RESTRICTED  
  
G/STR/M/28  
 
26 January 2016  
(16-0526)  Page: 1/7  
Working Party on State Trading Enterprises    
 
 MINUTES OF THE MEETING 
HELD ON 12 OCTOBER 2015 
CHAIR: MR ANDREW JORY (AUSTRALIA) 
1. The Chair referred to the proposed agenda contained in document G/AIR/STR/2, circulated 
on 2 October 2015. The Working Party adopted the following agenda:  
1   REVIEW OF NEW AND FULL NOTI FICATIONS SUBMITTED BY MEMBERS ..................... 1  
2   REVIEW OF UPDATING NOTIFI CATIONS SUBMITTED BY MEMBERS ............................ 2  
3   REVIEW OF NOTIFICATIONS PREVIOUSLY REVIEWED BY THE WORKING 
PARTY ......................................................................................................................... ..... 2 
4   COUNTER-NOTIFICATION OF THE STATE TRADING ENTERPRISES OF CHINA 
PURSUANT TO PARAGRAPH 4 OF  THE UNDERSTANDING ON THE 
INTERPRETATION OF  ARTICLE XVII ................................................................................ 5  
5   STATE TRADING ENTERPRISES' NOTIFICATION OBLIGATIONS OF THE 
RUSSIAN FEDERATION ..................................................................................................... 5  
6   RUSSIAN FEDERATION – RUSSI AN UNITED GRAIN COMPANY .................................... 6  
7   OTHER BU SINESS ........................................................................................................ 6  
8   ANNUAL REPORT ......................................................................................................... 6  
9   DATE OF NE XT MEETING ............................................................................................. 6  
 
1  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 the GATT 1994, the Working Pa rty was tasked with reviewing notifications and 
counter-notifications submitted by Members on their state trading enterprises ("STEs"). New and 
full notifications were made every two years. At this meeting the Working Party would take 
up 2014 new and full notifications submitted since the last meeting.  
3. The Chair suggested that the Working Party focus on two main elements: (i) whether the 
notification responded adequately to the information requested in the questionnaire contained in 
document G/STR/3/Rev.1; and (ii) whether more information was needed in order to permit – in the language of paragraph 2 of the Understanding – "a clear appreciation of the manner of 
operation of the enterprises notified and the effe ct of their operations on international trade". 
Pursuant to the 1995 Report, contained in document G/L/35, Members having questions on a 
notification were to submit them in writing to the delegation in question and to the Secretariat 
three weeks before the meeting. Responses were al so to be submitted in writing. Both questions 
and answers would be circulated to all Members.  
4. The Working Party had before it new and full notifications covering 2014, and in some cases 
prior periods, from 17 Members: Ecuador; Haiti; Indonesia; Korea; Kyrgyz Republic; Lao People's 
Democratic Republic; Malawi; Malaysia; Mauritius; Moldova; Montenegro; Nicaragua; Qatar; and 
Togo. For all but four of these Members, these we re nil notifications. No written questions had 
been received regarding any of these notifications, and no questions were raised at the meeting. 
5. The Working Party took note of the notifications. G/STR/M/28 
 
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  2  REVIEW OF UPDATING NOTIFICATIONS SUBMITTED BY MEMBERS 
6. The Chair noted that, since the procedures no  longer provided for updating notifications, 
these notifications all covered periods before 2004. They were all "nil" notifications, and no written questions had been submitted. The notifications were from Kyrgyz Republic; Malawi; Nicaragua; 
and Togo. 
7. The Working Party took note of the notifications.  
 
8. The Chair drew Members' attention to room document RD/STR/9, containing draft document 
G/STR/12. This table recorded all notifications, in cluding "nil notifications", from N1 in 1995 to N15 
in 2014, up to today. The table indicated that many Members had not met their notification obligations. For N15, the new and full notification requirement for 2014, the Working Party had, to 
date, received notifications from just 43 Members. China had today submitted its questionnaire 
response for the period 2003 to 2014 and that notification would be included in the table, and circulated to Members in the coming days.  
 
9. As foreshadowed at the Working Party's June  meeting, the Chair had consulted with a range 
of Members who had not submitted notifications for some time. Some of those Members assured 
him that notifications were being prepared and would be submitted imminently. Others noted that 
they could benefit from the assistance of the Se cretariat and or other Members in preparing their 
notifications. The Chair encouraged Members to continue to work to improve their notification record. The Secretariat was available to help Members, and some Members had indicated at the 
June meeting that they also would be prepared to assist. 
 10. The United States appreciated efforts to encourage Members to make required notifications, 
as some Members had either not made a notification or had not done so for some time. This was a particularly important issue for Members that had many STEs in their systems. Transparency was an important requirement for all WTO Members. Much of the information that should be provided 
in STE notifications had been provided in the TP R process or otherwise to the WTO. Updating a 
notification need not be burdensome. Those Members that had never submitted a notification should investigate why such a notification had not been provided and promptly inform the Working Party when such a notification could be expected. While paragraph 4 of the Understanding 
provided the opportunity for Members to submit counter-notifications, the United States hoped 
that Members would not need to utilize this mechanism with any regularity.   
11. The Working Party took note of the statements made. 
 
3  REVIEW OF NOTIFICATIONS PREVIOUSLY REVIEWED BY THE WORKING PARTY 
12. The Chair noted that this item related to the review of notifications that had previously been 
reviewed by the Working Party. Delegations had requested that the Working Party revert to four 
notifications.  
13. Turning first to the notification of Barbados, questions had been posed by the United States 
in document G/STR/Q1/BRB/5. A response had b een received from Barbados and copies were 
available in the room.1 Barbados provided those responses orally. The United States thanked 
Barbados for the written responses. It had not yet had a chance to look at the responses and had no comments at this time.  
14. Turning next to the notification of Canada, questions had been posed by the European Union 
in G/STR/Q1/CAN/9. Replies had recently been received from Canada, and copies were available in 
the room.2 
 
15. The European Union's questions related to the Canada's provincial and territorial liquor 
control authorities. Its concerns had already been raised in Canada's latest TPR. The 
European Union saw four problems. First, the operation of regional liquor control authorities 
governed by the Importation of Intoxicating Liqu ors Act was not fully transparent, as data was 
lacking on the delegation of authorization of import ation, sending, taking or transportation of such 
                                               
1 Subsequently circulated in G/STR/Q1/BRB/6. 
2 Subsequently circulated in G/STR/Q1/CAN/10. G/STR/M/28 
 
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  liquor into Canadian provinces and territories. Second, the European Union sought clarification on 
the different tax treatment of alcohol based on different origin. Third, it remained concerned about the implementation of variable mark-ups by the Ca nadian provinces. Fourth, it sought assurances 
that the liberalization of alcohol sales and retail channels would not be based on selective criteria 
such as product origin. Finally it invited Canada to explain how cost-of-service differentials were 
applied by its provincial liquor boards.   
16. The United States shared an interest in Canada's response, which it would look at with 
interest.  
 17. Canada noted that jurisdiction for trade, im portation and sale of alcoholic beverages fell to 
the sub-national levels of government (provinces and territories). Canada had answered as best it 
could in the time available but was working on more complete answers pending consultations with other levels of government that would be notified as soon as possible. Canada read a condensed 
version of its written answers for the sake of transparency. 
 18. Turning next to the notification of India,  questions had been posed by Australia and the 
European Union, in documents G/STRQ1/IND/6, 7 and 8. No responses had been provided. 
 19. Australia recalled that it had not yet received written responses to its questions, and looked 
forward to receiving a response from India. 
 
20. The European Union had submitted two sets  of questions to India. One set sought 
clarification on the activities of TASMAC and the second sought additional clarifications on the Food 
Corporation of India, which followed up previous exchanges in the Working Party. The 
European Union repeated its concern on the possible negative effects on trade of numerous Indian agricultural STEs. With reference to the Food Corporation of India, the European Union was 
concerned about potential spill-over effects of operations aimed at maintaining stocks of food 
grains by procuring the products at minimum suppo rt prices and managing imports. According to 
its website, the Food Corporation of India export ed 15 million tons of wheat from central pool 
stocks during 2013-14. How did India intend to minimize the trade-distorting effects of these 
operations? It invited India to submit relevant statistics and to complete its notifications. As to 
TASMAC, the European Union asked why this enterprise had not been included in India's STE notification, the reasons for maintaining this STE and the legal basis for granting it exclusive or 
special rights or privileges.  
 21. Canada echoed the EU's concerns with respec t to the Food Corporation of India. India had 
emerged as a significant exporter of wheat in rece nt years and Canada was interested in having a 
clear picture of the operation of the Food Corporation of India and in particular its role in the export of wheat.  
22. The United States looked forward to India's re sponses, in particular with respect to the Food 
Corporation of India. 
 
23. India stated that TASMAC (Tamil Nadu State Marketing Corporation Limited) was not an STE 
as recognized under the Foreign Trade Policy of India ("FTP"). The FTP was issued under the 
Foreign Trade Development and Regulation Act 1992, No. 22 of 1992. Para. 2.1 of the FTP for the 
period 2009-2012 (revised addition applicable with effect from 5/6/2012) stated that exports and 
imports shall be free except when regulated. Su ch regulation would be as per FTP and/or ITCHS 
contains the item by the export and import polic y regimes. Further, para. 2.11 of the FTP stated 
that any goods the import or export of which is governed through exclusive or special privileges 
granted to STEs may be imported or exported by STEs as per conditions specified in ITCHS. The 
FTP is available on the website http://www.dgft.gov.in/ . Perusal of the ITCHS reveals that all items 
under Chapter 22, which is comprised of beverages,  spirits and vinegar, were under free category, 
such that their import was allowed without any licensing conditions. None of the HS lines under 
Chapter 22 was under the STE category there were no STEs designated for its import. Therefore TASMAC was not an STE and no specific rights and privileges had been extended to it with regard 
to import of Chapter 22 items. Accordingly it was not included in India's STE notification. In this 
regard as for the new FTP also if the Member felt it appropriate Member it could refer to appendix 2(j) which listed the STEs which had been granted special privileges.   G/STR/M/28 
 
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  24. India expressed concerns on the trade distorti ons due to domestic support and said that the 
issue is being resolved in a different forum. Regarding the specific questions raised on FCI, Australia had asked for specific figures about exports. Since 2012-13 no rice had been exported by FCI. As to wheat, for 2012-13 FCI exported 2.899 million tons. The average f.o.b price was 
$314.01, and the tentative Minimum Support Price ("MSP") was $238 per ton. The real MSP would 
be reflected in India's domestic support notifications which would be submitted to the Committee on Agriculture taking into account the dollar prices  once the Reserve Bank of India had determined 
averages for that period. Distortions only occurred where a product was procured at a higher price 
than the price at which it was sold on the world market. In this case the data showed that rice was procured at $238 per ton (tentative) and exported at $314.01 per ton, so there was no distortion. For 2013-14, the quantity exported was 2.571 million tons, the average f.o.b was $294.15 per ton 
and the MSP was $221(tentative). For 2014-15, 3.27 million tons was exported, the average f.o.b 
was $281.22 per ton the MSP was $229 per ton (tentative). So again there was no distortion.  
25. India noted that the European Union had raised concerns that these figures were not 
reflected in India's notification. India had reported  that no quantity had been exported because the 
European Union's question related to India's pr evious notification for 2012, during which no 
exports had taken place. The European Union had also highlighted in its question potential adverse 
spill-over effects. These concerns were based on  the presumption that there were distortions but 
the figures showed that no trade distortions were being caused by these exports. India highlighted 
that in the period 2014-15 French rice was being exported to Egypt at a price of $243.74 per 
metric ton f.o.b. basis, while in the same period India had exported at $281.22 per metric ton. The 
European Union had asked how import levels were established. This answer could be found in the chapeau of India's notification, which explained that for agricultural products the main purpose of 
STEs was to ensure a fair return to farmers as well as food security, i.e., the availability of 
adequate food for all sections of society at affordable prices. Domestic and international prices as well as supply conditions were the main determinants of the quantity of imports. The resale price 
of imported products was based on commercial considerations. Regarding market structure 
statistics and the quantity of food grains, Indi a had already provided figures on the quantity 
exported by FCI. The total export quantity of f ood grains could be seen from the Trade Statistics 
part of the website of Department of Commerce, Government of India.  
 
26. The European Union thanked India for its rep lies, and sought confirmation that they would 
be provided in writing. Australia also wanted to study closely the information provided by India 
and would appreciate its submission in writing. India stated that it would share the information 
with the Secretariat for circulation to Members.  
 
27. Turning next to the notification of New Zeal and, questions had been posed by Chile and the 
European Union, and responses provided, in do cuments G/STR/Q1/NZL/8, 9, 10 and 11. Recently, 
follow-up questions had been submitted by Chile in document G/STR/Q1/NZL/12.   
28. The European Union recorded its interest in the question asked by Chile, which concerned an 
issue that the European Union had raised at pr evious meetings. As a follow-up to the reply 
received from New Zealand at the last meeting, the European Union asked three questions on the 
functioning of Zespri. Does New Zealand apply any import restrictions on kiwi plant nursery stocks 
other than on SPS grounds? Does Zespri provide its nursery stock free of charge to growers outside New Zealand? What is the share of kiwi fruit of New Zealand carried out by Zespri and by 
other operators?  
 29. New Zealand acknowledged the questions su bmitted by Chile last week and the EU 
questions received today, but could not respond now given the very recent receipt and specificity 
of the questions. New Zealand would respond as s oon as possible. In the meantime the Kiwi Fruit 
New Zealand website http://www.knz.co.nz/ contained further information including on Kiwi Fruit 
New Zealand's involvement in collaborative market ing arrangements and links to NZ's Kiwi Fruit 
Restructuring Act and export regulations. New Zealand would respond to Chile's questions in 
writing, and asked that the European Union put its questions in writing as well.  G/STR/M/28 
 
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  4  COUNTER-NOTIFICATION OF THE ST ATE TRADING ENTERPRISES OF CHINA 
PURSUANT TO PARAGRAPH 4 OF THE UNDE RSTANDING ON THE INTERPRETATION OF 
ARTICLE XVII 
30. The Chair noted that this item related to a counter-notification submitted by the 
United States (G/C/W/701/-G/STR/Q1/CHN/2), and previously discussed in October 2014 and 
June 2015. China had today submitted a response to the questionnaire for the period 2003-2014 and that response would be circulated to Members in the coming days.  
 
31. The United States dispensed with its written statement in light of China's notification. The 
United States hoped to engage with China on the substance of its notification and hoped that other 
Members who had not notified would be encouraged to do so as soon as possible.  
 
32. Canada extended its gratitude to China for submitting its notification. It looked forward to 
reviewing the notification very closely and might come back with questions.  
 
33. The European Union noted that the notification from China was very good news. It 
appreciated this transparency effort from China, and looked forward to reviewing the notification 
at the next meeting. 
 34. China stated that it paid high attention to the principles and obligations of transparency in 
the WTO. China's STE system had not undergone any changes in general except regarding the 
products subject to STEs. In order to facilitate Members' understanding of China's system and its 
operation China had just completed its notification for the period 2003-2014 and submitted it to the Secretariat this morning.  
 
35. The Working Party took note of the statements made. 
 
5  STATE TRADING ENTERPRISES' NOTIFICATION OBLIGATIONS OF THE RUSSIAN 
FEDERATION 
36. The European Union reiterated its concer n about the lack of notifications by the 
Russian Federation. In October 2014, Russia had confirmed the existence of a number of state-
owned and state-controlled enterprises operating in the commercial sphere. In June the 
Russian Federation had updated Members on develo pments in the regulatory system for natural 
gas exports, noting that some legislative chan ges had already taken place and further changes 
were being discussed. Russia had also informed Members that it was working towards reflecting all 
substantial elements of gas trade relevant for notification. As it had not yet submitted a notification, the European Union asked Russia to provide copies of the regulations it had 
mentioned in June, Regulation No. 1277/P of  14 July 2014 and Regulation No. 2001/P of 
9 October 2014, which it understood specified that Gazprom no longer had exclusive rights to export liquefied natural gas. It asked Russia whether Regulation No. 1277/P was the legal basis for granting the relevant exclusive or special rights  o r p riv i le g e s  to R us s ian S T Es  and  whe the r any 
amendment or new regulation had been adopted since July 2014 which impacted their activities. 
The European Union considered that the other ST Es mentioned by Russia in the meeting should 
also be notified. In conclusion, it asked Russia when it envisaged submitting notifications.  
 
37. The United States supported the EU statement regarding the need for the 
Russian Federation to submit its STE notification. That notification should include Gazprom given 
its influence through its purchases or sales on the level or direction of imports or exports. In 
paragraph 88 of its Working Party Report, Russia "confirms that Gazprom will be notified as an STE in accordance with Article XVII of GATT 1994". Russia also stated before the Working Party in 2012 that its STE notification was "nearly finalized and would be submitted in the near future". 
Moreover, paragraph 14.30 of its Working Party Report stated that "the representative of the 
Russian Federation confirmed that upon the da te 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 in the 
procedures of WTO Agreement. The Working Part y took note of these commitments". Moreover 
paragraph 14.30 was listed in paragraph 14.50 of the Working Party Report which listed Russia's 
commitment paragraphs. Thus there was no doubt of Russia's commitment to provide the required 
STE notifications. Transparency was an important WTO requirement that Russia agreed to abide by when it joined the WTO. Russia had struggled to  meet its transparency commitments in a number G/STR/M/28 
 
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  of WTO bodies, and the United States hoped that these struggles would not transfer to this 
Working Party. The United States urged Russia to fulfil its notification obligation as quickly as possible.   
38. The Russian Federation informed Members that  the process of compiling data and statistics 
required for its notifications for the years 2012 and 2013 was ongoing and efforts were being 
made to notify as soon as possible. Russia would immediately submit the notification once the 
necessary work was done. It would also submit the requested regulations as soon as possible in 
writing. The question raised about the years 2014 and 2015 related to next year's notification, not that of last year.  
39. The Working Party took note of the statements made. 
 
6  RUSSIAN FEDERATION – RUSSIAN UNITED GRAIN COMPANY 
40. The European Union had submitted written questions regarding the Russian United Grain 
Company. Did Russia intend to notify the UGC as an STE? What were the reasons for maintaining 
this STE and the legal basis? Could Russia provide a detailed description of the functioning of the 
company indicating how import levels were established by the STE, how the resale prices of 
imported products were determined, and a brief description of market structure, in particular statistics on the total quantity of export of food  grains and the quantity of exports from UGC?  
 
41. Canada and the United States appreciated th e questions from the EU and looked forward to 
seeing the responses.  
 
42. The Russian Federation had not had enough time to prepare a full response to EU's 
questions. It proposed as a preliminary step that the European Union refer to paragraphs 67 and 
82 of the Report of the Working Party for the Acce ssion of the Russian Federation providing some 
factual information about UGC. For clarification of the status, functioning and operations evaluation 
of the UGC for the years 2012-2013 Russia needed additional time.   43. The Working Party took note of the statements made. 
 7  OTHER BUSINESS 
44. No Member raised any issue under Other Business. 
 
8  ANNUAL REPORT  
45. The Chair noted that paragraph 5 of the Unde rstanding 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 taking into consideration the concerns of Members with transparency and conciseness of the annual report, as well as the instructions from the General Council in document 
WT/BFA/128, paragraph 29, "to reduce the overall vo lume of official documents". 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. 
 
46. The Committee adopted its 201 5 Annual Report. The Chair noted that the table with the 
status of notifications since 1995 would be issued as document G/STR/12, and would be updated 
before the next meeting of the Working Party.  
 9  DATE OF NEXT MEETING 
47. The delegations of Australia, Canada, Chile, the European Union and the United States 
requested that the Working Party hold two meetings in 2016.  
 48. The Chair indicated that, in light of the clear interest in holding two meetings next year, the 
Working Party would hold a first meeting in the spring, with the date to be communicated by the Secretariat in due course. A second meeting would be held on Friday, 21 October 2016.   G/STR/M/28 
 
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  49. The Chair urged all Members to submit their pending notifications. He further requested that 
written questions regarding notifications be provided three weeks before the date of the next 
meeting, and that written answers to written questions be provided well in advance of the 
meeting. 
 
50. The meeting was adjourned.  
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