RESTRICTED  
  
G/STR/M/27  
 
5 October 2015  
(15-5174)  Page: 1/6  
Working Party on State Trading Enterprises    
 
 MINUTES OF THE MEETING OF THE WORKING PARTY 
ON STATE TRADING ENTERPRISES 
HELD ON 25 JUNE 2015 
CHAIR: MR ANDREW JORY (AUSTRALIA) 
1.  The Chair referred to the proposed agenda contained in WTO/AIR/STR/1, circulated on 
15 June 2015. The Working Party adopted the following agenda: 
1   AGRICULTURAL EXPORTING STATE TRADING ENTERPRISES – ITEM 
REQUESTED BY CANADA  (G/STR/W/43) ......................................................................... 1  
2   PRESENTATION BY AUSTRALIA ON ITS EXPERIENCE IN FULFILLING ITS 
NOTIFICATION OBLIGATION IN CHANGING CIRC UMSTANCES......................................... 2  
3   COUNTER-NOTIFICATION OF THE ST ATE TRADING ENTERPRISES OF CHINA – 
ITEM REQUESTED BY THE UNITED STAT ES (G/C/W/701-G/ST R/Q1/CHN/2) ................. 4  
4   STATE TRADING ENTERPRISES NOTIFICATION OBLIGATIONS OF THE 
RUSSIAN FEDERATION – ITEM REQUESTED BY THE EUROPEAN UNION AND THE 
UNITED STATES ............................................................................................................... 5  
5   OTHER BU SINESS ........................................................................................................ 5  
6   DATE OF THE NEXT MEETING ...................................................................................... 6  
 
1  AGRICULTURAL EXPORTING STATE TRADING ENTERPRISES – ITEM REQUESTED BY CANADA (G/STR/W/43) 
2.  Canada explained that its paper highlighted wo rk in the Committee on Agriculture ("COA") that 
was also relevant to this Working Party. One of the outcomes of the Ninth Ministerial Conference 
was a Declaration on Export Competition which established an annual Dedicated Discussion in the 
COA, based on a report prepared by the Secretariat which was in turn based on questionnaire 
responses from Members. The Report included elements dealing with agricultural exporting state trading enterprises ("STEs"). The Cairns Group annu ally prepared a synthesis of the Report which 
includes elements that deal with agriculture exporting STEs, and this paper was a slightly modified 
version of the portion of that paper dealing with STEs.  
3.  Regarding the main findings of the paper,  20 Members reported a total of 77 agriculture 
exporting STEs covering a wide range of products. China, Colombia and India reported by far the 
most agricultural exporting STEs accounting for 69% of the total. The distribution by product 
grouping showed fruits, vegetables and tobacco accounting for almost half of the total reported STEs; the next most numerous category was wheat and wheat flour, coarse grains and rice. Only a 
few Members provided information on export values, prices and destinations so it was difficult to 
assess the influence of agricultural exporting STEs on global markets.  
4.  The reporting of 77 agricultural exporting STEs across 20 Members, some of which appeared to 
have export monopoly powers and other special privileges, suggested that these entities may have 
important impacts on global markets, but more information was needed to understand the extent of those impacts. It was also noteworthy that much of the information provided in response to the Secretariat's questionnaire went beyond what Members provided in their STE notifications, 
underscoring the need to improve compliance with notification obligations. Canada would update 
its paper based on recent documents and discussion  in the June meeting of the COA. The paper G/STR/M/27 
 
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  did not provide a global picture of STEs, and only looking at exporting STEs in agriculture 
overlooked other sectors and the role of importing STEs. Accordingly, Canada was interested in looking into those areas more closely.  
5.  Switzerland noted the lack of comprehens ive notifications to the Working Party. The 
questionnaire that formed the basis for review under the COA was more detailed than the one 
used in this Working Party, and Switzerland encouraged Members to take it into consideration when completing their notifications. Switzerland supported Canada's suggestion to extend their 
paper to other STEs.  
6.  Colombia found the information in the paper very interesting, summing up the situation of 
agriculture in the COA, and adding elements for di scussion by the Working Party. As pointed out in 
the recent Cairns Group Report, looking at export competition, four of the fourteen STEs reported 
were really exporting companies on the basis of the information provided last year in this Working 
Party. Colombia hoped that Canada would update its paper. 
7.  The European Union agreed that useful information was available in the agriculture context that 
could be used in this Working Party. It noted that information in the paper provided more 
information on STEs than notifications to this Working Party, and hoped the discussion would encourage better transparency. The European Unio n agreed that on the basis of the current 
information available it was basically impossible to assess the impact of some STEs on trade and 
there were areas that could be examined further both in this Working Party and in the COA. For 
example, the European Union was interested in additional information on export values, prices, destinations of trade where STEs were engaged and particularly if exports had adverse effects on 
markets in importing countries or regionally, and in information which would allow a check against 
the relevant provisions of the 2008 Agriculture Modalities, in particular Annex K. The information in this study was positive for transparency, and might make notifications to this Working Party easier 
for some Members since some of the inform ation was already provided to the COA.  
8.  Chile drew Members' attention to G/AG/W/1 25 and Addendum 4, and to the links between the 
work of this Working Party and the agriculture negotiations. Chile was concerned with the effect 
that STEs which export agricultural products have on world trade and the commercial interests of 
exporting countries such as Chile, in which ther e are no privileges, for example export support. 
Chile agreed that on the basis of the existing information it was impossible to truly evaluate the scope of the influence exercised by export monopoly  powers in global markets. Further, it was not 
possible to verify the exact situation for the STEs that are exporting agricultural goods and which 
are to be notified to this Working Party when it comes to general de minimis  in the modalities for 
agriculture the negotiations in Rev. 4, note 5 of Annex K and also on the basis of the criteria 
pertaining to S&D in paragraphs 4-6 of Annex K. Thus, Chile would support initiatives to offset the 
shortfall in information and to identify synergies between the work of this Working Party and the agricultural negotiations.  
9.  New Zealand supported the paper, and welcomed efforts to update it. The Report was prepared 
in the COA context and hence focused on agricultural exporting STEs. This Working Party had a 
broader mandate so in further elaborating this work it was important to look at importing STEs and non-agricultural STEs. This paper was an exampl e of the value of pulling together existing 
information so we can see notifications in one place. Existing notifications were neither complete 
nor up-to-date, and not all Members had submitted notifications, but reviewing current notifications in this way provided a broad holisti c overview into the current STE environment.  
10.  The Working Party took note of the statements made. 
2  PRESENTATION BY AUSTRALIA ON ITS EXPERIENCE IN FULFILLING ITS 
NOTIFICATION OBLIGATION IN CHANGING CIRCUMSTANCES 
11.  Australia noted that it always seeks to ensure  that its notifications, including of STES, were 
complete and timely submitted. Making STE notifications was quite complex for Australia, given its 
federal system of government and the relative independence of its states in establishing STEs. However, the process could be quite straightforward and not overly onerous if good practices and 
workflow management were followed. The responsibility for STE notifications fell jointly to the 
Department of Foreign Affairs and Trade and the Department of Agriculture, as Australia's STEs G/STR/M/27 
 
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  were mainly in the agriculture sector. In addition, the notification process required close 
collaboration between federal authorities and their state counterparts. Australia had worked hard to build and maintain close cooperation with state authorities and the industry and this had helped to ensure a cooperative approach. This extended to  the STEs themselves and assisted in building a 
capacity to compile the notifications in a timely manner and to ensure complete, accurate and 
transparent information. 
12.  Australia had over time reformed its agricultural trade policies and the number of STEs had 
declined in recent years from 9 in 1995 to 7 by 2004 and further down to 4 by 2006 and just 1 by 
2012. Australia had submitted notifications throughout this period, and planned to submit for the 2014-2015 notification period as soon as the data could be compiled and verified. Of the four STEs existing in 2006, Queensland Sugar Limited which marketed raw cane sugar grown in Queensland 
had its monopoly power removed in 2006. AWB International Limited now traded on behalf of the 
Australian Wheat Board, and the only remaining na tional body coordinated bulk wheat exports and 
ceased to operate as an STE in 2008. The Australian Grain Pool Propriety Limited, marketing 
barley, lupins and granola grown in the state of  Western Australia, had its powers removed in 
2009. Today Australia's only STE was the Rice Marketing Board of New South Wales which markets rice grown in New South Wales. 
13.  This contraction of STEs had simplified the no tification process for Australia. However, looking 
back at the historic challenges faced by Australia in meeting its notification obligations, there were a number of issues that needed to be met. Most of Australia's STEs were state-based and this presented challenges in coordinating information sharing and ensuring that the information was 
complete and consistent with that gathered at a national level. Australia engaged stakeholders at 
the national, state and industry level to ensure  this, explaining the process and purpose of 
notifications and ensuring that stakeholders played an active role, including a right to review draft 
notifications. Australia frequently used footnotes to clarify details such as data sources, where they 
might have been required to rely on estimates rather than solid data, for instance where reporting periods at state levels did not coincide requiring estimates for full-year trades. 
14.  Australia also faced staff changes within its own organization, at various levels of government 
and across stakeholders. This caused fractures in lines of communication and slowed down our capacity to complete the task in a timely fashion. Australia always followed good administrative practice, maintaining a thorough filing system, ensuring that offices provided good handover notes 
and advice to their successors and that the notifications themselves were clear enough that 
someone new to the task could trace the sources and nature of the information. Having a good 
communications network in place allowed Australia to submit its STE notifications in a timely 
manner, but we still needed to collect and collate the data, follow up with other agencies and fit 
this routine task in with competing priorities such as negotiations. Australia maintained clear milestones and critical dates, and made it clear to other agencies what would be required in 
preparing notifications, but always sought to be flexible in dealing with those agencies in the face 
of conflicting priorities. In Australia's case this was often being complicated by the limits on human resources, with the same people responsible for completing tasks associated with the ongoing WTO agenda and Australia's agenda of regional and bilateral FTAs. 
15.  The process of course did not end with a submission to our department of data, as that data 
needed to be reviewed to ensure that it was complete and would meet the requirements of the 
Secretariat. The fact that incomplete submissions would lead to follow up requests either from 
Canberra or from the Secretariat provided a strong incentive to get things right at the first 
attempt. We rely therefore on offices at all levels of the process reviewing the information before it is submitted to our department for accuracy and completeness, and follow this up with our own 
review processes in Canberra before submitting ou r notifications. This was aided by adherence to 
the same principles that govern all elements of the task, namely a clear set of critical dates, 
encouragement to authorities to provide detailed inputs. The final task in Canberra before submitting a notification was to verify the data, cross-checking it against publicly available 
material for consistency. Australia always provided information at a tariff line level to ensure 
comprehensive and uniform notifications over time with full explanations of how the numbers have been calculated. 
16.  Good administrative practice has always been the basis for Australia being able to submit 
comprehensive STE notifications on a regular basis in a timely manner. The key messages are simple. The primary objective is transparency and this provides the greatest value to our WTO G/STR/M/27 
 
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  Members and helps to ensure that Australia is seen as an active and honest participant in WTO 
activities. Our capacity to submit our STE notifications over time has been based on having sound internal systems to coordinate the work of several agencies across different levels of a federal system. Following a best practice approach makes the job easier, ensures that notifications 
provide a better resource for other WTO Members, and also makes the task of preparing and 
submitting notifications in subsequent years easier. 
17.  The notification process enhances the work of the WTO, supports its principles and rules and 
demonstrates Members' commitments to these principles. Beyond all else it provides an important 
framework for effective participation in the work of the WTO and ensures that meetings are more 
effective for us all. Clear and comprehensive notifications reduce the capacity for Members to maintain trade distorting practices and assist in ensuring compliance with WTO rules. Australia's 
aim today was to demonstrate that even in a complex environment where Australia maintained a 
number of STEs across a number of industry sect ors and under the control of quite autonomous 
subnational levels of government, it was still possible to prepare and submit comprehensive and 
timely STE notifications. Australia encouraged all Members especially those who have not had a 
strong record of notifications in the past to s ee the value of the system and to engage in the 
process.  
18.  The European Union observed that the presen tation showed that notifications allow Members 
to see policy development, which was why they are needed. It also showed that the preparation of 
notification itself does not stop at the moment when  it is submitted to the Secretariat, as review in 
the Working Party is the next step in the process. 
19.  The Working Party took note of statements made. 
3  COUNTER-NOTIFICATION OF THE STATE TRADING ENTERPRISES OF CHINA – ITEM 
REQUESTED BY THE UNITED STATES (G/C/W/701-G/STR/Q1/CHN/2) 
20.  The United States recalled that during its 2014 trade policy review and at the October 2014 
meeting of this Working Party, China stated that it was preparing its 2004 to 2013 notifications 
and would notify immediately once work was completed. To date China had not submitted these 
notifications and given the lapse of time he sought  an update from China on when it expected to 
submit these notifications. 
21.  China took note of the US questions and concerns. Capital was studying the details of the 
counter-notification and reserved the right to make further comments and clarifications. China 
might also request consultations with the United States. China fully respected the principle of 
transparency. There had been no change in Chin a's state trading system since 2003 except that a 
limited number of products were no longer subject to state trading administrations. China was 
working on its notifications for the years 2004 to 2013 and would submit such notifications once 
completed. 
22.  Canada looked forward to a notification by China in the near future. Referring to the first 
agenda item, China had in its previous notification and in response to the Secretariat's 
questionnaire on export competition reported 25 agriculture exporting STEs, by far the most of 
any Member. This underscored the value of an up-to-date notification.  
23.  The United States recalled that Members had a biennial obligation to provide a STE 
notification even if there were no changes to the information previously notified. In any event, the 
US counter-notification showed that there had been significant changes. The United States 
expected that China would review the status of each  entity listed in its counter-notification, explain 
whether the entity was a STE and provide other deta iled information called for by the notification 
questionnaire. The United States would welcome further engagement with China both here in the Working Party and outside the room if that would be helpful.  
24.  The European Union indicated that it was also  looking forward to a notification from China. 
25.  The Working Party took note of the statements made.  G/STR/M/27 
 
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  4  STATE TRADING ENTERPRISES NOTIFICATION OBLIGATIONS OF THE RUSSIAN 
FEDERATION – ITEM REQUESTED BY THE EUROPEAN UNION AND THE UNITED STATES 
26.  The European Union noted that, at the la st meeting of the Working Party, the Russian 
delegation confirmed that the Russian Federation had state-owned and state-controlled enterprises 
that operated in the commercial sphere. He reiterated concern over the lack of Russian STE 
notifications, and looked forward to Russia's notifications of its STEs, notably the JSC Gazprom, the JSC oil company Rosneft, the JSC Yamal SPG,  and LLC Gazprom Export, as announced at the 
last meeting. A notification would allow Members to assess whether these STEs operate in 
accordance with the WTO Agreement. In the absence of notifications, the European Union sought further details on the Regulation 1277 of 14 July 2014, listing the organizations mentioned above 
as granted with exclusive rights to export liqu efied natural gas. The EU asked Russia to clarify 
whether this regulation was the legal basis for granting the relevant exclusive or special rights or 
privileges to these STEs and whether any amendment or new regulation had been adopted since July 2014 which would impact their activities. The EU  also requested details on the operations of 
these STEs. With reference to Gazprom and as a follow up to the statement by Russia at the last 
meeting, the EU agreed with Russia that paragr aph 88 of the Working Party Report on Russian 
accession taken in isolation did not impose any specific commitment on Russia. However, 
paragraph 99 was listed as a commitment and Gazprom was identified as an STE in paragraph 88, 
therefore the reading of the two paragraphs 88 an d 99 led to the conclusion that Gazprom has to 
be notified. The EU asked when the Russian Federa tion envisaged submitting it notifications.  
27.  The United States supported the EU statement regarding the need for Russia to submit its STE 
notifications. In addition to the other entities discussed by the EU, the notifications should include 
Gazprom, given its influence, through its purc hases and sales, on imports or exports. In 
paragraph 88 of the Working Party Report when Russia acceded to the WTO Russia "confirmed that 
Gazprom will be notified as an STE in accordance  with Article XVII of the GATT 1994". Russia also 
stated before this Working Party in 2012 that its STE notification "was nearly finalized and would be submitted in the near future". In addition, paragraph 1430 of the Working Party Report stated 
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 su bsequent notifications in conformity with the 
relevant provisions and procedures of the WTO Agreement". The Working Party took note of the 
commitments and listed them in paragraph 1450 of the Working Party Report. Transparency was 
an important WTO requirement that Russia agreed to  abide by when it joined, and helped all WTO 
Members to better understand and evaluate Members' STE operations and compliance with 
relevant WTO obligations. He urged Russia to fulfil its notifications obligation as quickly as 
possible; if Russia was unable or unwilling to do so he requested that the Secretariat keep this item on the agenda for the next meeting.  
28.  The Russian Federation wanted to update th e Membership on developments on the regulatory 
system for natural gas exports under way in the Russian Federation. Some changes in the 
legislation on exports of natural gas had alread y taken place and changes to the law were being 
discussed internally. For this reason the Russian Fe deration was working toward the reflection of 
all substantial elements of gas trade relevant for notification. According to its regulations, Gazprom 
no longer had an exclusive right to export liquefi ed natural gas from the territory of the Russian 
Federation. The Russian Federation would act in full compliance with its WTO notification 
commitments. 
29.  The Working Party took note of the statements made.  
5  OTHER BUSINESS 
30.  No Member raised any issues under this agenda item. G/STR/M/27 
 
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  6  DATE OF THE NEXT MEETING 
31.  The Chair stated that the next regular meeting of the Working Party would be held on 
12 October 2015. He urged all Members to submit pending notifications. Written questions 
regarding notifications should be provided three weeks before the meeting and written answers to 
written questions should be provided well in advance of the meeting.  
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