RESTRICTED  
  
G/STR/M/29  
 
27 July 2016  
(16-3998)  Page: 1/13  
Working Party on State Trading Enterprises    
 
 MINUTES OF THE MEETING 
HELD ON 9 JUNE 2016 
CHAIR: YEILI RANGEL PEÑARANDA (COLOMBIA) 
1   ADOPTION OF  THE AGENDA ........................................................................................ 1  
2   REVIEW OF NEW AND FULL NOTI FICATIONS SUBMITTED BY MEMBERS ..................... 1  
3   REVIEW OF NOTIFICATIONS PREVIOUSLY REVIEWED BY THE WORKING 
PARTY ......................................................................................................................... ..... 5 
4   AGRICULTURAL EXPORTING STATE TRADING ENTERPRISES ...................................... 8  
5   STE NOTIFICATION OBLIGATION S OF THE RUSSIAN FEDERATION ........................... 10  
6   RUSSIAN FEDERATION – RUSSI AN UNITED GRAI N COMPAN Y .................................. 11  
7   EUROPEAN UNION – AL KO INC. (F INLAND) .............................................................. 11  
8   NON-NOTIFICATION AND OVERDUE NOTIFI CATIONS ............................................... 12  
9   OTHER BU SINESS ...................................................................................................... 13  
9.1   Non-notification of State Trading En terprises of the Unit ed Arab Emirates ......................... 13 
10   DATE OF NE XT MEETING.......................................................................................... 13  
 
 
1  ADOPTION OF THE AGENDA 
1.  The Chair referred to the proposed agenda contained in WTO/AIR/STR/4, circulated on 
27 May 2016. The Working Party adopted the agenda, including an item under other business. 
2  REVIEW OF NEW AND FULL NOTI FICATIONS SUBMITTED BY MEMBERS 
2.  The Chair recalled that, according to paragrap h 5 of the Understanding on the Interpretation of 
Article XVII of GATT 1994, the Working Party was tasked with reviewing the notifications and 
counter-notifications presented by Members on their state trading enterprises (STEs). As 
recommended by the Working Party (G/STR/8) and agreed by the Council for Trade in Goods on 22 June 2012, these new and full notifications were now presented every two years. In January, 
the most recent invitation was made to present notifications for the period 2014-2015 
(G/STR/N/16). Although the deadline for these notifications was 30 June, the Working Party had already received some notifications and those that had been circulated in time to be examined were on today's agenda. In addition, the agenda included notifications corresponding to previous 
periods that the Working Party had not yet examined. 
3.  The Chair proposed that the Working Party review the notifications in the same way as in 
previous meetings, focusing on two main elem ents: (i) whether the notification 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 the paragraph 2 of the Understanding, "a clear appreciation of the manner of operation of the enterprises notified and the 
effect of their operations on international trade". 
4.  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 G/STR/M/29 
 
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  delegation and to the Secretariat three weeks prior to the date of the meeting. Replies were also 
to be presented in writing. Both questions and replies would be distributed to all Members. 
5.  No questions were raised regarding the notifications of Argentina  (G/STR/N/15/ARG); 
Australia  (G/STR/N/14/AUS/Add.1); Egypt  (G/STR/N/16/EGY); Hong Kong, China  
(G/STR/N/16/HKG); Seychelles (G/STR/N/16/SYC); South Africa  (G/STR/N/16/ZAF); and 
Switzerland  (G/STR/N/16/CHE). 
6.  With respect to the notification of China (G/STR/N/15/CHN, G/STR/N/14/CHN, 
G/STR/N/13/CHN, G/STR/N/12/CHN, G/STR/N/11/CHN and G/STR/N/10/CHN), questions were 
raised by the European Union (G/STR/Q1/CHN/3), Australia G/STR/Q1/CHN/4) and the United States (G/STR/Q1/CHN/5). 
7.  The European Union thanked China for its noti fication, and appreciated the effort undertaken in 
its preparation. It had submitted questions in or der to understand better some elements in the 
notification. China had presented its STEs following the same template as in its Protocol of Accession. While it welcomed this approach as it showed the changes that had occurred since 
accession, the European Union considered it necessary that China submit the notification expected 
this year following the notification format so that it would be clearer which STEs were currently active and what were their characteristics. 
8.  While the European Union did not intend to repeat all its written questions, there were four 
questions where it had a particular interest. First, could China clarify which STEs were currently 
trading in silk products, fertilizers and oil? Second, in point 4.2 of its notification, China had stated 
that it had not applied STEs on the export of cotton yarn and woven fabrics of cotton since it 
joined the WTO. The counter-notification prepared by the United States identified an enterprise 
called Chinatex Cotton Import and Export Company as an STE that should be notified in accordance with Article XVII. Could China clarify the legal status of that enterprise and its 
activities? Third, could China explain why it restricted the export of coal, via a system of STEs and 
quota licences? Finally, with regards to Table 2 of China's notification, could China provide the same type of information but broken down for each of the five tariff lines of coal subject to state 
trading? 
9.  The United States also had questions and concerns regarding China's notification. It had 
already submitted a number of questions, so woul d not repeat all of those concerns. However, it 
highlighted three of the more serious concerns. 
10.  First, could China explain why it did not follow the questionnaire format but instead decided to 
use a different notification format? The United States understood that China was likely the only WTO Member that had refused to follow the agreed format and was interested as to why. If this 
was an error, could China inform Members when it would submit a corrected notification? 
11.  Second , when pressed as to why it had not previously submitted its notifications, China had 
consistently responded that China's STE system had not undergone any changes in general, except 
regarding the products subject to STEs. However, when reviewing China's most recent notification, 
this did not appear to be the case. In its 2002 and 2003 notifications, China had notified 109 STEs. However, in the most recent version, China had only notified 23 STEs. Some of those STEs were carried over from the 2002 to 2003 notifications, while others were brand new. These were not 
renamed entities, but wholly different STEs, some of which were even identified as STEs in the 
US counter-notification. Could China please explain this discrepancy? Why did China originally claim that there were no changes to its STEs and then significantly under-report the number of 
STEs in its updated notification? This was particularly concerning, given the large presence of STEs 
in China's economy. 
12.  Third, China has not provided any response as to the status of the entities listed in the 
US counter-notification. As stated in its counter-n otification, of the 153 entities that notified, 44 
were ones that - according to publicly available information - explicitly had been identified as STEs or otherwise qualified as an STE under paragraph 1 of the Understanding. Could China please explain why it had failed to update Members on the status of these enterprises? China had 
repeatedly stated, both bilaterally and in Working Party meetings, that it was reviewing the 
counter-notification and would respond. By not replying, was China making a de facto  admission G/STR/M/29 
 
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  that the information provided by the United Stat es was indeed correct, and that China was unable 
to provide any response to counter what the US counter-notification? The United States would appreciate it if China could respond to these concerns during this meeting, or bilaterally if it preferred.  
13.  Australia had posed questions to China in G/STR/Q1/CHN/4 on 20 April 2016. Australia had 
asked questions about TRQ administration and pricing for agricultural imports by STEs in China 
and about coal exports from China's STEs and pricing around those coal exports, and looked 
forward to a response. 
14.  China appreciated the questions submitted by the European Union, Australia and the 
United States. China had just received the questions posed by the United States yesterday, so it 
would study them and come back later. China would respond today to the questions raised by the 
European Union and Australia. 
15.  Regarding the questions from the European Unio n, starting with question 1, the rationale for 
China's statement is paragraph 1 of Act 5 of China's Protocol of Accession, which states that "… 
without the prejudice to China's right to regulate trade in a manner consistent with the WTO 
Agreement, China shall progressively liberalize the availability and scope of the right to trade, so 
that, within three years after accession, all enterprises in China shall have the right to trade in all 
goods throughout the customs territory of China, except for those goods listed in Annex 2A, which 
continue to be subject to state trading in accordance with the Protocol. Such right to trade shall be the right to import and export goods."  
16.  Regarding sub-question 1, China had fulfilled its WTO commitments. According to 
announcement No. 64 of 2004 of MOFCOM and the General Administration of Customs, state 
trading administration on the export of silk was abolished on 1 January 2005. While China's notification stated that they were suspended in  the fourth column of line one of page 6 and 
paragraph 5 in the notes on statistic information on page ten, the word should be "abolished". This 
was a translation problem and would be corrected. Regarding sub-question 2, MOFCOM made annual announcements about the import value of processed oil (fuel oil) for non-state trading in 
the next year which, compared to the permitted amount of imports at the time of China's 
accession to the WTO, had increased significantl y. Details could be found in the announcements 
and websites of MOFCOM. For fertilizer, China did not set quantitative restrictions on imports by non-STEs. 
17.  Regarding Question 2, sub-question i, Chin a had provided clear answers in its responses to 
questions A to C. For agriculture products subject to state trading, the shares of STEs in both import tariff rate quotas and export quotas were listed in China's Protocol of Accession. STEs did 
not enjoy any other exclusive or special rights . Regarding sub-question ii, the qualification 
requirements and registration conditions for non-STEs to engage in the permitted import and export of products subject to state trading could be found to the Interim Measures for the 
Administration of import Tariff Rate Quotas for Agriculture Products; the Trial Measures for the 
State Trading Administration of Import of Crude Oil, Processed oil and Chemical Fertilizer; the Interim Measures for the Administration of Import Tariff Rate Quotas of Chemical Fertilizer; and the announcements issued annually by MOFCOM  and the National Development and Reform 
Commission. Any enterprise with the right to trade was allowed to import agriculture products 
under import TRQs subject to state trading, except for the shares exclusively allocated to STEs. Annual announcements were released on the National Development and Reform Committee and 
MOFCOM websites about the application conditions and allocation principles for the import TRQs of 
grains, cotton and sugar. Companies could simply follow the procedural requirements set out in those announcements. 
18.  Regarding sub-question iii, China believed there was a misunderstanding. Both STEs and non-
STEs were allowed to engage in oil trading. According to the Trial Measures for the State Trading Administration of the Import of Crude Oil, Processed Oil and Chemical Fertilizer, the volume of imports of crude oil, refined oil and fertilizers incl uded figures of both state and non-state trading. 
The enterprises with the qualification of foreign trade and having met the  necessary conditions for 
operating products subject to state trading administration could become non-STEs upon registration and filing for record. G/STR/M/29 
 
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  19.  Regarding sub-question iv, besides import TRQs for state trading, STEs could also act as 
agents for the import and export businesses for other enterprises. It was therefore difficult to differentiate transactions conducted on their own and on behalf of other enterprises. The statistics of individual STEs were internal information an d considered as business secrets. Therefore, no 
relevant information was available. 
20.  Regarding question 3, Chinatex Cotton Impo rt and Export Company was affiliated with China 
National Textiles Import and Export Company, which was renamed Chinatex Corporation in 
May 2005. 
21.  Turning to the Australian questions on agri culture, and in respect to question (a), any 
enterprise with the right to trade was allowed to import agricultural products under the import TRQs subject to state trading, except for the shares exclusively allocated to STEs. Annual 
announcements were released on the National Development and Reform Committee and MOFCOM 
websites on application conditions (including for non-STEs) and allocation principles for the import TRQs of grain, cotton and sugar. In respect to ques tion (b), import TRQs of agricultural products 
for state trading were allocated among STEs, taking into account factors such as the historical 
performance, operational situation and amount of a pplication, etc. Import TRQs for fertilizer were 
allocated in a first-come, first-served manner. In respect to question (c), besides the import TRQs 
for state trading, STEs could also act as agents for the import and export business for other 
enterprises. It was therefore difficult to distin guish between the transactions conducted on their 
own and on behalf of other enterprises. 
22.   With respect to the Australian questions on  industrial products, China's answer to question 
(b) would cover both (a) and (b). Coal exports were subject to state trading and quota 
administration in China. Export quotas were determined according to the production and operation, the export performance, the amount of application and other factors. In recent years, 
export quotas allocated by China had not been re duced and the decline of exports was mainly due 
to falling prices in international markets and unprofitability for export enterprises. Regarding question (c), coal prices were determined by the market. Procurement prices, domestic sales 
prices or export prices of the coal were determ ined independently by enterprises. They were the 
internal information of enterprises and were cons idered as business secrets. Therefore, there was 
no relevant information available. 
23.  Regarding the notification from Morocco  (G/STR/N/16/MAR), no written questions were 
received. The European Union congratulated Morocco on the efforts undertaken to prepare its 
notification. It was analysing the information provided and would have questions for the next 
meeting. 
24.  Regarding the notification from Tunisia  (G/STR/N/14/TUN, G/STR/N/13/TUN, 
G/STR/N/12/TUN and G/STR/N/11/TUN), the Chair noted that no written questions were received. 
A few days ago, a new notification from Tunisia had been received, and would be reviewed at the 
next meeting. 
25.  The European Union welcomed the notificati on by Tunisia. It was analysing it and would 
probably have more detailed questions later, but there was one point it wanted to raise at this 
stage. The European Union had a concern with reference to the operation of the Pharmacie 
Centrale de Tunisie . This was the STE in charge of imports of medicines and pharmaceutical 
products. As stated in the notification, the price by producers was subject to evaluation by the Health Ministry in Tunisia and, specifically, by the Direction de la Pharmacie et du Medicament , 
which de facto  meant that the selling prices of imported products were imposed by the Ministry of 
Health and the Central Pharmacy of Tunisia. Furthermore, the European Union understand that since May 2013 exporters were forced to absorb depreciation of the currency - the Dinar - for a 
four-year period in order to sell any new pharmaceutical products. Against this background it 
asked Tunisia to demonstrate that it respected Arti cle XVII:1(a) of GATT, and that the activities of 
the Pharmacie Centrale de Tunisie  were consistent with general principles of non-discriminatory 
treatment. Lastly, it noted that the notification did not contain the relevant information for 
demonstrating that operations of the PCT did not create serious obstacles to trade, and invited 
Tunisia to submit this missing statistical information and, in particular, on import mark-ups.  
26.  The delegation of Tunisia was not present in the meeting room.  G/STR/M/29 
 
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  27.  Regarding the notification from Viet Nam  (G/STR/N/16/VNM, G/STR/N/15/VNM), the Chair 
noted that this was the first notification from Viet Nam since it acceded to the WTO in 2007. 
The United States had submitted written questions. 
28.  The United States thanked Viet Nam for its notification. It had submitted questions regarding 
this (G/STR/Q1/VNM/1) and looked forward to Viet Nam's written responses. Viet Nam noted that 
it had just received questions from the United Stat es a few days ago. It wo uld send them to capital 
and respond before the next meeting. 
29.  The Chair noted that, if any delegations that had posed questions orally today wished to 
receive those replies in writing, they should send those questions directly, in writing, to the 
corresponding Member with a copy to the Secretariat for distribution. 
30.  The Chair drew delegations' attention to room document RD/STR/12, which reflected all 
notifications, including nil notifications, submitted from series N/1 in 1995 up to series N/16 in 
2016. There were numerous blanks, indicating that many Members were behind in complying with 
their notification obligations. For example, the Working Group had only received notifications for 
2014 from 46 Members, while the deadline for 2016 notifications was 30 June. She encouraged 
delegations to improve their record of notificati ons, and reminded Members that when appropriate 
and timely, the Secretariat could help Members to improve their level of compliance with the 
obligation to notify. 
31.  The Working Group took note of the notifica tions, the questions and answers provided and the 
statements made. 
3  REVIEW OF NOTIFICATIONS PREVIOUSLY REVIEWED BY THE WORKING PARTY 
32.  The Chair noted that this item concerned the review of notifications previously reviewed by 
the Working Party. Delegations had asked the Working Party to return to five notifications.  
33.  Regarding the notification of Canada, the European Union had posed questions regarding the 
operation of provincial and territorial liquor control boards (G/STR/Q1/CAN/9). Canada had 
submitted written answers (G/STR/Q1/CAN/10). It had further indicated that it was undertaking consultations with different government levels and would come back with a more complete reply. 
The core problems addressed were, first, that the operations of regional liquor control authorities, 
which were governed by the Importation of Intoxicating Liquors Act, were not fully transparent; the European Union asked for more data on the delegation of authorization of importation, sending, taking, or transportation of liquor. Seco nd, the European Union requested clarification on 
the different tax treatment of alcohol based on different origins. It was mainly interested in the 
rationale for providing exemptions to local products on federal excise tax and provincial mark-ups, and how these actions complied with WTO rules on non-discrimination. More generally, the 
European Union was concerned about implementati on of variable mark-ups by the Canadian 
provinces. In this context, a new practice had rece ntly been put in place by the Ontario Provincial 
Liquor Monopoly. This development was very worrying and the European Union would be coming 
with questions next time. The European Union invited Canada to provide complete replies to its 
questions. 
34.  Regarding the new issue raised by the European Union, Canada had been made aware of the 
concerns through other channels, in Ottawa, and was conveying those concerns to the 
Government of Ontario. Canada thanked everyone for their patience in waiting for its responses. 
While Canada tried to respond in a timely fashion, these particular questions required coordination among different federal departments and levels of government and that took a little extra time, 
but Canada now had complete responses, and would submit them today, so they should be 
available for all Members for review shortly. In th e interim, Canada would provide a short synopsis 
of its responses. 
35.  Regarding Question 1(a), all province and territories permitted the importation, sending, 
taking or transportation of intoxicating liquor for manufacturing or for commercial purposes not related to the use of liquor as a beverage. However, as intoxicating liquor was a controlled substance, some provinces and territories maintained certain conditions or requirements for the 
purchase or sale of intoxicating liquor from purposes not related to use as a beverage. Canada's G/STR/M/29 
 
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  written response included a table that provided detailed information on the various conditions that 
may apply on a province-by-province basis. 
36.  Regarding Question 1(b), under the Importation of Intoxicating Liquors Act (IILA), the 
exception in question allowed domestic licenced di stillers and brewers to import bulk intoxicating 
liquor to blend or flavour their products. The ex ception operated in conjunction with the Excise 
Act 2001 and Excise Act, which defined licensees' requirements and particular activities of licensees including the importation of bulk spirits and manufacturing beer. The domestic licensee 
could take advantage of this exception when importing intoxicating liquors from any foreign 
supplier. However, a foreign supplier would not be  authorized under the IILA, the Excise Act 2001 
or the Excise Act to directly import bulk spirits and manufacturing beer under this exception, unless it held a domestic licence to carry on the business or trade of a distiller or brewer in 
Canada. 
37.  In regards to Question 3, British Columbia had introduced its new wholesale pricing model in 
April 2015. Under the new model, all liquor retailers, except duty-free stores, purchasing their 
product from the liquor distribution branch paid  a common wholesale price and were then free to 
determine the retail mark-up. The objective of this price model was to create a level playing field for all retailers including both private retailers and British Columbia liquor stores operated by the 
liquor distribution branch. Consistent with Article XVII:1 the model was applied equally to domestic 
and imported products and implemented in accordance with commercial considerations. The Nova Scotia Liquor Corporation used a competitive bidding process for selecting which types of economy beer and spirits would be sold in retail outlets. A ll vendors were invited to submit bids and winning 
candidates were selected based on a number of criteria including quality, price and consistency of 
supply. The policy was an operational business prac tice applied to economy beer and spirits only. 
Again, consistent with Article XVII:1, the policy was applied equally to domestic and imported 
products and was implemented in accordance with commercial considerations. 
38.  Regarding the notification of India , the Chair noted that questions had been posed by 
Australia (G/STR/Q1/IND/7, G/STR/Q1/IND/9) and the European Union (G/STR/Q1/IND/6, 
G/STR/Q1/IND/8). Replies had been rece ived from India (G/STR/TR/Q1/IND/10, 
G/STR/TR/Q1/IND/11 and G/STR/TR/Q1/IND/12).  
39.  Regarding the Food Corporation of India, th e European Union noted that, in its reply to the 
question by Australia in (G/STR/Q1/IND/11), India had indicated average f.o.b. prices. Could India 
confirm that these f.o.b. prices were not lower than the comparable price charged for the like-
products to buyers in the domestic market, and that is in reference to Article 9 1(b) of the Agreement on Agriculture?  
40.  Regarding TASMAC (Tamil Nadu Marketing Corporation Limited), the European Union had 
asked India questions related to the operation of this enterprise, indicating that it should be 
notified as an STE under Article XVII. The European Union still sought clarification why India 
considered it did not qualify as an STE, regardless of the fact that TASMAC was not recognized 
under the foreign trade policy of India as India stated in its reply. According to the information available on the webpage, as well as information available to us, TASMAC seemed to fulfil the requirements to be considered a STE. It seemed to be functioning under the administrative control 
of a government body - that is the Prohibition and Excise Department of Tamil Nadu. It had also 
been responsible for the import and sale of imported foreign liquors since 1983. The European Union therefore considered that TASMAC was grante d formally or in effect, exclusive or special 
privileges in the exercise of which they influenc ed the level or direction of imports or exports. 
41.  More specifically, the European Union asked India to clarify the conditions of importation of 
items under Chapter HS 22, the Chapter which comp rises beverages, spirits and vinegar. In its 
reply India noted that elements under this Chap ter were under a "free" category, which meant 
that import was allowed without any licensing condition. This statement seemed to be in contradiction with the European Union's experi ence with TASMAC. TASMAC invited offers for 
registration of imported foreign liquor brands from owners of those brands or from distributors and 
the European Union had concerns that these registrations might be administered in a way that 
restricted imports. G/STR/M/29 
 
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  42.  India would be happy to receive the additional questions or concerns raised by European 
Union in writing and then, as appropriate, would respond to those queries. 
43.  Regarding the notification of Indonesia , the Chair noted that questions had ben posed by 
Australia (G/STR/Q1/IDN/16), to which written responses have been provided by Indonesia 
(G/STR/Q1/IDN/17).  
44.  Australia thanked Indonesia for providing answer s to its questions in writing and in advance of 
the meeting. Australia had an enduring interest in the size of the domestic rice stockpile 
maintained by Perum Bulog. 
45.  Indonesia thanked Australia for its continued interest. It took note of the follow-up questions 
which once conveyed in writing would be conveyed to the capital. 46.  Regarding the notification from Malaysia , the Chair recalled that Australia had presented 
written questions (G/STR/Q1/MYS/1), to which Malaysia had recently responded 
(G/STR/Q1/MYS/2).  
47.  Australia observed that it had not yet seen Malaysia's answers, but was interested to observe 
them. Malaysia noted that it had submitted its replies on 6 June 2016. In the interests of time, 
Malaysia invited Australia, as well as other Members, to refer to the document, and looked forward 
to discussing any issues arising from its replies that Members might have bilaterally. 
48.  Regarding the notification of New Zealand, the Chair recalled that questions had been 
presented by Chile and the European Union, and replies provided, in documents G/STR/Q1/NZL/8, 
9, 10 and 11. Chile had presented additional questions under G/STR/Q1/NZL/12 to which New Zealand replied in document G/STR/Q1/NZL/13. Chile had recently raised additional questions 
(G/STR/Q1/NZL/14).  
49.  The European Union noted that New Zealand had recently carried out a public consultation on 
possible changes to the Kiwifruit Export Regula tions of 1999. There were several options under 
consideration on how to modify the operation of  Zespri. The European Union understood from the 
documents that the contemplation was around ways of expanding Zespri's core business, rather than on ways to limit the use of monopoly ex port powers exercised by Zespri. The Nairobi 
Ministerial Declaration Decision on Export Competition stated, in paragraph 21, that "Members 
shall make their best efforts to ensure that the use of export monopoly powers by agricultural exporting state trading enterprises is exercised in a manner that minimizes trade distorting effects and does not result in displacing or impeding the exports of another Member". With this in mind, it 
was important for New Zealand to ensure that Zespri did not abuse its statutory roles as a single 
point of entry and as a partner in all collaborative marketing agreements. How would the reforms proposed in the discussion document address the option whereby the monopoly powers of Zespri 
would be disciplined or abolished? Could New Zealand clarify the envisaged steps and timelines for 
amending the export regulation? 
50.  Chile noted that it had raised questions to New Zealand that sought to clarify how the STE 
Zespri complied with the relevant WTO legislation. New Zealand had replied to the questions today 
and Chile had sent them to capital for analysis.1 Chile was aware of the reform process under way 
in the Kiwifruit Export Regulations of 1999, an d had participated in the process of public 
consultation in March of this year, sending comments to the Ministry for Primary Industries (MPI) 
in New Zealand. In the framework of the consultati on process, the Ministry for Primary Industries 
had published an independent review of the Kiwifr uit Export Regulations 1999. Chapter 2 of this 
document, entitled Objectives and Purpose of Re gulating Kiwi Exports of 1999, pointed out that 
New Zealand must take account of its commitments and international obligations when assessing 
the possible amendment of its regulation. Chile fu lly shared the views pointed out in the report. 
In addition, as formally expressed in the consultation, Chile was very concerned that the 
amendment adopted be duly aligned with the international commitments of New Zealand, 
including those recently undertaken in Nairobi. In this context Chile subscribed to the sense of the questions of the European Union and awaited replies. 
                                               
1 G/STR/Q1/NZL/15. G/STR/M/29 
 
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  51.  New Zealand thanked Chile for providing questions well in advance of today's meeting. It had 
provided answers to Chile this morning but for the benefit of others would read them out. 
Regarding Chile's first question, New Zealand's export arrangements for kiwi fruit were entirely consistent with the provisions of GATT 1994 and, in particular, Article XVII. Zespri Group Ltd was a 
non-governmental STE due to its automatic, but not exclusive, right to export kiwifruit to markets 
other than Australia, as established under the Kiwifruit Export Regulations 1999. These regulations also provided for others to export kiwifruit to markets other than Australia, in collaboration with 
Zespri, subject to approval of the independent body Kiwifruit New Zealand. 
52.  Regarding Chile's second question, Kiwifrui t New Zealand, the independent body responsible 
for approving collaborative marketing arrangements for kiwifruit, published information on the collaborative marketing application process on their website. The information required to be 
released under Regulation 15 of these regulations, including Part 15(c), was also available on the 
Kiwifruit New Zealand website. As required, this information was published within 3 months of the end of the season, April–March. New Zealand would provide the specific links to this information.  
53.  Regarding the questions posed by Chile and the EU today, the answers just provided also 
respond to the questions about consistency with WTO obligations. As background on the review process, in April 2015, the New Zealand kiwifruit industry submitted a request to the Government 
for amendment to the Kiwifruit export regulations. Following receipt of this request, the Ministry 
for Primary Industries commissioned an independen t review of the industry regulator, Kiwifruit 
New Zealand. The Government had been considering this request and the findings from the review 
and on 26 February this year released a discussi on paper for public submission. New Zealand was 
encouraged that Chile had engaged by making su bmissions. The deadline for submissions closed 
on the 29 March and the MPI was currently analysing these and preparing its advice to the Government. This could take some time, but the review was expected to be completed this 
calendar year. Zespri's current export authorization under Regulations was not within the scope of 
the current review. Key topics covered in the discussion paper were the ownership of Zespri shares, Zespri's core business, Kiwifruit New Zealand's governance and reporting, and 
collaborative marketing. 
54.  The Working Group took note of the notifica tions, the questions and answers provided and the 
statements made. 
4  AGRICULTURAL EXPORTING STATE TRADING ENTERPRISES 
55.  The Chair noted that this item was on th e agenda at the request of Canada, which had 
presented a document (G/STR/W/44).  
56.  Canada noted that part of the implementation  of the Nairobi Ministerial Decision on Export 
Competition involved a continuation of a dedicated session on export competition in the Committee 
on Agriculture. The purpose of the paper and this agenda item was to bring the relevant portions 
of that discussion to the attention of this Work ing Party. Under that process, the Secretariat 
circulated an annual questionnaire on developments in the field of export competition, including a 
section on agriculture exporting STEs. On the basis of responses to the questionnaire, as well as other notifications from Members including to this Working Party, the Secretariat developed a background document. On the basis of that docu ment, the Cairns Group had been developing, on 
an annual basis, a submission of its own summarizing and synthesizing various elements. 
57.  Document G/STR/W/44 was one year out of date due to the scheduling of meetings and the 
pace of work, but was basically the relevant portion of the Cairns Group submission to the 
Committee on Agriculture. A new version of the Ca irns Group submission was presented two days 
ago in the Committee on Agriculture. There had been a good discussion, including a detailed presentation from New Zealand on behalf of the Cairns Group on developments in export 
competition, as well as agriculture exporting STEs. 
58.  Canada encouraged Members, in preparation for the next meeting of this Working Party, 
to consult the Secretariat background document, the sections pertaining to STEs, and the Cairns Group paper, as well as the presentation from Ne w Zealand and the record of discussion from the 
Committee on Agriculture. Canada would update th e document and also take a closer look at G/STR/M/29 
 
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  cross-referencing that document with Members' STE notifications with a view to maybe posing 
some new questions based on any areas of discrepancy. 
59.  Ukraine thanked Canada for its submission. It reserved its right to make clarifications to 
para. 2.6 to exclude Ukraine from the developed Me mbers, in terms of agriculture. Ukraine hardly 
appeared to have export monopoly powers, taking into account the use of ethyl alcohol in internal 
production of alcoholi c beverages. For exampl e, the export share of ethyl alcohol in 2014–2015 
amounted to only 1.1% of this production.  
60.  Chile endorsed the proposal by Canada, with the clarification just made. It was very important 
to have these discussions in a holistic fashion, taking advantage of a momentum of discussions in 
the dedicated session where Members had the oppo rtunity to raise questions on this issue on 
agricultural exports.  
61.  Australia noted that a lot of information discussed in the Committee on Agriculture was 
relevant for the Working Group, so perhaps there was a more automatic way to take advantage of 
that information. Paragraph 2.5 of Canada's report talked about the provision of export values, 
prices and destinations. Some of that information - particularly on prices - was supposed to be 
provided in notifications here, to demonstrate whose practices were in compliance with GATT Article XVII and particularly commercial considerations. It would be interesting to see if Members 
were providing more, or less, information, and how to ensure that any information provided in a 
different arena - if relevant - was also  automatically brought into this room. 
62.  The European Union observed that the do cument presented by Canada showed how much 
more information we would like to have or we would need. The European Union hoped that 
Members would improve their efforts to comply with notification obligations to the Working Party. 
63.  The Philippines fully endorsed the cross discussi on of agriculture-related STEs in this Working 
Party. The Philippines had a strong interest in the export competition pillar of the Agreement on 
Agriculture, as well as the relevant aspects of the STE discussion in this Committee.  
64.  Colombia agreed that complying with verification procedures in this Working Party helped 
create better disciplines in the Committee on Agriculture in Special Session. 
65.  Switzerland noted that the dedicated sessi on of the CoA on developments in export 
competition had been positive and useful in improving transparency in all areas of agriculture 
export competition. The background achievem ents of the CoA meeting contained valuable 
information in the area of exporting STEs, and showed also some gaps in transparency. It was 
important to consider this information in this Working Party. 
66.  New Zealand echoed the sentiments of previous speakers about the value of this report, 
which could be further improved as pointed out in the Committee on Agriculture. Some corrections 
were needed, e.g. the points of Ukraine will need  to be reflected on and accommodated. A second 
point of suggested improvement was looking at importing STEs. This report, for good reason, was limited to agricultural exporting STEs but the Working Group needed to broaden the consideration 
to importing STEs as well. New Zealand had a particular interest in agriculture but the mandate of 
this Working Party went beyond that, so taking a broader holistic view was very useful across the range of different STEs. Members should take a closer look at the information contained in 
notifications, i.e. was it sufficient and were all STEs being fully notified as they should be?  
67.  China had no mandate from capital, so its comments would be very brief and preliminary. 
Export STEs in the agriculture sector had been fully discussed in the Committee on Agriculture. In 
that session, China had expressed its concerns about repeating work in different sectors so before 
discussing the paper one should be very ca reful about the differences between the two 
discussions. China needed more time to consult with capital. 
68.  Canada thanked delegations for the positive messages and ideas on how to improve and 
expand the paper, and would be happy to work with Ukraine to address any factual inaccuracies. 
China had also raised a worthwhile point. The scope of discussions in this Working Party was somewhat different than those in the Committee on Agriculture, and also the ways STEs were defined differed slightly. This needed to be taken in consideration as work continued. G/STR/M/29 
 
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  69.  The Working Group took note of the statements made. 
5  STE NOTIFICATION OBLIGATIONS OF THE RUSSIAN FEDERATION 
70.  The Chair noted that this item was on the agenda at the request of the European Union and 
the United States. It had previously appeared on the agenda at meetings in June and 
October 2015.  
71.  The European Union reiterated its concern with the lack of notifications of Russian STEs under 
Article XVII. At a meeting of the Working Party in October 2014, Russia had confirmed that it had 
a certain number of State-owned and State-controlled enterprises which operated in the 
commercial sphere. At a meeting in June 2015, the Russian Federation had provided an update of developments in the regulatory system of natura l gas exports, which were ongoing, and had noted 
that some changes in the legislation on export of natural gas had already taken place and further 
changes to the law were being discussed internally. Russia had also stated that it was working 
towards reflecting all substantial elements of gas trade relevant for notification to the Working Party. Later, this was repeated in October 2015. Since no notification had been presented, the 
European Union reiterated the following points. 
72.  With reference to Gazprom, the European Union requested a copy of the Regulation 
No. 1277/P of 14 July 2014 and Regulation No. 2001/P of 9 October 2014, which it understood 
were the regulations according to which Gazprom no longer had an exclusive right to export 
liquefied natural gas from Russia. As in previous  meetings the European Union also asked Russia 
to clarify whether regulation No. 1277/P was the le gal basis for granting the relevant exclusive or 
special rights or privileges to the Russian ST Es, and whether any amendment or new regulation 
had been adopted since July 2014 which would have an impact on their activities. As far as the 
other STEs mentioned in the meeting of October 2014 are concerned, these STEs also need to be notified. Finally, the European Union asked Russia when it envisaged submitting notifications on 
STEs to the Working Party. 
73.  The United States continued to have concerns  regarding Russia's non-notification of its STEs 
and believed that such notifications should include Gazprom, given its influence though its 
purchases or sales on the level or direction of im ports or exports. In para. 88 of its Working Party 
report, Russia had confirmed that Gazprom would be notified as an STE in accordance with Article XVII of GATT 1994. Russia had also stated before this Working Party in 2012 that its STE notification was nearly finalized and would be submitted in the near future. Moreover, 
paragraph 1430 of its Working Party report st ated that: "… the representative of the 
Russian Federation confirmed that upon the date of accession the Russian Federation would submit 
all initial notifications required by any agreement constituting part of the WTO Agreement and 
would submit subsequent notifications in conformity with the relevant provisions and procedures of 
the WTO agreement." The Working Party took note of these commitments. Moreover, paragraph 1430 was listed in paragraph 1450 of the Working Party report, which lists Russia's 
commitment paragraphs. Thus, there could be no doubt of Russia's commitment to provide the 
required STE notifications to this Working Party. 
74.  Transparency was an important WTO requirem ent that Russia agreed to abide by when it 
joined the WTO.  It allowed WTO Members to better understand and evaluate a Member's STE 
operations and its compliance with relevant WTO obligations. Russia had struggled to meet its 
transparency commitments in a number of WTO bodies, but the United States hoped that these struggles would not transfer to this Working Party. It urged Russia to fulfil its notification 
obligation as quickly as possible. The United St ates was willing to further 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. 
75.  The Russian Federation reiterated that change s in the legislation of the Russian Federation on 
export of natural gas had already taken place. As it informed the membership at the meetings of 
the Working Group in June and October 2015, in accordance with Regulation No. 1277 of 
14 July 2014 and No. 2001 of 9 October 2014, the list  of companies authorized to export LNG from 
Russia had been expanded. Under the regulation, public joint stock company Gazprom was no 
longer the only company with exclusive rights to export LNG. The Russian Federation acted in full G/STR/M/29 
 
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  compliance with its WTO commitments and would make the notification once necessary work was 
finalized. 
76.  The Working Group took note of the statements made. 
6  RUSSIAN FEDERATION – RUSSIAN UNITED GRAIN COMPANY 
77.  The Chair noted that this item was on the agenda at the request of the European Union. 
Questions had been submitted by the European Union (G/STR/Q1/RUS/), to which the 
Russian Federation had responded (G/STR/Q1/RUS/2).  
78.  The European Union thanked the Russian Federati on for its replies. According to those replies, 
the Russian Federation had not granted the United  Grain Company exclusive or special rights or 
privileges. Russia also noted that in 2014 the Un ited Grain Company did not participate in any 
import operations. The European Union understood that the United Grain Company was mandated 
by statutory powers to carry out State procurement in the exercise of which it influenced exports 
of grain, and thus was an STE subject to notification. It also considered that the United Grain Company had effects on trade, as it was among the top five Russian grain exporters. There were 
12 grain elevators with a total capacity of 1.8 million tonnes and 14 processing plants with a 
capacity of 1.2 million tonnes under the company's management, as well as one of the nation's largest port handling companies. The European Union therefore requested Russia to specify, again, 
why it considered that the United Grain Company fell outside the definiti on under Article XVII. 
79.  The United States shared the concerns raised by the EU and looked forward to a more specific 
explanation from Russia. 
80.  Canada had an ongoing interest in this issue. It was studying the responses to the EU's 
questions and might have its own questions in the future. 81.  The Russian Federation noted that the United Grain Company (UGC) was not an STE within 
the meaning of the Understanding on the Interpreta tion of Article XVII of GATT, so there was no 
need to notify it as an STE. The Russian Federation had not granted the UGC exclusive or special 
rights or privileges, statutory constitutional powers to exercise trade operations, including internal trade, export or import. UGC exercised its trade operations on the basis of an equal agricultural 
market participant. Import levels were determined on a commercial basis and the resale prices of 
import products were determined by the market. As mentioned by the European Union, in 2014, 
the UGC did not participate in import operations. In 2014, UGC exported 1,108.4 thousand tons of agricultural products (3.7% of total grain export s from the Russian Federation). In 2014, Russia 
exported 30.1 million tons of grains, 22.1 million tons of wheat (73%), 4 million tons of barley, 
3.5 million tons of maize and 0.5 million tons of other grains. The main export destination for UGC was Middle East countries. In 2014 UGC exported 928,000 tons of wheat, 100,000 tons of maize 
and 80,000 tons of barley. 
82.  The Working Group took note the statements made. 
7  EUROPEAN UNION – ALKO INC. (FINLAND) 
83.  The Chair noted that this item was on the agenda at the request of the Russian Federation. 
The Russian Federation had submitted written questions (G/STR/Q1/EU), to which no response 
had yet been provided. 
84.  According to information available to the Russian Federation, Alko Inc., a limited company 
wholly-owned by the Finnish Government, and Alko Incorporated Business Operations were based 
on the Alcohol Act, the Decree of the Operation of the Alcohol Company, the Companies Act and Alko Inc.'s Articles of Association. The Ministry of Social Affairs and Health was responsible for the 
ownership, steering and supervision of Alko Inc. , owing to the special task assigned to Alko 
Incorporated in law. The Ministry of Social Af fairs and Health adhered to the Ownership Steering 
Act and cooperated with the Ownership Steering Department of the Prime Minister's Office. Alko 
Inc. had an exclusive right to the retail sale of beverages containing over 4.7% alcohol by volume. 
Alko Inc. also provided import operations and applied different import surcharges, depending on 
the country of origin. Against this background the Russian Federation asked the European Union G/STR/M/29 
 
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  to: (i) clarify whether it intended to notify Alko Inc. as an STE;(ii) provide the reasons for not 
notifying this STE before; (iii) specify the exclusive or special rights of purchase enjoyed by Alko Inc.; (iv) provide a brief description of intern al market structure, the import market structure 
and volume of imports by Alko Inc.; (v) indicate how import levels were established by Alko Inc.; 
and (vi) indicate how the resale prices of imported products were determined by Alko Inc. 
85.  The European Union thanked the Russian Federation for its interest in Alko Inc. Currently, the 
status of Alko was under assessment and the European Union would come back, as well as to the 
questions, once this assessment had been completed. This reply would be submitted in writing for 
circulation. 
86.  The Working Party took note of the statements made. 
8  NON-NOTIFICATION AND OVERDUE NOTIFICATIONS 
87.  The Chair noted that this item was on the agenda at the request of the United States.  
88.  The United States appreciated efforts of the Chair, the Secretariat and the Working Party to 
encourage Members to make required notifications, but had noticed that a number of Members 
had either failed to make any notification or had not done so for some time. According to the 
updated status report from the Secretariat, 55 Memb ers had not made a notification in the last ten 
years. Transparency was an important WTO re quirement for all Members and notifications, 
including counter-notifications, were sometimes the only way that other Members could be 
properly informed as to a certain Member's activity in any given area. Low levels of compliance undermined the transparency function of this Working Party. 
89.  Much of the information that should be provided in STE notifications 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. Therefore, if it was a matter of updating a notification, the 
notification process need not be cumbersome. 
90.  The United States believed that the non-notification issue was a serious problem. One action 
that had worked in other WTO groups was to have the Chair send a letter to Members who had not submitted a notification. For purposes of this Working Party, such a letter could be sent to those 
Members that had not submitted a notification in the last ten years and enquire as to why such a 
notification had not been made. The Chair could also offer the Secretariat to assist the Member in making its notification. Alternatively, the Secretariat could survey delinquent Members, informally, to see why the notifications were not being made and report back to the Working Party on the 
reasons given without specifying specific Members. The Membership could then work with the 
Secretariat to come up with a plan to help those Members make the notifications. The United States was interested in Members' reactions to these proposals. 
91.  The European Union agreed with many of the points raised. Indeed, the importance of 
transparency could not be overestimated, and was being raised in various bodies because for 
some, including this Working Party, the record was very poor. The European Union would be 
positive about ideas which could improve transparen cy and help Members prepare of notifications, 
such as sending letters. Exercises like the presentation made last year by Australia, where they shared their experience with preparation of STE notifications, could be very useful if Members needed more information exchange on preparatio n of notifications. Apart from compliance with 
notifications, the completeness of these noti fications once they were submitted was very 
important. The European Union noted some proced ural improvements in the operation of this 
Working Party, such as issuing an annotated agenda in advance of the meeting. This had helped a 
lot, allowing capital colleagues to better prepare for the meeting. 
92.  Australia was interested in seeing more Members being transparent about their STEs. Other 
WTO bodies had used a letter from the Chair so Australia would be supportive if it was useful. 
Australia was willing to provide assistance to any delegation that was having difficulty in filling out 
its notification. The Secretariat had made the same offer, so there were different avenues available. Australia also encouraged more presentations as the EU had alluded to. Given the poor compliance rate compared to other bodies, Australia was interested to understand the problems 
people had in complying with their obligations here. G/STR/M/29 
 
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  93.  Canada was open to any suggestions that might be useful in helping Members to improve 
their notification record. Actions could include letters from the Chair, better sharing of information 
by Members, assistance from the Secretariat, or other steps. There was a bit of a problem in this 
Working Party, perhaps more so than in some ot hers. This tied to the agenda point introduced 
earlier relating to the work of the Committee on  Agriculture, and to US comments about trade 
policy reviews. Those documents provided a very rich source of information that was largely untapped outside of the trade policy review proce ss. Although Canada did not have a specific 
suggestion today, the Working Party could probably save a lot of duplication and effort if it made 
better use of information already at its disposal. 
94.  The Chair thanked delegations that made comments or specific recommendations. She would 
use her good offices as Chair and if the Secretariat had other recommendations would be open to 
hearing them. 
95.  The Working Party took note of the statements made. 
9  OTHER BUSINESS 
9.1  Non-notification of State Trading En terprises of the United Arab Emirates 
96.  During the United Arab Emirates' trade policy review the United States had enquired as to the 
status of the UAE's STE notifications, as the UA E had not submitted a notification since 1996. The 
UAE had responded that it did not consider the notification a priority and that making the 
notification was a challenge because of the definition of STEs and the federal structure of the UAE government. The United States was concerned by this  response as it gave the impression that the 
UAE did not place much value on its transparency obligations. As was evident in the UAE's activity 
in other WTO bodies, this was not the case. Furthermore, with a federal government itself, plus 
50 state governments, the United States did not find the UAE's structure of government to be a particularly compelling reason not to notify. As to  the definition issue, the United States urged the 
UAE to seek technical assistance from the Secretariat in understanding the provisions in 
Article XVII. If it would help, and because it also had a federal system of government, the 
United States would be willing to supplement any assistance from the Secretariat and work with 
the UAE on a technical level to help it meet this notification obligation. 
97.  The Working Party took note of the statement made. 
10  DATE OF NEXT MEETING 98.  The Chair informed delegations that the next  meeting of the Working Party was scheduled for 
Friday 21 October 2016. The Working Party would of course hold additional meetings if so 
requested by delegations. The Chair urged all Memb ers to submit their pending notifications, and 
requested that written questions regarding notifications be presented three weeks before the next 
meeting, and that written answers to written questions be provided well in advance of the 
meeting. Finally, the Chair requested that delega tions update the Working Group's contact list is 
information in order to receive documents directly by email. 
99.  The meeting was adjourned.   
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