RESTRICTED  
  
G/STR/M/34  
 
6 December 2018 
(18-7732) Page: 1/10 
Working Party on State Trading Enterprises    
 
MINUTES OF THE MEETI NG 
HELD ON 19 OCTOBER 2018  
CHAIR: ANTONIUS YUDI TRIANT ORO (INDONESIA)  
1   ADOPTION OF THE AGENDA  ................................ ................................ ........................  1 
2   REVIEW OF NEW AN D FULL NOTIFICATIONS  SUBMITTED BY MEMBER S .....................  1 
3   REVIEW OF NOTIFI CATIONS PREVIOUSLY R EVIEWED BY THE WORKI NG PARTY  ........  5 
4   CONTINUED N ON-NOTIFICATION OF S TATE TRADING ENTERPR ISES BY THE 
RUSSIAN  FEDERATION  ................................ ................................ ................................ ..... 8 
5   CONTINUED NON -NOTIFICATION OF STATE TRADING ENTERPRI SES BY THE  
UNITED ARAB EMIRATES  ................................ ................................ ................................ . 9 
6   OTHER BUSINESS  ................................ ................................ ................................ ........  9 
7   ANNUAL REPORT (2 018) TO THE COUNCIL FOR TRADE IN GOODS  ..............................  9 
8   DATE OF NE XT MEETING ................................ ................................ ..............................  9 
 
1  ADOPTION OF THE AGEN DA 
1.  The Chair referred to the proposed agenda contained in WTO/AIR/STR/ 9, circulated on 
9 October  2018. Nothing was raised under Other Business.  
2.  The Working Party adopted the agenda.  
2  REVIEW OF NEW AND FU LL NOTIFICATIONS SUB MITTED BY MEMBERS  
3.  The Chair  recalled that, according to paragraph 5 of the Understanding on the Interpretation of 
Article XVII of GATT 1994, the Working Party was tasked with reviewing the notificatio ns and 
counter -notifications presented by Members on their St ate Trading Enterprises (STEs). As 
recommended by the Working Party (G/STR/8) and agreed by the C ouncil for Trade in Goods on 
22 June 2012, these new and full notifications were now presented eve ry two years.  
4.  The last call for new and full notification s covering the years 2016 and 2017 was contained in 
document G/STR/N/17. This document provided that the deadline for new and full notifications 
covering this period was 30 June 2018.  At this meetin g the Working Party would take up notifications 
circulated since the last meeting on 31 May 2018.   
5.  The Chair proposed that the Working Party review the notifications in the same way as in previous 
meetings, focusing on two main elements: (i) whether the no tification responded adequately to the 
information requested in the Questionnaire (G/STR/3/Rev.1); and (ii) whether more information was 
required in order to permit, in  the language of paragraph 2 of the Understanding, "a clear 
appreciation of the manner o f operation of the enterprises notified and the effect of their operations 
on international trade".  
6.  The Chair recalled that, as provided in the Working Party's 1995 Report (G/L/35), Members 
wishing to raise questions on a notification under review were to present them in writing to the 
delegation and to the Secretariat three weeks before the meeting. Replies were also to be presented 
in writing. Both questions and replies would be distributed to all Members.  G/STR/M/ 34 
 
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  7.  No questions were raised regarding the notifications of Argentina  (G/STR/N/1 7/ARG), 
Ecuador  (G/STR/N/ 16/ECU), Indonesia  (G/STR/N/ 17/IDN), Japan  (G/STR/N/17/ JPN), 
Kazakhstan  (G/STR/N/17/KAZ) ), the Republic of Korea  (G/STR/N/1 7/KOR), Liechtenstein  
(G/STR/N/1 7/LIE), Peru (G/STR/N/16/PER and G/STR/N/17/PER ), South Africa  
(G/STR/N/17/ZAF ), the Former Yugoslav Republic of Macedonia  (G/STR/N/1 7/MKD ), and the 
United States  (G/STR/N/17/ USA).   
8.  Regarding the notification made by Brazil  (G/STR/N/ 17/BRA), the European Union  recalled that 
Brazil had notified 10 STEs in 1996 and had updated its notification in 1997. No notification was 
made between 1997 and 2016. In 2016, Brazil notified that it did not maintain any STE. The 
European Union asked Brazil to explain the reas ons for this change in the number of existing STEs , 
and whether  this was due to a change in the legal status or in the nature of these enterprises , or to 
a change in Brazil's understanding of STEs. The United States  stressed that his country had a strong 
interest in ensuring that WTO Members lived up to their notification obligations in the Working Party. 
The United States  recalled that under the Understanding on the Interpretation of Article XVII of the 
General Agreement on Tariffs and Trade, any WTO Membe r which has reason to believe that another 
member has not adequately met its notification obligation may raise the matter with the Member 
concerned. If the matter is not satisfactorily resolved, a WTO Member may make a counter -
notification to the Working P arty. In 1996, Brazil submitted its first STE notification, with statistical 
information provided in 1997, notifying 10 entities as STEs. It did not make another notification 
until 2016, when it notified that it did not maintain any STEs that fell with in the working definition 
in paragraph 1 of the Understanding. No explanation had been given for the change. Brazil repeated 
its nil notification in 2018, again failing to provide an explanation for the change. The United States 
had independently –researched Br azil's claims : publicly -available information indicated that there 
appeared to be a number of entities that Brazil had failed to identify as STEs. The United States said 
that the issue had been raised with Brazil in September and hoped that this could be r esolved 
through bilateral discussions. If not, the United States may need to file a counter –notification with 
the Working Party.   
9.  Brazil  responded that the difference noted by the European Union and the United States reflected 
the profound reforms that Bra zil had undertaken  over a timespan of two decades. The new 
notification was  the result of an analysis  confronting domestic legislation and the performance of 
Brazilian State Owned Enterprises in the national economy and in foreign trade : as a result of this 
analysis, Brazil concluded that no enterprise met the criteria set forth in the Understanding on the 
Interpretation of GATT Article XVII. The companies notified by Brazil in 1997 had either changed 
their status or no longer influence d the level or direction of imports or exports: COBRA was 
incorporated into the conglomerate of BANCO DO BRASIL at the end of the 1990s. PETROQUISA  was 
incorporated by PETROBRAS in 2012. ITAIPU wa s a sui generis  entity and did not meet the criterion 
of being able to influence the level or direction of imports or exports through its purchases or sales. 
ITAIPU is not a company but rather a power plant based on an international treaty b etween Brazil 
and Paraguay: it wa s a legal e ntity of international law and wa s not subject to the rules applicable 
to public entities. INB did not meet the criterion of exercising rights  so as to influencing the level or 
direction of imports or exports through purchases or sales. Any export carried out by INB constitute d 
the core of  the companies' activities and would be insufficient to affect the level or direction of 
imports or exports. Moreover, trade in nuclear products ha d a special nature , distinct from the trade 
in goods subject to the review of the Working Party. COMPANHIA VA LE DO RIO DOCE and 
FLORESTAS RIO DOCE had been  privatized in 1997. CONAB did not meet the criterion of having 
been granted exclusive or special rights or privileges. It operates primarily in the domestic market 
promoting auctions for the sale of public sto cks of maize, rice, coffee, beans, and others. It did not 
carry out imports or exports: it could not  therefore be confused with the marketing boards that 
existed in several countries and had a monopoly on imports or exports  of agricultural products. CMB 
was a private enterprise with its own budget and administrative autonomy and did not receive 
resources from the Brazilian government, PETROBRAS had lost its exclusive or special privileges 
with the end of the State monopoly on petroleum in 1997.  
10.  Regarding t he notification made by Canada  (G/STR/N/ 17/CAN), the European Union  first asked  
Canada  to clarify the role of the Canadian Dairy Commission as regards  "providing the technical 
support necessary for the operation of Canada's milk supply management system" and 
"administering revenue pooling agreements on behalf of the industry" . During the period 2015 -2017 
covered by the notification, Milk Class 7 had bee n introduced in several provinces of Canada, and 
the European Union  underst ood that the prices for Milk Class 7 were set by the Canadian Dairy 
Corporation. The European Union  was concerned that the new Milk Class 7 ha d a cross -subsidisation G/STR/M/ 34 
 
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  effect for expo rts, through the high internal prices for dairy fats  and an import substitution effect. 
The E uropean  Union  wanted  to understand the role of the Canadian Dairy Commission in the 
operation of Milk Class 7. In particular, the E uropean Union  asked Canada to explain whether the 
role of the Canadian Dairy Commission wa s the same as in the management of the "Special Milk 
Classes" 5a, 5b, and 5c  and if not , how that difference worked  in practice . Second, the 
European  Union asked Canada whether it agreed that its mi lk class system, although allegedly a 
private mechanism, could only exist by virtue of a milk quota system imposed by the government 
of Canada and its Provinces and that the price levels on products produced within milk class 7 were 
possible only due to th e higher prices paid for other milk classes to the farmers . Third, the 
European  Union  asked Canada to explain how milk class 7 wa s not in breach of Article 20 of the 
Nairobi Decision i.e. circumvention of export subsidies ban by an STE.  The European Union  
acknowledge d that CDC wa s not the exporter and no direct subsidies was paid. However, these 
prices were possible only because of the Canadian dairy quota system, which was imposed by the 
Canadian government. Therefore , export with such low prices was  only possible "by virtue of 
governmental action." This fell under the definition of export subsid ies of Article 9( c) of the 
Agreement on Agriculture . Therefore, the European Union  wanted  to know how Canada justifie d that 
milk class 7  was not a subsidy, and tha t CDC did not breach Article  20 of the Nairobi Decision . 
Fourth, the European Union  asked Canada to explain the difference between two prices: the "Average 
representative domestic sales price" of 6.66 and 6.50 CAD/kg in Table I for imports (page 5 of the 
notification)  and the "Average representative domestic sales price" of 10.57 and 10.62 CAD/kg in 
Table II for expor ts (page 6 of the notification).  According to the corresponding footnotes, two 
different definitions had been used for the same notion  and the  European Union wondered  why two 
different sets of representative domestic sales prices ha d been used . Finally, the European Union 
noted that u nder the United  States - Mexico - Canada Agreement, Canada ha d committed to 
eliminate milk classes 6 and 7, and t o ensure that products currently in those classes be reclassified 
and associated to prices established based on end use. The European Union asked Canada to explain 
how it intend ed to implement those commitments, and how that change would  affect, if at all,  
Canada 's replies to the above questions . 
11.  In response to the first question of the European Union, Canada  responded that this  question 
was not  in the scope of the Working Party on State Trading Enterprises and Canada 's notification 
obligation pursuant to the provisions of Article XVII:4(a) of the GATT 1994 and paragraph 1 of the 
Understanding on the Interpretation of Article XVII. Canada was required to notify the products 
which were imported into or exported from their territories by state trading enterpr ises. In terms of 
the Canadian Dairy Commission this included exclusive or special privileges with respect to butter 
imports. Domestic milk class pricing is not related to the Canadian Dairy Commission 's exclusive or 
special privileges with respect to butt er imports. Canada noted that it had answered similar questions 
from the European Union  and other WTO Members in the Committee on Agriculture, and would 
continue to do so. Canada suggested that these types of questions be referred to that Committee.  
Moving  to question 2 of the European Union, Canada did not believe that this question was in the 
scope of the Working Party on State Trading Enterprises and Canada 's notification obligation 
pursuant to the provisions of Article XVII:4(a) of the GATT 1994 and par agraph 1 of the 
Understanding on the Interpretation of Article XVII. In response to the  third question of the 
European  Union, Canada stated that it had agreed to the provisions of the Nairobi Decision on Export 
Competition, including the section on Agricul ture State Trading Enterprises, and Export Subsidies  
and that it  was committed to its implementation, including the elimination of exports subsidies for 
dairy products by the end of 2020. Canada was not in breach of Article 20, or any other Articles of 
this Decision.  With respect to question 4, Canada replied that for the average representative 
domestic sales price for Table I, the "average representative domestic sales price for imported 
butter " had been used, while for Table II the average representative sales price was the "average 
representative dom estic retail sales price ". For T able I, the average representative s ales price for 
imported butter wa s generally lower than the average representative domestic retail sales price as 
Canada 's WTO tariff rate qu ota for butter wa s for the use of processors an d further processors. 
Canada had  determined that it was more appropriate and representative to present the information 
in this manner . Finally, with regard to the United  States - Mexico - Canada Agreement, Canada did 
not believe that this question was in the scope of the Working Party on State Trading Enterprises 
and Canada 's notification obligation pursuant to the provisions of Article XVII:4(a) of the GATT 1994 
and paragraph 1 of the Understanding on the I nterpretation of Article XVII.  
12.  Regarding the notification made by China  (G/STR/N/16/ CHN and G/STR/N/17/ CHN), the 
United  States  stressed its disappointment with China's most recent notification. First, China was not 
willing to follow the notification forma t that all  Members had agreed to follow, as China was unwilling G/STR/M/ 34 
 
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  to provide any information with regard to its STEs on an entity -specific basis, as all other WTO 
Members do. Rather, China provided aggregate or no information regarding the specific import, 
export or other activities conducted by these entities. Such lack of detail provided little or no insight 
into the activities of those entities and the level of influence of those entities through their purchases 
or sales on the level or direction of import s or exports. Second, as the United  States had 
demonstrated in its counter -notifications in 2014 and 2017, information regarding the STEs that 
China had reported on, as well as others that China failed to notify, was publicly and readily available 
oftentim es on the entities own websites. Therefore , Members should be asking themselves why 
China believed that it should not be following the notification format that it had agreed to, and more 
importantly, what was its motivation in failing to provide that infor mation to Members. While looking 
forward to hearing from Ch ina on these issues, the United  States stressed that it would continue to 
review China's notifications and would decide on the appropriate next steps.  
13.  China  said it looked forward to receiving the US questions in writing  so he could transfer it to 
capital for feedback .  
14.  Regarding the notification made by the European Union  (G/STR/N/17/EU), Brazil  noted that 
while the objective of SYSTEMBOLAGET was to reduce the consumption of alcohol  by limiting its 
availability , the mark -up had been reduced from 19%, as reflected in notification G/STR/N/16/EU, 
to 17.5% . Brazil  also noted that imports by the STE had increased by 20% between 2013 and 2017. 
Second, considering that national consumption had increased by 16 % between 2013 and 2017, 
Brazil  asked whether the European Union consider ed that allowing Sweden to maintain a monopoly 
in this sector  fulfilled legitimate objectives in terms of public health. Third, Brazil asked why the 
European Union had notified the British Wool Marketing Board as an STE in its new and full 
notification, but not in previous notifications N/13, N/14 and N/15. The European Union  said it would 
appreciate to get the questions in writing and that it would respond in due ti me.    
15.  Regarding the notification of the Philippines (G/STR/N/8/PHL/Rev.1 to 
G/STR/N/16/PHL/Rev.1), the European Union  asked the following questions: i) whether the National 
Food Authority (NFA) notified by the Philippines as an STE related to rice tariffi cation and whether 
the Philippines could provide updates concerning this issue ; ii) how the NFA ensured "reasonable" 
price levels for rice ; and iii) noting that the NFA wa s also engaged in trade of "other commodities" , 
the European Union asked which we re the commodities concerned  and how the implementation of 
the Nairobi decision was ensured . The European  Union had received responses in writing to these 
questions and was  in the process of  reviewing them. The United States  welcomed the notification 
made by the Philippines and, particularly, the provision of  all the annual information and data since 
its last notification in 2002.  The United States  noted that while this n otification was dated 
September  2018, it did not provide information for the 2016 -2018 per iod and asked when the 
notification for this period would be submitted for review by Members. The Philippines  indicated that 
an update to the notification would be provided as soon as possible.  
16.  The Chair drew the attention of delegations to document G/STR /20, which contains a Status of 
Notifications and noted that many, if not the majority, of Members were not fulfilling their notification 
obligations. Regarding the notification requirement for the period 2014 - 2015, the Working Party 
had, to date, receiv ed notifications from just 54 Members. Regarding the notification requirement 
for the period 2016 - 2017, the Working Party had, to date, received notifications from just 
26 Members. The Chair encouraged Members to work with their capitals to improve the n otification 
record.  
17.  The United States  thanked the Chair for his initiative to encourage notifications and noted that 
a number of Members had either failed to make any notification or had not done so for some time. 
According to the latest data circulated b y the Secretariat, 53 Members had not made a notification 
in the last ten years. In addition, only 26 of 136 Members had made the requisite notification for the 
most recent cycle, despite having a biennial requirement to do so. That was the lowest level of  
compliance the Working Party had ever seen, with the previous being 45 notifications in 1996. 
Transparency was an important requirement for all WTO Member s and notifications and 
counter -notifications were sometimes the only way that other Members could be  properly informed 
of certain Members' activities in any given area. Low levels of compliance undermined the 
transparency function of the Working Party. The United States also noted that much of the 
information to be provided in the context of STE notifica tions had been provided and discussed in 
the Trade Policy Review process, in the WTO Committee on Agriculture, or had been otherwise 
provided to the WTO. The non -notification issue was a serious problem for the Working  Party and G/STR/M/ 34 
 
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  required some type of actio n. The United States would support  any initiative to be taken by the Chair 
and the Secretariat in this regard. The United States encouraged members to think creatively as to 
how compliance with notification requirements could be improved. The United States recalled  that 
Document JOB/CTG/10/Rev.1 contained a proposal seeking to address the issue of missing 
notificat ions across a number of Committees. The United States  reported that the European Union  
and Japan were now co -sponsors of an updated version of this proposal.  The United States  
encouraged  Members to discuss this proposal in more detail and to  provide ideas about ways to 
improve transparency .  
18.  The delegate of Chinese Taipei  indicated that its new and full  notification had been forwarded 
to the Secretariat for circulation  before the meeting of the Working Party .   
19.  The Working Party took note  of the statement m ade. 
3  REVIEW OF NOTIFICATI ONS PREVIOUSLY REVIE WED BY THE WORKING P ARTY  
20.  The Chair  noted that this item concerned the review of notifications previously reviewed by the 
Working Party. Delegations had asked that the Working Party revert to three notifications.   
21.  Regarding the notification of India  (G/STR/N/14/IND), questions had been posed by Canada  
(G/STR/Q1/IND/16  and G/STR/Q1/IND/17 ). Canada  stated that it had been negatively affected by 
India's measures limiting  the imports of pulses. Canada's high quality and reliable supply of pulses 
was an important source of proteins for many Indian consumers. Canada was disappointed when 
India introduced quantitative restrictions on the import of dry peas on 25 April 2018 an d was 
extremely disappointed by the extension of this measure until the end of this calendar year. To date, 
India had not provided clear information on the GATT or WTO basis for th ose quantitative 
restrictions. The Food Corporation of India and NAFED were playing an important role in the 
implementation of import quotas on dry peas: these STEs were responsible for the procurement, 
import and export of pulses . Getting a better understanding of the role of STEs was important to 
gain a better understanding of h ow the decisions of STEs affect the domestic situation in India, in 
particular in view of the fact that India's STEs were also responsible for the procurement of pulses 
in India. The lack of transparency in terms of more recent notifications was a concern to Canada. 
Canada recalled that the elimination of quantitative restrictions was a fundamental principle in the 
GATT and WTO and in particular the Agreement on Agriculture. T he United States  shared the  
concerns  raised by Canada  and looked forward to India' s response. The United States was 
particularly interested in hearing about the role of the Food Corporation of India (FCI) and any new 
privileges related to its activities since India's 2012 notifica tion. Australia  indicated that shared the 
concerned expre ssed by Canada and the United States with regard to measures on pulses and that 
it supported the questions submitted  to India . Australia  said that over the last twelve months , it had 
asked a number  of questions regarding a range of measures on  pulses at the Council for Trade in 
Goods, the Committee on Agriculture, the Committee on Market Access, the Committee on Import 
Licensing and at the Working Party on State Trading Enterprises. Unfortunately, to date, India had 
not provided fulsome  responses to Austral ia's questions. Australia requested that India should 
respond in writing to the questions posed at the Working Party on 31 May 2018 and should submit 
updated notifications of its STEs as soon as practicable. Of particular interest was the role of STEs 
in the procurement, disposal, import and export of pulses. Australia  noted that in November 2017, 
the Government of India had removed bans on exports of all forms pulses. Australia also noted that 
notifications provided information  that was critical  for the functioning of WTO Committees  and it 
expected all WTO Members to take their obligations seriously . The European  Union  said that he 
supported the questions and comments made by Canada, the United  States and Australia . He 
recalled that the European Union had  asked clarifications in past meetings of the Working Party , but 
that India had not provided any satisfactory response to these questions. In particular, India ha d 
failed to respond to the questions raised in April 2016, merely indicat ing that "details could be 
obtained from the website of the Department of Commerce in trade statistics and from the website 
of Food Corporation of India". The E uropean Union reiterate d its request of clarification on the export 
operations of FCI and again invite d India to prov ide the relevant and up -to-date statistics on food 
grains as per the quest ionnaire form on STE s (G/STR/3/Rev. 1). The European Union also noted  that, 
in the Working Party meeting of 31 May 2018, India had indicated , in response to Canada's first 
question , that it was in the process of updating its STE notification. In relation to the second question, 
India had indicated that there had been no exports of pulses from the public stockholding. In 
response to question 4, India had indicated that its agencies had no role in import quotas since there 
were no procedures notified by the office of DGFT. On the remaining questions, India had said that G/STR/M/ 34 
 
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  written replies would be submitted in due course. The E uropean Union urged India to provide detail ed 
replies to all the questions raised and was looking forward to receiving India's clarifications  in writing . 
The European Union  also recalled that it had previously asked information about Tamil Nadu State 
Marketing Limited (TASMAC)  but India did not consi der TASMAC to fall under the definition of a State 
Trading Enterprise as defined in the Foreign Trade Policy (FTP) of India. However, t he 
European  Union  said that it did not consider this condition sufficient for exempting India from the 
notification oblig ation of TASMAC, in accordance with Article XVII of the GATT. Furthermore, despite 
confirmation that TA SMAC wa s a governmental entity (benefitting of special privileges), India still 
consider ed that it was not subject to notification , because  those privile ges were not exclusive and 
therefore the third criterion of the WTO definition of the STE (that is an STE must influence, through 
purchases or sales, on the level or di rection of imports or exports) wa s not met.  The European Union 
said that it disagreed  with India's position and underline d that the level of imports of bever ages and 
spirits to Tamil Nadu wa s in reality influenced by the activities of TASMAC. Indeed, TASMAC was 
mandated to undertake several commercial activities in Tamil Nadu, such as off -trade retail sale 
(vending) and purchases of Imported Foreign Liquor brands from the local manufacturing/bottling 
units, for example. These TASMAC activities considerably influence imports of beverages and spirits 
to Tamil Nadu. Therefore, the European Union  wanted  to reiterate its position that TASMAC seem ed 
to qualify as an STE to be notified to the WTO.  India ha d stated previously that its authori ties we re 
conducting  internal consultations to reply to the EU's detailed questions on TASMAC. The 
European  Union asked whether  India ha d concluded its internal consultations and could  substantiate 
its position. The European Union  underline d its interest in receiving detailed written replies  from 
India. 
22.  India indicated it had submitted a notification for the years 2012, 2013 and 2014 before the 
meeting of the Working Party . Regarding the four questions posed by Canada, India stated  that FCI 
had no privileges for the import or export of pulses. In 2015/2016 and 2016/2017, F CI had procured 
2.98 lakh metric tons of pulses to create a buffer stock as mandated by the Government under the 
price stabilization fund. India indicated that the response with regard to other organizations would 
be submitted in due course. On question 2,  FCI had offered the pulses procured under the price 
stabilization fund to disposal by E -auctions, which do not include pulses acquired by other agencies, 
including NAFED. On question 3, India indicated that FCI played no role in the import restrictions on  
dry pea s and that the response with regard to other organizations would be submitted in due course. 
With regard to Canada's last question, he indicated that the response would be submitted in due 
course. Regarding the issues raised by the European Union, India reiterated that TASMAC was not 
an STE according to the list of STEs notified by the Directorate Gen eral of Foreign Trade (appendix  2 
of the FTP). Import and export is free except when regulated by way of prohibition, restriction or 
exclusive trading through State Trading Enterprises. All items under Chapter 22 of the Harmonized 
System were under the free category. Therefore, there was no STE designated for imports. TASMAC 
had not even been issued an import and export code. India indicated that his del egation  would 
submit further details soon.  
23.  Regarding the notification of New Zealand  (G/STR/N/17/NZL) Chile had posed questions 
reflected in document G/STR/Q1/NZL/18). Chile pointed out that informal responses had been 
received from New Zealand and that they were under review . The European Union  supported the 
questions raised by Chile  and asked further questions to New Zealand . The European Union first 
noted that  "ZESPRI  Group Limited ha d total discretion over the quantities it decides to export " and 
that almost an entire annual production of kiwi fruit  in New Zealand was exported.  Considering this 
very substantial role of ZESPRI  in trade , the European Union asked  New Zealand to clarify how 
New Zealand ensure d that ZESPRI  acted in a manner consistent with the general principles of non -
discriminatory treatment  as per 1(a) of GATT Article XVII. Further, t he European Union  continue d to 
be concerned with ZESPRI 's decisions relating to the provision of nursery -stock to overseas growe rs. 
The European Union recalled that it had  asked New Zealand questions on this issue  in the regular 
Committee on Agriculture. ZESPRI  was an STE and was subject to commitments of the Nairobi 
Decision on STEs, including that of paragraph 20 which rule d that "Members shall ensure that 
agricultural exporting state trading enterprises do not operate in a manner that circumvents any 
other disciplines contained in this Decision". Export monopoly rights granted to ZESPRI  by the 
New Zealand's government allow ed ZESPRI to provide its kiwi fruit  nursery stock free -of-charge to 
growers outside New Zealand. In the EU's view this was a circumvention of the Nairobi commitment 
to ban granting export subsidies. Without its export monopoly , ZESPRI  would likely not be able to  
provide kiwi fruit  nursery stock free -of-charge to growers outside New Zealand. The European Union 
asked whether New Zealand could  explain how it intend ed to bring itself into compliance with the 
Nairobi Decision .  G/STR/M/ 34 
 
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  24.  With regard to Chile's questions, New Ze aland  clarified that ZESPRI  was not an STE but rather 
a grower -owned cooperative and that New Zealand took a broad interpretation of the definition of 
STEs: ZESPRI  had an automatic right, but not an exclusive right, to export kiwi fruits. In July 2017 , 
the Government amended the Kiwi  fruit Export Regulations 1999 to enable ZESPRI  to improve 
alignment of its share ownership with kiwi  fruit supply. Amendments to the Regulations enable d 
ZESPRI  to improve alignment of share ownership with kiwi  fruit supply, while ensuring ongoing 
protections of shareholder rights. The amendments, subject to shareholder vote, enable d ZESPRI  to 
cease dividend payments to dry shareholders (i.e. those that no longer supply ZESPRI  with kiwi 
fruit), and set rules about maximum shar eholding based on growers supply of kiwi  fruit. ZESPRI  
would continue to have access to other commercial measures, such as share b uyback, to encourage 
alignment. The changes also confirmed that ZESPRI 's core business including purchasing 
New Zealand grown kiwi fruit for export as well as marketing of New Zealand grown kiwi  fruit, market 
development for New Zealand grown kiwi  fruit, and kiwi  fruit research and development . ZESPRI  
could  engage  in other bu siness activities, provided it wa s low risk to the inte rests of kiwi fruit  
growers . Otherwise  kiwi fruit growers had to approve the activity . The other purpose was to enhance 
Kiwifruit  New Zealand (KNZ 's) independence from the industry and its a ccountability to the 
Government: i) the Chair plus two of the five  board members would be fully independent of the kiwi 
fruit industry, and would  be appointed by the Minister for Primary Industries. Kiwi fruit  growers 
would  elect the remaining three board members. T he Chair had a casting vote; ii) KNZ would  have 
three -yearly statements of intent that would  be approved by the Minister for Primary Industries; iii) 
The Mini stry for Primary Industries would  engage annually with KNZ to discuss performance against 
its statement of intent.  The amendments had come  into effect on 1 August  2018. With regard to the 
question asked by Chile on the statistics provided , New Zealand indicated that there was no 
restriction  on who could import or sell kiwi fruit  in the New Zealand market, and that kiwi fruit  was 
popular with New Zealand consumers, as it was  with overseas consumers. New Zealand 's notification 
provided  information on kiwi fruit  imports into New Zealand, "Average import price " for 2016/17 and 
2017/18, and the "average representative domestic sa les price " for kiwi fruit . On the third question 
asked by Chile on ZESPRI 's actual share  in the world k iwi fruit market , New Zealand indicated that 
its delegation took a broad interpretation of the definition of a state trading enterprise (STE) under 
the Un derstanding on the Interpretation of Article XVII of the General Agreement on Tariffs and 
Trade 1994. So, while ZESPRI  was not a marketing board or government owned e nterprise, 
New Zealand had notified ZESPRI  as an STE because of its automatic, but not exc lusive, right to 
export kiwi fruit  from New Zealand to markets other than Australia. This regulated right d id not 
extend to ZESPRI 's commercial operations beyond the export and marketing of kiwi  fruit from 
New Zealand. This right also did not make ZESPRI  a government ow ned commercial entity. ZESPRI  
was a private company, owned by growers and former growers. The New Zealand Government ha d 
no equity shares in ZESPRI , and had no role in its management. New Zealand 's notification wa s 
complete and provide d all information relating to ZESPRI  operations as an STE.  
25.  Turning to questions posed by the European Union, New Zealand recalled that it was an efficient 
agricultural producer with a comparatively small domestic market, which meant that it exported the 
majority of the primary products it produces. As the country that pioneered the commercialisation 
of the kiwi fruit , it was therefore unsurprising that the kiwi fruit  industry remained globally renowned 
for producing the highest quality fruit available, and for innovation, including in the development of 
new kiwi fruit  varieties.  In addition, given ZESPRI 's regulated automatic, but not exclusive, right to 
export kiwi fruit  from New Zealand to markets other than Australia, the Kiwi fruit  Export Regulations 
1999 required that ZESPRI  "must not unjustifiably discriminate among suppliers and potential 
suppliers in respect of –a decision on whether to purchase kiwi fruit ; or - the terms of the purchase 
contract. " The Regulations set out that justifiable discriminati on was justifiable "if on commercial 
grounds ". Kiwi fruit  New Zealand, the independent regulator, was responsible for monitoring and 
enforcement of non -discrimination rules. On the second question p osed by the European Union, 
New Zealand confirmed that the Government remained in full compliance with the MC10 Export 
Competition Decision, including with respect to regulations that applied to the private company 
ZESPRI  Group Limited ( ZESPRI ). The European Union 's assertion that there was circumvention of 
the M C10 Export Competition Decision was simply not correct. ZESPRI  could only be considered a 
state trading enterprise by virtue of the fact that it had an automatic, but not exclusive, right to 
export kiwi fruit  from New Zealand to markets other than Australi a. This was set out in New Zealand 's 
Kiwi fruit  Export Regulations 1999. As New Zealand had already informed the European Union, the 
New Zealand Government had no role in ZESPRI 's management or commercial decisions. ZESPRI 's 
decisions to invest or establis h partnerships with companies in third countries were, therefore, driven 
solely by commercial considerations. Its activities in third countries were subject to those countries' 
laws and regulations. Nothing in the Kiwi fruit  Export Regulations 1999 require d ZESPRI  to engage G/STR/M/ 34 
 
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  in such activities. Further, ZESPRI  did not receive any trade distorting subsidies, tax advantages, 
special financing, or preferential access to foreign exchange from the New Zealand Government. 
Like other companies and industries, where  eligible, ZESPRI  could apply for Government support for 
research and development activities. Any suggestion, therefore, that such a private company could 
not determine what contractual arrangements were commercially viable, because of an automatic, 
but no t exclusive, right to export had no basis in fact.  New Zealand added  that there had been in 
recent years, in the European Union and elsewhere, an outbreak of bacteria affecting kiwi fruit vines. 
Because of New Zealand's role as a leader in research and development of new varieties, it had 
developed resistant varieties, whi ch could explain the increase in nursery stock exports to the 
European Union , as well as to other countries that produce kiwi fruit.  
26.  Regarding the notification of Viet Nam (G/STR/N/15/VNM  and G/STR/N/16/VNM), the Chair 
recalled that United  States had made  a counter -notification (G/STR/ Q1/VNM/4)  and that Viet Nam  
had responded in document G/STR/Q1/VNM/5. The Chair also recalled that the United States had 
replied to Viet Nam  (G/STR/Q1/VNM/6) . The United States  thanked Viet Nam  for its responses in 
August 201 8 and recalled that it had replied and requested further clarification on many assumptions 
made by Viet Nam . For example, in explaining why certain entities may not be STEs, Viet  Nam 
appeared to state that orders from the Prime Minister and Deputy Prime Mi nister did not carry legal 
authority in Viet Nam . However, the United State s noted that Article 4.6 of Law  80/2015/QH13 on 
the Promulgation of Legal Documents included Prime Ministerial Decisions within Viet Nam 's System 
of Legal Documents. Therefore, the United States asked Viet Nam  to carefully review the legal and 
factual points raised in the United States' reply and to make any revisions needed to its notifications 
as a result.  
27.  Viet Nam  indicated that work on the questions asked was still ongoing and that Viet Nam  hoped 
to submit responses before the next meeting of the Working Party.  
28.  The Working Party took note  of the statement made.  
4  CONTINUED NON -NOTIFI CATION OF STATE TRAD ING ENTERPRIS ES BY THE 
RUSSIAN  FEDERATION  
29.  The United States  regretted that this was the eighth consecutive meeting that this topic was on 
the agenda and the sixth year that this issue had been raised in the Working Party. Russia had made 
an effort to meet its transpare ncy commitments in other WTO bodies, but the United States regretted 
that this effort was not being exhibited in this Working Party. Russia had missed four consecutive 
notification cycles, or eight years, as indicated in G/STR/ 20 of 11 October 201 8, and ha d not fulfilled 
a single STE notification obligation since joining  the WTO. That being said, the United States 
welcomed Russia's indication at the October 2016 meeting of the Working Party that companies had 
been granted the exclusive right to export lique fied natural gas. In addition, the United States noted 
that according to a Presidential Decree from March 2009, JSC  United Grain Company and its 
subsidiaries were state agents that conducted procurement and commodity interventions in the grain 
market, with  mandates to increase (1) grain export volumes, (2) the volume of grain purchases, 
and (3) sales on the domestic market. These entities all appeared to have elements and activities 
that fell under the working definition of a STE in the Understanding on the  Interpretation of 
Article XVII. The United States trusted that Russia would provide all the required information in its 
eventual notifications, both for the past eight years and going forward. Russia had repeatedly stated 
in the Working Party that its STE  notification was "nearly finalized and would be submitted in the 
near future"  and had said at the May 2018 meeting that the notification was in its final stage . 
Transparency was an important WTO requirement that Russia agreed to abide by when it joined th e 
WTO. It allowed WTO Members to better understand and evaluate a Member's STE operations and 
its compliance with relev ant WTO  obligations. The United  States urged Russia to fulfil its notification 
obligation as quickly as possible. It was willing to furth er engage with Russia either here in the 
Working Party, or outside the room if that would be helpful, on helping it make its 
required  notification.  
30.  The European Union  echoed the concern expressed by the United States  about the lack of an 
STE notification  by the Russian Federation . On the basis of the replies of the Russian Federation in 
past meetings and in the context of its Trade Policy Review, the European Union understood that 
the Russian Federation grants exclusive rights to several companies as esta blished by the Order of 
the Government of the Russian Federation of 14 July 2014 No.1277 -r and by the Government 
Regulation No 2001 -r of 9 October 2014. At the last meeting of t his Working Party held last G/STR/M/ 34 
 
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  May 2018, the Russian Federation had explained that  the preparation of the notific ation was "in its 
final stage". The European Union regretted that Russia had not yet fulfilled its notification obligations 
and urged Russia to transform its repeated announcements of ongoing work in concrete action.  
31.  The Russian Federation  agreed  that transparency was crucial  for the effective functioning  of the 
multilateral system . The delegation of the Russian Federation  expected to receive statistical data 
from the Ministry of Energy in the coming weeks , regarding the activities of companies granted with 
the exclusive right to export natural gas and liquified natural gas . The Russian Federation expected 
to submit its new and full notification for three consecutive periods ( from 2012 to 2017 ) in the near 
future.  
32.  The Working Party took note  of the statements made.  
5  CONTINUED NON -NOTIFI CATION OF STATE TRAD ING ENTERPRISES BY T HE UNITED 
ARAB EMIRATES  
33.  The United States  recalled that during the October 2016, and May and November 2017 meetings 
and also during the U AE's TPR in June 2016, it had inquired as to the status of the UAE's STE 
notification, as the UAE had not submitted a notification since 1996. The UAE had responded that it 
did not consider making the notification a priority and that making the notificatio n was a challenge 
because of the definition of STE and the federal structure of t he UAE's government. The 
United  States continued to be concerned by that response as the UAE was giving the impression that 
it did not place much value in its transparency obl igations. Furthermore, being a federal government 
itself, plus 5 0 state governments, the United  States did not find the UAE's structure of government 
as a particularly compelling reason not to notify. As to the definition issue, the United States urged 
the UAE to seek technical assistance form the Secretariat in understa nding the provisions of 
Article  XVII. The United States would also be willing to supplement any assistance form the 
Secretariat and work with the UAE on a technical level to help it meet its  important notification 
obligation.  
34.  The United Arab Emirates  responded that the UAE had, since its accession to the WTO, made 
every effort to be in conformity with its commitm ents. The United Arab Emirates had given  all the 
relevant information to interes ted Members during its three Trade Policy Reviews, in a spirit of 
transparency and cooperation. The delegation of the United Arab Emirates was in contact with the 
WTO Secretariat and with the capital , in relation to the data to be provided in the context o f the 
Working Party.  
6  OTHER BUSINESS  
35.  The Working Party took note  that no issue had been raised under other business.  
7  ANNUAL REPORT (2018)  TO THE COUNCIL FOR TRADE IN GOODS  
36.  The Chair noted that paragraph 5 of the Understanding on the Interpretation of Article XVII of 
the GATT 1994, instructed the Working Party to report annually to the Council for Trade in Goods. 
At its meeting of 30 October 2012, the Working Party had agreed on a new  format for the annual 
report. It was agreed to separate the draft annual report and the table of notifications since 1995 
into two separate documents, with both to be circulated as room documents in advance of the formal 
meeting. The draft annual report h ad been circulated as room document RD/STR/25 and the table 
of notifications as room document RD/STR/20, both dated 11 October 2018.  
37.  The Working Party adopted  its 2018 Annual Report.  
38.  The Chair  indicated  that the table of notifications would be issued as a formal document and 
would be updated before the next meeting of the Working Party.  
8  DATE OF NEXT MEETING  
39.  The Chair indicated that the Working Party was holding two meetings per year and that interest 
had been expressed in continuing with this approach. Th e Chair proposed to hold the next meeting G/STR/M/ 34 
 
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  on 31 May  2019. The United States  however indicated a preference for the month of April, so that 
a six-month period be kept between meetings.  
40.  The meeting was adjourned . 
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