RESTRICTED  WORLD TRADE  
ORGANIZATION  G/C/M/78 
1 March 2005 
 (05-0866) 
Council for Trade in Goods  
  
 
MINUTES OF THE MEETING OF THE COUNCIL FOR TRADE IN GOODS 
25 NOVEMBER 2004 
 
Chairperson: H.E. Ambassador Choi (Korea
)    
 
 
 The meeting of the Council for Trade in goods was convened by airgram WTO/AIR/2445 and 
the proposed agenda for the meeting was containe d in document G/C/W/503.  The meeting proceeded 
on the basis of the proposed agenda.  
 
I.
 REVIEW OF THE OPERATION OF THE AGREEMENT ON TRADE-
RELATED INVESTMENT MEASURES (TRIMS) UNDER ARTICLE 9 ........................2  
II. REGIONAL TRADE AGREEMENTS ..................................................................................3  
A. EURO-MEDITERRANEAN  ASSOCIATION  AGREEMENT  BETWEEN  THE  
EUROPEAN  COMMUNITY  AND  EGYPT ..............................................................................3  
–  NOTIFICATION FROM THE PARTIES TO THE AGREEMENT (WT/REG177/N/1, 
WT/REG1 77/1) ................................................................................................................... ...................... 3  
B. FREE  TRADE  AGREEMENT  BETWEEN  ALBANIA  AND  SERBIA-
MONTENEGRO ..................................................................................................................... ...3 
–  NOTIFICATION FROM THE PARTIES TO THE AGREEMENT  (WT/REG178/N/1, 
WT/REG1 78/1) ................................................................................................................... ...................... 3  
III. TRANSITIONAL REVIEW UNDER PARAGRAPH 18 OF THE PROTOCOL 
OF ACCESSION OF THE PEOPLE'S REPUBLIC OF CHINA........................................3  
(i) Export restrictions on coke .................................................................................................... .....7 
(ii) Export restrictions on fluorite................................................................................................ .....7 
(iii) Reallocations of TRQs .......................................................................................................... ......8  
(iv) Transparency ................................................................................................................... ...........8  
(v) Border trade................................................................................................................... .............8  
(vi) Government procurement ......................................................................................................... ..8 
(vii) Tariff lines for SKD and CKD ................................................................................................... .9 
(viii) SPS measures................................................................................................................... ...........9  
IV. MARKET ACCESS MATTERS ...........................................................................................13  
V. MAJOR REVIEW OF THE IMPLEMENTATION OF THE AGREEMENT ON 
TEXTILES AND CLOTHING (ATC) IN THE THIRD STAGE OF THE 
INTEGRATION PROCESS PURSUANT TO ARTICLE 8.11 OF THE AGREEMENT (G/L/683, G/L/692).......................................................................................13
 G/C/M/78 
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 VI.
 POST-ATC ADJUSTMENT-RELATED ISSUES ..............................................................13  
A. REPORT BY THE CTG  CHAIR INFORMAL CONSULTATIONS (G/C/W/469/R EV.1)......................13  
VII. CONSIDERATION OF ANNUAL REPORTS OF SUBSIDIARY BODIES OF 
THE COUNCIL FOR TRADE IN GOODS.........................................................................14  
VIII.  ADOPTION OF THE ANNUAL REPORT OF THE COUNCIL FOR TRADE 
IN GOODS TO THE GENERA L COUNCIL (G/C/W/501)...............................................14  
IX. OTHER BUSINESS................................................................................................................1 5 
A. ALBANIA 'S REQUEST FOR A WTO  WAIVER ...............................................................................15  
B. NEXT MEETING OF THE CTG ....................................................................................................15  
 
 
 
I. REVIEW OF THE OPERATION OF THE AGREEMENT ON TRADE-RELATED 
INVESTMENT MEASURES (TRIMS) UNDER ARTICLE 9 
1.1 The Chairman  recalled that at the July meeting the Council had received a joint proposal by 
Brazil and India (document Job(04)/93) concerning a study on the impact of TRIMs and of their 
elimination, and that at its October meeting, when the Council discussed the proposal, Members had 
expressed that, before reaching a final decision on this matter, more time was needed to further reflect 
on the possible scope and context of the study.  His predecessor, Ambassador Chiaradía, had 
suggested that the Chair should carry out, at an approp riate time, informal consultations on this issue.  
It had been the Chair's intention to conduct such  consultations as soon as possible.  However, given 
Members' busy schedule of informal consultations on other items of  the CTG agenda as well as on 
other aspects of the Doha Work Programme, and in order to allow them more time to reflect on the 
proposed study and on the Article 9 review in ge neral, he found it more productive to undertake 
informal consultations at a later stage.  According to  his contacts with some of the interested parties it 
seemed that this would be an appropriate way of pr oceeding;  thus, he asked the Council to agree that 
the Chair should carry out consultations sometime at the beginning of 2005.   
1.2 The representative of Pakistan  expressed his hope that an early resolution of this matter would 
take place and also that his delegation wanted  to take part in the consultation process. 
1.3 The representative of India  thanked the Chair for the report a nd reiterated the importance that 
his delegation attached to Article 9 review of  the TRIMs Agreement.  Concerning the joint 
submission proposing a study on the effect of TRIM s and their elimination and to assess the trade and 
developmental aspect of TRIMs, he hoped that it w ould provide additional inputs to inform the debate 
under this agenda item and that further progress on the proposal would take also place.  He also 
recalled that in 2002 India, along with Brazil, ha d expressed some ideas that could be usefully 
addressed in the course of the review under Article 9.   He welcomed the fact that the Chair would 
proceed with consultations in early 2005 and e xpressed its intention to take part in them. 
1.4 The representative of Brazil  reiterated his delegation's interest  in this agenda item and said he 
was aware of the constraints that had led the informal  consultations not to occur as predicted.  He felt 
encouraged by the Chair's intention to hold those consultations early in 2005 and hoped that these 
would not be delayed again, since Brazil had submit ted the joint proposal with India in the spirit of 
entailing substantive debate on this issue.  
1.5 The Council  took note of the statements made. 
  G/C/M/78 
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 II. REGIONAL TRADE AGREEMENTS 
A. EURO-MEDITERRANEAN  ASSOCIATION  AGREEMENT  BETWEEN  THE  EUROPEAN  
COMMUNITY  AND  EGYPT 
 –  NOTIFICATION FROM THE PARTIES TO THE AGREEMENT 
(WT/REG177/N/1, WT/REG177/1) 
 
B. FREE  TRADE  AGREEMENT  BETWEEN  ALBANIA  AND  SERBIA-MONTENEGRO 
 –  NOTIFICATION FROM THE PARTIES TO THE AGREEMENT  
(WT/REG178/N/1, WT/REG178/1) 
 
2.1 The Chairman  drew the Council's attention to the tw o Agreements listed under this agenda 
item, notified under GATT Article XXIV.1  In the absence of comment s, he proposed that the 
Committee on Regional Trade Agreements carry out the examination of the above-mentioned 
Agreements in accordance with the following terms of re ference:  "to examine, in light of the relevant 
provisions of the GATT 1994, the trade agreements ju st referred to and to submit a report to the 
Council for Trade in Goods.  It is understood that the understanding read out by the Chairman of the 
Council for Trade in Goods under Item 7 of the agenda of the meeting of the Council for Trade in Goods on 20 February 1995, as containe d in document WT/REG3/1, will apply mutatis mutandis  to 
the examination of the agreements.  It is also  understood that, during the examination, due account 
will be taken of the intrinsic differences between customs unions and free trade areas". 
2.2 The Council
 so agreed. 
 
III. TRANSITIONAL REVIEW UNDER PARAGRAPH 18 OF THE PROTOCOL OF 
ACCESSION OF THE PEOPLE'S REPUBLIC OF CHINA 
 
3.1 In accordance with paragraph 18 of the Protoc ol of the Accession of the People's Republic of 
China ("the Protocol") in document WT/L/432, the Chairman  said that the CTG would report to the 
General Council on the Transitional Review Mechanism (TRM).  As last year, he suggested that the 
Council proceed in two stages.  First, the CTG s ubsidiary bodies were required to transmit their 
reports to the Council for Trade in Goods.  This they  had done and, as a first step in today's review 
process, he wanted to give Members an opportunity  to make general comments on those reports, and 
would then propose that the Council take note of th e Reviews that had been carried out in the CTG 
subsidiary bodies.  Then the Council would move on to  its own report.  Turning to the reports of the 
subsidiary bodies, the Chairman reminded Member s that the following CTG subsidiary bodies had 
carried out the Review:  Committee on Market  Access (document G/MA/155);  Committee on 
Agriculture (G/AG/19);  Committee on Customs Valuation (G/VAL/57 and Corr.1);  Committee on Sanitary and Phytosanitary Measures (G/SPS/34) ;  Committee on Technical Barriers to Trade 
(G/TBT/W/249);  Committee on Import Licensing (G/LIC/13);  Committee on Rules of Origin 
(G/RO/58);  Committee on Anti-Dumping (G/ADP/13);  Committee on Subsidies and Countervailing Measures (G/SCM/115);  Committee on Safeguards (G/SG/73);  and Committee on Trade-Related Investment Measures (G/L/708 and Corr.1).  3.2 The representatives of the United States
 and the European Communities  noted that many of 
the questions that they had submitted for the trans itional review sought clarifications about matters 
that had not been fully answered in some of the CTG subsidiary bodies. 
 3.3 The representative of China
 raised a question concerning the process and procedure of the 
transitional review since some Members had stated th at they had already raised the same questions in 
                                                      
1 The texts of the Agreements and their notifications had been circul ated, respectively, in documents 
WT/REG177/N/1, WT/REG177/1 and WT/REG178/N/1, WT/REG178/1. G/C/M/78 
Page 4  
 
 subsidiary bodies; his question was whether the CT G had the mandate to review those issues which 
should be covered by its subsidiary bodies.  3.4 He also questioned, with regard to docum ent G/C/W/499, submitted by the US, which said 
"many of these questions relate to matters that  were not fully addressed by China during the 
transitional reviews held before the Committees that  report to the CTG", whether it was possible for 
the US delegation to provide the delegation of China with a defini tion of "fully addressing matters", 
so as to enable his delegation to make appropriate preparations in an attempt to fully address these 
matters.  
3.5 Referring to document G/C/W/498, submitted by Japan, he stated that from the title of this 
document it was not clear that this was a question submitted to China or that Japan expected some 
response from China.  The title was "Communicat ion from Japan" and "Japan's Comments to the 
CTG".  Only after reading the content was he ab le to see that the document contained a lot of 
requests, demands and expectations.  In light of  these observations China urged Japan to do as 
follows:  (i) to make the title of the document more appropriate;  (ii) to study carefully paragraph 18 
of China's Protocol of Accession, which governed the current exercise;  and (iii) to try to figure out 
what was the exact assignment, from wherever it came, in order to fully understand the rules and 
procedures governing this exercise.  3.6 He then referred to document G/C/W/502, submitted by the European Communities.  He 
pointed out that the quality of the EC paper was pr etty low.  For example, the paper stated in 
paragraph 2, "It is of utmost importance to ensu re a proper and meaningful functioning of this 
mechanism.  The objective of the EC was to have, in each subsidiary body of the CTG, a meaningful 
discussion and detailed replies from the Chinese side  to this limited number of questions."  He 
questioned what the definition of "a meaningful discussion" was, in light of paragraph 18 of the 
Protocol;  whether China had obligations to reply in detail to questions from the EC under 
paragraph 18.  Referring to para graph 3 of G/C/W/502, which said that, "To ensure an efficient 
functioning of the mechanism, the EC has transmitt ed the questions well in advance of each meeting 
(typically six weeks)", his delegation drew attenti on to the fact that the EC's questions in the 
Committees on Market Access, Import Licensing a nd SPS had been submitted less than six weeks 
prior to the meetings, and that his delegation had received these questions for the meeting of the CTG 
only one day prior to the meeting;  thus the document was incorrect. 
 3.7 Referring to paragraph 4 of document G/C/W/502,  which stated, "The EC regrets to note that 
the assessment of this year's TRM exercise in the subsidiary bodies under the CTG is rather 
disappointing.  The EC impression is that China provide d replies of a very general nature that lacked 
specificity ...", he also questioned what the legal ba sis was for them to make this kind of remark;  
paragraph 18 of the Protocol stated how specific Ch ina's replies should be.  Referring to paragraph 4 
again, which said, "The EC regrets that China pr ovided written replies only in very few instances", he 
stated that in accordance with paragraph 18 of th e Protocol, China had no obligation to provide any 
written replies at all.  
3.8 Referring to paragraph 5 of G/C/W/502, which said that "The issues ... for which the answers 
provided by the Chinese side were not sufficient can  be listed as follows:", he requested the EC to 
provide China with a definition of "sufficiency" so  as to enable his delegation to prepare sufficient 
responses.  
3.9 Referring to China's question on  the CTG's mandate, the Chairman
 stated that it was his 
understanding that the CTG was following established practice, and that he was giving Members the 
opportunity to make general comments in order to review the reports of the Council's subsidiary 
bodies.   G/C/M/78 
 Page 5 
 
 
 3.10 The representative of the United States  stated that the jurisdiction of the CTG was the 
jurisdiction of the subsidiary bodies, and the reports  of these bodies were before the CTG.  It was, 
therefore, entirely proper for Members to address the ma tters that had been raised in those subsidiary 
bodies.  Last year they had proceeded in the same fa shion, and China at that time had responded to the 
questions from other delegations.  As  concerned the definition of "fully addressed", he stated that in 
several areas, for example on export restrictions, th e US had had a series of questions, some of which 
had been addressed but some not at all.  The ques tions being asked in the CTG were those which had 
not previously been addressed. China had not re sponded to any of the questions in the SPS 
Committee.  The term "fully addressed", therefore, was a polite way of saying that the questions listed 
in the US submission had not been answered, and the US were now seeking answers in this forum. 
 
3.11 The representative of the European Communities  stated that the CTG was simply following 
already established normal rules of procedure.  They  had only raised in their submission the issues 
which had not been answered in the subsidiary b odies.  The questions had either not been fully 
answered or had not been answered sufficiently.  As invited by the Chinese delegation, he had quoted 
a phrase from paragraph 18 of the Protocol, whic h said that, "China shall provide relevant 
information", and he believed that this year China, as concerned some issues, had not provided 
relevant information.  Howeve r he acknowledged that on some other issues, China had provided 
relevant information, both in this forum and in the context of bilateral fora.  On the issue of 
submitting their questions, he acknow ledged that on some occasions they had not been submitted six 
weeks in advance.  However "typically" did not me an that they had done this each time.  That was 
their target and unfortunately in some cases they ha d been late, but he hoped that this would not cause 
any major problems for China.  His delegation was approaching this meeting with an open mind and 
was looking forward to China providing re levant information on their questions. 
 3.12 The representative of Japan
 pointed out that their submissions had been made well in 
advance, so that China could prepare their responses with enough specificity and without any 
misunderstanding as to the substance of the issues.  As for the points raised in paragraph 18 of the 
Protocol, and on the mandate of the CTG, he shared the views expressed by the US and EC.  The competence of the CTG covered the competences that  were given to the subsidiary bodies.  If any 
points were not fully addressed in those subsidiary bodies, the CTG itself had the competence to deal 
with those issues.  As concerned th e content of Japan's submission, he noted with appreciation that the 
Japanese representatives in Beijing had received some information from the Chinese Government 
concerning some specific questions they had posed  on coke and coal.  The total amount of export 
licences to be issued for coke and coal was 14 mil lion tonnes.  However they still wanted to ask 
China, as stated in heading 1(d)  of document G/C/W/498, to "speci fy when and how China will issue 
export licences for 2005 and what will be the total am ount of coke authorized by the export licences".  
The second part of the question had already been re sponded to by China, via their representatives in 
Beijing, but they had not been informed how, and th ey also questioned the timing of the issuance of 
export licences.  He understood that there had to be so me sort of standard practice that would apply to 
export licences.  He would appreciate it if China could provide them with some documentation or 
information on links to websites of the Chinese Government.  
3.13 The representative of China
 stated that the previous three speakers seemed to believe that, as 
far as the TRM was concerned, the CTG had a mandat e to review those questions that had already 
been taken up by the subsidiary bodies, but none of them was able to provide any legal provision to 
support this belief.  Therefore he was not convinced that their requests could be  agreed to or accepted 
by China. 
 
3.14 With regard to the US' explanation of what "fully addressed" meant, he asked if the US could 
provide this definition in writing, and believed that  such a written submission could help China to 
prepare their responses in a manner which would fu lly address the US' concerns.  Referring to the 
remarks made by the US delegates that China had not made a single response in the SPS Committee G/C/M/78 
Page 6  
 
 this year, he urged the US delegates to read the re port of that Committee to see whether or not China 
had addressed some questions, including a question on AQSIQ 73.  3.15 Referring to the statements made by the EC delegate that in accordan ce with paragraph 18 of 
the Protocol, China was required to provide relevant  information, he stated that China had provided 
relevant information, contained in  document G/C/W/505, and that he would be glad to discuss this 
matter with the EC to see whether the EC's re quest for full and sufficient answers fell under the 
definition of "relevant informati on" mentioned in paragraph 18. 
 3.16 Referring to the statement made by Japan on the mandate of the CTG as contained in 
paragraph 18.1 of the Protocol, he drew attention to the last sentence of that paragraph which stated, 
"Each subsidiary body shall report the results of  such review promptly to the relevant Council 
established by paragraph 5 of Article IV of the WTO Agreement, if applicable, which shall in turn 
report promptly to the General Council".  His unde rstanding of the mandate of this body was to 
receive reports from those subsidiary bodies whic h carried out TRMs, which should be in turn 
reported to the General Council.  Nowhere in para graph 18 did it say that the CTG had a mandate to 
review those questions that had already been  covered by appropriate subsidiary bodies. 
 3.17 The Chairman
 stated that as concerned the mandate of  the CTG, he would suggest consulting 
with the Secretariat's Legal Affairs Division, bu t it was his understanding that since this was the 
relevant Council, the CTG had the mandate to review  the reports of its subsidiary bodies.  The CTG 
would not reopen the reports, but he  invited delegations to make ge neral comments on the collective 
reports of the subsidiary bodies.  He then sugg ested moving to the second stage, China's specific 
review exercise, where delegations  would have another opportunity to  take up some of the issues 
discussed in the first stage.  He al so suggested that the CTG take note  of the reports of its subsidiary 
bodies and the statements made. 
 
3.18 It was so agreed . 
 3.19 The Chairman
 said that China was required to provid e information to the CTG in accordance 
with paragraph 18.1 of the Protocol of Accession.  The relevant information requirements were listed 
in Annex 1A. China had submitted information as required under Annex 1A of the Protocol of 
Accession, contained in document G/C/W/505.  He also drew attention to the documents by Japan, 
contained in document G/C/W/498, by the United States, contained in document G/C/W/499, and by 
the European Communities, contained in document G/C/W/502.  3.20 The representative of China
 stated that over the past three months the 11 subsidiary bodies of 
the CTG had concluded this year's TRM on China.  Some Members had raised a great many written 
questions in these reviews and he thanked these Me mbers for their interests in China's policies, 
measures and practices in its trade regime.  Alt hough China had its own opinion of the Transitional 
Review Mechanism, they had still faithfully implemented their commitments upon accession and 
engaged considerable efforts for the review.  
3.21 Firstly, prior to the session of the releva nt body, China had submitted the information 
required by Annex 1A to the Accession Protocol.  Secondly, with regard to the written questions 
raised by Members, after consulting the competen t authorities they had provided accurate and serious 
responses.  As for the questions raised before this  Council, many of them had already been responded 
to by China in previous reviews.  However in the spirit of cooperation China would still explain and 
clarify these repetitive questions.  Thirdly, in order to facilitate the understanding of China's  
implementation of its commitment on trading rights, China had provided for this meeting the full text 
of the English version of the Rules of Registrati on of Foreign Trade Operators, which was enforced 
on 1 July 2004.  Lastly, China had drafted a no tification of Quantitative Restrictions and would 
submit it to the Committee on Import licensing shortly.  All these efforts demonstrated China's  G/C/M/78 
 Page 7 
 
 
 sincerity and resolution in implementing its commitments upon accession.  He believed that the TRM 
required China's cooperation and also the unders tanding and good will of other Members.   
 3.22 In addition, she made some remarks in terms of the notification of China's subsidy policies.  
As they had emphasized, the Chinese Government atta ched great importance to the implementation of 
the transparency obligation of th e WTO Agreement on Subsidies and Countervailing Measures.  They 
had also taken note of concerns of Members on various occasions.  In recent years the Ministry of Commerce had endeavoured to coordinate all the rele vant authorities, to collect information and to 
study the notification requirements including translating the WTO Notification Handbook.  This project alone had already cost a large amount of manpower and financial resources.  With all this 
effort China, at the present stage,  had finished some major technical  work and planned to submit the 
notification of China's subsidy policies to the SC M Committee in the next year.  Next, she responded 
to specific questions and comments posed to  China prior to this review, as follows: 
 
(i) Export restrictions on coke 
3.23 Coke was an exhaustible resource, while  the coke industry was highly polluting and 
energy-consuming.  Therefore in order to protect the environment and achieve sustainable development, China had taken a ser ies of measures to reduce the out put of coke.  Meanwhile pursuant 
to GATT Article XX(g), as well as the relevant dom estic laws and regulati ons, coke export was under 
a global quota administration in China.  However, it might take some time to see the results of their 
efforts in terms of restricting coke production of domestic industry.  In the year 2004 the demand for 
coke in international markets had risen treme ndously, which had drawn great attention from the 
Chinese Government.  China, on the one hand, had ma de efforts to further improve administration on 
domestic production and trade and, on th e other hand, had tried its best to maintain a quantity of coke 
exports.  On 27 May 2004, nine Ministries had join tly issued certain guidelines on administration  and 
control over the coke industry, which further cl eared up the industry by closing coke companies 
which could not meet the requirements of environm ental protection.  On 23 July 2004, MOFCOM had 
issued urgent notice on an administrating order of coke export which required local government and 
relevant enterprises to strictly comply with the export administration restriction to actively improve 
their operations and to thoroughly eliminate sales of export licences for coke.  The above measures 
had been proved effective.  At present China's expor tation of coke was stable and prices had declined 
rapidly.  The export quota for coke in the year 20 05 would be 14 million tonnes.  The time to apply 
for export licences was determined by an enterp rise when its quota was allocated.  Besides, 
MOFCOM Announcement No. 74 of 2004 clearly sti pulated conditions for coke-exporting companies 
and the procedures for quota application.  The allocat ion of quota was based on standards in line with 
WTO rules, such as applied quantity and historical performance.  Commercial interest was the priority 
of Chinese coke-exporting companies when choosing th eir importers.  Coke prices were determined 
by the market.  China hoped that WTO Members woul d realise the sacrifices China had made as well 
as the pressure and the dilemma China was facing in terms of environmental protection and natural resource preservation.  As a WTO Member China woul d continue to abide by WTO rules in the future 
and take measures on the basis of non-discriminati on, publicity and transparency to maintain the 
stable supply of coke in the international markets.  (ii) Export restrictions on fluorite 
3.24 In order to protect fluorite, an irreproducib le resource, pursuant to GATT Article XX(g) as 
well as the relevant domestic la ws and regulations, China imposed export quota administration on 
fluorite.  The quota was allocated by tendering.  As the resources of fluorite kept reducing, the output of fluorite was constantly declining rather than in creasing.  In addition, with the increasing costs of 
production and transportation, the price of fluorite bo th at home and abroad was rising, which in turn 
led to a decline in the volume of domestic c onsumption and exportation.   This phenomenon was 
caused by the law of market economy, rather th an the administration of the Chinese Government. G/C/M/78 
Page 8  
 
  
(iii) Reallocations of TRQs 
3.25 In 2003 the number of reallocations of ch emical fertilizer was as follows:  NPK 350,000 
tonnes;  DAP 12,000 tonnes;  Urea 20,000 tonnes.  All applications for reallocation had been satisfied.  
In 2004, as the price of fertilizer in international markets was higher than in domestic markets, there 
was no profit for Chinese importers.  Therefore, none of the  three types of fertilizer fulfilled their 
TRQs.  After the publication of MOFCOM's a nnouncement No. 51 of 2003, which announced the 
reallocation of the returned TRQs, there was no new application, so there was no application denied 
either.  (iv) Transparency 
3.26 With regard to the laws of China, Article 7 of the Legislation Law of the People's Republic of 
China  stipulated that laws were made and amended by the National People's Congress, or its Standing 
Committee.  According to Article 52 the final version of the law should be published in the 
Announcements of the National People's Congress or of  its Standing Committee.  With regard to the 
regulations according to Article 52 and 62 of the Legislation Law , the regulations should be made by 
the State Council and published in its Announcements.  With regard to other measures, Articles 71 
and 77 of the Legislation Law  required that administrative measures should be made and published by 
the relevant authorities.  In addition the Foreign Trade and Economic Cooperation Gazette of 
MOFCOM  published all laws and regulations c oncerning foreign trade and investment. 
 (v) Border trade 
3.27 The Member which had raised this question seemed to have ser ous misunderstanding:  part 14 
of Annex 5A to the Protocol of Accession was the subsidy notification on tariff and import duties 
reduction and exemption made to the SCM Comm ittee, in which China had never committed to 
eliminate preferential import duties for border trade.  As for paragraph 2A of the Protocol, it simply 
required China to apply the provisions of a WTO Ag reement and the Protocol to the entire customs 
territory of China, including the border trade regions.  Moreover, the WTO allowed Members to 
regard border trade as an exemption to MFN and to  grant certain preferential arrangements.  At 
present, except for the following three categori es of goods:  (a) goods that were prohibited or 
restricted to import by laws and the regulations;  (b) cigarettes, wine, cosmetics and other goods that 
the Government required to pay full duties;  and (c ) goods that were subject to anti-dumping measures 
and safeguards, all other goods that residents of border areas imported for their own needs enjoyed a 
border trade preferential treatment, which was 50 per cent reduction of import duties and VAT.  The 
purpose of this policy was to promote and facilita te the economic development of frontier provinces 
and the regions, especially the minority's group re gion and the western areas.  China was further 
improving the administration of border trade.  In fact, the current total amount of border trade 
accounted for less than 1 per cent of the total import and export amount. 
 
(vi) Government procurement 
3.28 Compared with those foreign governments th at had decades of experience in government 
procurement, China had fewer than ten years of expe rience in dealing with this issue.  Nevertheless, 
since accession China had been actively implementing its commitments in terms of government 
procurement.  The present Government Procurement Law of the People's Republic of China  contained 
neither discriminatory regulations nor restrictive measures on non-domestic s uppliers or non-domestic 
goods, projects and services.  All foreign suppliers  enjoyed the same treatment and had the same 
opportunities for government procurement projects.  The Chinese Government would take foreign 
suppliers' suggestions and comments into consider ation during its process of drafting the specific 
implementing rules for the Government Procurement Law .  China was establishing a systematic  G/C/M/78 
 Page 9 
 
 
 government procurement framework.  At the same time the Chinese Government had invited experts 
and scholars to look into the issue.  However the process was still very much unfinished, and China 
needed time to study on the occasion of GPA.  Therefore China was not in a position to provide a 
timetable at this stage.  (vii) Tariff lines for SKD and CKD 
3.29 China had made clear explanations on this  issue in the TRM in the Committee on Market 
Access.  As set forth in paragraph 93 of the Workin g Party Report, there were no changes in the tariff 
lines for CKD and SKD. 
 
(viii) SPS measures 
3.30 In regard to the risk analysis of SPS measu res, in order to ensure that SPS measures were 
based on risk assessment and science, the Ch inese Government developed and publicized 
Management Practices of Risk Analysis on Imported Plant and Plant Products  and Management 
Practices of Risk Analysis on Imported Animals .  In addition, in order to strengthen the coordination 
of the risk analysis China had established a cross-departmental China Risk Analysis Commission  with 
the participation from various authorities concerned.  3.31 With regard to SPS measures and product quality requirements, the former was clearly 
distinguished from the latter in the Chinese admini stration.  The already-mentioned notification on 
Foodstuff Health Standards did not contain any requ irements on moisture and impurities.  For some 
products moisture or temperature would cause microb es to propagate.  Therefore, China had made 
requirements in this respect with the purpose to ensure human health. 
 3.32 The Live and Frozen Bird Product Standard  notified by China on 9 August 2002 
(G/TBT/N/CHN/6) was still under review and not yet o fficially approved.  During the review process 
China would take all the concerns of various  interested parties into consideration. 
 3.33 With regard to the AQSIQ Ordinance 7 a nd Decree 25, the applicant's qualification of 
quarantine permit was set by two rules which stipulat ed that enterprises or ag ents as an independent 
legal person which could sign a trading contract w ith foreign parties were qualified to apply for 
import quarantine permits from AQSIQ.  The criter ia for AQSIQ to accept applications for import 
quarantine permit was set forth by Article 7 of th e AQSIQ Decree No. 25.  Article 6 of Ordinance 7 
required the owner of the goods to be imported or th eir agent to provide relevant information.  The 
purpose of this requirement was to enable the co mpetent authority to understand the status of 
imported goods and therefore to make an accura te assessment of the goods' potential risks.  
 
3.34 In terms of administration of agricultural  product processing companies, the functions of 
AQSIQ and Industrial and Commercia l Management Bureau (ICMB) we re fundamentally different.  
ICMB was mainly responsible for the administration and supervision on markets, i.e. to administer 
and supervise the operation in the region of circula tion in accordance with the relevant laws;  whereas 
AQSIQ was held responsible for the monitoring and inspecting of the status of the processing 
companies in terms of safety, sanitation and quality.  As a result, the contents and the requirements of 
the two inspections of the facilities conducted by these two authorities were different. 
 3.35 As to the question of why importers had to  reapply for a new import inspection permit after 
the original one expired, that w as because China's quarantine require ments were mainly reflected by 
the quarantine permit to importers.  Since frequent changes took place in animal and plant epidemics, 
import quarantine requirements might vary from differe nt countries or regions, or in different time 
periods.  If importers did not import the commodities covered by an import in spection permit shortly 
after it was granted or if major changes had taken place in the situation of epidemics of the exporting G/C/M/78 
Page 10  
 
 county of the commodities, the importers had to  reapply for a new import inspection permit, by 
simply returning the original permit to AQSIQ and applying for a new permit.  3.36 As to the reason why an importer had to specify certain information about a commodity before signing the contract and why it was necess ary to reapply for a permit when certain changes 
happened, this was to facilitate import risk assessm ent, to identify import quarantine requirements and 
to schedule import quarantine work.  3.37 On the issue of the AQSIQ Decree No. 73, this  only reiterated the requirements of Article 11 
of the Border Animal and Plant Quarantine Law  which was enforced on 1 April 1992 and had been 
notified to the WTO.  This was not a new requirement.  Obtaining an import quarantine permit before 
signing an import contract allowed importers to understand whether they were permitted to import 
relevant animal or plant products from a certain c ountry or region, and if so, the specific quarantine 
requirements.  On the other hand exporters were also able to identify China's import quarantine 
requirements from the trading contract.  This would also allow the quarantine inspection authority of 
the exporting country to implement quarantine meas ures and to produce quarantine certification, in 
accordance with China's requirements set out by the contract.  This would prevent products which did 
not meet with China's requirements from being export ed to China and therefore prevent importers, as 
well as exporters, from suffering unnecessary economic losses.  3.38 In regard to the AQSIQ Announcement 111, th e HS codes of animal and plant products that 
were exempt from entry quarantine review and a pproval would be published on a website.  These 
exemptions were based on the fact that the epidem ic risks did not exist for these products any more.  
 3.39 The representative of Japan
 requested China to submit the information on export restrictions 
for coke (including the information received bilaterally in Beijing) in writing to the CTG. 
 
3.40 The representative of the United States  thanked the Chinese delegate for her very detailed 
responses.  He believed that the TRM was a very important exercise.  Wh en China acceded to the 
WTO, many of its laws and regula tions and other measures in trade areas had not yet been issued, so 
there was a need to examine those regulations and measures, once they were issued.  In addition, 
China had been given many transition periods to  become WTO-compliant, and that was another 
purpose for this TRM exercise.  The TRM could be very beneficial, both for China and other 
Members, and would help to clarify China's impl ementation efforts and also to convey Members' 
expectations to China.  It could further clarify areas where there was agreement or disagreement on 
certain issues.  In the US submission, some of the questions addressed matters that had not been fully 
addressed in subsidiary bodies, and there were also some new issues that they were raising.  For the 
most part their questions were simply seeking clarifications regarding Chinese regulations and 
measures or Chinese trade practices, or simply seeking relevant data.  He highlighted a few areas of concern that the US were trying to convey through their questions:  (i) Firstly, export restrictions on coke:  In 2004 this became a significant problem, as the prices for coke, a key steel-related import, more than trip led from the 2003 level, and this was due largely to 
the shrinking export quota in 2004 as well as the selling of export licences.  The US had discussed 
these issues with China as they aro se, and had been pleased with Chin a's short-term response.  China 
had expanded the 2004 quota and cr acked down on the selling of export licences, and as a result the 
price of coke had gone down substantially and mo re quantities were available.  He cautioned, 
however, that these were just short-term fixes.  Th e US appreciated the measures taken but would also 
like to see China eliminate export quotas, in particul ar the export quota system for coke and other raw 
materials.    (ii) Another concern dealt with SPS measures in China.  This was an area where the US was 
looking for improvements, particularly with regard  to the use and publication of risk assessments.   G/C/M/78 
 Page 11 
 
 
  
(iii) The last area of concern involved governm ent procurement.  The US was in support of 
China's initiating GPA negotiations, and there had b een some recent developm ents that in the US' 
view were taking a step backwards.  China was in the process of drafting regulations on their procurement of software, and MOFCOM, the Ministry  of Commerce and the Ministry of Finance had 
recently held a public forum where they discussed the proposed guidelines in the area of software 
procurement.  The US had appreciated the opportunity of being part of that forum, but its key concern 
at this point was the definition of domestic indus try and domestic software that seemed to be going 
forward, which was one that was likely to exclude US software companies from procurements.  The 
US viewed these potential regulations as not benefiti ng China.  It would certainly decrease foreign 
investment in this sector and could severely limit th e future growth of China's software industry.  
Getting this regulation right was also critical for anot her reason, i.e. the high software piracy rates in 
China.  It was critical that the Chinese Government remain in the market as a purchaser of foreign 
software.  Therefore this issue was attracting significant attention in Washington and among US 
industry, and in this light his delegation wanted to  be able to work with the Chinese Government to 
work out a mutually agreeable solution before the regulations were finalized .  Finally, although the 
delegate of China had given a very  lengthy, detailed set of responses to the US questions, he felt he 
might have missed one of the responses.  The thir d US question dealt with data regarding the annual 
consumption of two types of fertilizer in China, and he felt he did not ha ve a clear understanding of 
China's response to this question.  
3.41 The representative of the European Communities
 thanked the Chinese delegation for their 
statement, and requested them to circulate their statem ent.  He also apologised if in his intervention he 
raised questions which had already, in part, been an swered by China.  His first point of concern was 
export restrictions on raw materials.  He had heard from China some element of answers to the 
questions that they had put in their paper.  If hi s understanding was correct, those answers had mainly 
focused on coke.  However, the EC had also posed the same question regardin g another raw material, 
rare earth.  Therefore, he would welcome additi onal information from China, both on coke and rare 
earth, and more precision on whether China intend ed to impose any due domestic restriction and 
whether China had any timetable for eliminating the export quota system on both products.  The second was automobiles, and here he had not had much precision on the question that the EC had 
posed, so he would welcome an answ er to the question.  On subsidy notifications, he understood that 
the Chinese delegate had said that China would proceed  in the next year with the notification of the 
new sets of subsidies that had been put in place sin ce accession;  if that was so, he looked forward to a 
full and exhaustive notification of this subsidy scheme.  In the last paragraph of point three of the EC 
paper, concerns were raised on  subsidies taking the format of VAT reimbursement.  Additional 
information on this point would be welcome.  Tu rning to SPS measures, the EC had posed the same 
question as the US.  They would welcome some precision from China on their assessment of whether 
they conformed to international standards and, wh en they did not conform to those international 
standards, whether they completed sound risk assessment.  On the last point, on government 
procurement, he had heard China say that they had been applying non-discriminatory basic rules for public procurement but that they ha d not yet finished this business.  He asked China to be more 
explicit on that point;  to what extent had they not yet finished?  Also, when did they intend to start 
negotiations to join the GPA, as they had committed to in the Protocol? 
 3.42 The representative of China
 stated that with regard to th e request for written answers, she 
would like on behalf of the Chinese delegation to re peat China's position that the information they had 
submitted in writing prior to this meeting, and the answers provided during the course of the meeting, 
were sufficient and meaningful.  Providing written answers to Members' questions went beyond the 
provisions of paragraph 18 and would be overly burdensome for China. 
 3.43 Another representative of China
, referring to Japan's question on the allocation of China's 
quotas for coke, stated that he had downloaded Announcement No. 68 of 2004 of the Ministry of G/C/M/78 
Page 12  
 
 Commerce from the Ministry's website, on quotas fo r coke, which was 14 million tonnes for the year 
2005.  In this specific announcement,  it was also stated that with re gard to the application for quotas, 
the timing period for application was from 1-15 N ovember, and after that the authorities would 
allocate the quota before the end of the year.  On the question from the US regarding data on the two 
fertilizers, he noted that this matter had been a ddressed in the Market A ccess Committee, and stated 
that China was working on this issue and would inform the US as soon as they had the statistics. 
 3.44 On the questions from the EC with regard to the VAT  reimbursement issue, if this referred to 
the Chinese policy regarding the copper industry, he  said that China had responded to this issue in 
great detail in the SCM Committee.  He therefore sugg ested that the EC delegate look at the minutes 
of that meeting.  On the issue of the GPA, the situ ation in China was that they were at a very initial 
stage of establishing, rather than reforming, their GPA system.  The law was fairly new, and a lot of 
regulations still had to be drafted, so there was a lot of work to do with regard to further improving the 
legal system with regard to government procurement.   In the meantime, as noticed by other Members, 
China was doing a lot of preparatory work with re gard to their accession to the GPA Agreement.  
With regard to the rare earth i ssue, China's position was clear:  it believed it had the right to have 
export administration for exhaustible resources.  Since the situation was more or less like the situation 
of coke, they were also trying to find detailed statistics which would support the understanding of 
their side.  On SPS-related issues, China had already stated very clearly detailed answers.  He also 
informed the Council that, as he had promised in the TRMs of the Market Access and Import 
Licensing Committees, China was providing more notifi cations and other information to the relevant 
subsidiary bodies of the Council.  In the Import Licensing Committee they had recently submitted 
more than ten regulations which would be helpful to Members in understanding China's efforts to 
comply with their obligations to the WTO;  also in the Market Ac cess Committee China was 
finalizing its quantitative restrictions notification,  a full one, for the year 2004, which would be 
submitted shortly, in which some of the questions ra ised by the EC and other Members would be fully 
addressed, including information on quotas and other details. 
 3.45 The representative of the European Communities
 thanked China for their response and 
requested further information on the following questions:  (i) the precise point in time when the identifica tion of complete vehicles and assemblies occurred 
after importation; 
(ii) the meaning of the reference to so-called "r egulated amounts" in respect of classification of 
assemblies and completed vehicles and their consistency with WTO rules;  and (iii) how China intended to implement the provi sion of its new automobile policy relating to 
custom classifications. 
 
3.46 He then followed up on rare earths and clarif ied that the EC was not asking for statistics as 
such;  their questions were aimed more at iden tifying the domestic limitations applied on domestic 
production in accordance to Article 20, which China ha d to implement in order to justify a restriction 
on imports.  
3.47 The representative of China
 clarified that China did not have  any new separate tariff headings 
or tariff lines for CKD and SKD of automobiles.  The existing practice was that SKD and CKD were 
all treated as the vehicles them selves, under HS heading 87.03.  This was exactly the situation 
described in paragraph 93 of the Working Part y Report on China's Accession.  On the specific 
question on the "regulated amounts", as he had re sponded in the meeting of the Market Access 
Committee, the automobile policy itself was simply  a framework, and a lot of detailed implementing 
rules were still to be drafted.  He therefore suggest ed that the delegate of the EC keep an eye on the 
development of the drafting of these regulations in  China.  The people concerned would be provided 
with the opportunity to comment on this issue.  On the VAT policy, he drew Members' attention to page 5 of document G/SCM/115, in which there were three paragraphs with regard to the VAT rebate  G/C/M/78 
 Page 13 
 
 
 granted for imports of copper raw materials, which we re fairly detailed.  Regarding rare earth, China 
was working on that matter and would provide  further information when available. 
 3.48 The Chairman
 thanked the delegation of China for th e answers that it had provided and also 
those delegations that had raised questions and made comments.  Regarding the form of the CTG 
report, he suggested  that the Council proceed in the manner it did last year.  This would mean that a 
brief factual report would be prepared with references to the relevant documents and attached to it the 
portion of the minutes of this meeting which relate d to the Transitional Review.  The CTG report, 
together with the reports of the subsidiary bodies,  would then be transmitte d to the General Council. 
 
3.49 It was so agreed . 
 
IV. MARKET ACCESS MATTERS 
 REQUESTS FOR A WAIVER - INTRODUC TION OF HARMONIZED SYSTEM 2002 
CHANGES INTO WTO SCHE DULES OF TARIFF CONC ESSIONS (G/C/W/500) 
   
4.1 The Chairman  drew the Council's attention to the draft waiver decision circulated in 
document G/C/W/500, which had been made in c onnection with the introduction of HS2002 changes 
into WTO schedules of tariff concessions.  This had b een the subject of consultations in the Market 
Access Committee. 
4.2 The representative of New Zealand  informed the Council that, in accordance with the 
procedures relating to the implementation of HS2002 changes to schedules of concessions, her 
delegation had submitted the documenta tion required in order to be cove red by the collective waiver.   
New Zealand expected to be included in the list of  countries in the Annex to document G/C/W/500 for 
submission to the General Council. 
4.3 The Chairman  informed the Council that a revised draft waiver decision would be issued so as 
to include New Zealand in the Annex to document G/C/W/500 and requested the Council to 
recommend that this revised draft waiver decision,  including New Zealand, be forwarded to the 
General Council for its adoption. 
4.4 The Council  so agreed. 
V. MAJOR REVIEW OF THE IMPLEMEN TATION OF THE AGREEMENT ON 
TEXTILES AND CLOTHING (ATC) IN THE THIRD STAGE OF THE 
INTEGRATION PROCESS PURSUANT TO  ARTICLE 8.11 OF THE AGREEMENT 
(G/L/683, G/L/692) 
This section to be issued as an Addendum to this document 
VI. POST-ATC ADJUSTMENT-RELATED ISSUES 
A. REPORT BY THE CTG  CHAIR INFORMAL CONSULTATIONS (G/C/W/469/R EV.1) 
This section to be issued as an Addendum to this document 
 G/C/M/78 
Page 14  
 
 VII. CONSIDERATION OF ANNUAL REPORTS OF SUBSIDIARY BODIES OF THE 
COUNCIL FOR TRADE IN GOODS  
7.1 The Chairman
 recalled that, pursuant to the "Procedures for an annual overview of WTO 
Activities and for reporting under the WTO" (W T/L/105) adopted by the General Council on 15 
November 1995, all bodies constituted under Agreements  in Annex 1A of the WTO Agreement were 
required to submit annually a factual report to the Council for Trade in Goods, and that the Council 
was to take note of these reports. 
7.2 In the absence of comments, the Council  took note of the reports of the following 
Committees:  (i) Committee on Market Access, documen t G/L/699;  (ii) Committee of Participants on 
the Expansion of Trade in Information Technolog y Products, document G/L/706;  (iii) Committee on 
Agriculture, document G/L/719;  (iv) Committe e on Customs Valuation, document G/L/718;  
(v) Textiles Monitoring Body, document G/L/700;  (vi) Committee on Sanitary and Phytosanitary 
Measures, document G/L/709;  (vii) Committee on Technical Barriers to Trade, document G/L/710;  (viii) Committee on Import Licensing, document G/ L/715;  (ix) Committee on Rules of Origin; 
document G/L/704;  (x) Committee on Anti-Dumping Practices, document G/L/707;  (xi) Committee 
on Subsidies and Countervailing Measures, docum ent G/L/711;  (xii) Committee on Safeguards, 
document G/L/703;  (xiii) Committee on Trade-Rela ted Investment Measures, documents G/L/705 
and Corr.1;  and (xiv) Working Party on State Trading Enterprises; document G/L/716. 
VIII.  ADOPTION OF THE ANNUAL REPORT OF THE COUNCIL FOR TRADE IN 
GOODS TO THE GENERAL COUNCIL (G/C/W/501) 
8.1 The Chairman
 drew the Council's attention to the draft report of the Council for Trade in 
Goods circulated in document G/C/W/501 and reca lled that, in accordance with the "Procedures for 
an annual overview of WTO Activities and for Re porting under the WTO" (WT/L/105) which was 
adopted by the General Council on 15 November 1995,  it was agreed that "The respective sectoral 
Councils should report in November each year to the General Council on the activities in the Council 
as well as in the subsidiary bodies" and that the re ports of the sectoral Councils should be "factual in 
nature, containing an indication of actions and deci sions taken, with cross re ferences to reports of 
subordinate bodies and could follow the mode l of the GATT 1947 Council reports to the 
CONTRACTING PARTIES".  The draft report submitte d to Members' attention would be updated in 
light of the current meeting. 
8.2 The representative of Hong Kong, China  suggested one factual correction to paragraph 8 and 
also one textual amendment under section 8.  Concerni ng the factual correction, he suggested that the 
last line of section 8 should read "25 October" sin ce the first informal consultations on the issue took 
place at the margin of the dedicated session on 25 Oct ober.  As to the textual amendment he proposed 
that in the first word of the fifth line under secti on 8, the world "several" be replaced with the 
number 21, so as to be consistent with the practice in other parts of the report. 
8.3 The Chairman  proposed that the Council agree to adopt the report amended according to the 
suggestions by Hong Kong, China, and u pdated to include the current meeting. 
8.4 The Council  so agreed.  G/C/M/78 
 Page 15 
 
 
 IX. OTHER BUSINESS 
A. ALBANIA 'S REQUEST FOR A WTO  WAIVER  
9.1 The Chairman  recalled that the delegation of Albania had indicated its wish to raise, under 
"Other Business", the question of a request for a WTO waiver.  This had been followed by a written 
communication from Albania circulated in document G/C/W/504. 
9.2 The representative of Albania  recalled that since 8 December 2000, when Albania had 
acceded to the WTO, his Government had committe d itself to fulfil all its obligations and, 
particularly, to introduce a number of trade reform s.  The aim was to restructure Albania's economy 
so as to facilitate integration of Albania in the international trading system .  Several reforms were 
being implemented and a number of improvements could be noted, especia lly in trade liberalisation.  
The Albanian Government was convinced that being a WTO Member opened new paths for 
cooperation and opportunities for overcoming a number  of problems in a more structural way.  
Albania had demonstrated its willingness to implem ent economic, financial and political reforms.  
Despite all these changes and reforms, the priorities of  the Albanian Government remained as follows:  
(i) Harmonizing costs and benefits of the liberaliza tion and integration process;  (ii) macro-economic 
stability;  (ii) developing domestic supply capacities in several sectors of the economy; and, (iv) 
compatibility with international obligations.  In this  regard, the Minister of Economy of Albania, on 
behalf of his Government and in accordance with Paragraphs 3 and 4 of Article IX of the Marrakech 
Agreement Establishing the World Trade Organization, had presented to the CTG a request for a waiver 
from obligations to implement the commitment s for 2004/2005 for a small group of products. 
9.3 Given that Albania was a small economy in transition, whose budget depended mostly on 
customs tariffs, the cost to implement such co mmitments during 2004 would have a negative impact 
on its economy.  Estimated at 5.8 million dollars , these costs represented about 33 per cent of the 
budget for 2004.  This burden on the current defi cit budget could also have a negative impact on 
Albania's macro-economic stability, which remained  fragile despite the consolidation efforts 
undertaken by its authorities.  A favourable cons ideration by WTO Members of Albania's request 
would be an important contribution to swifter development in Albani a;  would avoid damages to the 
economic and trade interests;  and would assist Alba nia in its efforts to extend its domestic markets, 
eliminate trade instability, and benefit from investme nt in several industries.  He reiterated Albania's 
commitment to continue along its path to fulfil its  WTO obligations and to respect WTO principles. 
9.4 The Chairman  proposed that the Council take note of the statement made by Albania and agree 
to revert to this matter at the next meeting.  The Chair also indicated that under the provisions of 
Article IX of the WTO Agreement, the time-period fo r consideration of a request of a waiver "shall 
not exceed 90 days", at the end of which the CTG had to submit a report to the Ministerial Conference 
or the General Council, as the case may be.  Given the proposed timing for the next CTG meeting, it 
would not be possible to consider Albania's request  within the specified tim e-frame.  He requested 
Members' understanding in this regard and in th e absence of objections, suggested taking action on 
Albania's request at the next CTG meeting. 
9.5 The Council took note  of the statement made and agreed  to revert to this matter at its next 
meeting. 
B. NEXT MEETING OF THE CTG 
9.6 Finally, the Chair  indicated that the next CTG meeting was scheduled to take place on 
Friday, 11 March 2005.  The agenda would close on Tuesday 1 March 2005. 
 
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