what the
response of those bilateral donors and other regional and international organisations or institutions had
been. As regards trade facilitation, only a very small percentage of those more than 1,000 requests hadrelated to trade facilitation, and, when asked by the S ecretariat to identify priorities, those very small
number had been further reduced significantly. Faced with the need to sort, prioritise and rationalize
their requests, Members had generally given prefer ence to activities other than trade facilitation.G/C/M/65
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3.8 Almost all of the technical cooperation requests had been requests for national activities, which
meant that given their number and the Secretaria t’s wish to cover the largest possible number of
countries, it had been thought that regional activitie s would be the most efficient way of proceeding.
The Technical Assistance Plan for 2003 was still in the process of being finalised within the Secretariat
and would be presented to Members later that month in the Committee on Trade and Development.
There would be a number of activities in the area of trade facilitation in Africa, Asia, Latin America and
in the Caribbean region, as well as a number of activities on the Singapore issues as a whole, as this had
been explicitly requested by a significant number of delegations. When dealing with the Singapore
issues as a whole, one might wish to make these activities more of a policy dialogue than a training
activity. The Secretariat also planned to cooperate with other organisations and to participate in some of
the technical activities organised by them. Furthermor e, there would be an increasing number of Trade
Policy Courses, Short Trade Polic y Courses, advanced training programmes for senior government
officials on the Doha Development Agenda and simila r activities, where trade facilitation would be dealt
with. Moreover, many activities on customs valuati on also touched upon trade facilitation, even though
it had been decided not to especially refer to trade facilitation in the title of those activities.
3.9 On the Doha Development Agenda Database, as Members had already been informed in the
past, the Secretariat had entered into a strategic partnership with the OECD to set up the Doha
Development Agenda Trade-Related Technical Assistance and Capacity Building Database. A number
of meetings had been held in the course of the fi rst semester with the OECD Secretariat and with the
major donor countries who had requested the establishment of the database. The objectives of the
database, as agreed amongst the agencies, the regional banks, the OECD and Members were as follows:(i) transparency of delivered trade-related technical  assistance, (ii) exchange and information sharing,
(iii) minimisation and avoidance of duplication where possible, (iv), estimation of the progress in the
implementation of the Doha mandates on technical assistance and capacity building, at large, (v)
coordination and coherence in the activities all organisations were doing, (vi) meeting the objectives of
the report the Director-General was instructed to prov ide to Ministers at the Fifth Ministerial Conference
in paragraph 41 of the Doha Ministerial Declaration. An interim report would be provided to the General
Council in December. Finally, (vi) the need to manage  the trade-related technical assistance needs in a
coordinated way. Members had been requested to indicate their technical assistance activities by 31
st
July 2002, the response had been very satisfactory,  and although some organisations had not yet
responded, the Secretariat already had a critical mass of data which was being worked on. This data was
being collated, checked and then uploaded into the da tabase. The server for the database was housed in
the WTO. In this context, he noted with appr eciation that the DFID of the United Kingdom had
provided substantive financing for this project . A joint report by the WTO and the OECD on the
database would be presented to the General Council on 10th December 2002. The Di rector-General of
the WTO and the Secretary General of the OECD w ould write an introductory note on the database to
the General Council.
3.10 The Chairman recalled that at the last meetin g, reference had also been made to technical
assistance and capacity building activities undertaken by international organisations. In this context, he
informed delegations that a communication had b een received from the World Customs Organisation,
copies of which had been made available. This communication related to capacity building tools. He
invited the representative of the WCO to  introduce his organization's submission.
3.11 The representative of the WCO informed that th e compendium had been prepared in response to
many informal questions the WCO had received from many WTO delegates on the occasion of the past
CTG meetings.  As for the background of the compe ndium, he informed that at a Council Session in
June, where all Director Generals from a 161 Member administrations had gathered and tried to identify
the priorities for the coming year, they had identifie d two priorities, security and the facilitation of the
trade supplied chain. Another priority was how to respond to the Doha Declaration including trade
facilitation, with a particular emphasis on capacity building. The Doha Declaration already called for aG/C/M/65
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coherent approach among the international organisations. The WCO considered capacity building to
be a very important area, but it was up to Member to identify their needs and priorities.
3.12 The WCO Council had urged its Members, 161 Customs administrations in total, to make
necessary coordination with trade and foreign affairs ministries within each of their countries toenable Geneva-based negotiators to be well informed of their capacity building needs.  In order to
help the WCO Member Customs identify their needs and put them forward to their national political
leaders, the Council had instructed the WCO Secretariat to set up a high-level group of Customs
representatives to develop a Customs capacity building strategy. A first meeting of the high-level
group had been held a week ago inviting the representatives of other stakeholders including the WTO
Secretariat, World Bank and trade to start the discussion, with a view to elaborating a Customs
capacity building tool to be presented before the next WTO Ministerial Conference in Cancun.  Thefirst step of the WCO's work in this regard was naturally to produce an inventory of existing WCO
capacity building tools.
3.13 He explained that the Compendium comprised three elements: firstly, WCO instruments;
secondly a forum for international cooperation and exchange of experience.  In this connection, heemphasized that countries were invited to take ownership approach by learning their counterparts’
experience and identifying their way forward for capacity building on their own. The third element
was training and technical assistance in close cooperation with national administrations, as the WCO
often relied on their national administrations to provide resource persons.
3.14 He remarked that discussion at the first day of the current meeting had clearly demonstrated
that capacity building went beyond training and technical assistance. The WCO  believed that a
comprehensive package of overall Customs reform was necessary to implement any Customs-related
WTO Agreements. This would require huge resources and WCO alone could not respond to all
capacity building needs. That was why a coherent approach was indispensable embracing donors,recipients, lending institutions such as World Bank and international organizations such as WTO and
UNCTAD. The WCO expected that the WTO work on trade facilitation would assure political will
and support from stakeholders including trade, that would result in realignment of resources to
Customs, which was not a sole but an important player in trade facilitation.
3.15 Finally, he touched upon the WCO's way forwar d, noting that as part of its work, the WCO
would carry out a survey to identify national, regional and global trends and patterns regardingcapacity building needs of our Members. He expressed his hope that that exercise would enable them
to develop a more comprehensive tool that would supplement the Compendium currently submitted.
3.16 The representative of Brazil remarked that it was no surprise that Members saw the issue of
technical assistance and capacity building as one of highest priority in their work. This was a position
Members had constantly reaffirmed in the CTG, to a large extent on the basis of the seminar held last
year, which had clearly indicated that a lot of the pr oblems faced by many countries in facilitating the
flow of goods could be overcome by a comprehe nsive technical assistance effort. Some case studies
presented on this occasion had shown what tangible and concrete results could be achieved through
technical assistance. He thanked Japan for presenti ng information on the assistance they had provided.
The Japanese document was very comprehensive and demonstrated a commitment to providing
technical assistance. It followed the line of Memb ers’ previous submissions . He also expressed his
appreciation to the Secretariat for the information provided on what had been done and what was going
on in the area of technical assistance. He further exte nded his thanks to the representative of the WCO
for the information on the activ ities undertaken in that forum.
3.17 It was important to recall the pre-Doha prepar atory discussions on trade facilitation. There was a
very clear willingness to tackle the issue of trade facilitation on two inter-linked and parallel tracks. One
was on the question of the issue itself, and the other one was on the issue of technical assistance. ThereG/C/M/65
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was a clear position that one had to ensure that assi stance would be provided to enable each and every
Member to implement any agreement r eached in this field. It was necessary to look at this issue on two
distinct levels. The first level was to take a step backwards and look at past experience. The Uruguay
Round had produced a very comprehensive set of commitments for all Members, and the large number
of difficulties many developing countries were still experiencing in implementing these agreements
clearly revealed that there was a need for enhanced t echnical assistance.  Brazil took note of the fact that
the Secretariat's role in this exercise was limited to essentially explaining the Agreements to Members,
outlining what the commitments implied and what Memb ers had to undertake internally to give practical
effect to these Agreements. The fact that seven years after the Uruguay Round, explanations still had to
be given to Members on what they had signed up to, basically constituted a failure of the negotiating
process. It was important to take this into account a nd try to avoid a repetition of that situation. Members
had to be fully aware of what they were negotiatin g and what they were signing up to. Members had to
look at how to deal with this in the future.
3.18 In Brazil’s view, there were no structural flaws in Articles V, VIII and X,  and his delegation did
not see any pressing need to change them. Brazil w ould therefore be more predisposed to work on the
basis of trying to achieve some non-binding guidelin es or best practices in these areas. A number of
Members felt that there was scope for improving or st rengthening those disciplines. In Brazil’s view, it
was up to the delegations presenting specific proposals in this respect to present concrete indications of
technical assistance that would be forthcoming to a llow for the implementation of such new disciplines.
There had to be an indication of how one could adopt  developed countries’ standards in these areas with
a developing country budget. In doing so, one coul d avoid the current problem that even seven years
after the adoption of an Agreement, Members still had difficulties to understand and implement their
commitments. So far, the specific proposals on tec hnical assistance had been scant. There had been
generic references to the need to provide technical assistance, but so far, de veloping countries had not
seen anything concrete on what ki nd of technical assistan ce would be provided to implement the specific
proposals that had been put on the table.
3.19 The Chairman thanked the Brazilian delegation for its intervention and noted that it had
provided a sound framework for discussions on this item, and some pointers as to how one should be
approaching the technical assistance requirements. He remarked that the Brazilian intervention should
be able to provoke some discussions.
3.20 The representative of Cuba thanked the delegati ons of Canada, New Zealand and Japan for their
contributions. Cuba also welcomed the activities the WCO, UNCTAD and WTO were taking in this
area. The Cuban delegation stressed the key importan ce of technical assistance and capacity building as
an integral part of the review pr ocess stipulated in the Doha Declaration. At the same time, they were
also key elements of the development dimension of the multilateral trading syst em as reflected in the
Doha Declaration itself. In this context, the C uban representative highlighted some of the elements
included in the document presented by the UNCT AD Secretariat, which indicated that technical
assistance requests were nothing new and that in th e 1990's, commitments to help developing countries
via ODA dropped by more than 50% compared to th e previous decade. This meant that unless one
reversed this trend, it would be impossible to meet  the needs of developing countries, and to fully
comply with the Doha commitments. Moreover, while Cuba recognised and greatly appreciated thatmany of the proposals of develope d countries contained recognition of the need to accommodate the
concerns of developing countries, it was necessary to  tackle this more precisely and target proposals
which would lead to more effective technical assi stance and capacity building, such as the proposal to
create more appropriate infrastructure in developing  countries in order to create transport networks, so
that these countries were better equipped to assume additional undertakings and commitments and couldtruly contribute to strengthening the multilateral tradin g system. Finally, Cuba was of the view that the
need to boost technical assistance and capacity build ing in this area should go hand in hand with the
exercise of reviewing and improving trade facili tation. Cuba welcomed the statement of the Deputy-G/C/M/65
Page 32
Secretary General of WCO that his organisation was prepared to go further in capacity building and to
help to really put such assistance into effect.
3.21 The representative of the Philippines thanked Canada, New Zealand and Japan for the
information on the technical assistance they had prov ided to developing countries, which had been very
useful. She also thanked the WCO and the WTO for the briefing on how they were trying to proceed on
the technical assistance programme. The Philippines in terpreted the statements by the WTO Secretariat
as a positive signal that developing countries were  taking this whole exercise very seriously. The
Philippines understood the problems of the Secretaria t, which was now overwhelmed by the number of
requests it had received. From the experience of her delegation, she could associate very much with
what the Secretariat had said about trade facilitation not having been listed as a priority by most
delegations when having to prioritise a large number of technical assistance needs. This had also been
the case for the Philippines, which had not listed trad e facilitation as a priority area, as its needs for
technical assistance is focused on existing Agreemen ts, such as the Agreement on Agriculture and the
Agreement on Services, to name but a few. This did not  mean that the Philippine s did not need technical
assistance for trade facilitation. The Philippines was in the process of prioritising its national needs as
well as of identifying its future needs.
3.22 Her delegation appreciated the information that the Secretariat was trying to coordinate with
other agencies, international organisations and possible donors on how to deliver various types of
technical assistance, taking into account the national n eeds. In this context, she recalled that as regards
customs valuation, which also was an area related to  trade facilitation needs, there was a WTO seminar
coming up on 6-7 November. She noted that it would be  useful if some trade facilitation aspects would
be included in that workshop. What the Philippines did not want to see was another trade facilitation
workshop where no clear objective is attainable at the end of the day because the Philippines did not like
to waste the available resources. Coordination was th erefore very important, including coordination with
possible donors. It was the right way to approach th ese potential bilateral donors to see whether there
were also other resources. The Philippines understood that in a situation with more than 1000 requests,
of which the Secretariat could only carry out up to 400, the focus would be on regional activities.
Regional activities would still be very useful. She concluded by noting that the effect of these regional
activities would multiply if the venues of the various workshops were disseminated to as many countries
as possible.
3.23 The representative of the European Communities noted  that he had listened very carefully to the
statements been made by Brazil, Cuba and the Philippi nes, as well as to the presentations by Japan and
the Secretariat. The EC had been heavily engaged in technical assistance and capacity building activities
in the past and would continue doing so also in the future. The EC had no written paper to share with,
but could share information regarding upcoming proj ects on the national basis, not to mention the fact
that the Communities were also constantly and heavil y involved in the technical assistance and capacity
building programmes run by the WCO, the WTO or other international bodies.
3.24 As regards trade facilitation, the EC was planning regional workshops in the year 2003 in three
main areas: Central America, the Andean Pact C ountries, and South Asia, covering India, Nepal,
Bangladesh, Pakistan and Sri Lanka. These were  regional workshops not only devoted to trade
facilitation, but also to a range of other subjects, including trade facilitation. Further to these activities,
the EC was in the process of organising two cour ses, each of them lasting one month. These courses
were destined for African and Latin American countries, and focused on the Doha Development
Agenda.  Two full days of these courses would be devoted to trade facilitation. Furthermore, the
Communities had decided that trade facilitation would al so be one of the main issues to be incorporated
in its long term 5-year programme for the ACP c ountries. In addition to that, the EC carried out
technical assistance measures on trade facilitation which were already negotiated with MERCOSUR,
Egypt and the Philippines, and was were looking forw ard to including other countries, as these technical
assistance measures got to be negotiated and agreed upon. When talking about trade facilitation in thisG/C/M/65
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context, the EC was also referring to the ideas th e Communities had put on the table in the Council for
Trade in Goods on the three issues under discussion.
3.25 Commenting on what the Secretariat had said as  regards its technical assistance programme for
2003, he remarked that while he appreciated that trade facilitation and customs valuation were issueswhich would go together, the EC woul d prefer to see trade facilitation in a broader way and handled in a
specified manner in the Technical Assistance Work Programme for 2003, as it was important to address
the right audience. If trade facilitation was bu ried under a different name, it would not be very
transparent and could not provide the effective audience one was looking for.
3.26 The representative of Canada agreed with dele gations on the importance of technical assistance.
Several delegates had stressed that this issue was an integral part of the Doha mandate. It was clear that
this element of the Ministerial Declaration was a key element if one wanted to ensure that there was an
effective participation by all WTO Members in the ongoing negotiations, and for everybody to enjoy the
benefits of trade liberalisation. All submissions by delegations and intergovernmental organizations had
shown how many activities were going on in this area,  as well as the complexity of the issues to be
addressed. It was obvious that all these endeavours s hould be directed in the same direction and that it
was important to ensure that there was coherence a nd coordination in these efforts. These efforts must
be targeted as closely as possible to the needs a nd requirements of the benefi ciary countries, which were
generally developing countries. It was under this point  that Canada would like to refer to a remark made
by the Philippines concerning the needs identificati on of the recipient countries. Canada understood that
many countries still had problems with the implem entation of the Uruguay Round commitments. It was
important to distinguish between two types of techni cal assistance, one directly associated with the
implementation of WTO commitments and technical assistance which would fit into a much broader
framework of trade facilitation.
3.27 From Canada’s point of view, its bilateral efforts in the area of trade facilitation-related
technical assistance fitted into a much broader framework than simply the implementation of WTO
rules. Canada’s programmes aimed at the modernisa tion and simplification of customs procedures, and
at setting up programmes and systems to guarantee a better collection of information, as well as more
certainty as regards the generation of income from fiscal matters, fraud avoidance, and more efficiency
from customs valuation. All of these issues had to be seen in a broader framework than simply the
implementation of WTO commitments.
3.28 It was in this spirit that Canada had set up an ambitious programme. The Canadian Customs and
Revenue Agency had tried to set up programmes in va rious countries which had to be seen as examples
of modernisation. Canada hoped that the recipient countries would benefit from these programmes.
Brazil had very eloquently highlighted the need to identify proposals which would fit in the WTO
framework. Many of the activities Canada undertook under its bilateral programmes made a direct, orindirect, contribution to this goal.  For example, training for the modernisation of customs systems
indirectly help implementing ex isting obligations, or commitments which might be developed
subsequently if that was the wish of WTO Members. The effectiveness of technical aid provided by
multilateral and regional organisations, or donor countri es, very often depended on the selection of the
participants sent by recipient countries as well as on a clear identification of the needs of these recipient
countries. Canada’s experience showed that all t oo often the persons who participated in technical
assistance activities were not in a position to implem ent the experience acquired or the training received
in their work environment, and therefore the effort  did not lead to the expected results, reducing the
efficiency of certain programmes which were ther efore not worth pursuing. There were two points one
had to remember when considering what to do, b earing in mind coherence and coordination issues:
Firstly, one had to make sure that the needs and priori ties of developing countries in terms of technical
assistance, including in relation to trade agreements , were addressed and secondly, to ensure that the
participants were the right persons, who would be able to implement and use the knowledge acquired in
these activities. Canada therefore hoped that its submission as well as the submissions from Japan andG/C/M/65
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New Zealand would enable developing countries to better identify  their trade facilitation needs in a
broader framework than the mere implementation of  WTO Agreements. Canada also encouraged other
countries to make submissions similar to its ow n and the ones presented by Japan and New Zealand.
3.29 The representative of New Zealand thanked Japan for its new submission, as well as the
representative of the WCO for the detailed informati on on their very specific and intensive work in this
area. The representative further extended the thanks to the representative of the Secretariat for his
outline of the technical assistance activities. New Zeal and was not disappointed or surprised to hear that
there were so few technical assistance requests regarding trade facilitation and that the 2003 Technical
Assistance Plan would contain only few activities targ eted on trade facilitation, as it was difficult for
countries to prioritise their activities. There were a large number of agreements and New Zealand could
appreciate that the priorities might lie in areas othe r than trade facilitation. That low level of requests
indicated the value of the work Members were doing  in this forum on technical assistance. Obviously
the capacity of Secretariat was limited institutiona lly-wise to deliver technical assistance programmes
which was why it was incumbent on the CTG to pick up some of these issues. Picking up on a comment
by the Philippines, she suggested that the Secret ariat could maybe approach bilateral donors to see
whether some of them could pick up those requests which the Secretaria t could not address. It had been
very useful to hear about the WTO database on TRTA which would be operational in the next few
months. This database would add to the picture of what was happening in this area and where the current
gaps lied with respect to technical assistance. It  was New Zealand’s understanding that the database
contained a broad categorisation of activities and incl uded categories such as infrastructure, which had
been raised in the CTG as a concern of members in the context of trade facilitation. While assistance oninfrastructure certainly was not di rectly within the WTO's purview, the database should help Members
to better understand what other agencies were doing in this area.
3.30 As a final comment, the representative of New Zealand noted that Brazil’s intervention on
technical assistance work had been a very interes ting contribution, which cont ained reasonable thoughts
on how to proceed in this area. What her the delegation wanted to add was that it would hope that
developing countries could be very specific in iden tifying the gaps and what difficulties they saw in
bringing themselves up to step with the proposals. Th is would in turn help donors to design projects that
would assist in identifying those gaps and to  en sure that there was a good dialogue on the proposals on
technical assistance and that the two ran in pa rallel and not out of step with each other.
3.31 The representative of Nigeria thanked the WTO Secretariat for the insi ghts into the technical
assistance requests Members had put before them, as well as the WCO for the information on the
capacity building tools they were bu ilding up at their own level. He fu rther extended his thanks to the
Japanese delegation for the insight in their tech nical assistance programmes in the area of trade
facilitation for certain developing countries, particul arly in the Asia Pacific region and to some African
countries. Turning to the briefing given by the Secret ariat, he noted that the sheer number of the requests
that had been submitted on technical assistance in dicated that the Secretariat had been clearly
overwhelmed by the requests. More importantly, it al so indicated that there were challenges which
developing countries had to contend with internally . It also showed that the issue was beyond the WTO.
The WTO's technical assistance delivery system was quite limited, which was why Members were
facing the challenge of how to address the issue out side the WTO. In this context, he thanked those
Members who had shared their insight into the ki nd of assistance they had delivered to developing
countries. Countries like the US and the EU were doi ng so much, but the challenge was that even more
needed to be done as the WTO could not do as mu ch as it would want and had only a very limited
competence in terms of the actual delivery of techni cal assistance, which was what developing countries
would need. Developing c ountries' needs would go beyond the i ssue of continually evolving rules or
continually mounting pillars to support Article V, Article V III or Article X. One had to talk about
infrastructures. If infrastructures were not in place in developing countries, no matter what kind of rules
one put in place, and no matter how one wanted to st rengthen the three Articles, developing countries
would still not be able to meet the expectations of developed country Members. He had raised thisG/C/M/65
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matter before Members so that the developed country partners would have to think beyond just talking
about technical assistance within th e WTO. Developing countries really  appreciated the efforts made in
this respect, but they needed more. This called for more creative ways of delivering technical assistance
in the area of infrastructure for developing countries.
3.32 The representative of the United States noted th at there had been numerous aspects of technical
assistance brought up, which highlighted in detail so me of the problems encountered in the area of
technical assistance. The United States appreciate d the interventions made in this respect. The US
delegation would not go into all the problems again, as it had already touched upon them in the past, but
would like to comment on one problem everybody ha d heard about. The problem really was not one of
quantity of the money, but of the quality of the assistance. This was unfortunate because one would hear
from countries that there was all this money, but so mehow, the recipients still were not learning what
they needed to know about how to  implement agreements or how to facilitate trade. There was a
distinction between going to a country or a region and giving seminars in general and the kind of very
specific assistance that, for example, the WCO had pr esented in their compendium of tools. Everybody
was able to understand what these tools were, both at the implementation level, and in the customs
facilities in different countries. How countries could benefit from them was another question, but it
would come a lot closer to helping countries to ge t the kind of direct, practical and concrete means of
facilitating trade. This was her delegation's ambiti on. The different objectives laid out in the Doha
Mandate should permit Members to both look at the rules and at the same time make sure that
everybody understood what one was talking about and also knew the practical means to improve the
system at all levels. It was very important to ach ieve a demand driven approach to assistance that
presented concrete means for implementing the re sults for future trade facilitation negotiations.
3.33 The representative of Malaysia thanked Japan for the paper it had presented. Looking at the
document, one could see that there had been a lot of developed countries he lping developing countries
improve their customs management system and othe r areas. Malaysia noted the amount of technical
assistance Japan had provided to Malaysia, for wh ich his country was grateful. Malaysia was also
thankful to New Zealand and Canada for the papers  they had presented at the last meeting. His
delegation appreciated the projects they had been carrying out both bilaterally and at a regional level in
terms of APEC. The point raised by the WTO Secretariat about its limited capacity to provide technical
assistance was an important one, but perhaps one ha d to look at some other ways to overcome the
limitations. The limitations seemed especially to exist in terms of human resources rather than financial
resources, even though the money was also limited. Th e budget for next year was not too bad, so that
maybe some creative ways would have to be looked at in terms of training personnel outside the WTO,
by external experts in the field. With the money at  hand, these people could go under the auspices of the
WTO. That was one way to look at it. The other point was the issue raised by the WCO representative,
who had referred to the need for huge resources for capacity building. This was an important issue and
highlighted the complexity of the whole issue of technical assistance.
3.34 There were a number of questions for Members to reflect upon. The first one was that
everybody had to accept the fact that the needs in terms of trade facilitation were comprehensive in
nature. The question Malaysia would raise was whether these needs were addressed in the context of the
WTO. His delegation was not trying to  say that countries were not helpin g out in this exercise, but if one
looked at it frankly in the context of WTO, he woul d not say that the needs were actually addressed in a
very comprehensive manner. What one currently had was training programmes in terms of seminars and
workshops trying to educate customs officials a nd officials dealing with trade facilitation on the
regulatory and perhaps the administrative and procedural  aspects, but that was just one aspect of it. The
other aspect which had been raised by Nigeria was the infrastructure needs. These needs would certainly
be taken into account by other development bodies , but there was no cohesive discussion on this,
because just having an understanding of the rules woul d not help in trade facilitation if the infrastructure
was not there. Members needed to understand how the WTO would work in a more comprehensive
manner, without taking out the mantle of being a development agency, which the WTO was not, asG/C/M/65
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everybody agreed. It was important to have thin gs done both on the regulatory aspect and on the
infrastructural situation. Another point which also had been raised when discussing the needs and
priorities was the question of whether technical as sistance and capacity building would depend on future
rules. In Malaysia's view, this should not be the case. As Brazil had pointed out, if one had certain non-
binding guidelines that would constitute a good system  that would really assist in trade facilitation, then
Members could point out the kind of technical assistance and capacity building they needed, both in
terms of the regulatory and the non-regulatory part. He raised the question as to whether in the
hypothetical situation of Members not  agreeing to negotiating binding rules, which could be a possible
outcome,  it meant that the technical assistance would not be granted. In Malaysia's view, this should not
be the case. Trade facilitation was something which everybody agreed to be good for the country, and
good for the economy, and it should not been held hostage by the need to set up rules. Technical
assistance should be there with or without rules on a continuous basis. By way of an example, he noted
that in Malaysia, even without rules, the country had gone into IT on a large scale and there had been
some custom officials in town who explained that it had taken the Malaysian authorities almost a decade
to incorporate IT technologies into their system, not  even taking into account the amount of money that
had to be invested by the government, as well as by agencies that had helped funding of those projects.
In addition, the project itself did not stop there, it wa s an ongoing process. IT moved very fast, so that
Malaysia had to keep up pace with that.
3.35 He further noted that it was important to draw  attention to the kind of problems in terms of
technical assistance as outlined in the UNCTAD docum ent, which had been circulated the day before.
Although the document referred to projects relating to Article V and transit facilitation, it cut across
various rules. The paper's findings that one could not implement projects involving high standards and
sophisticated systems, which worked well in Europe , in developing regions such as West Africa, were
very important. The paper gave a good example of  a system, which had worked well in Europe, but
could not be implemented in Africa, where it did no t get off the ground over a period of more than 20
years. The paper identified project underfunding as one of the main reasons for the project failure.
Therefore, it was important to get some commi tment from donor countries that project underfunding
would not become the rule and that even if there were no rules, the funding would continue, because at
the end of the day, trade facilitation would help e xports and importers. One should not lose sight of the
fact that there were delegations who disagreed that  binding rules would really help in setting up the
system.
3.36 The representative of Paraguay thanked the de legations of Canada, Ne w Zealand and Japan as
well as the representatives of the WCO and UNCTAD fo r their contributions to this important debate. It
was worthwhile repeating what the Ambassador of Paragu ay had said the day before that tallied with the
statement of many delegations that had taken the floor at the current session, on how important it was
for developing countries to have technical assi stance and capacity building. The Doha Development
Agenda in its paragraph 27 contained Members’ commitment to ensure adequate technical assistanceand support for capacity building in the area of trade fa cilitation. It was also worthwhile referring to the
Secretariat document on the trade facilitation needs and priorities of Members (G/C/W/393), which on
its page 7 reflected specific proposals submitted by Paraguay on the importance of developing of
infrastructure. The submission also presented a possi ble solution to some of the problems by pointing at
the need to establish more efficient communica tions, which would render trade more fluid. The
Ambassador of Paraguay had also referred to the request for cooperation of a bilateral nature that several
delegations had made, and to the developing world’ s need to cooperate also  bilaterally with the
developed world. By identifying these requirements to gether with the determination of a mechanism for
effective technical assistance, one could achieve benefits. Members should treat this as a priority
measure as it was essential to improve trade and enhance development.
3.37 The Chairman noted that the discussions had been constructive with useful contributions by
delegations. Members had created a framework to take this exercise further. Delegations had talked
about the need for technical assistance, and referen ce had been made to the kind of technical assistanceG/C/M/65
Page 37
Members would require, including in the area of infra structure. There had been some debate on how to
better coordinate technical assistance activities am ong donors and other international organizations in
this area. Reference had also been made to the fact  that out of the large number of technical assistance
requests, only a small number had addressed trade facilitation, and that when countries had been
confronted with the need to prior itise their technical assistance requests, this small number had further
been reduced significantly. The Secretariat had info rmed that it was working with other international
organizations, as well as with regional organizations  to see how some of the additional requests which
could not be addressed by the WT O could be handled by them, both on a national and regional basis.
That meant that even though some of the proposals w ould not be able to be addressed by the WTO, they
might still be taken up by those other organisations. That was the way one should approach this issue.
3.38 Reference had also been made by some delega tions that one would come to a stage where some
of these ideas, not only in the area of trade facili tation but in the area of the three GATT Articles, may
emerge, for which one might be able to pin down so me very specific type of technical assistance. He
noted that it would be a worthwhile exercise if countries could spend some time on their own, having
listened to the discussions in the course of the th ree meetings, to get an idea of where things were
moving, in what areas proposals had been made and how they could be addressed. He stressed that this
was not meant to refer to the question as to whether there should be any binding rules at this stage, but
only to the fact that if there were some elements , what could be done in order to provide the kind of
technical assistance Members had talked about at this session.
3.39 The representative of the Secretariat clarified that when mentioning that trade facilitation-
related technical assistance activities would also be  dealt with together with activities on customs
valuation or market access, or in the framework of Trade Policy Courses, the Secretariat had not meant
to indicate that there would not be specific trade facilitation activities in the Technical Assistance Plan.
Those trade facilitation activities that were linked w ith customs valuation and other issues were only an
addition to other activities specifically focussing on trade facilitation. Trade facilitation would not bedealt with through the back door of other activitie s under other headings. There was a specific trade
facilitation section. In response to the interventi on by New Zealand, he further informed that the
Secretariat intended to forward those technical assist ance requests that either did not fall within the
WTO remit (such as requests for assistance in infrastructure upgrading) or requests the Secretariat
would not be able to deal with, to bilateral dono rs, mainly through the coordinating forum of the
Development Assistance Committee of the OECD.
3.40 The representative of Japan remarked that Singapore's request for the Secretariat to prepare a
compilation of the proposals made by delegations in  the course of the discussions would provide
Members with precise information, wh ich would enable them to identify  some concrete ideas of their
trade facilitation  needs, priorities and difficulties.
3.41 The Council took note of the statements made.
IV. REVIEW OF THE OPERATION OF THE TRIMS AGREEMENT UNDER
ARTICLE 9 (G/C/W/307 AND ADD.1)
4.1 The Chairman recalled that the Council initiated the review under Article 9 of the TRIMs
Agreement in October 1999.  Since then there had been an invitation outstanding to delegations to
present written submissions on this issue.  To date, none had been received.  At the last meeting,
several delegations indicated their interest in continuing the discussion on the Article 9 review,
preferably on the basis of written inputs.  Others suggested some ideas on aspects that might be takeninto account in the review.   Members might also wish to offer additional comments on the
background study produced by the WTO and UNCTAD Secretariats on TRIMs and other
performance requirements.G/C/M/65
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4.2 The representative of Brazil reiterated that the issue of the review of the TRIMs Agreement as
well as discussions related to TRIMs in the context of the mandate given by  Ministers for
implementation issues was very important to his delegation.  He had mentioned in previous meetings
that Brazil would be submitting a written contribution.  The paper was being examined and analysedin the various sectors of government that had competence over the issue.  He said that Brazil would
submit its contribution in a relatively short time. The representative of Colombia looked forward to
the contribution from Brazil and  hoped that it would be received in sufficient time to analyse it.
4.3 The representative of India said that the joint WTO/UNCTAD study clearly demonstrated that
only when countries reach a particular level of development did it become meaningful to use TRIMs.
Many low-income countries and LDCs had been denied the use of this important development tooleven before certain sectors in their development process had reached the threshold of benefitting from
TRIMs.  In this context the implementation issues raised by developing countries seeking to allow
developing countries to maintain local quantitative TRIMs keeping in view their development
requirements, became relevant.  One might argue that performance requirements did not necessarily
help economic development and growth but this was seen from a static perspective.  From a dynamicperspective many studies had found that when performance requirements were in place, along with
certain complementary measures, and for a specified period of time, the impact on income, growth
economic development and employment, was positive.  He was concerned about limiting flexibility
for developing countries and LDCs to use TRIMs to the neglect of anti-competitive
practices of transnational corporations; which would need to be addressed in the context of the reviewexercise.
4.4 The representative of the European Communities believed that the question of flexibility in
the use of TRIMs was important but he also noted that the existing TRIMs Agreement did not do
more than repeat what was in Articles III and X1 of the GATT.  To reopen that would be actuallyasking for waivers for existing GATT disciplines.  Since the CTG was doing a review of the existing
TRIMS Agreement, Members were going beyond the scope of the actual review and into the question
of the implementation debate which was  much broader but was not on the agenda.
4.5 The representative of the United States wished to make it clear that the review should not be
seen as an opportunity to lower standards contai ned in the TRIMs Agreement.  Current commitments
on TRIMs, including required elimination and term ination of notified TRIMs, must be maintained.
4.6 The representative of Pakistan said that in principle Article 9 did provide an open-ended
opportunity to Members to go through a review of the Agreement without prejudging any outcome at
this particular stage, despite the fact that Members had not been able to get into very substantive
recommendations.  The WTO and UNCTAD joint study was a step in the right direction and gave
ample grounds to think further.  The US and EC we re well within their rights to give their own
interpretation on the language used in Article 9 but his delegation was not willing to accept any
limited interpretation of Article 9.
4.7 The representative of Japan took the floor to echo what the EC and US had stated before.
There was much flexibility in the existing TRIMs Agreement and the review process under Article 9
should not be interpreted to loosen the discipline of the TRIMs Agreement.
4.8 The Council took note of the statements made.G/C/M/65
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V. NEW PANAMA CANAL TRANSIT TOLLS – COMMUNICATION FROM
ECUADOR (G/C/W/418)
5.1 The Chairman said that this item had been put on the agenda at the request of Ecuador and
asked the representative of Ecuador to introdu ce the submission containe d in document G/C/W/418.
5.2 The representative of Ecuador had stated in the Committee on Market Access on
23 September, that this topic was vitally important to the WTO and its Members in the context of the
trade facilitation work under Article V of the GATT.  Document G/C/W/421 contained Panama's
replies to Ecuador in the aforementioned Committee and he pointed out some of the trade implications
of this matter.  He referred to the invitation extended by Panama in its statement to the Committee on
Market Access to use other means of inter-ocean tran sportation on its territory such as rail or road,
and to recall the right to use the Canal, in keepin g with Panama's international obligations under the
Torrijos-Carter Treaties and Article V of the GATT.  Land transportation was preferred when there
was no inter-ocean canal and before Article V of the GATS guaranteeing "the routes most convenient
for international transit", came into existence.  He stated the following with respect to Panama's
replies:
5.3 First, regarding the autonomy of the Canal Authority, Article 310 of the Constitution of the
Republic characterized it as having legal personality under "public law". Article 312 established a
board of directors composed of 11 members.  The presiding member is appointed by the President of
the Republic with the rank of Minister of State, another member is appointed by the Legislative
Assembly, and nine are proposed by the President of the Republic and ratified by the LegislativeAssembly.  Article 313 of the Constitution prescribed that the board of directors shall set the tolls
"subject to final approval by the Cabinet Council".  Under Article 314, the budget of the Canal
Authority and the transfer of any surplus to the "National Treasury" must be approved by the Cabinet
Council and the Legislative Assembly.  Lastly, Article 315 stipulated that the Canal Authority "shall
make annual payments to the Panama National Treasury per Panama Canal net ton".  This wasobviously a very special kind of autonomy, given the direct links with the Government.
5.4 Second, with respect to differentiated tolls, which were the crux of the matter, Panama stated:
"The toll system was designed long before the Canal opened and its main purpose was to recover the
investment and operating costs.  The system was designed so that total costs could be distributed
proportionally between the vessels transiting the Cana l".  This was true, and so much so that the
problem lay precisely in the fact that this design had been substantially altered under the new,differentiated toll structure.  The Canal Administrator, Mr Alberto Alemán, himself acknowledged
this rather emphatically in remarks made on 19 July and available on the Panama Canal Authority's
Internet site, when he said: "The model replaces the one in force since the opening of the Canal and
differs conceptually from that applied by the previous United States administration, which operated
the Canal on the break-even principle, without making a profit. The Constitution of Panama providesthat as the country's most strategic economic resource, the Canal must be profitable in order to
promote the social development of all Panamanians".  But the fundamental issue was that the previous
system was both efficient and profitable, as can be seen from a review of the Canal's accounting
records.  Therefore, it is one thing to generate reasonable revenue as permitted under Article V of the
GATT, and quite another, entirely unacceptable thing to impose an onerous and undue burden onworld trade.  The reply concerning the new toll structure was: "This change is based on the fact that,
from the point of view of costs, Canal operations  require a vast amount of fixed assets, which are
virtually identical for all vessels, irrespective of size."  Yet smaller vessels were being penalized with
the highest rates.  How could this contradiction and inconsistency be explained?  Regrettably, there
was no acceptable answer as to why this toll was not commensurate with cost, in accordance withArticle V of the GATT.G/C/M/65
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5.5 Third, as for the services that had traditionally been covered by the tolls and those that were
not covered under the new toll structure, Panama listed 18 in its reply, ranging from inspection of
vessels in transit to public relations service.  All these 18 services had been payable separately since
2000, although they had been covered by the toll under the previous Canal administration.  The
situation gave cause for concern, considering that the Canal Administrator, Mr Alberto AlemánZubieta, said on 19 July:  "The considerations underlying the adoption of the new rate structure
included the country's need for users to recognize the value of the route, and to derive maximum
benefit from the natural resource most crucial to the nation's social and economic advancement.  It
was likewise suggested that it was desirable to adopt a structure based on the utilization and real value
of the water resource, and mention was also made of the principles of self-determination and
sovereignty whereby Panama could fully enforce its rights regarding the management of the Canal,
including any decision on tolls".  These remarks were made after a hearing with users, includingrepresentatives of the private and public sectors of several WTO Members, where under the relevant
rules, they were accorded five minutes in which to deliver their statements, with no questions or
discussion allowed.  They had voiced their objectio ns to the new toll system, though these were not
taken into account, considering that the Canal Administrator adduced domestic political
considerations that have little bearing on autonomous management in full compliance of internationalobligations.  This was particularly relevant in the light of section 3.4 (basic obligations), fourth
subparagraph of document G/C/W/408 prepared by the Secretariat for this meeting and which
concluded in regard to charges for free transit: "The general principle therefore is that transit traffic
shall not be a source of fiscal revenue".
5.6 For the time being, he did not wish to expand on the implications that would arise for
international trade through "cascading" that will drive up the shipping freight and import and export
costs of many WTO Members in the Americas, Asia and in Europe. Neither did he dwell on the
strangely coincidental effect on Ecuador's banana exports with which Panama was trying to compete
and which use the vessels unreasonably penalized by a toll incommensurate with costs, and when itwas not the small vessels that were generating the need for new investments in the Canal.  This topic
warranted more in-depth and thorough study.  He requested that this statement be circulated to
Members along with the one containing the viewpoints of the Federation of Chambers of Commerce
of Ecuador.  It would also be appreciated if the Secretariat could prepare a report on the past and
present structure of the Panama Canal toll system, as this would furnish objective information
conducive to a dispassionate assessment of the situa tion and to this Council's further study of a topic
of such capital importance to the facilitation of world trade.
5.7 The representative of Panama said Panama's reply had been distributed both in the Market
Access Committee as well as in th e Council for Trade in Goods. Pana ma had not consolidated the
services in the geographic area covering the Panama Canal as per its obligations.   Therefore he could
not accept any interpretation of a rule, particularly Ar ticle V, that could arise out of the inclusion of
sectors that were not included in the criteria or the commitments which were bound when Panama
joined the WTO.  Panama pointed out that any action which would lead us to that stage would set a very
prejudicial precedent for this institution and the Members’  obligations to it.  With regard to Article V he
thought there should be no such interpretation, that  charges included transport charges and that with
regard to the concept of freedom of transit, accordin g to the Secretariat's paper, this would guarantee
Members most favoured nation treatment.  Panama grants national treatment; in other words it goes
beyond the obligations of Article V which was being invoked.  The Republic of Panama considered that
the tolls levied on vessels travelling through the Pana ma Canal were fair and in keeping with any rule of
WTO.   He did not believe that there were any rest rictions whatsoever on freedom of transit through the
Panama Canal, hence it was earning its living being a tr ansit area, not just for canal transport but for all
modes of transport.  The biggest user of the canal for small vessels was the Republic of Panama which
was giving all Members of the WTO the same national treatment that it was giving its own vessels.
Further, Panama was in competition not only with bananas from Ecuador but from Columbia, from the
Caribbean and from Central America, so he could not single out Ecua dor.  Finally, the adoption of theG/C/M/65
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new services regime, was the outcome of a process where transparency was exercised and  that was
undertaken in conformity with the former regime of the canal, so that the process  had not really changed
things.
5.8 The representative of Chile said Chile had a special interest in the Panama Canal as users,
especially in the light of yesterday's discussion of Article V of GATT.  His authorities were looking at
this with Chile's shipping companies and were trying to assess the scope and see what increase in cost
were involved.  He supported the idea of Ecuador that the Secretariat do a comparative study of the
rates that were applied before for transit through the Panama Canal and the new rates.
5.9 The representative of Korea said that when this Panama Canal authority's plan to increase the
transit toll was made public there were many worries and complaints from shipping and forwarding
companies.  Panama had to take into consideration the importance of the Panama Canal in
international trade.  He had been informed that the Panama Canal authorities planned a two-step
increase in its transit toll which implied that the Panama Canal authorities had some understanding of
the situation of forwarding and shipping companies.  He looked forward to an early amicable
settlement, not only bilaterally between Ecuador and Panama, but also with other Members who were
interested.
5.10 The representative of the European Communities flagged the interest that the EC attached to
this question.  The Panama Canal was a very important shipping strait for international trade and the
EC had heard from the European shipping companies concerns about the increase that had taken placeand the increase that was  going to follow next year.  The EC was studying this file and would come
back to it at a later stage.
5.11 The Chairman proposed that the Council take note
 of the various delegations' comments on this
item.5.12 The representative of Ecuador sought clarification.  At the end of the last point, the Chairman
had said note would be taken but actually there was a request by Ecuador, seconded by Chile and a
very strong interest voiced by two other countries.  Regarding the document that was asked for by
Ecuador, supported by Chile, and supported by the European Communities, which came under Article
V of GATT, he asked whether the Chair was simply taking note or whether he was acceding to the
proposal made by Ecuador.
5.13 The Chairman said that the Secretariat had some technical points to sort out and he  suggested
the Secretariat consult with the respective delegations, Ecuador, Chile and Panama. Perhaps the
delegations, after listening, could decide on the course of action which should be taken.
5.14 The Council took note.
VI. REQUEST FOR A WTO WAIVER – NEW EC SPECIAL TARIFF ARRANGEMENTS
TO COMBAT DRUG PRODUCTION AND TRAFFICKING – REPORT TO THEGENERAL COUNCIL
6.1 The Chairman recalled that at its meeting on 31 July, the General Council took note of the
statement by the General Council Chairman regarding this waiver request in which he encouraged the
CTG Chairman and all delegations to persevere in th eir efforts to reach agreement on finalizing a report
to the General Council.  The General Council agreed to the Chairman's proposal that it revert to this
matter once the Goods Council had submitted its report pu rsuant to Article IX:3(b ).  He informed the
CTG that he intended to take up consultations in this matter as soon as practicably possible.G/C/M/65
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6.2 The Council took note.
VII. MARKET ACCESS MATTERS
(i) Committee on Market Access - Periodic Report of the Committee (G/MA/116 and Corr.1)
7.1 The Chairman  drew the Council's attention to the Committee's periodic report, as contained in
document G/MA/116 and Corrigendum 1.  There were no comments.  The Council took note of the
report.
(ii) Introduction of harmonized system 1996 changes into WTO schedules of tariff concessions –
requests for a waiver
- Argentina – Schedule LXIV (G/L/559, G/C/W/409 & Corr.1)
- El Salvador – Schedule LXXXVII (G/L/563, G/C/W/413 & Corr.1)
- Israel – Schedule XLII (G/L/560 & Corr.1, G/C/W/410 & Corr.1)
- Morocco – Schedule LXXXI (G/L/568, G/C/W/417)
- Norway – Schedule XIV (G/L/562, G/C/W/412 & Corr.1)
- Thailand – Schedule LXXIX (G/L/564, G/C/W/414 & Corr.1)- Venezuela – Schedule LXXXVI (G/L/561, G/C/W/411 & Corr.1)
7.2 This item concerned requests for waiver extensions in connection with the introduction of
HS96 changes into WTO Schedules.  Seven Members had forwarded to the Secretariat requests for
waiver extensions in connection with the introduction of HS96 changes to their schedules ofconcessions.  Pursuant to Article IX of the WTO Agreement, these requests for waiver extensions
were before the Council for Trade in Goods for its consideration;  in each case, draft decisions had
been circulated in G/C/W documents to assist the Council in its consideration of these requests.  There
were no comments.  The Council approved the requests for waiver extensions for the seven listed
Members until 30 April 2003 and recommended that the draft decisions contained in the cited G/C/W/documents be forwarded to the General Council for adoption.
(iii) Transposition of schedules into the harmonized system – requests for an extension of the
waiver
7.3 The Chairman draw attention to the communicat ion from Sri Lanka, containing a request for
an extension of a waiver which is going to expire on 31  October 2002.  This request for a waiver
extension had been made in connection with the transposition of its schedule into the HarmonizedSystem, and in accordance with paragraph 1 of the Understanding in respect of Waivers of
Obligations under GATT 1994.  Pursuant to Article IX of the WTO Agreement, this request for a
waiver extension was before the Council for Trade in Goods for its consideration.  The request from
Sri Lanka has been circulated in document G/L/565 and a draft decision in document
G/C/W/415/Rev.1.  The Council approved an extension of the waiver for Sri Lanka until 30 April
2003 and recommended that the draft decision cont ained in document G/C/W/415/Rev.1 be forwarded
to the General Council for adoption.
(iv) Zambia – renegotiation of Schedule LXXVIII - request for an extension of the waiver
7.4 The request by Zambia was circulated in document G/L/567 for an extension of a waiver
granted to it in connection with the renegotiation of its schedule and to a draft decision in document
G/C/W/416.  The Council approved an extension of the waiver for Zambia until 30  April 2003 and
recommended the draft decision contained in docu ment G/C/W/416 be forwarded to the General
Council for adoption.G/C/M/65
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VIII.  PREPARATIONS IN CONNECTION WITH PARAGRAPH 18 OF THE PROTOCOL
ON THE ACCESSION OF THE PEOPLE'S REPUBLIC OF CHINA
8.1 The Chairman recalled that before the summer break the CTG agreed that the CTG review of
China's commitments pursuant to paragraph 18 of its Protocol of Accession would take place on 22
November 2002.  He had carried out informal consultations on how the CTG should carry out its
obligations under this review and he confirmed that the review would take place at the last regular
meeting of the Council for Trade in Goods on 22 November 2002.
8.2 The Council took note.
IX. OTHER BUSINESS
9.1 The representative of the European Communities said that a Panamanian Decree on import
tariffs, which entered into effect on 22 July 2002, had changed the tariffication of certain milk
products to the disadvantage of Community  exporters.  Such change appeared to violate WTO rules,
as it went beyond the bound rates for modified milk set upon Panama's WTO accession.  Panama's
protocol of accession to the WTO included a tariff of 5% under the position 1901.10.10 (modified
milk).  The Decree, which entered into effect on 22 July 2002, had on the one hand, cancelled the
original tariff code and, on the other, created two new tariff codes, to which new tariffs had been
assigned.  Code 1901.10.10 was bound at 5% upon Panama's WTO accession, and these recentchanges did not appear to have been notified to the WTO.  WTO rules might have been violated with
regard to modified milk for children over 12 months, where the new 65% tariff had been imposed.
9.2 The representative of Panama thanked the European Communities for its interest and asked
them to submit their concerns in writing so that it  could be transmitted to the authorities in Panama.
9.3 The Chairman informed delegations that th e next meeting of the CTG was scheduled for
Friday, 22 November 2002.  The agenda for the meeting would close on Monday, 11 November.
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