RESTRICTED  WORLD TRADE  
ORGANIZATION  TN/RL/M/22 
7 February 2005 
 (05-0483) 
Negotiating Group on Rules  
  
 
SUMMARY REPORT OF THE MEETING 
HELD ON 16 DECEMBER 2004 
 
Note by the Secretariat
 
 
 
1. The Negotiating Group on Rules ("the Group") held a formal meeting on 16 December 2004. 
A. ADOPTION OF THE AGENDA  
2. The Group adopted the flowing agenda: 
A. ADOPTION OF THE AGENDA 
B. ANTI-DUMPING 
C. SUBSIDIES AND COUNTERVAILING MEASURES, INCLUDING FISHERIES 
SUBSIDIES  
D. SPECIAL AND DIFFERENTIAL TREATMENT PROPOSALS REFERRED TO 
THE GROUP BY THE CHAIRMAN OF THE GENERAL COUNCIL    
E. OTHER BUSINESS 
- Date of future meetings of the Group for the first semester of 2005.   
B. ANTI -DUMPING  
3. The Group discussed a submission entitled "Accrua l of  Interest (ADA Articles 9.3.1 & 
9.3.2)" (TN/RL/W/168).  The sponsor explained that  the theme of the paper was previously discussed 
in its earlier submission (TN/RL/W/98) and in the c ontext of a submission by other Participants on 
reviews (TN/RL/GEN/10).  It explained that the Agreement on Anti-Dumping (ADA) called for the 
refund of duties in excess, both in retrospective and prospective systems, but did not require the 
payment of interest on the excess duties collected.  The paper suggested that when authorities refund duties, a reasonable amount of interest should be paid on those duties to alleviate the burden on the 
importer.  
4. Some Participants welcomed the clarifications sought in the submission, agreed that the time 
value of money was an important principle to re cognize, and submitted that lost interest often 
constituted a burden on exporters in  addition to the amount of dumping or subsidies found to exist.  
They saw merit in further discussing the issues raised  in the two footnotes of the submission.  They 
asked whether the submission suggested the paymen t of interest in the context of provisional 
measures, as well as similar provisions of the Agreement on Subsidies and Countervailing Measures 
(ASCM).  TN/RL/M/22 
Page 2  
 
 5. Other Participants cautioned against the difficu lties of implementing such a proposal in view 
of differences between retrospective and prospective duty collection systems and enquired whether 
the sponsor had considered such differences.  It wa s estimated that in a prospective system no more 
than 1 per cent of duties would be subject to refund applications, while in retrospective systems, there 
was always a chance that a cash deposit would be refunded or not finally collected.  Therefore the 
amount of money which potentially could be paid back was far bigger in the retrospective duty 
collection system.  
6. It was recalled that an earlier submission on reviews had encouraged the authorities to pay 
interest at a reasonable rate if duties were not re funded within 90 days following the completion of a 
review under Articles 9.3 or 11.2.  Interest woul d only be applied after the final duty was assessed. 
Regarding footnote 2, the view was expressed that if authorities assessed an in correct or insufficient 
amount of duty, an importer should not be required to pay interest as it would impose an unreasonable 
burden on him.  It was enquired whether in making a re fund interest should be paid even if no interest 
had been earned by the authorities on the excess monies deposited.  A discussion on how countries 
collect and reimbursement duties was suggested. 
7. The sponsor explained that it had considered  the distinctions between prospective and 
retrospective systems.  The discussions had clarif ied that some countries with prospective systems 
allowed for payment of interest where excess dutie s were refunded, which proved that even in a 
prospective system this was a relevant issue.  A lthough the paper focused on Articles 9.3.1 and 9.3.2, 
if provisional duties were followed by final me asures of a lesser amount, the additional monies 
collected should be returned with interest.  The sponsor noted that in both prospective and 
retrospective systems a customs service might improperly assess duties and then refunds should be 
provided with interest.  The sponsor also envi saged scenarios where its proposal might also be 
applicable to prospective systems. In re-determina tions, for instance, situations might occur where an 
authority re-evaluated whether or not a party had been fulfilling its obligations and sought to collect 
additional amounts because of an impropriety.  The s ponsor observed that in its system over-collected 
duties were refunded with interest and similarly, where a party had underpaid, additional duties were 
collected and interest assessed.  It wished to ensure that basis for in terest rates was open, transparent, 
and consistent.   
C. 
SUBSIDIES AND COUNTERVAILING MEASURES , INCLUDING FISHERIES SUBSIDIES  
8. The Group discussed a submission entitled "Additional Views on the Structure of the 
Fisheries Subsidies Negotiations" (TN/RL/W/169).  Th e sponsor observed that the fisheries subsidies 
negotiations had made good progr ess and had benefited from a wide-ranging discussion concerning an 
appropriate structure for the negotiations.  It be lieved that the top-down approach proposed in 
TN/RL/W/166 offered a way forward in a flexible and realistic manner.  In contrast, a bottom-up 
approach could lead to disciplines th at were weaker than current rules.   It emphasised that the primary 
focus of the negotiations should be to strengthen di sciplines on subsidies that contributed directly to 
over-capacity and over-fishing, and that the fundame ntal discipline applicable to such subsidies 
should be a prohibition.  However, there could be various ways to make such a prohibition 
operational, including the broader prohibition discussed  in TN/RL/W/166, and the exact scope of the 
prohibition would need to be negotiated.  
9. The sponsor believed that the top-down appr oach was sufficiently flexible to allow 
programmes that did not generally contribute to over-capacity and over-fishing through the 
negotiation of appropriate exceptions. It referred  to a paper it had submitted to the Committee on 
Trade and Environment (WT/CTE/W/154) which identif ied several types of programmes that did not 
generally contribute to over-capacity and over-fishing and were similar conceptually to the candidates 
suggested for consideration as exceptions under the top-down approach reflected in TN/RL/W/166.  A  TN/RL/M/22 
 Page 3 
 
 
 top-down approach could also allow for a reasonabl e transition period for Members to reconsider and 
adapt their programmes. 
10. As for the negotiation of exceptions, the sponsor saw merit in basing such negotiations on the 
consideration of Members' particular current fi sheries programmes rather than on a discussion of 
broad categories of fisheries subsidies.  It was not always easy to determine what programmes are 
included in a given category; discussion of specific programmes would avoid this problem and would 
alleviate concern that the exceptions could be open-en ded and lead to circumvention.  It believed that 
exceptions to a prohibition under a top-down approach  should be actionable unde r other provisions of 
the ASCM.  Members might want to consider clar ifying the serious prejudice provisions of Article 6 
of the ASCM to make them more operational in the specific context of fisheries subsidies.   
11. Some Participants agreed that  the way forward should be based on a sound, transparent and 
enforceable framework of a broad ban prohibition of fisheries subsidies within the context of which 
Members could negotiate their programmes affected  by such prohibition.  Discussions should not 
focus on broad categories of fisheries subsidies, but rather on the details of the Member's actual programmes.  This would ensure a common understa nding of what subsidies fall within different 
categories and would serve as an important exercise  in transparency.  The idea of placing conditions 
on certain exceptions, for example vessel decommissi oning, was also referred to in order to ensure 
that exempted programmes meet the desired envi ronmental objectives.  Concerns were however 
expressed that trying to write new rules based on en vironmental or management concepts would take 
the WTO outside its traditional area of competency and expertise.  They also echoed the need to 
render any exceptions to the prohi bition actionable and to analyse further how to assess serious 
prejudice in the context of fisheries subsidies.  The importance of strengthening the notification 
obligation was also called for. 
12.  Other Participants were of the view that a top-down approach was not in line with the 
existing ASCM, which prohibited only two types of severe trade distorting subsidies.  A top-down approach would prohibit fishery subsidies without any consideration of adverse effects and would 
treat the sector differently than other sectors whic h are disciplined on the basis of trade distortion.  
Further, a top-down approach would not allow flex ibility for future policy needs, which would be 
especially detrimental for developing countries.  Th e exceptions and/or transitional periods might not 
be enough to reflect diverse policy needs of countries with different fishery environments.  Further, 
Members would not be able to avoid the race fo r exceptions.  A broad prohibition was an extreme 
inappropriate approach; Members should develop toge ther a balanced and practicable prohibition.  
The scope of permitted subsidies should be wide r and should be made non-actionable, while the 
reintroduction of a dark amber box in the context of fi sheries subsidies was not desirable.  If enhanced 
transparency was sought, Members should implemen t the existing notification requirements in the 
ASCM.  It was enquired whether the sponsor would consider including certain subsidies mentioned in 
its own paper, such as "buybacks" and "hatcheri es programmes" into a non-actionable category.   
13. On the issue of Special and Differential Treat ment (S&D), although one Participant saw merit 
in reflecting the significant differences among devel oping countries in the final disciplines, other 
Participants considered that any disciplines should not differentiate between developing countries.  
They emphasised that whether a top-down or bottom-up approach was used, resulting disciplines should not displace employment in the fisheries sector or cause adverse social and economic consequences for fishing communities.  They cau tioned against an outright prohibition that could 
inhibit the use of fisheries subsidies for legitimate and sustainable development; fisheries subsidies for 
developmental purposes should not be actionable.  It was emphasized that discussions should not focus solely on current programmes, but should also encompass potential future programmes to 
develop fisheries.  The sponsor and other Partic ipants were invited to provide the Group with 
information on the amount of subsidies given unde r various categories and programmes listed in 
footnote 7 of the submission.  TN/RL/M/22 
Page 4  
 
 14. The sponsor welcomed the support for a prohi bition focussed on over-capacity/over-fishing, a 
prohibition that identified the most harmful subsid ies.  It emphasised the importance of retaining 
actionability for exceptions to the prohibition and discouraged any carve-outs from the ASCM that 
could be subject to circumvention and abuse.  Regard ing the dark amber category, it would be hard to 
be specific about exactly what changes would be needed until the membership  had a better sense of 
what the prohibition would be.  It was of the vi ew that the top-down approach was sufficiently 
flexible to address the legitimate interests of  Members at all levels of development.   
D. 
SPECIAL AND DIFFERENTIAL TREATMENT PROP OSALS REFERRED TO THE GROUP BY THE 
CHAIRMAN OF THE GENERAL COUNCIL  
15. The Chairman of the Group referred to the General Council's Decision of 1 August 2004 
stipulating that the bodies to which S&D proposals ha ve been referred should expeditiously complete 
their consideration of the proposals and report to the General Council, with clear recommendations for 
decision, no later than July 2005.  Rules-related proposals (AD/SCM) were contained in documents 
TN/CTD/W/1, TN/CTD/W/3/Rev.2 and TN/CTD/W/4 /Add.1 and related to Articles 15 of the ADA, 
3.1, 27.3, 27.1, 27.4, 27.8, 27.9, 27.13 and 27.15 of the ASCM.  Since the referral of these proposals 
to the Group in May 2003, they had been  considered at two formal meetings and, except in respect of 
one of these proposals, the sponsors were either unable to attend the meetings or were not in a 
position to introduce their proposals.  The Chairman invited the sponsors to introduce their proposals, 
but no Participant was in a position to do so.  At the suggestion of a Participant, the Chairman 
undertook to enter into contact with the sponsors of the proposals.  
E. OTHER BUSINESS  
16. The Group agreed that the first two meetings in  2005 would be held on 21-25 February and 
11-13 April 2005.  The Chairman informed Partic ipants that he had reserved rooms for possible 
meetings of the Group in the weeks of 6-10 June and 11-15 July 2005 and proposed to take a final 
decision as to these meetings in April 2005.  
17. The next meeting of the Group relating to AD/SC M including fisheries subsidies will be held 
on 21-25 February 2005.  The deadline for any info rmal elaborated proposals for consideration in 
informal mode at that meeting is Monday , 7 February 2005, close of business.    
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