RESTRICTED  WORLD TRADE  
ORGANIZATION  G/C/M/86 
3 January 2007 
 
 (07-0017) 
Council for Trade in Goods  
  
MINUTES OF THE MEETING OF THE COUNCIL FOR TRADE IN GOODS 
20 NOVEMBER 2006 
 
Chairperson: H.E. Ambassador Yonov Agah (Nigeria
) 
  
 The meeting of the Council for Trade in Goods was convened by airgram WTO/AIR/2932 
and the proposed agenda for the meeting was c ontained in document G/C/W/567.  The meeting 
proceeded on the basis of the following agenda.  
Table of Contents
 
 
I. REVIEW OF THE OPERATION OF THE AGREEMENT ON TRADE-
RELATED INVESTMENT MEASURES (TRIMS) UNDER ARTICLE 9 ........................2  
II. REGIONAL TRADE AGREEMENTS ..................................................................................3  
A. FREE TRADE AGREEMENT BETWEEN HONDURAS AND MEXICO ...................................................3  
B. FREE TRADE AGREEMENT BETWEEN GUATEMALA AND MEXICO ................................................3  
C. FREE TRADE AGREEMENT BETWEEN JORDAN AND SINGAPORE ...................................................3  
D. ECONOMIC PARTNERSHIP AGREEMENT BETWEEN JAPAN AND MALAYSIA ..................................3  
E. FREE TRADE AGREEMENT BETWEEN  THE EFTA STATES AND THE REPUBLIC OF KOREA ..............3  
F. FREE TRADE AGREEMENT BETWEEN COSTA RICA AND MEXICO ..................................................3  
G. FREE TRADE AGREEMENT BETWEEN THE UNI TED STATES AND THE KINGDOM OF 
BAHRAIN ............................................................................................................................... .......3  
H. ENLARGEMENT OF THE EUROPEAN UNION ..................................................................................3  
I. ASSOCIATION AGREEMENT BETWEEN THE EUROPEAN COMMUNITIES AND ALGERIA .................3  
III. MARKET ACCESS MATTERS .............................................................................................5  
A. COMMITTEE ON MARKET ACCESS – PERIODIC REPORT OF THE COMMITTEE ...............................5  
B. INTRODUCTION OF HARMONIZED SYSTEM 2002  CHANGES INTO WTO SCHEDULES OF 
TARIFF CONCESSIONS – REQUESTS FOR EXTENSION OF THE WAIVER ..........................................5  
C. A PROCEDURE FOR THE INTRODUCTION OF HARMONIZED SYSTEM 2007  CHANGES TO 
SCHEDULES OF CONCESSIONS USING THE CONSOLIDATED TARIFF SCHEDULES (CTS) ................6  
D. INTRODUCTION OF HARMONIZED SYSTEM 2007  CHANGES INTO WTO SCHEDULES OF 
TARIFF CONCESSIONS – REQUESTS FOR A WAIVER ......................................................................6  
IV. TRANSITIONAL REVIEW UNDER PARAGRAPH 18 OF THE PROTOCOL 
OF ACCESSION OF THE PEOPLE'S REPUBLIC OF CHINA........................................6  
A. REPORTS OF THE SUBSIDIARY BODIES OF THE COUNCIL FOR TRADE IN GOODS ..........................6  
B. COUNCIL FOR TRADE IN GOODS -SPECIFIC REVIEW ....................................................................11  G/C/M/86 
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  V.
 UNITED STATES – REQUEST FOR WAIVERS FOR AFRICAN GROWTH 
AND OPPORTUNITY ACT, CARIBBEAN BASIN ECONOMIC RECOVERY ACT, AS AMENDED, AND ANDEAN TRADE PREFERENCE ACT, AS AMENDED........................................................................................................................ ......15
 
VI. EUROPEAN COMMUNITIES – REQUEST FOR AN EXTENSION OF 
ARTICLE XIII WAIVER FOR THE TARIFF RATE QUOTA FOR BANANAS 
OF ACP ORIGIN.................................................................................................................. ..21 
VII. UNITED STATES – REQUEST FOR AN EXTENSION OF THE WAIVER 
FOR THE KIMBERLEY PROCESS CERTIFICATION SCHEME FOR ROUGH DIAMONDS ............................................................................................................24
 
VIII.  CANADA – REQUEST FOR AN EXTENSION OF THE WAIVER FOR THE CARIBBEAN INITIATIVE...................................................................................................24
 
IX. CUBA - REQUEST FOR EXTENSION OF WAIVER UNDER ARTICLE IX OF THE WTO AGREEMENT CONCER NING GATT ARTICLE XV:6 .......................25
 
X. CONCERNS AND QUESTIONS RAISED TO COLOMBIA REGARDING 
CERTAIN CUSTOMS MEASURES APPLIED TO IMPORTS OF GOODS 
FROM PANAMA AND OTHER WTO MEMBERS ..........................................................25  
XI. CONSIDERATION OF ANNUAL REPORTS OF SUBSIDIARY BODIES OF THE COUNCIL FOR TRADE IN GOODS.........................................................................27
 
XII. ADOPTION OF THE ANNUAL REPORT OF THE COUNCIL FOR TRADE IN GOODS TO THE GENERA L COUNCIL (G/C/W/501)...............................................28
 
XIII.  ISSUES RELATED TO TRADE IN TEXTI LES – SUBMISSION OF TURKEY...........28  
XIV.  OTHER BUSINESS................................................................................................................3 1 
A. DATE OF THE NEXT MEETING .....................................................................................................31  
 
 I. REVIEW OF THE OPERATION OF THE AGREEMENT ON TRADE-RELATED 
INVESTMENT MEASURES (TRIMS) UNDER ARTICLE 9 
1.1 The Chairman
 recalled that the Council had before it for some time a joint proposal by Brazil 
and India concerning a study of the impact of TRIMs and of their elimination.  The terms of reference 
for this study were contained in document JOB(04)/9 3.  Members had taken up this issue on repeated 
occasions but had been unable to reach a consen sus on the desirability of conducting the proposed 
study. As far as he understood, there had been no new developments in Members' positions since the 
last CTG meeting in May.   1.2 The representative of Brazil
 re-stated his delegation's interest in this subject.  His delegation, 
together with the Indian delegation had made a proposal for a study that would not be pursuant to any 
specific sector nor would raise any systemic interests or concerns.   On the contrary, it was envisaged 
in the TRIMS Agreement itself.  In that context, his delegation regretted that Members had not been engaging actively in this subject and his delegation would continue to raise this matter in the CTG. 
 1.3 The representative of Argentina
 also expressed his delegation's disappointment with the lack 
of progress here.  It was a subject of much interest to many developing countries and the study which 
had been requested in Brazil's and India's document was in conformity with the TRIMs mandate.  For 
that reason, his delegation encouraged delegations to co-operate to move forward on this matter. 
  G/C/M/86 
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  1.4 The representative of India  said that his delegation was a co-sponsor of the proposal and, 
therefore, was interested in seeing the matter move forward.  His delegation fully agreed with the 
statements from Brazil and Argentina.  1.5 The representative of Pakistan
 also supported the previous speakers and would like to see 
progress in this area. 
 1.6 The Chairman
 proposed that the Council take note of the statements made and that the 
Council revert to this matter at a future meeti ng at the request of any interested Members. 
 
1.7 The Council so agreed . 
 
II. REGIONAL TRADE AGREEMENTS 
A. FREE TRADE AGREEMENT BETWEEN HONDURAS AND MEXICO  
B. FREE TRADE AGREEMENT BETWEEN GUATEMALA AND MEXICO  
C. FREE TRADE AGREEMENT BETWEEN JORDAN AND SINGAPORE   
D. ECONOMIC PARTNERSHIP AGREEMENT BETWEEN JAPAN AND MALAYSIA  
E. FREE TRADE AGREEMENT BETWEEN  THE EFTA STATES AND THE REPUBLIC OF KOREA   
F. FREE TRADE AGREEMENT BETWEEN COSTA RICA AND MEXICO   
G. FREE TRADE AGREEMENT BETWEEN THE UNITED STATES AND THE KINGDOM OF BAHRAIN   
H. ENLARGEMENT OF THE EUROPEAN UNION  
I. ASSOCIATION AGREEMENT BETWEEN THE EUROPEAN COMMUNITIES AND ALGERIA  
2.1 The Chairman  drew Members' attention to the nine Agreements listed under this item that had 
been notified under GATT Article XXIV.1  The texts of the Agreements and their notifications had 
been circulated in the documents listed.    
2.2 The representative of the European Communities
 made a few short introductory remarks 
related to sub-item H. First, his delegation understood that sub-item H was on the agenda in part to 
invite the Committee on Regional Trading Arrangement s to start the evaluation of this impending 
enlargement under Article XXIV:5.  His delegation welc omed that.  Second, he drew the attention of 
the CTG to the fact that on 28 September, his dele gation had provided to Members the notifications 
necessary regarding this upcoming enlargement of the EU to include Bulgaria and Romania.  
Obviously, in accordance with the procedures set out in Article XXIV:6, his delegation was ready and 
willing to engage in the examination of the change s to the tariff regimes of Bulgaria and Romania 
consequent to enlargement and, where appropriate , negotiate with Members holding negotiating rights 
and offer eventual compensation.  Following the notif ication of 28 September, the period for partners 
to claim supplying rights was open and his delegatio n looked forward to working with all delegations 
concerned to treat justifiable requests for co mpensation as a result of this enlargement. 
                                                      
1The texts of the Agreements and their notifications had been circulated in documents 
WT/REG213/N/1, WT/REG214/N/1, WT/REG215/N/1, WT/REG216/N/1, WT/REG217/N/1, 
WT/REG218/N/1, WT/REG219/N/1, WT/REG220/N/1, and WT/REG221/N/1.   
 G/C/M/86 
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2.3 The representative of Ecuador
 was grateful for the information and notifications submitted by 
the EC in this connection.  It was also grateful  for the EC's readiness to begin proceedings provided 
for in Article XXIV and Article XXVIII of the GA TT 1994 with the inclusion of tariff negotiations 
and consultations so as to tackle the compensat ory adjustment mentioned in paragraph 6 of 
Article XXIV of GATT 1994.  Ecuador, in acco rdance with paragraph 4 of the Guidelines on 
Procedures for Negotiations under Ar ticle XXVIII of the GATT, would communicate in due course to 
the EC its interest in initiating negotiations a nd consultations envisage in Article XXVIII of the 
GATT 1994, under those headings in which it had be en recognized as having initial negotiating rights 
and/or a principal supplying inter est and/or a substantial interest. 
 
2.4 Ecuador was a main supplier of bananas and other products to Bulgaria and Romania and, 
thus, expected due compensation.  In this conn ection, she reminded Members that the process of 
compensatory adjustments for the enlargement of the EU to 25 in 2004 had not yet been completed.  
Three years had passed without her delegation receiving a satisfactory offer which would enable it to 
reach an agreement on compensatory adjustment s for the damage suffered by Ecuador.  The new 
deadline for the conclusion of these negotiations was 1 February 2007.  In th is connection, Ecuador 
reserved its right to withdraw substantial equivalent  tariff concessions on produc ts of interest to the 
EC should, by the end of the year, there was no agreement on adequate compensation, in conformity with Article XXVIII:3 of GATT 1994.  
2.5 The representative of Guatemala
 said that her delegation had ta ken note of the data presented 
by the EU so that it could make a general assessment under Article XXIV of GATT 1994.  Various 
WTO bodies were dealing with specific concerns;  Guatemala had submitted specific concerns in the 
General Council.  However, she would not address tho se.  She wished to inform Members that, with 
regard to the inclusion of Bulgaria and Romania,  Guatemala had submitted a note to the EC in which 
it requested a bilateral meeting to discuss matters re lated to the access of various Guatemalan products 
to the European market.  Guatem ala was interested in negotiating and agreeing on market access in 
the EC for its future sugar exports.  This note was based on Guatemala's cap acity as a Member with 
substantial interest and she hoped that the EC w ould respond to the concerns expressed and fully 
respect Guatemala's negotiating rights.  
2.6 The representative of Honduras
 noted that the negotiating period was still open.  For the 
record, his delegation wished to make it perfectly clear that, as was said by Ecuador, the process of enlargement of 10 new EU Members had still not been  completed.  His delegation reserved its rights 
in this particular matter for the future, especially in areas where it had an interest. 
 
2.7 The representative of Australia
 said that her delegation had take n a strong interest in the EC 
enlargement processes, including from 15 Member St ates to 25 Member States across a number of 
Committees.  Her delegation shared concerns that  others had expressed related to the lack of 
completion of this process.  In relation to the 25 to 27 enlargement, her delegation noted its 
expectation that the examination of the EU 27 enla rgement would cover modifications of agriculture 
subsidy commitments.  She also asked the EC to confirm that the 90-day period commenced on 
28 September 2006 despite the fact that there was a revision of the EC's original circulation 
distributed later.    2.8 The representative of Colombia
 echoed the statements of Ecuador, Guatemala and Honduras.  
Similarly, her delegation's concer ns continued, time was running out, and thus far there had been no 
negotiations with the EC that might lead to a solution for each and every Member that had been 
effected by the EU enlargement.  Her delegation was still waiting to see what would develop over the 
next few months, particularly in view of the fact that the time period was about to expire and there had been no action on the part of the EC in this connection.   G/C/M/86 
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  2.9 The representative of the European Communities  noted the comments and concerns of those 
delegations worried about the unfinished business of  the EU 10 enlargement and took these concerns 
seriously.  His delegation did not necessarily share their appreciation that nothing had been done by 
the EC on this matter.  His delegation considered  that matters were taken into account in the 
movement to a tariff-only regime, but did understand th at views were divided on this.  His delegation 
was studying Guatemala's letter regarding the treatment  of sugar in the context of this forthcoming 
enlargement, and would reply in a few days.  In response to Australia's qu estion regarding the fact 
that his delegation notified on 28 September but su bsequently issued a corrigendum on 12 October, 
his delegation considered, strictly speaking, that the 90-day period for compensation claims indicating 
a negotiating interest started from 28 September.  Howe ver, if a particular country had difficulty in 
analysing the data, or in identifying the possi ble negotiating rights and its compensation rights 
because of the corrigendum, his delegation would be flexible and give correspondingly additional 
time for countries to engage with the EC in that process.  His delegation would not be dogmatic about 
the date from which the process began, to the extent that an individual Member would need a few days time corresponding to the delay caused by the corrigendum. 
 
2.10 The Chairman
 proposed that the Council take note of the statements made and that the 
Committee on Regional Trade Agreements carry out  the examination of the above-quoted nine 
Agreements in accordance with th e following terms of reference: 
 
"to examine, in light of the relevant provisi ons of the GATT 1994, the nine trade agreements 
just 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 contained 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 cu stoms unions and free trade areas." 
 2.11 The Council so agreed
. 
 
III. MARKET ACCESS MATTERS 
3.1 The Chairman  noted that the Market Access Committee had forwarded four items for 
consideration to the Council for Trade in Goods.   
 A. 
COMMITTEE ON MARKET ACCESS – PERIODIC REPORT OF THE COMMITTEE  
3.2 The Chairman  drew Members' attention to the peri odic report of the Committee on Market 
Access contained in document G/MA/193.  As the repo rt was factual in nature, and reflected the work 
undertaken in the Market Access Committee, he s uggested that the Council take note of it.   
 3.3 The Council so agreed
. 
 B. 
INTRODUCTION OF HARMONIZED SYSTEM 2002  CHANGES INTO WTO SCHEDULES OF TARIFF 
CONCESSIONS – REQUESTS FOR EXTENSION OF THE WAIVER  
3.4 The Chairman  drew Members' attention to the draft waiver decision circulated in document 
G/C/W/564, which had been made in connection wi th the introduction of HS2002 changes into WTO 
schedules of tariff concessions.  The current waiver decision was contained in document WT/L/638 and would expire on 31 December 2006.  The one year extension of the waiver decision was the subject of consultations in the Market Access Committee where it was considered at the formal meeting that 
took place on 4 October 2006.  He proposed that the Council approve the draft waiver decision 
contained in G/C/W/564 forward it to the General Council for adoption? G/C/M/86 
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3.5 The Council so agreed
. 
 C. 
A PROCEDURE FOR THE INTRODUCTION OF HARMONIZED SYSTEM 2007  CHANGES TO 
SCHEDULES OF CONCESSIONS USING THE CONSOLIDATED TARIFF SCHEDULES (CTS) 
3.6 The Chairman  drew Members' attention to a draft decision put forward by the Market Access 
Committee in their work to estab lish new procedures to introduce the 2007 Harmonized System 
nomenclature changes into Members' schedules.  Th ese procedures were approved with modifications 
at the formal meeting of that Committee on 3 November 2006.  He proposed that the Council approve 
the procedures and that they be forwar ded to the General Council for adoption. 
 
3.7 The Council so agreed . 
 D. 
INTRODUCTION OF HARMONIZED SYSTEM 2007  CHANGES INTO WTO SCHEDULES OF TARIFF 
CONCESSIONS – REQUESTS FOR A WAIVER  
3.8 The Chairman  drew Members' attention to the draft waiver decision circulated in document 
G/C/W/566, which had been made in connection wi th the introduction of HS2007 changes into WTO 
schedules of tariff concessions.  This draft waiver decision was considered at the formal meeting of the Committee on Market Access that took place on 16 Oc tober 2006.  He noted that the Preamble currently 
contained a cross-reference to a pa ragraph which was deleted from the final version of the draft HS2007 
procedures just approved.  To remedy this situatio n, he proposed deletion of the seventh phrase of the 
preamble which read:  "Considering that the General Council, by its decision of ......, set forth  a 
procedure by which those Members not currently covered by this waiver  could be included;"  This 
would not impact the draft waiver decision.   He pr oposed that the Council approve this waiver decision 
and recommend that it be forwarded to  the General Council for adoption. 
 
3.9 The Council so agreed
. 
 
IV. TRANSITIONAL REVIEW UNDER PARAGRAPH 18 OF THE PROTOCOL OF 
ACCESSION OF THE PEOPLE'S REPUBLIC OF CHINA  
A. REPORTS OF THE SUBSIDIARY BODIES OF THE COUNCIL FOR TRADE IN GOODS  
4.1 The Chairman  informed Members that, in accordance with paragraph 18 of the Protocol of the 
Accession of the People's Republic of China in docum ent WT/L/432, this Council was to report to the 
General Council on the Transitional Review.  He suggested proceeding in two stages.  The CTG 
subsidiary bodies had, as required, transmitted their re ports to the CTG.  As a first step, he would give 
Members the opportunity to make general comments on those reports and then he would propose that 
the Council take note of these Reviews.  Then, he  would move on to the CTG's own Transitional 
Review in which the CTG was required to review the information provided by China pursuant to 
designated parts of Annex 1.A of the Protocol.    4.2 He reminded Members that the following CT G subsidiary committees had carried out the 
Review:  Market Access - the report was containe d in document G/MA/194;  Agriculture - the report 
was contained in document G/AG/23;  Customs Valu ation - the report was contained in document 
G/VAL/60;  Sanitary and Phytosanitary Measures - the report was contained in document G/SPS/43;  
Technical Barriers to Trade - the report was contained in document G/TBT/20;  Import Licensing - the report was contained in document G/LIC/15;  Rules of Origin - the report was contained in document G/RO/62;  Anti-Dumping - the report was contained in document G/ADP/15;  Subsidies and Countervailing Measures - the report was contai ned in document G/SCM/119;  Safeguards - the  G/C/M/86 
 Page 7 
 
 
  report was contained in document G/SG/82;  a nd TRIMs - the report was contained in document 
G/L/792.  4.3 The representative of the United States
 recalled that this was the fifth Annual Transitional 
Review Mechanism for China, after which more th an one-half of the required reviews would have 
been completed.  After five years it might be helpful to remind Members why the TRM was required 
in the first place.  Unlike prior acceding Members,  China was allowed to accede to the WTO without 
having its trade regime in order.  China had to issue,  revise or repeal thousands of law, regulations and 
other measures.  This process began shortly befo re China acceded and continued well into China's 
WTO membership.  China was also granted numerous  transition periods in its accession agreement, 
meaning that it did not have to adhere fully to certain WTO disciplines until those transition periods 
were over.  The TRM was designed to help Me mbers understand and assess the progress that China 
had made in adopting and complying with WTO discip lines.  From that perspective, the United States 
believed that the TRM continued to be a useful mech anism.  It helped to provide needed additional 
transparency for China's trade regime, and it a llowed Members to seek and obtain clarifications 
regarding China's various trade policies and practices.   It also provided Members with a multilateral 
forum for conveying their expectations and con cerns with China's implementation and compliance 
efforts.  In that regard, the TRM was a useful  supplement to bilateral discussions with China. 
 4.4 After five years of WTO membership, Chin a should have implemented almost all of the 
commitments that it had made in its accession protocol.  Among the few commitments left to be 
phased in were particularly important ones in the area of financial services, scheduled for 
implementation in less than one month.  At presen t, the United States' expectation was that China 
should be acting and should be treated as a full member of the international trading system.  China was reaping the benefits of that membership, and it should be fulfilling all of the responsibilities that 
went with that membership.  Looking back over th e last five years, China had made significant 
progress in implementing specific commitments as well as in adhering to the ongoing obligations of a 
WTO Member under the WTO agreements.  At the same time, however, serious areas of concern 
remained on several fronts.  Many of the Reviews carried out by the subsidiary committees this year 
had generated productive exchanges and demonstrated th at China had put a lot of time and effort into 
reviewing and considering Members' questions and in preparing responses.  He recalled, in particular, 
the useful exchanges that took place before the Anti-Dumping, the SPS, and the TBT Committees.  
One or two other reviews, however, were significantly less productive.  That of the Market Access 
Committee stood out in this regard, which was wh y his delegation was re-asking several of the 
questions it had originally submitted for that Review.    4.5 He highlighted some of the concerns that the United States attempted to raise through the 
TRM exercises.  One common theme emerged from sev eral of the committees, including the Market 
Access, the TRIMS, the Import Licensing, and th e Subsidies Committees.  China had increasingly 
resorted to industrial policies that limited ma rket access by non-Chinese origin goods, or that 
allocated substantial governmental resources to su pport increased exports.  The objective of these 
policies seemed to be to support the development of Chinese industries that were higher up the 
economic value chain than the industries that ma de up China's current labour-intensive base, or 
simply to protect less competitive domestic industries.  He mentioned six examples of these industrial 
policies.  First, China had issued a comprehensiv e auto policy that included provisions discouraging 
the importation of auto parts and encouraging the u se of domestic technology.  It also required new 
automobile and automobile engine plants in China to include substantial investment in research and 
development facilities, even though China expr essly committed in its WTO accession agreement not 
to condition the right of investment on the conduc t of research and development.  While China 
pointed out that industrial policies like this one we re not in themselves binding, the problem was that 
they often led to the implementation of measures th at appeared to conflict with WTO rules.  One 
obvious example involved the April 2005 regulations on auto parts tariffs that served to prolong G/C/M/86 
Page 8  
 
  prohibited local content requirements for motor ve hicles; those regulations were currently being 
challenged by the United States, the EC and Canada in a WTO dispute settlement case.   
 4.6 A second example of another major industrial policy concerned China's steel industry.  This 
policy called for the state's management of nearly ev ery major aspect of China's steel industry.  The 
United States and China had engaged in a productive dialogue in this area, which had increased each 
side's understanding of the other si de's concerns.  Third, it had become clear that China was using 
export restrictions on key raw materials such as c oke and fluorspar in an attempt to bolster the 
competitiveness of downstream producers.  China's export restrictions kept the domestic Chinese 
price for these raw materials artificially low, so  that downstream producers could gain a significant 
price advantage over foreign competitors.  Four th, increasingly, China had also pursued unique 
national standards in many areas of high technology, even where established international standards 
already existed.  Often, the goal seemed to be to foster the extraction of technology or intellectual property from foreign rights-holders.  Fifth, it appeared that excessive government subsidization 
continued to benefit a range of domestic industries in  China.  Notably, some of this subsidization 
involved prohibited export subsidies or prohibited import substitution subsidies.  The United States 
and other Members had repeatedly called for China to  withdraw these prohibited subsidies, but so far 
China had not acted.    4.7 Finally, a troubling trend had emerged over the last year, as China struggled with increasing foreign competition within China.  Instead of lo oking for the market to dictate outcomes, China 
increasingly was resorting to policies that combined restrictions on foreign investment with promotion 
of domestic companies.  This approach was evidenced by the State Council Opinions on the 
Revitalization of the Industrial  Machinery Manufacturing Industries , issued in June 2006.  This 
document called for new controls on foreign invest ment for 16 types of equipment manufacturing, 
such as the manufacturing of semiconductor equipmen t, aircraft engines, pollution control equipment 
and textiles machinery.  It combined these new cont rols on foreign investment with a number of 
initiatives designed to promote and develop domestic companies and to expand their market share in 
China.  As was evident from the Reviews in the Agriculture and the SPS Committees, government 
intervention was also a problem in the agricultural sector.  Trade in the agricultural sector was beset 
by uncertainty, largely because of selective in tervention in the market by China's regulatory 
authorities.  Capricious practices by Chinese cust oms and quarantine officials could delay or halt 
shipments of agricultural products into China, while sanitary and phytosanitary standards with 
questionable scientific bases and a generally opaque regulatory regime frequently frustrated traders in 
agricultural commodities.  China's continuing ban on imports of U.S. beef and beef products was an 
area of particular concern.  It was this excessive government intervention, evident in so many areas of 
China's economy, that gave rise to many of the Unite d States' most difficult trade issues with China.  
This government intervention was a reflection of Ch ina's unfinished journey from a centrally planned 
economy to a free-market economy governed by the rule of law.  At the same time, even 
acknowledging that incomplete transition, there we re some types of measures that China simply 
should not be resorting to as a mature member of the international trading system.  Local content 
requirements, export restrictions and prohibited su bsidies – China should have abandoned its use of 
these types of measures some time ago.  The Unite d States looked forward to its continuing bilateral 
dialogue with China on these and other issues.  The United States continued to prefer using that route, 
where possible, to resolve its outstanding concerns.  4.8 The representative of the European Communities
 said that China was now approaching the 
end of its own transitional period for implementing its accession commitments.  It was clear that China 
had reaped enormous benefits from its membership of the WTO and its access to the rules and 
transparent trading environment provided by the WTO and its Members.  China was now a major trading partner for all and with that came a res ponsibility to show leadersh ip and commitment, and 
demonstrate its own stake in the proper functioni ng of the WTO.  Transparency was an essential 
element of this organization;  the special scrutiny provided for in the Tran sitional Review Mechanism  G/C/M/86 
 Page 9 
 
 
  was approved by China as part of its protocol of ac cession, and as part of its deal in 2001.  Against 
that background, while his delega tion obviously welcomed the cons tructive dialogue, engagement, and 
information provided by China in a number of areas and committees under the TRM, his delegation was still concerned, as were others, about a number of  areas where there was a lack of co-operation by 
China in this year's TRM exercise.  His delegati on had been under-whelmed by the nature of Chinese 
responses to its questions, and was frankly disconcer ted when China's representative at the Market 
Access Committee recently said that the TRM was a discriminatory practice with which China would 
not co-operate.  He hoped that that statement could be  reflected upon and retracted at this meeting.  In 
short, his delegation would welcom e more concrete and detailed rep lies from China to the questions 
that his delegation had raised than had been the case in recent months.  His delegation had circulated a 
document (G/C/W/568) which set out questions to which his delegation wished to see a response from 
China.  He wished to flag six areas of particular c oncern to the EC where it was particularly interested 
and vigilant to see substantive responses from China.  4.9 First, in respect to transparency, his dele gation would like to have more information from 
China about the way in which it had been implemen ting its commitment to provide advance notice of 
significant changes to its trade regulations and to  allow third countries to comment on those proposed 
changes.  A second area related to export restrict ions.  His delegation invited China to notify the 
quantities associated with its various export rest rictions on goods; to transmit to the WTO the 
justification, where there was one, for such export rest rictions;  and for those restrictions where, as far 
as his delegation could see there was no justification, like coke and rare earth, his delegation invited 
China to notify the EC and the WTO when and how it intended to bring those regimes in line with the 
WTO rules.  A third area concerned China's compul sory certification system, i.e. approval system, for 
industrial goods.  His delegation encouraged China to review that system and to develop  and 
implement it in a way that was less costly fo r exports to China, less burdensome in terms of 
procedures to be followed, and more proportiona te in terms of the requirements imposed upon 
products seeking entry to the Chinese market.  Fourth ly, regarding the automotive industrial policy,  
his delegation invited China to review the severe lim itations on foreign participa tion in joint ventures.  
It asked China to indicate when it planned to accede to the 1958 UNECE "Agreement Concerning the 
Adoption of Uniform Technical Prescriptions for Wheeled Vehicles, Equipment and Parts which can be fitted and /or be used on Wheeled Vehicles an d the Conditions for Reciprocal Recognition of 
Approvals Granted on the Basis of these Prescrip tions", which would represent an international 
standard and reduce technical barriers to trade in this sector.  Fifthly, regarding the steel industry 
development policy, he asked China to indicate its plans for enacting implementation measures and which Ministries were responsible for preparing the measures in questions.  His delegation also 
welcomed any information China might provide regarding any intentions to restrict or allow foreign majority investments in the steel sector.  Finally,  his delegation invited China to indicate its current 
thinking on the preparation for accession to th e WTO Government Procurement Agreement. 
 4.10 The representative of China
 expressed his delegation's appreciation for the efforts made by the 
various bodies and the CTG to draft their reports on the TRMs handled by those bodies.  After reading all the reports, he believed that there was a need to  consolidate the form by which the different bodies 
and the CTG were preparing their reports.  His de legation liked the format of the report of the 
Committee on Market Access because it was simple, clear, gave no confusion about what happened, 
and gave a reference to where Members could find the WTO discussions on this issue.  Other reports 
attached Annexes or paragraphs from the minutes of  the meetings which his delegation believed was 
unnecessary.  Therefore, his delegation took the oppor tunity to request that the subsidiary bodies 
follow the format of the Market Ac cess TRM report for their next year's  reports.  It was better to make 
a reference to the document number in which the minutes of the relevant meeting could be found 
rather than annex paragraphs from the minutes to the report.   Members' ability to find those 
paragraphs should be trusted.  His delegation also wondered why so me reports were from the Chair 
while others were from the Committees and wonder ed why there was such a discrepancy in the 
practice.  It would also be desirable to have a cons olidated report by the Co mmittee or by the Chair.  G/C/M/86 
Page 10  
 
  Here his delegation could be flexible but a unified  practice in this regard would help Members to 
avoid any possibilities of confusion or questi ons about the format of the report.   
 4.11 Regarding the US and EC statements, he appr eciated that there were different understandings 
of the functions and role of the TRM under Paragr aph 18 of the Accession Protocol.  The debate or 
divided views about the functions and roles of the TRM had always existed since the first year of  
transition.  His delegation had a different understand ing than that of some Members on the role and 
mandate of the TRM.  Therefore, he could not agr ee with some of the assertions and allegations made 
by the US.  For instance, the US sai d that the reason why it raised th e same question in the CTG that it 
had raised in other subsidiary bodies was becau se the TRM in some subsidiary bodies was not 
productive enough.  The US said that in some CTG subsidiary bodies the TRMs generated productive 
exchanges whereas in some other bodies, e.g. anti-dumping and SPS, there was a less productive 
exchange.  His delegation had difficulty understanding  what was the US definition of productiveness?  
Where in Paragraph 18 was this found?  If Paragr aph 18 said that China had to be productive enough 
to satisfy the US, China would be that productive. Otherwise, China would be put in a position of 
whatever it did or did not do, risking not being productive enough for certain Members.  The same was 
true for the EC.  The EC said that it wanted detailed responses.  He would appreciate if the EC delegation could provide a definition of detailed resp onse, which would help China to meet or satisfy 
EC requests.  Otherwise, whatever efforts China ma de to participate in this exercise, Members could 
still say that it was not detailed enough, or not pro ductive enough.  He believed that if Members were 
requesting information under Paragraph 18, there w as no way for China to satisfy them.  China was 
prepared to participate in the TRM as Paragraph 18 mandated, no more or less productive.  Members' 
requests that went beyond Paragraph 18 were  beyond China's obligations to accommodate. 
 4.12 The US also alleged that China's agricultu ral trade was governed by great uncertainty and  
government intervention.  Remarks of this kind were irresponsible and contrary to the facts.  If US 
exports of agricultural products to China had made  a record in terms of value and quantity and had 
been conducted in a state of uncertainty, it seemed th at the US did not want to change this because it 
was good for the US.  The US allegations that ther e was still too much government intervention in the 
agricultural sector was typical of the hypocrisy on the part of US trade pol icy.  When government 
intervention was in the interest of the US, it welcomed this intervention.  When government 
intervention was perceived as not in the interest of the US  it was seen differently.  He had received 
many US delegations in China who were beggi ng for government intervention to solve certain 
problems.  Finally, he believed that some Members were raising the same questions as they had raised 
in some subsidiary bodies not because they were sp ecifically related to any specific commitments in 
China's accession, or because China was not impl ementing certain specific commitments well, but 
because they had trade concerns.  This was understa ndable.  However, after reading the submissions 
by some Members to the CTG this year, he believe d that they failed to understand the mandate of 
Paragraph 18, the purpose of the Transitional Review , or his delegation's responses.  If the problem 
was one of language, his delegation was prepared to e xplain in more detail what it meant or to repeat 
what it had said in the subsidiary bodies.    4.13 The representative of the United States
 said that his delegation would not agree to the proposal 
that all subsidiary bodies change the format of thei r reports after 5 years of the TRM.  The practice in 
most committees over the last 5 years was to have a brief factual report and attach the minutes of the meeting.  His delegation found this a useful format  particularly since China had refused since the 
beginning of the TRM to provide any written respon ses to any written questions .  As to the Chinese 
delegations' request for a definition of what "pr oductive" might mean, while it was not necessary to 
provide a definition, a basic idea of whether a re view had been productive was whether or not China 
had ignored Members questions.  When China ignored the questions and continued to refuse to answer 
them when raised a second time, his delegation c onsidered that to be unproductive.  Lastly, with 
regard to the Chinese claims that the US wa s hypocritical in complaining about government 
intervention when it caused trade issues, yet seeking government intervention to resolve trade issues,  G/C/M/86 
 Page 11 
 
 
  he believed that this was a function of China's incomplete transition from a planned economy to a 
market economy governed by the rule of law.  It  was not possible at this stage for the Chinese 
Government to simply step out and let the market dictate outcomes.  China's economy was not at that 
point yet.  When problems did arise, they had to  be fixed by further government intervention.   
 
4.14 The Chairman  proposed that the Council take note of  the statements made and of the 
subsidiary body reports.  4.15 The Council so agreed
. 
  
B. COUNCIL FOR TRADE IN GOODS -SPECIFIC REVIEW  
4.16 The Chairman  recalled that China was required to provide 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 in formation as required u nder Annex 1A of the 
Protocol of Accession in document G/C/W/569.  He also drew Members' atte ntion to the questions 
from Japan contained in document G/C/W/561;  th e questions from the United States in document 
G/C/W/560;  and the questions from the Eu ropean Communities in document G/C/W/568. 
 4.17 The representative of China
 said that some questions posed were exactly the same or similar 
to previous questions.  China believed that it had given detailed, specific responses to these questions 
in the previous meeting as well as in meetings over the past 4 years.  His delegation believed this was 
happening because Members had different interpretati ons of Paragraph 18 of China's Protocol of 
Accession or because Members were not being atten tive enough to his delegation's statements and 
explanations.  He requested that Members refrai n from raising the same issues as those raised 
previously at this TRM.  Export  restrictions, whether in the form of export quotas or duties, as repeatedly stated on various occasions, were ma inly aimed at protecting the environment and 
preserving natural resources, especially exhaustible natural resources.  His delegation believed that 
measures in this regard were consistent with Artic le XX of GATT.  In order to achieve this goal, 
China both implemented domestic pro duction controls and export restri ction measures.  With respect 
to the US question, China's Mineral Resources Wh ite Paper of 2003 outlined the state of China's 
mining industry.  It was introductory material for the public media and public information instead of a formal government policy document.  Therefore,  there was no follow-up implementing measures to 
carry out in this White Paper.  Regarding the automobile imports, according to the GCA No. 38 of 
2006, this standard was used to distinguish whole year call for auto-parts.  As stipulated in GCA 
No. 125, these would not be implemented until 1 Ju ly 2008, before which China would continue to 
maintain auto-mobile imports as in the past.  As to the Government Procurement Agreement, China 
has made efforts in its participation in the accessi on of negotiations into this Agreement and was now 
preparing to start negotiations before December 2007.   At present, a working team of 21 Government 
Ministries or Agencies, including the Ministry of Finance and Ministry of Commerce, had been established to work on the initial o ffer for the accession negotiation.   
 4.18 Regarding the transparency issue, the Ch inese Government had faithfully implemented its 
accession commitments.  All Ministries or Government  Agencies, including the Ministry of Finance, 
AQSIQ, the General Customs Administration and the Mi nistry of Agriculture, etc. were requested to 
provide copies of their newly published trade-related rules to MOFCOM, which was now including all trade-related laws, regulations and rules in  the Chinese Foreign Trade Co-operation Gazette.  
However, it should be noted that while the MOFC OM Gazette published a compilation of the trade-
related laws, regulations and administrative measure s, other Ministries or Agencies could still publish 
their own Gazettes and make their own policy known to the public.  This was a more effective method 
for transparency, in his Government's experien ce.  A public opinion solicitation process, and draft 
trade-related regulations were also published on the website of the respective government competent 
bodies, which provided an easy access for interested  parties to make their voices heard.  Public G/C/M/86 
Page 12  
 
  hearings, symposium and discussion groups also helped to make interested parties involved.  On 
issues regarding importation and distribution of boo ks, newspapers, magazine s, pursuant to Articles 
14 and 16(a) of the Revised Foreign Trade Law, th e Chinese Government had the right to administer 
the importation and exportation of  certain products to protect public moral, public interest and 
national security in accordance with Article XX of GATT 1994.  Except for this issue, his delegation 
believed that the rest was more related to trade in  services rather than goods. Therefore, he referred 
Members to previous discussions in the Council fo r Trade in Services for China's position in this 
matter.    4.19 As clarified in the Subsidies and Count ervailing Measures Committee, the VAT rebate for 
steel exports was definitely not an export subsid y.  There was no prohibitive clause in the SCM 
Agreement to prevent Members from using a policy t ool such as a VAT rebate rate lower than a VAT 
rate.  Since his colleague had made a detailed e xplanation of the VAT reba te on domestic equipment 
purchases, he did not want to elaborate, but enc ouraged Members to read the minutes of the SCM 
Committee meeting of 25 October 2006.  This was a measure to balance the tax burden between 
domestic and imported products rath er than give preferential tr eatment to domestic products.  
Pursuant to Article 18 of Annex 1A of the Protocol of China, his de legation did not regard reform of 
State-Owned Enterprises as relevant to the mandate  of the CTG Transitional Review Mechanism.  
Members should be aware of China's resolution to fu rther this reform.  This was definitely not a 
privatization process but aimed at introducing a more corporate structure and having enterprises operating according to the market economy.  For inv estment issues, the State Council had issued an 
opinion on the revitalization of industrial mach inery manufacturing industries.  While the State 
Council opinion provided guidance in the development of domestic industry, it was not compulsory or 
binding.  So far no implementing measures had been  enacted.  As for the matter of merger and 
acquisition regulations raised by the US, as stated in the TRIMs Committee, China did not regard this 
as related to the TRIMs Agreement or covered under the mandate of the CTG.  China was entitled to 
improve its FTA regime and, in this respect, it saw no inconsistency with the WTO Rules and its 
accession commitments.  Nor did China see any necessity to  discuss this in this Review.  With regard 
to border trade, he requested the Member who ra ised this question to go through Announcement No. 
50 of 2003 published by the General Customs Admi nistration, and later Announcements No. 27 and 
39 which eliminated the preferential import duty for bor der trade.  At present China did not maintain 
any import preferential treatment for border trade.  As for steel policy, China's stance remained the 
same and there were no plans to implement this policy. 
 4.20 The representative of Japan
 did not think it was necessary to explain her delegation's 
questions in a detailed manner because they were  self-explanatory and, as the Chinese delegation had 
pointed out, some of them were repeated from last  year and from subsidia ry body questions.  Her 
delegation had re-submitted them because it was not satis fied with the answers fr om the past exercises 
and it was not convinced that China had fully carried out its commitments under the Protocol of Accession.  Her delegation wished to briefly respond  to the responses provided by China.  As for the 
customs duties regarding complete automobile featur es, China answered that the current policy would 
continue until 1 July 2008.  Her delegation would li ke to know the situation after that date.  As for 
export restrictions on cokes and fluorite, Ch ina was conducting both domestic control and export 
restrictions.  Her delegation was interested to  know how effectively China was conducting the 
domestic control.  Her delegation had requested some data and would appreciate if China could 
submit some data in its reply.  As for dist ribution services, her dele gation had submitted these 
questions because, in last years exercise, China ha d confirmed that these issues were taken up in the 
CTG.  However, her delegation was flexible and was waiting for the response on this issue in the 
Council for Trade in Services.  Her delegation l ooked forward to hearing good news from the China 
in the area of government procurement.  4.21 The representative of the United States
 said that his delegation, in its written submission, 
raised some new questions as well as resubmitted prev ious questions posed in the Reviews of one or  G/C/M/86 
 Page 13 
 
 
  more subsidiary committee reviews.  The repeat ed questions were ones for which China provided 
incomplete answers or no response.  One of tho se repeated questions addressed the importation of 
books, newspapers, periodicals, electronic publications  and audio-visual products.  China did not 
allow foreign enterprises to import these products, even though the accession protocol gave them this 
right.  Previously, China had justified these import  restrictions under Article XX of GATT.  The 
question in the US submission was not one that ha d been answered.  His delegation knew that China 
had raised the Article XX exception, but his de legation's asked China to explain why these import 
restrictions were necessary.  Why could not China's public moral objective be achieved in a less trade-
restrictive manner?  A second area of enquiry in his delegation's submission involved export quotas 
and export duties maintained by China on raw materi als such as coke and fluorspar.  China addressed 
the issue of the export quotas.  His delegation's question pointed out that China had added export 
duties on these very same products to further disc ourage exports.  China did not address the export 
duties and his delegation would like an explanation of the trade-policy objectives.  Another enquiry 
involved VAT rebate on steel.  China explained that  these were not export subsidies.  His delegation 
did not allege that that was the case, but asked a ser ies of questions such as what was the trade-policy 
objective of these rebates, whether China provided those rebates for steel-making raw materials and 
semi-finished steel products, and on other steel products.  None of those questions had been answered.   
 4.22 In the interest of transparency, his dele gation sought to understa nd the new regulations on 
mergers and acquisitions that were in effect from August 2006.  China previously refused to provide 
any clarification for the TRIMs Committee because it said that the US had not linked its questions to 
violations of particular provisions in the TRIM s Agreement.  His delegation had hoped China would 
reconsider its position and provide the requested clar ifications.  He reminded China that the Chair of 
the TRIMs Committee had stated, in paragraph 46 of the Minutes that, "he wished to recall that this 
exercise in this Committee was an exercise in tran sparency, based on co-operation and would allow all 
Members to understand better the Chinese legislati on on a whole series of matters connected to 
investment".  It was not a challenge to the comp atibility of the Chinese legislation.  His delegation 
believed that all Members were interested in seei ng that the discussions in the Committee were as 
precise and cooperative as possible.  There were other WTO fora where the compatibility of the legislation of Members with the WTO rules could be  challenged.  His delegation was simply looking 
for responses to its questions in the interest of  transparency.  The US saw a variety of updated 
information on the operation of state-owned enterprises in China.  China had maintained that this was 
not relevant to the Committee when the questions were  posed there, and now China maintained that it 
was not relevant to the CTG.  His delegation wonde red where this information would be relevant and 
asked if China could reconsider its position and answ er the questions.  His delegation noted that in 
March 2006 China tried to implement its commitment to  establish a single official journal.  At that 
time China's State Council issued a notice directing all central, provincial and local government 
entities, to send copies of all their trade-related m easures to the Ministry of Commerce for publication 
in the gazette. The US welcomed this move and would like an update on the progress that was being 
made by the Central, provincial a nd local Government entities following the directive in this notice.   
 4.23 The representative of  the European Communities
 took note of China's suggestion that because 
of different interpretations of the Protocol of  Accession, or because Members were not listening 
properly to China's explanations, Members were not fully satisfied and were asking the same 
questions.  His delegation believed that Members ask ed the same questions again because they were 
looking for factual replies to factual questions .  On this, there was no question of differing 
interpretations.  It was a famous Chinese who said that truth should be sought from facts – this was 
what Members were trying to do in this exercise.  He provided the example of export restrictions to 
show the way in which Members had been asking questions according to the letter and spirit of 
paragraph 18 of the Protocol and of the specific commi tments entered into by China in this Protocol.  
China had undertaken to eliminate, upon accession, e xport restrictions unless they could be justified 
under WTO Rules (Paragraph 165 of the Working Pa rty Report).  China had also accepted a legal 
obligation to notify any possible expor t restrictions to the WTO, in particular the quantities associated G/C/M/86 
Page 14  
 
  with those restrictions.  On these issues, his dele gation had not yet received  full factual information 
and asked China, in line with its commitments wh en it joined the WTO, to present a comprehensive 
table which would identify the products, the expor t restrictions, the quantities, export taxes, if 
appropriate, and any other restrictions on the produ cts in question.  His delegation had repeatedly 
sought such information.  His delegation welcomed  China's replies on a number of points.  But 
certainly in the area of export restrictions, the info rmation was lacking.   He noted that in China's 
submission, China said that it would circulate, "in a couple of days", information relating to the restrictions applied in 2006.  It was almost the en d of 2006 and this information, particularly on the 
quantities of the restrictions, would have been useful had it been available much earlier in the year.   
 
4.24 The representative of Cuba
 said that, in his delegation's view, this examination seemed a little 
discriminatory.  Other recently acceded Members, as well as original Members of the WTO were not subject to such detailed scrutiny in each of the WTO Committees.  It also seemed discriminatory to 
refer to government subsidy problems, as some Members had.  For many years and in many cases there had not been any changes as established by the Agreements in the matters of domestic 
assistance.  This was a system of double standa rds.  At the same time, to question supposed 
restrictions on exports or imports when one importa nt Member of the WTO maintained a large number 
of restrictions on the imports and exports of vari ous other Members which had not been notified nor 
did they comply with the MFN principles.  This  was once again a question of discrimination and 
double standards.  His delegation wanted to shar e these views for obvious reasons and ventured to 
hope that these other Members would provide full information about their import restrictions and 
export subsidies. 
 4.25 The representative of China
 thanked Cuba for its statement and its strong sense of justice.  
China was used to discrimination;  this was not the only place China was being treated 
discriminatorily. No other Member but China was requi red to go through this transitional review once 
a year in each subsidiary body.  The question here was that certain Members alleged that China 
ignored their questions, or China did not provide r esponses.  He recalled that China had ignored none 
of their questions.  China had given all the respon ses.  Of course, some of the responses were not 
positive.  However, a negative response was not satisf actory.  The point here was that some Members 
kept asking the same question, no t because these questions fell within the mandate of those subsidiary 
bodies or within the mandate of the TRM, but because,  they were unsatisfied with the answers they 
received.  This was the essence of the issue.  So long as China could not satisfy their request to address 
their concerns, they kept raising the questions in all of the subsidiary body Reviews, regardless of 
whether these questions fell into the mandate of t hose bodies.  He also considered some delegations 
arrogant to refuse to recognise that China had provi ded responses and answers.   The questions were 
raised again as if China had never provided responses.  He did not wish to go into substantive details 
about these issues because his delegation had repeat ed itself during the Reviews.  For instance, one 
Member claimed that China w as a centrally planned economy and was not a fully free market 
economy.  The statement by Cuba  indicated that th ere were Members who claimed that they were free 
market economies and still maintained a large num ber of export restrictions and government 
intervention in the form of anti-dumping restricti ons, trade remedy measures and legislations, and 
export restrictions.  His delegation was puzzled and did not really know how to satisfy those Members.   
 
4.26 The representative of the United States  acknowledged that China was the only WTO member 
who had to undergo a transitional review mechan ism and, in this sense, one could call that 
discriminatory.  At the same time, China was the only Member of which he knew which had been 
allowed to accede to the WTO without having its trade regime in order.  China had to issue, revise, 
repeal thousands of laws, regula tions and other trade measures and,  while it began shortly before 
accession, this process was not completed until well af ter accession.  In addition, China was given 
many transition periods in its Accession Protocol, meaning that it was allowed to comply over time 
with various WTO disciplines.  Because there w as discrimination in China's favour when China 
accede, this "discriminatory procedure" was put in place.  He also wished to continue to dispute  G/C/M/86 
 Page 15 
 
 
  China's claim that all of his delegation's questi ons had been answered many times before.  For 
example, questions 7 and 8 from his delegation's submission concerned export duties that were 
announced on 27 October 2006.  Those were not questions  that had been posed year after year.  They 
were asked but no response about the trade polic y objectives was received.  Another example was 
question 9 from his delegation's submission which ask ed three specific questions regarding the VAT 
rebates on steel.   
 4.27 The Chairman
 thanked all Members for their statements and the delegation of China for the 
answers that it had provided.  Regarding the form of  the report of the Review that was carried out, he 
proposed that the Council proceed in the same manner  as last year.  This would mean that a brief 
factual report would be prepared with references to the documents submitted and the portion of the 
minutes of this meeting which related to the Tran sitional Review attached.  The CTG report, as well 
as the reports of the subsidiary bodies, woul d then be transmitted to the General Council. 
 4.28 The representative of China
 said that he did not think there was a need to attach the relevant  
paragraphs of the minutes;  a reference to the re levant paragraphs of the minutes was sufficient. 
 4.29 The representative of the United States
 said that his delegation wanted to follow the past 
practice of this Council and attach the releva nt paragraphs of the minutes to the report. 
 4.30 The representative of China
 said that he would have  to consult his capital on this issue.  China 
was requesting the consolidation or streamlining of  the form of the TRM report.  Members could 
easily find the relevant portions of the minutes wher e the TRM was discussed.  Therefore, instead of 
attaching these paragraphs to the report, a referenc e to the paragraphs in the minutes was sufficient. 
 4.31 Conclusion of this agenda item was suspende d for a short time pending further consultations. 
 
4.32 In resuming consideration of this agenda item, the Chairman
 informed Members that he had 
held consultations with China.  He proposed that the Council take note of all the statements made and 
that taking into account the past practice of th is Council as well as the views expressed at this 
meeting, he would prepare a factual report which, t ogether with the subsidia ry body reports, would be 
presented to the General Council.  This would conclude the Transitional Review Mechanism. 
 
4.33 The Council so agreed . 
 
V. UNITED STATES – REQUEST FOR WAIVERS FOR AFRICAN GROWTH AND 
OPPORTUNITY ACT, CARIBBEAN BASIN ECONOMIC RECOVERY ACT, AS 
AMENDED, AND ANDEAN TRADE PREFERENCE ACT, AS AMENDED  
5.1 The Chairman  recalled that at the 11 March 2005 meeting of the CTG, the United States 
circulated three requests for waivers in docume nts G/C/W/508 and Add.1, G/C/W/509 and Add.1, and 
G/C/W/510 and Add.1.  The first document consisted of a request for a waiver for the Caribbean Basin 
Economic Recovery Act (CBERA), the second document consisted of a request for a waiver for the 
African Growth and Opportunity Act (AGOA), and th e third document consisted of a request for a 
waiver for the Andean Trade Promotion Act (ATPA).   These requests were considered at that meeting, 
as well as at the 15 June, 15 July and 10 November  2005 meetings of the Council, and the 11 March, 9 
May, and 12 July 2006 meetings.  In addition, several informal meetings were he ld on this matter during 
which a series of questions and answers were exchan ged.  These were in documents  G/C/W/516, 519, 
520, 527 and 534, and the responses in documents G/C/W/518, 526, 531.  Following the Chairman's 
report to the General Council on this matter, the Ge neral Council, at its meeting of 27 and 29 July 2005, 
agreed that the CTG should continue its consider ation of this matter a nd report back when it had 
completed this work.    G/C/M/86 
Page 16  
 
  5.2 He added that at the 10 March 2006 meeting, the Chairman circulated draft decisions on each 
of the three requests.  Document G/C/W/541 contai ned the draft decision for the renewal of the US 
waiver for the Caribbean Basin Economic Recovery  Act;  document G/C/W/542 contained the draft 
decision for a waiver for the African Growth  and Opportunity Act; and document G/C/W/543 
contained a draft decision for the renewal of the wa iver for the Andean Trad e Preference Act.  These 
three draft decisions stimulated a large number of statements at the discussions following their 
introduction.  The majority of these statements voiced support for the adoption of these decisions.  However, a few delegations voiced c oncerns with certain aspects of the Decision.  He had held an 
open-ended consultation on the matte r in which he explained that he had consulted among some of 
these concerned Members in an effort to find some way to address their concerns.  At the 
consultation, he informed Members that he sensed that consultations were on-going on language to be 
read out by the Chairman during the adoption of the draft decision and which would be recorded in the minutes of the meeting.  The concerned Memb ers were still consulting on this language.   
 5.3 The representative of the United States
 said that his delegation continued to consult with 
interested delegations so that this issue might be br ought to closure with the approval of the requests.  
He confirmed that his delegation had been trying to deal with the concerns that were put forward by 
Members.  He saw basically two separate problems associated with the waiver requests.  Initially, 
when the waiver request was introduced in 2005,  China had proposed an amendment which was 
problematic for his delegation.  This amendment was supported by Pakistan and subsequently by 
Argentina.  His delegation had been working with China to come up with language which would give 
comfort to those who had expressed concerns about the design of the waiver request.  He hoped to 
reach an agreement with those concerned Members in time for the next CTG meeting.  The second 
problem with the waiver requests was expressed by Paraguay.  His delegation had met with Paraguay 
a number of times, both here and in capitals, to discuss this issue.  He believed that Paraguay 
continued to request compensation in a way that  was inappropriate and not impossible for his 
delegation in the way that the legislation for the pr ogrammes was set out. This was, in a sense, a more 
difficult obstacle.  His delegation reiterated, on the one hand, its appreciation for those who had 
shown a willingness to work with the US and move forward, as well as its dismay, on the other hand, 
that there appeared to be an insupera ble obstacle towards progress from one Member. 
 5.4 The representative of Benin
, speaking on behalf of the African Group, noted that the Council 
for Trade in Goods had been discussing this matter fo r over one and one-half years.  During this time, 
African trade ministers had clearly expressed in Nairobi in April 2006 that, given the potential and contribution of AGOA for their countries' economies, they  had a great interest in participating in this 
regime.  Individual African Members had reiterated the message from African trade ministers underlining the important contribution AGOA made to  improving trade flows, promoting investment, 
creating jobs and also to enhancing the balance-o f-payment structures.  Those countries participating 
in AGOA had also expressed their concern with rega rd to the excessive delays which would result 
from further postponing the decision for granting waivers.  This was why the African Group called upon WTO Members to co-operate so that this matter c ould be resolved once and for all.  He said that 
the patience of the African Group was not inexhaustible  and, if this was not settled, would run out.  
His delegation might be compelled to request that the AGOA waiver be considered separately from 
the other two agreements because it had not seen th e necessary co-operative and flexible approaches 
from other Members.  His delegation believed that successful conclusion of this matter would be 
found through the manner in which it was being a pproached and hoped that the right spirit would 
prevail.  The African Group appreciated the approa ch suggested and the possibility that a statement 
from the Chair be submitted to Members at the next meeting, would move towards a decision.   
 
5.5 The representative of Argentina
 assured the delegate of Benin, on behalf of the African 
Group, that his delegation was ready to co-operate an d be flexible with a view towards the adoption of 
all the waiver decisions.  This flexibility and co -operation must be exercised by all delegations 
including the US.  At the informal meeting his delegation declared its surprise at the progress  G/C/M/86 
 Page 17 
 
 
  emanating from certain consultations in which his delegation did not participate.  The idea was to 
achieve appropriate language for a Chairman's statement.  If one delegation decided to hold 
consultations for the purpose of proposing a Chair's text as a possible solution,  then that was their 
prerogative.  However, it was this body which would decide whether this approach was appropriate.  
He considered that the proposing delegation seemed to  want to stand above the law;  it wanted to 
adopt three waivers which did not include any assura nce for other Members that the adoption of such 
waivers would not create new and fresh obstacles to trade for other Members.  Non-beneficiaries of 
these programmes, which his delegation supported in the belief that Members should not be 
discriminated against, must be assured that these measures would not lead to the creation of trade 
barriers.   
 
5.6 Other adopted waiver decisions which had been  contained language with the safeguard clause 
to which he referred.  He recalled the EC waiv er adopted by the General Council recently for the 
Balkan countries, as well as the Canadian waiver for CARIBCAN.  He asked why one delegation, the 
US, should be exempted from the obligation to ass ure other Members that their waiver would not 
harm non-beneficiary's interests?  In an attempt to  improve the draft decision for the US's requested 
waivers, his delegation had attempte d to look for wording.  First, he suggested that the three US 
waiver decision contain elements that were co mmon to all waivers, namely permission for the 
proposing countries to give preferential treatment;  the obligation to submit an annual report;  the 
obligation to notify the General Council of any change  in the list of beneficiary countries;  and the 
right of other Members, as well as the obligation of th e US, to consult.  Second, he requested that the 
US be flexible, co-operate, and make possible th e adoption of these waivers by accepting, like other 
Members, an assurance clause in th e operative part of the draft decisions.   He proposed the following 
language to be inserted after paragr aph 1 in the operative part of the draft decisions:  "all appropriate 
measures to ensure that such preferential treatment  does not create or raise new trade barriers to the 
trade of other WTO Members".  The wording could be improved but his proposal reflected a 
compromise for the US to take the appropriate steps to ensure that the rights of other Members were 
observed and properly respected.  Finally, he proposed  that the annual report, required in paragraph 2 
of the operative part of the draft decisions, incl ude assurances that there ha d been no diversion of 
imported products under the preferential treatment to third markets.    5.7 The representative of Nicaragua
 recalled that this matter was of great importance to many 
developing countries, among them the poorest and mo st vulnerable Members of this organization. 
Consequently her delegation felt c onstrained to state its position.  Nicaragua was sensitive to points 
made by Paraguay and their scope because her country was faced with a similar situation in the past 
when it had to decide between defending national trading interests and its solidarity with sister 
countries and the proper functioning of a multilateral system.  On those occasions, Nicaragua opted 
finally for not objecting to the waiver for the CBI initiative from which Nicaragua subsequently 
benefited.  Nicaragua supported adoption of the th ree waivers requested by  the US  because these 
were instruments which would promote trade and hen ce development of the beneficiary countries, in a 
manner consistent with the objec tives and standards of the GATT 1994.  Her delegation invited the 
parties concerned to continue to look for a satis factory solution which would avoid possible damage 
to a developing Member.  
 
5.8 The representative of Mauritius  said that his delegation fully associated itself with the 
statement by Benin on behalf of the African Group.   He reiterated the importance of AGOA to the 
Sub-Saharan African countries which had been discu ssed extensively in various formats.  Further 
delay in granting this request would be a major ca use of uncertainty to actual and potential investors 
and could lead to a de-multiplying effect in te rms of employment, investment and overall economic 
drop.  His delegation urgently appealed to those de legations which still had r eservations to reconsider 
their position and exhibit a degree of flexibility, keeping in view the economic and development 
imperative of these schemes.  G/C/M/86 
Page 18  
 
  5.9 The representative of Ecuador
 said that her delegation supported the renewal of all the 
waivers for the US preferential schemes and did not be lieve it appropriate that  distinctions should be 
established at this stage of the game for different treatment for the different beneficiaries.  Ecuador considered all preferential systems important  and that each reflected regional and specific 
circumstances.  The ANDEAN preferences stemmed from international responsibilities for the drug 
and illicit crop problem which was of a global dimensi on and operated in two  ways.  Ecuador, within 
its scarce budgetary provisions devoted enormous ec onomic resources to combating drug trafficking 
and investigating its effects.  This money was not  ear-marked for other needs of its inhabitants. 
Through preferential schemes it was possible to ex change production with new alternative crops 
produced for export to the North-American market.  Such a pragmatic approach would prevail and 
enable Ecuador to deal with this difficult and delicate problem.  The ATPA expired on 31 December 
2006 and hopefully would be renewe d without any delay.  At present, authorities in her country were 
trying to make sure this renewal took place.  Ecua dor reiterated its request for all Members to adopt 
the US requests.  Her delegation was also open to  considering the changes to the paragraphs as 
proposed by China, and would examine Argentina's suggestions. 
 
5.10 The representative of Angola
 said that his delegation supported the declaration made by 
Benin on behalf of the African Group and encour aged other delegations to show flexibility and 
willingness to resolve the impasse.  Further delay on the approval of the waiver for the AGOA could 
cause significant damage to the al ready fragile African ec onomies, given the importance attributed to 
AGOA.  While not intending to reduce the importa nce of the other processes, he simply called on 
Members to review their position due to the vulnera ble position of the majority of African economies, 
Members of the LDC Group and amongst the poorest countries in the world economy.  5.11 The representative of Paraguay
 indicated his delegation's full co-operation in searching for a 
solution.  However, the conditions  were still not there to achieve a consensus.  He explained why 
Paraguay could not agree to the adoption of the deci sions which would authorise the inclusion in law 
of the trade preference schemes described in th e AGOA, CEBERA and ATPA.  The establishment of 
these types of preferential schemes was not the outco me of multilateral negotiations but was the fruit 
of policies and individual actions designed to fa vour the development of needy economies.  As a 
consequence, such schemes might generate discrimin ation which was prejudicial to other countries 
faced with a similar or identical situation which had not been taken into account when such schemes 
were prepared.  Consequently, it was legitimate th at such countries be listened to and that their 
concerns be taken on board.  This  was a systemic objective which Pa raguay had defende d consistently 
within the WTO.  He provided, as an example, th e case of  the EC Cotonou Agreements which raised 
the controversy between EC and India on the app lication of the GSP drugs scheme which called for 
the condition of the concessions of tariff preferenc es to developing countries.  This dispute concluded 
with the ratification of the principle of non-discrim ination in the application of preferences of the 
enabling clause.  More recently, in the context of the Uruguay Round special measures for the least-
developed countries, Paraguay maintained that th e granting of exemptions or waivers to such 
countries should not cause prejudice to the rights of  other developing countries.  Paraguay was not 
seeking compensation nor payment for the application of such preferential schemes;  it was claiming 
that consideration be given to its concerns and needs when fa vouring much more developed and 
prepared economies.  His country was recognised as being a small and vulnerable country in land-
locked circumstances and believed that interna tional organizations and multilateralism existed to 
protect these interests - what would be the purpose of paying the costs associated with joining the 
WTO otherwise?  His delegation had a great deal of patience.  In 2002 it began to express its concerns 
to the US and still had patience after 5 years.  Ec uador mentioned a possibility of a renewal of ATPA 
- would Paraguay continue to be discriminated agains t in this preferential scheme?  His delegation did 
not believe, as the US implied, that the problem w as insuperable.  His delegation would continue to 
look for a way out in the context of the good relati ons it had always maintained with the US.  His 
delegation had demonstrated its readiness and commitment through many contacts and statements  G/C/M/86 
 Page 19 
 
 
  before the US authorities.  It hoped that such e fforts would bear fruit soon and make it possible for 
Paraguay to join the consensus for whic h the Chair was so dearly searching. 
 5.12 The representative of Bolivia
 considered that the concerns of some Members were of a 
systemic nature and did not touch upon the substan ce or contents of the programmes.  His delegation 
agreed that the adoption of th ese three waiver requests should be a joint approach.  While 
understanding the concerns of Para guay, his delegation believed that there may exist alternative ways 
and means of solving these concerns.  Adoption of the waivers, particularly ATPA, was important to 
Bolivia.  It was one of the fundamental pillars  upon which it established the principle of shared 
responsibility in the struggle to control narcotics traffi c.  Bolivia encouraged the Chair to continue his  
efforts to achieve the objective of adopting the waiv ers.  It remained ready to assist in any way. 
 5.13 The representative of Kenya
 supported the three waivers which had to be regarded separately, 
even if two were renewals and one was a new re quest.  If one preferential programme fulfilled the 
conditions, there would be no point in holding it b ack until the others fulfilled necessary conditions.  
Issues that had been raised by some Members had been addressed in the AGOA waiver draft decision.  
The operative part of the decision dealt most of th e issues raised and there was nothing else  needed 
because paragraph 4 and 5 took care of some of the issues that Paraguay had raised.  If the AGOA 
waiver passed the test, why wait for the others to a pprove it?  If there were specific issues peculiar to 
AGOA he wanted to hear them.  The AGOA waiver should not be furt her withheld because there was 
always the possibility to raise any pr oblem that may arise in the future. 
 
5.14 The representative of Jamaica  said that her delegation was encouraged by the report from the 
US that consultations were ongoing on  possible language that could be included in a Chair's statement 
as a means of facilitating adoption of the waivers.   It was concerned that one Member still had 
concerns about the adoption of the waivers.  It urged Paraguay to show fl exibility and understanding 
in light of the importance of this programme to the beneficiary countries.  The main beneficiary 
countries of these three programmes were the most vulnerable in the multilateral trading system.  The main beneficiary countries under CBERA were th e small-economies under the Caribbean sub-region 
which viewed the programme as a platform for in tegrating into the global regional economies.  The 
adoption of the waivers had been pending for a long  time in the CTG which had had an impact on the 
programmes.  She urged expeditious adoption of th e three waivers, taken together, as this would 
provide legal certainty and investor confidence.   
 5.15 The representative of Uganda
 associated her delegation with the statement by Benin on behalf 
of the African Group.  Her delegation joined other Me mbers who spoke in favour of the three waivers. 
Her delegation also called on those Members who had ra ised objections to reconsider their stand.  It 
was important that such countries make an asse ssment of the likely negative repercussions and 
impacts on very poor developing countries in compar ison with the discrimination in their economies.  
Her delegation also supported the statement by Ke nya calling on Argentina and Paraguay to look 
closely at paragraphs 4 and 5 of the AGOA draft decision where their concerns were addressed.  She called for sympathy and understanding from tho se objecting Members and hoped for a quick 
resolution to the impasse.  Her delegation was supportive  of the Chair's efforts in trying to resolve this 
impasse and remained ready to work to reach an agreement. 
 5.16 The representative of Senegal
 supported Benin's statement on the AGOA waiver.  He drew 
Members' attention to the fact that this progra mme had enabled many African economies to integrate 
harmoniously into the world trading system, not only by improving their participation in world trade 
but also by promoting foreign direct investment in their countries.  Senegal benefited particularly in 
the textile sector where it enjoyed joint investment  by the Senegalese and US private sector.  He 
called on all Members which had conc erns with regard to these progr ammes to show flexibility and, 
in doing so, help the African Continent to bene fit from the AGOA programme.  He reaffirmed his 
delegation's support in finding a solution to these requests. G/C/M/86 
Page 20  
 
   
5.17 The representative of Colombia
 shared the interest expressed by other Members with regard 
to the overwhelming need for these waivers to be extended as a packag e.  For the Andean countries, 
this would be a recognition of the consistent effo rts that they had made to find a solution to the 
problem of the production and sale of illicit drugs.  Th e success was a direct resu lt of the international 
community that was called upon to share the res ponsibility with these developing countries who had 
made many necessary sacrifices.  Colombia had been looking at alternative ways which would enable 
it to find a lasting solution for all countries against this problem.  Her delegation thanked the Chair for 
his efforts and encouraged Members to continue the consultations to find appropriate solutions. 
 
5.18 The representative of Nigeria  supported the statement made by Benin on behalf of the African 
Group, as well as those of other African Members.  Her delegation reiterated its support for the 
extension of the AGOA waiver and called upon Members to hasten the progress towards the 
conclusion of the AGOA waiver and the tw o other waivers because the delay on the AGOA 
negatively effected the African countries. 
 
5.19 The representative of Chile  regretted the lack of progress and that the situation had not moved 
over the last few months.  On the one hand, the US  was offering, quite laudably, preferential access to 
its markets to a group of countries to increase the re venue and development of these countries.  On the 
other hand, Paraguay was negatively effected by this measure and was requesting similar or 
equivalent treatment.  Her delegati on re-affirmed its call for continuing consultations to ensure that 
those parties involved could find a solution to the pr oblem and that the waivers could be approved.  
Her delegation trusted the Chair to reach a solution to enable Paraguay to see its claims respected.  
The WTO was not a forum for handing down justice but simply for negotiating in favour of free trade.  It was possible that a solution might be found in ot her areas that were not being debated at present. 
 
5.20 The representative of Barbados
 said that her delegation was part of the Caribbean region 
which had benefited from the provisions of CBE RA and supported the earliest approval of the 
extension of this waiver as well as the other two wa ivers submitted by the US.  Her delegation viewed 
the three waivers as one package.  For Barbados , CBERA had helped enable the development of 
productive capacities as well as expansion of trade th rough export strategies.  Her delegation thanked 
the US and other concerned Members and the Chair fo r efforts in seeking to resolve the differences.  
Her delegation encouraged all parties to rema in open-minded and constructive in reaching a  
resolution.  5.21 The representative of Uruguay
 thanked the Chair for his efforts and encouraged the parties 
involved to continue dialogue with a view to finding a mutually satisfying solution. 
 
5.22 The representative of Peru  supported the statements of Ecuador, Bolivia and Colombia in 
particular.  The waivers should be dealt with together  and not separately.  With regard to the specific 
issue of narcotics, an enormous amount of resources ha been put into combating this problem by the 
countries concerned.  The elimination of drugs tr afficking was of international importance and had 
environmental, political and social consequences.  The preference scheme for the Andean region was 
of a temporary nature because many of the countri es in the area were on the verge of concluding free 
trade agreements with the US.  She reiterated he r delegations position that the waivers be extended 
and that those delegations who ha d objections take into account the efforts certain countries were 
making in the fight against drug trafficking.  
5.23 The Chairman
 thanked Members for their statements.  He noted that, as stated by many 
Members, these programmes were of immense importa nce to developing countries all over the world, 
particularly many small and vulnerable economies in the Caribbean and in Africa.  He proposed that 
the Council take note of the statements made and agr ee to revert to his matter at its next meeting. 
  G/C/M/86 
 Page 21 
 
 
  5.24 The Council so agreed . 
 
VI. EUROPEAN COMMUNITIES – REQUEST FOR AN EXTENSION OF ARTICLE 
XIII WAIVER FOR THE TARIFF RATE QUOTA FOR BANANAS OF ACP ORIGIN 
6.1. The Chairman  recalled that the European  Communities submitted a re quest for an extension of 
its Article XIII waiver for the tari ff rate quota (TRQ) for bananas of AC P origin which was circulated in 
document G/C/W/529 of 11 October 2005.  In this document, the European Communities requested an 
extension of its GATT Article XIII waiver concerni ng the TRQ for bananas of ACP origin which was 
contained in document WT/MIN(01)/16 of 14 Nove mber 2001.  At the CTG meeting in November 
2005, the Council agreed to defer consideration of th is agenda item to its 10 March 2006 meeting.  At 
the March meeting, the EC proposed  to postpone consideration of its  waiver request until after the 
monitoring and review process of its new banana regi me was concluded.  This was met with statements 
by concerned Members who did not ag ree with this proposal.    At the May meeting, the EC maintained 
its proposal to postpone considerati on of its waiver request which wa s again met with disagreement by 
certain concerned Members.  At our last meeting in July, he had summar ized the situation as he saw it – 
that there were significant divergences in Member s' position on this matter.  Some Members did not 
want to consider the EC request, one Member was ready to support the request, while others were 
urging its adoption.  The EC did not wish to withdraw its request so the request was still on the table.  At the last meeting, the Council agreed that he woul d inform the General Council of this situation in a 
factual manner, while not changing the status of th e Council's treatment of this request which was for 
Members to decide.  It was agreed that he would inform Members of the report which he intended to 
make to the December meeting of the General Council.   
 6.2 Before opening the floor for discussion of this agenda item, he read to Members the following 
brief, factual report which he inte nded to make to the General Council
2:   
  
 The European Communities submitted a request for an extension of its Article XIII 
waiver for the Tariff Rate Quota for bananas of ACP origin, circulated in document G/C/W/529, dated 11 October 2005.  The existing waiver, contained in document WT/MIN/(01)/16, was to expire on 31 December 2005.   The EC has stated that the policy objecti ve of the TRQ for ACP countries was to 
maintain preferential access for ACP suppliers in a way that ensures total market access  for 
MFN suppliers of bananas to the EC market.  The EC also stated that it did not consider that the TRQ was GATT-inconsistent but it was reques ting the waiver to provide legal certainty 
for both ACP and MFN operators.    At the meeting of the Council for Trade in Goods in November 2005, the Council 
agreed to defer consideration of this agenda  item to its 10 March 2006 meeting.  At that 
meeting, the EC proposed to postpone consider ation of its waiver request until after the 
monitoring and review process of its new ba nana regime was conclu ded.  This was met 
with statements by concerned Members who di d not agree with this proposal.  Some of 
these concerned Members did not wish to consider this waiver request at all.    
 At the May meeting, the EC maintained its  proposal to postpone consideration of its 
waiver request which was again met with disa greement by certain concerned Members.  At 
the meeting of the CTG in July 2006, I conclude d that there were sign ificant divergences in 
Members' position on this matter.  Some Members did not want to consider the EC request, one Member was ready to support th e request, while others were urging its 
adoption.  Those in the first category vi ewed the EC waiver request as unfounded and 
                                                     
 
2 Statement subsequently made by the Chairman of the Council for Trade in Goods at the meeting of 
the General Council on 14-15 December 2006. G/C/M/86 
Page 22  
 
  with no legal basis.  They did not believe  that the request met the terms of the 
Understanding in Respect of Waivers, nor th at there was sufficient information to assess 
its merits.  The few Members in the second category, in the spirit of seeking a peaceful resolution of the matter, appeared interested  in approving this request.  However this 
position remained premised on having all in formation at hand, including the rebound 
tariff of bananas following the phase-in of the tariff-only banana re gime.  And finally, 
those in the third category supported and urged the adoption of this waiver.   I am making this report to the Genera l Council in light of the requirement in 
Article IX(b) of the WTO Agreement to report to the General Council.   This request has 
been on the agenda of the Council for a year and, whether or not Members agree that the 
EC waiver request merits approval or furthe r consideration, as Chair, I believe it is 
necessary to report on this matter to the General Council.  While some Members have 
voiced their refusal to entertain consideration of this waiver request, there has also been 
some analytical discussion of the content of th e request, in particular, whether the request 
and substantiating documentation meet the requirements of the Understanding.   
   Given this situation, I can only report th at the matter remains inconclusive and I 
believe further time is needed for the CTG to continue its deliberation of this request.   
 
6.3 The representative of the European Communities
 said that his delegation would have liked to 
have seen active consideration of this waiver request  in this Council by now.  However, his delegation 
was realistic and recognised that there were s till quite significant divergences between Members both 
on the substance of the request or whether it should be entertained in the first place.  Given those 
divergences we accept that there was no alternative but  to suspend consideration of this request for a 
waiver until such time as Members would feel that  there were sufficient elements to take up the 
discussion further.  His delegation, therefore, agreed  with the Chair's characterisation of the state of 
play and was able to go along with the manner of presentation and the factual report as outlined. 
 6.4 The representative of Ecuador
 repeated her delegation's pos ition underlining its opposition to 
this request being approved as long as discriminatory treatment against her country and other MFN suppliers continued through the EC import regime fo r bananas.  This question, like no other between a 
developed Member and a developing Member of this Organization, had been continuing for 13 years, 
with damaging consequences for Ecuador's economy.  To date, the EC had not bound a banana tariff 
in the WTO which gave rise to great legal uncertain ty for importers and exporters.  The EC had not 
met their WTO obligations, laid down in a number of  legal instruments, to bring into force from 1 
January 2006, a tariff-only banana im port regime.  In fact, the opposite ha d transpired.  From this date, 
a tariff of 176 Euros per ton had been applied to  MFN imports while a tariff free quota of 775,000 
tonnes has been granted to ACP countries.  This tariff was set unilaterally and autonomously.  It did not meet the maintenance of at least total access to the European markets of MFN exporting countries 
as stipulated by the two Decisions of 2005.  She al so recalled that the Doha Article 1 waiver was no 
longer in force following the second arbitral decision of October 2005 which stipulated that the second 
tariff proposed by the EC of 187 Euros per ton did not maintain total access to MFN providers as 
stipulated by the Annex of the Doha  waiver.  In light of this, and gi ven the high significance of this for 
her country's economy, Ecuador woul d maintain its opposition to any request for an extension of the 
waiver which sought to further establish a situatio n which violated the fundamental principles and 
rules of the WTO.  Finally, returning to the question of compensation,  bearing in mind the previous intervention by the EC and Ecuador, her delegation could not accept that the current import regime of 
the EC provided the necessary compensation to the EC when it included a number of illegal points 
which made it anything but a tariff-only regime.  6.5 The representative of Honduras
 suggested the following elements to  enrich the Chair's report.   
Firstly, his delegation felt that there was no legal basi s whatsoever for an extension of this waiver.   G/C/M/86 
 Page 23 
 
 
  The EC request did not fulfil the pre-requisites that an extension required in at least 3 areas:  i) it did 
not clearly define which trade agreement with the ACP was covered by the request and particularly, what the bound MFN tariff was against which the preference margin of the ACPs would be determined;  ii) it did not explain why these ACP preferences, which were obviously greater than 
those which were granted under the Article XIII waiv er of GATT, were necessary;  and iii) it did not 
define the genuinely exceptional circumstances which needed to be present in order to justify a waiver 
under Article XIII.  Since the submission of the EC request to the CTG, the many shortcomings which 
had been identified had not been resolved.  Fu rthermore, as the EC knew, Honduras and other 
developing countries which supplie d bananas believed that the exclusive tariff rate quota which the 
EC reserved for ACP bananas was incompatible wi th the compliance obligations which the EC had 
under Bananas III.  Instead of resolving these con cerns, the EC continued to make its requests 
seemingly in a way in which to escape its complia nce obligations.  Honduras was not prepared to 
sacrifice its rights, nor was it prepared to negotiate  on the well established rules and procedures of the 
system.  Therefore, once again his delegation felt bound to respectively oppose the extension of this 
waiver now and in the future until its lega l and systemic concerns were fully met. 
 
6.6 The representative of Panama
 repeated a number of points his delegation had made on this 
issue.  Panama maintained its opposition to a review of this request for fundamental legal reasons.  As 
Panama and other Members had explained to the EC on many occasions, the rules of the WTO 
authorised review of a waiver request if the measures  covered by the request were clearly defined.  In 
this case there was no clear definition of the preferential quota covered for the simple reason that over 
the last eleven months the EC had seen fit not to  clarify the bound MFN le vel which would help to 
make this preference.  In reality, the EC seemed to  have adopted the position that it had not decided 
what the bound level would be.  Yet, even if th e EC confirmed this bound level and presented the 
descriptive clarity required, as Panama and others ha d made clear to the EC, the absence of really 
exceptional circumstances would always be a legal ob stacle to any review for this request.  The earlier 
waiver of Article XIII of the GATT previously give n to the EC was justified because of the agreement 
related to Bananas III which required the granting of  the waivers to Articles 1 and XIII.  The tariff 
rate quota had not been the subject of any agreed a rrangements.  Quite to the contrary.  It was the 
subject of procedures under Article XXI:5 which w as still outstanding.  Panama's system of rights 
would be prejudiced if it permitted th e review of a waiver which was designed to give coverage to a 
measure which had not been cons istently and coherently define d and which was without legal 
recourse.  In so far as the EC was not able to provide, as it did in 2001, the necessary clarity and 
identification of exceptional circumstances which was re quired to justify the extension of Article XIII, 
his delegation could not consider the request as ready for review.  6.7 The representative of Nicaragua
 repeated that the sectoral and systemic concerns Nicaragua 
had about the EC's request had not changed since th e last meeting of the CTG.  Nicaragua continued 
to feel that the treatment was discriminatory and undeservedly generous to ACP suppliers while  extremely prejudicial to developing MFN countries.   This had also discriminated against MFN 
countries in the market to the benefit of ACP su ppliers.  Her delegation considered this request 
unacceptable as it departed from the normal rules in which exemptions and waivers were subject for 
the following reasons:  i) it contained no coherent  and reliable description of the system to be 
operated;  ii) the EC described the waiver as some thing not needed which clearly demonstrated that 
the exceptional circumstances required for granting an exemption did not exist;  and iii) the EC had submitted it with the purpose of obviating the lega l inconsistencies which had arisen in this 
connection.  If this request was accepted, a preced ent would be established which neither the MFN 
countries concerned nor the broader WTO system c ould accept.  Nicaragua hoped that those Members 
who had no interest in the banana dispute would voice their systemic concerns in this connection so 
that the CTG could take action on this request.  6.8 The representative of Jamaica
 said that the EC waiver request was a matter of importance to 
many countries, including her own.  Unfortunately, there had not been any movement on this issue in G/C/M/86 
Page 24  
 
  the CTG;  her delegation would have wished to s ee favourable consideration of the request.  As had 
been pointed out in previous meetings, the waiver was sought in order to provide legal certainty for 
ACP and MFN suppliers. Certainty and unpredictabil ity would seek to ensure the continued viability 
of the banana industry in Jamaica.  The Chair's report represented a fair reflection of the situation 
regarding this issue.  Her delegation hoped, howev er, that at some point a solution would be found 
that would take into account the interests of all parties concerned. 
 6.9 The representative of Benin
 said that, as far as the ACP Group was concerned, various 
countries were producers and exporters of bananas.  His delegation would want consultations, which 
had been suspended on this issue, in due course to  be resumed so that a balanced and fair solution 
could be reached and the ACP banana producers and exporters would be in a position to have their 
appropriate market share which would enable them to  garner appropriate levels of income for their 
efforts.  6.10 The Chairman
 proposed that the Council take note of the statements made and agree to revert 
to this matter at its next meeting. 
 6.11 The Council so agreed
. 
 
VII. UNITED STATES – REQUEST FOR AN EXTENSION OF THE WAIVER FOR THE 
KIMBERLEY PROCESS CERTIFICATION SCHEME FOR ROUGH DIAMONDS 
7.1 The Chairman  recalled that at the last meeting, the United States had informed Members that 
this waiver would be expiring at the end of 2006 an d that his delegation intended to circulate a draft 
decision for an extension of this waiver at the present meeting of the Council.  Document G/C/W/559 
was circulated and was the subject of an open-ended informal consultations held on 20 October.  At 
this informal meeting, there was general agreem ent on extending this waiver, while some Members 
made some editing and drafting suggestions to the draft decision.  Document G/C/W/559/Rev.1 
incorporated these suggestions.  This draft was considered at a second informal meeting.  The 
comments made at this informal meeting were incor porated into the document before Members today.   
He proposed that the Council approve the draft deci sion contained in G/C/W/559/Rev.1 and forward it 
to the General Council for adoption.  
7.2 The Council so agreed
. 
 
VIII.  CANADA – REQUEST FOR AN EXTENSION OF THE WAIVER FOR THE 
CARIBBEAN INITIATIVE 
8.1 The Chairman  recalled that at the last meeting of th e Council, Canada introduced its request for 
an extension of its existing waiver for the Cari bbean Initiative programme.  Canada's request and 
background information were circulated in document G/C/W/555.  Since the last  meeting, Canada had 
circulated a draft decision for this extension, in document G/C/W/558, which was for consideration by 
the Council today.    8.2 The representative of Canada
 recalled that Canada was first granted a waiver in 1986 for the 
Commonwealth Caribbean Countries Initiative for CARIBCAN.  This programme unilaterally 
extended duty-free access to the Canadian mark et for most commodities originating in 18 
Commonwealth Caribbean countries.  It was subseque ntly extended in 1996.  The duty-free treatment 
provided under CARIBCAN had been shown to pr omote the expansion of trade and economic 
development of its beneficiaries while not raising barriers for the trade of any other WTO Member.  
Indeed, between 1986 and today, no WTO Member had requested consultati ons with Canada in 
accordance with the actual waiver with respect to any difficulty or matter arising from the 
implementation of the provisions of CARIBCAN.  In light of the continued relevance of the  G/C/M/86 
 Page 25 
 
 
  considerations underlying this initiativ e, Canada was asking the CTG to agree to renew this waiver for 
a five-year period.  8.3 The Chairman
 proposed that the Council take note of the statement made, approve the draft 
decision contained in G/C/W/559 and forward it to the General Council for adoption. 
 
8.4 The Council so agreed . 
 
IX. CUBA - REQUEST FOR EXTENSION OF WA IVER UNDER ARTICLE IX OF THE 
WTO AGREEMENT CONCERNING GATT ARTICLE XV:6 
9.1 The Chairman  drew Members' attention to document G/C/W/562 and Corr.1 in which Cuba had 
circulated a request for an extension of its existing waiver concerning GATT Article XV:6.  He noted that the request had annexed to it a draft decision fo r consideration by the Coun cil.  He understood that 
this draft decision was an updated vers ion of the existing waiver decision. 
 
9.2 The representative of Cuba
 informed Members that G/C/W/562 contained the request for the 
renewal of this exemption which would expire in December 2006.  This request contained a report 
which Cuba submitted every year under this ex emption which explained that the conditions 
underlying the Cuban waiver still prevailed.  As  you know Cuba was not a Member of the IMF 
because the US Helms-Burton Act, in Title 1, S ection 104, clearly established the opposition of the 
main share-holder, which had veto power, of the IM F to Cuban membership in that organization.   
The issuing country of the US dollar, which was the main form of international exchange, had a 
prohibition on Cuba's use of this currency for any fi nancial and trade transactions outside its territory 
within any other country in the world.  This, theref ore, obliged Cuba to make such transactions in 
third-country currencies, although its main commod ities were quoted in the international market in 
US dollars.  In spite of all this, the economy of C uba had continued to flour ish including its foreign 
trade over the last few years to the benefit of th e vast majority of the Members of the WTO.  
However, a series of measures designed to support th e blockage of Cuba had been tightened.  For 
example, the use of the US dollar as well as some  other measures which had been reported in the 
press.  If there was any confusion, he wished to cl arify that the same conditions remained.  In recent 
years, however, Cuba had demonstrated that it had been consistent in its undertakings and had made 
use of this waiver without effecting the objectives of the WTO or without causing damage to the 
rights of the other Members of the Organization.  Proof of this had been that it had not made any 
request for any consultations in this connection.  As indicated, the draft decision annexed to this 
request was exactly identical to the one that was ad opted in the past except for the dates which were 
changed consistent with an extens ion of the waiver for until 2011. 
 
9.3 The Chairman  proposed that the Council take note of the statement made, approve the draft 
decision contained in G/C/W/562 and forward it to the General Council for adoption.  9.4 The Council so agreed
. 
 
X. CONCERNS AND QUESTIONS RAISED TO COLOMBIA REGARDING CERTAIN 
CUSTOMS MEASURES APPLIED TO IMPORTS OF GOODS FROM PANAMA 
AND OTHER WTO MEMBERS  
10.1 The Chairman  recalled that at the last meeting of the Council, it was agreed to revert to this 
matter at this meeting.  Prior to the last meeti ng, the delegation of Panama had circulated document 
G/C/W/548 containing its concerns over certain cu stoms measures by Colombia that were affecting 
trade from Panama, and specifically, the trade generate d by the Colón Free Zone.  Panama stated that 
Colombia had issued a number of resolutions that affected its trade as well as that of other WTO 
Members, including the People's Republic of China;  the Republic of Korea;  Hong Kong, China;  G/C/M/86 
Page 26  
 
  India;  Indonesia;  Malaysia;  Pakistan;  Thailand;   Chinese Taipei;  Singapore;  and the Philippines.  
The document also contained a list of questions for Colombia.  Colombia's responses to these questions were circulated in document G/C/W/554.    10.2 The representative of Panama
 informed Members of some recent events since the meeting of 
12 July 2006.  The customs measures applied by Co lombia had to do with the fixing of indicative 
reference prices on certain products originating or coming from Panama.  In addition, restrictions on 
the use of ports through limiting points of entry into Colombia for produ cts classified in HS 
Chapters 54-64, socks and textiles, coming from Pana ma and from China, meant, in practice, that 
these products could only come in by air through the Eldorado Airport, and by sea thr ough the seaport 
of Baranquilla.  Following a formal request by his c ountry on 15 September, a first consultation was 
held at the WTO between Panama and Colombia.  At those consultations, Members of the permanent 
missions of Panama and Colombia were present as well as high ranking officials from these respective Governments.  In addition, representatives from the Missions of Chinese Taipei; Pakistan; Hong 
Kong, China; the Philippines; Thailand; Guatemala an d China also joined in these consultations.  This 
occasion provided an opportunity fo r an exchange regarding Panama's questions on the legislation and 
procedures which supported the application of th ese measures by Colombia to goods originating or 
coming from Panama and other Members of the WTO.  Following great efforts and bilateral meetings 
among high-ranking officials from both countries, he w as able to inform Members that, on 31 October 
2006, Colombia agreed to put an end to the cust oms restrictions through the exemptions of all 
resolutions which contemplated restrictive measures against Panama.  His delegation was told that the 
resolutions which removed these restrictions would be published in the Official Colombian Gazette 
No. 46439 on 1 November 2006.  His delegation woul d soon submit a formal notification on this 
matter to the relevant WTO bodies
3. 
 10.3 The representative of Colombia
 confirmed that, after intense meetings between authorities 
from both countries in an effort to reach a satisf actory solution, on 31 October 2006 an agreement to 
establish customs co-operation was established.  Th is agreement would make possible joint initiatives 
and investigative controls to prevent customs i rregularities in both countries.  Her delegation had 
removed the measures which were a subject of con cern to Panama and other countries as published in 
the Official Journal of the Republic of Colombia  No. 46.439 of 1 November 2006.  Her delegation 
was pleased that, as stated by the Ambassador of Panama, there would be a formal notification of 
these facts shortly. 
 
                                                      
 3 Subsequently circulated under the joint symbol WT/DS348/10,  G/L/782/Add.1, and 
G/VAL/D/8/Add.1 of 7 December 2006.  G/C/M/86 
 Page 27 
 
 
  10.4 The representative of Hong Kong, China  said that his delegation was pleased to note that the 
matter has been settled between Panama and Colomb ia and that Colombia had recently lifted the 
customs measures which established indicative pr ices for selling goods imported from Panama and a 
number of WTO Members, including Hong Kong, China.  He requested both Members to share with other Members, especially those effected by the meas ures, their agreed arrangement in more detail.  
Specifically, he noted that Colombia had issued a Resolution No. 12950 which had modified some 
existing Resolutions, such that an estimated price mechanism was now in place to govern goods 
originating and arriving from all countries, apart from those with whom Colombia had signed a free trade agreement.  According to Resolution 12950, there were 10 Colombian legislations relating to 
estimated prices and goods covered by these legisl ations include textiles and clothing products, 
footwear, electrical appliances and toys.  Since Hong Kong, China's major export items were subject 
to the estimated price mechanism, his delegati on was interested in better understanding this 
mechanism and would be grateful if Colombia could provide Members with this legislation on 
estimated prices as listed in the Resolution 12950.  Hi s delegation would also li ke more details on this 
measure, including the purpose of the estimat ed price mechanism and how it was applied. 
 
10.5 The representative of Chinese, Taipei
 welcomed the improvements made by Colombia and 
looked forward to receiving the formal notification.   As Hong Kong, China mentioned, the estimated 
pricing system still remained and his delegation woul d also wish to look into the effect of that 
measure.  His delegation looked forward to  receiving more information from Colombia. 
 
10.6 The representative of Guatemala  said that her delegation had also been looking at this 
question with interest and welcomed the fact th at the parties had reached a mutually acceptable 
agreement, favourable to both parties.  Her delega tion would welcome the timely provision of the text 
of the agreement between the two parties in the formal notification which was to be circulated. 
 
10.7 The representative of Thailand  thanked Panama and Colombia  for sharing the information 
that they had settled this matter.  However, like othe rs, his delegation would be grateful if Panama and 
Colombia could provide more detailed information on this matter and on the Resolution they had just 
mentioned.    10.8 The representative of Colombia
 took note of the concerns raised which she would pass on to 
her authorities who would reply in due course. 
 10.9 The Chairman
 proposed that the Council take note of the statements made. 
 10.10 The Council so agreed
. 
 
XI. CONSIDERATION OF ANNUAL REPORTS OF SUBSIDIARY BODIES OF THE 
COUNCIL FOR TRADE IN GOODS 
 
11.1 The Chairman  recalled that, pursuant to the "Procedures for an annual overview of WTO 
activities and for reporting under the WTO" (WT/L/105)  which were adopted by the General Council 
on 15 November 1995, all bodies constituted under agre ements in Annex 1A of the WTO Agreement 
were required to submit annually a factual report to the Council for Trade in Goods, and the Council 
was to take note of these reports.   
11.2 In the absence of comm ents, the Council took note  of the reports of the following 
Committees:  (i) Committee on Market Access, documen t G/L/801;  (ii) Committee of Participants on 
the Expansion of Trade in Information Technolog y Products, document G/L/797;  (iii) Committee on 
Agriculture, document G/L/796;  (iv) Committe e on Customs Valuation, document G/L/799;  
(v) Committee on Sanitary and Phytosanitary M easures, document G/L/794;  (vi) Committee on 
Technical Barriers to Trade, document G/L/803;   (vii) Committee on Import Licensing, document G/C/M/86 
Page 28  
 
  G/L/800;  (viii) Committee on Rules of Origin, document G/L/790;  (ix) Committee on Anti-Dumping 
Practices, document G/L/791;  (x) Committee on S ubsidies and Countervailing Measures, document 
G/L/798;  (xi) Committee on Safeguards, documen t G/L/795;  (xii) Committee on Trade-Related 
Investment Measures, document G/L/793;  (xiii ) Working Party on State Trading Enterprises, 
document G/L/788;  and (xiv) the Independent Entity, document G/L/802. 
XII. ADOPTION OF THE ANNUAL REPORT OF THE COUNCIL FOR TRADE IN 
GOODS TO THE GENERAL COUNCIL (G/C/W/501) 
12.1 The Chairman
 drew Members' attention to the draft report of this Council circulated in 
document G/C/W/563.  In accordance with the "Proced ures for an annual overview of WTO activities 
and for reporting under the WTO" (WT/L/105) which were 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 reports of the sectoral Councils should be "factual in nature, cont aining an indication of actions and 
decisions taken, with cros s references to repor ts of subordinate bodies and c ould follow the model of the 
GATT 1947 Council reports to the C ONTRACTING PARTIES".  The draf t report would be updated in 
light of today's meeting.   
 12.2 In the absence of comments, the Chairman
 proposed that the Council agree to adopt the report 
updated to include the current meeting. 
12.3 The Council so agreed . 
XIII.  ISSUES RELATED TO TRADE IN TEXTILES – SUBMISSION OF TURKEY  
13.1 The Chairman  recalled that, at the last CTG meeting on 12 July, the discussion had once 
again focused on the new proposal submitted by Tu rkey on 28 April 2006 in document G/C/W/549, 
which contained, in particular, the terms of refere nce of a work programme as proposed by Turkey.  
At that meeting, there continued to be no common understanding among the Members on the item 
raised by Turkey with Members keeping to thei r previous positions.  One Member had proposed to 
delete the item from the Agenda, in view of what he characterized as lack of progress on the issue for 
about a year, but this had been opposed by several others.  The Chairman had proposed, therefore, to hold further consultations to continue the discu ssion on the issue as proposed by Turkey in 
G/C/W/549.  He had convened such  open-ended consultations on 3 November 2006.  Members had a 
good discussion, but it seemed obvious that the resp ective positions had not evolved in substance and 
that, once more, one could not see some form of  convergence emerging. The Chairman suggested, 
nevertheless, that Members continue to consider any possible opportunity to discuss the issue further 
among themselves.  He recalled that Turkey had clar ified, at the open-ended consultations on 8 May, 
that the work programme the CTG was now talk ing about was the one contained in document 
G/C/W/549. 
13.2 The representative of Turkey
 observed that this issue had b een on the CTG’s agenda for some 
time, and that he did not intend to repeat all the arguments for a work programme, but rather to evoke 
some issues where, as it had become apparent fro m the bilateral consultations and from previous 
open-ended meetings, Turkey needed to be more sp ecific.  First, to put the records straight, he 
suggested that the Members should concentrate on document G/C/W/549, which included the terms of 
reference of the work programme.  Among others, th e effects of the expiry of the ATC on global 
trade, the current conditions and their impact on economic trends, in pa rticular on developing 
countries, and possible areas of collaboration among entr epreneurs, could be assessed in such a study.   
Turkey was looking for a work programme by the WTO Secretariat, whose terms of reference would 
be identified by the Members.  Second, this proposal was " sui generis ".  It might compile trade and 
investment flows data, identify ways and means to generate more trade and might suggest guidance to  G/C/M/86 
 Page 29 
 
 
  countries and other international organizations fo r cooperation.  Turkey could hardly see any link 
between this proposal and any other proposal in another WTO forum.  Therefore, none of the 
proposals made in the NAMA negotiations, including Turkey's very specific proposal on "Harmonization in the Textiles and Clothing Sector s", which suggested tariff harmonization in those 
sectors for further liberalization, could  be an issue of such a study.  Third, in the last CTG meeting 
Turkey had been encouraged by the support of so many Members for a work programme.  That fact 
once again indicated the desire of the membership to better unde rstand the existing and future 
conditions in those sectors and to discuss them thor oughly in the WTO.  It signalled the way forward 
and the need to move up another step.  He exp ected that, at the next meeting of the Council, 
discussion would move to the next stage with discu ssion of the terms of reference of such a work 
programme, that the Members would have the oppor tunity to have more concrete or specific 
discussions, and that each of them would have  a better understanding of this programme. 
13.3 The representative of China
 stated that his delegation had not changed its position.  China was 
still not convinced of the relevan ce of this item to the work of the CTG and still maintained its 
systemic concerns.  
13.4 The representative of India  wished to elaborate on some concerns which his delegation had.  
First, in the scope of the Work Programme, Turkey had proposed that the Secretariat "scrutinize the 
adjustment-related issues and make recommendati ons on measures in order to assist developing 
countries" (Page 2, paragraph III.B3 of G/C/W/ 549).  The recommendations that could follow from 
such a study would either be tariff related or rul es related.  Textiles and clothing tariffs were being 
negotiated in NAMA and other parts of the Doha nego tiations such as Rules.  In effect, Turkey was 
suggesting that the Secretariat recommend to Members positions for the ongoing negotiations.  India 
did not see this as an appropriate role for the S ecretariat.  The second concern was about selecting 
specific sectors for such comprehensive examinatio n.  The WTO was all about "pains and gains", 
commitments made in one area being offset by advantages gained in other areas.  For all Members a balance was involved.  Therefore, if a study had to be conducted it had to be comprehensive, to 
measure the gains and losses for all WTO Members under all agreements.  The third concern was 
related to document G/C/W/522, which was about th e performance of a particular WTO Member in a 
particular sector.  India did not think that this s hould be the appropriate trigger for a study of this 
nature.  While India understood the issues raised and also the problems faced by several developing countries, it was unable under these circumstances to support the proposal made by Turkey.   
13.5 The representative of Indonesia
 stated that, like China and Indi a, Indonesia also had systemic 
concerns with the proposal made by Turkey.  Sin ce textiles and clothing had been fully liberalized 
from the quota regime by the termination of ATC, Indonesia had witnessed with satisfaction that this 
sector had been treated like the other sectors of in ternational trade.  Members were now negotiating 
textiles and clothing in the NAMA negotiations.  Fo r his delegation, NAMA was more than sufficient 
to tackle the problems of the textiles and clothing se ctor.  Therefore, any proposal to treat this sector 
differently from another sector was not acceptable. 
13.6 The representative of the United States  stated that the position of his delegation had not 
changed.  The United States would be willing to work  with Turkey and other Members to craft a work 
programme, based on Turkey’s proposal, that would ensure a productive and constructive debate and 
outcome. 
13.7 The representative of Hong Kong, China  appreciated the concerns of some exporting 
Members over the impact of the quota phase-out on their economies.  Textiles had been one of the 
most peculiar subjects in the history of the GATT an d the WTO in that it had always been singled out 
from the principles that were held dearly in the organisation, mainly liberalization and non-
discrimination, and thus had attracted restrictive an d discriminatory treatment since the early 1960's.  
He recalled that despite provisions in GATT Article XI prohibiting the use of quantitative restrictions G/C/M/86 
Page 30  
 
  on imports or exports, the restraining countries ha d forged the Short-term Arrangement Regarding 
International Trade in Cotton Textiles to restrict  textiles imports in 1961.  Then the Short-term 
Arrangement had become the Long-term Arrangeme nt in 1962, and the restraint coverage had 
comprehensively been expanded from cotton to man- made fibres and wool under the MFA in 1974.  
For over four long decades when its economy was taking off, Hong Kong, China had been a major 
victim of these discriminatory restrictions by the r estraining countries.  It had regarded the Agreement 
on Textiles and Clothing as one of the key achievements of the last Round.  It would indeed be difficult to contain surprise and disappointment that, immediately after the integration of textiles into 
the normal WTO mechanisms, a fresh suggestion aimed at singling out textiles for special treatment had been put forward in the WTO.  Hong Kong, Ch ina had serious systemic concerns on singling out 
this sector post-ATC and on any new and supplementary institutiona l arrangements to oversee this 
trade sector.  This was inconsistent with the spirit of integration of the textiles and clothing trade and 
would send the wrong signal to the world that this sector was different from all other sectors and for some reason deserved separate treatment.  The repr esentative of Hong Kong, China also recalled that 
the WTO Secretariat had produced a useful paper in  June 2006 on options for the LDCs to improve 
their competitiveness in the textiles and clothing  business (WT/COMTD/LDC/W/37).  This paper set 
out useful and realistic options for LDCs to improve their competitiveness in the Textiles and 
Clothing sector.  Some of those options were equally  applicable to developing Members.  One point 
particularly highlighted in that paper was that utili zation rates in most preferential schemes remained 
very low and that generous reform of these schemes with more relaxed rules of origin could quickly 
raise the competitiveness of the exporting developi ng Members and improve preference utilisation.  
Hong Kong, China urged the preference-giving countries to give serious consideration to this option. 
13.8 The representative of Jordan
 agreed with India’s statement that trade carried pains and gains 
but added that if the Members were able to make it more predictable, the pains might become gains.  
He did not see any linkage between what wa s discussed in a Negotiating Group and what was 
discussed in a regular body like the CTG.  What  was required was a work programme under the 
umbrella of the CTG, with terms of reference agreed upon by all Members. 
13.9 The representative of Pakistan  referred to the concerns his de legation had raised in previous 
meetings, which were recorded in the minutes.  His delegation maintained its position in this regard. 
13.10 The representative of Tunisia  repeated the importance his c ountry attached to textiles and 
clothing, in view of the significance of this sector  to its economy.  He reiterated his delegation’s 
support for the Turkish proposal for the establishmen t of a work programme on textiles and clothing.  
The understanding of his delegation was that the point of agreeing to a study was not to return to an 
earlier situation but to enable developing countries to  make a better assessment of the situation and of 
the development in international trade in textiles af ter the removal of the quota regime, and to prepare 
these countries properly to meet the future challenges in  this sector.  In his view, this initiative for a 
study had no link with the proposal made by Turk ey in the NAMA Negotiating Group.  He believed 
that the terms of reference for this study could be examined by the Members in the CTG, once the 
principle of such a study had been agreed. 
13.11 The representative of El Salvador  repeated the importance of textiles trade for the economies 
of many developing countries.  Textiles and the work programme on the sector had been broadly 
discussed within this Council.  Many developing co untries had expressed interest in this matter.  Her 
delegation, therefore, felt that it was necessary to make progress on this issue as quickly as possible.  
El Salvador was committed to continue to work with the other Members to design a work programme 
on the textile sector and considered it important to promote a constructive initiative in this area which 
would certainly be favourable for the membership of this organisation. 
13.12 The representative of Egypt  reiterated the position of his de legation in favour of having a 
work programme to study the changes arising in trade in textiles and clothing.  G/C/M/86 
 Page 31 
 
 
  13.13 The representative of Morocco  stated that her delegation’s position remained unchanged.  She 
commented that Members should avoid mixing what was happening in the CTG and what was happening in another body regarding the question of harmonization in the NAMA context.  Her 
delegation was one example of a Member which did not have a clear-cut position on harmonization.  
This did not prevent it from being in favour of this  initiative for a study and to encourage all Members 
to take part in it. 
13.14 The representative of Mexico
 repeated that his delegation considered the Turkish proposal a 
neutral one, for the reasons given by delegation of Turkey.  Therefore, his delegation was are very 
much in favour of this proposal. 
13.15 The Chairman  concluded that it seemed clear from the in terventions made that there remained 
no common understanding among the Members on the item as raised by Turkey in G/C/W/549, or on 
the terms of reference of the work programme co ntained therein.  At the same time, Members 
continued to be willing to continue the discussion on this item.  Therefore, he proposed once more 
that the Council take note of the statements made, and revert to this item at its next meeting.  He also 
proposed, in the meantime, to hold further consulta tions to continue the discussion on the issue as 
proposed by Turkey in G/C/W/549.  At the next CTG meeting he would report on these consultations.  
He also encouraged Members, in the meantime, to seize any opportunity  to meet so as to get a better 
appreciation of each other’s position, in order for th e Council to be eventually in a position to move 
forward on the issue. 
13.16 The Council so agreed . 
XIV.  OTHER BUSINESS 
A. DATE OF THE NEXT MEETING  
14.1 The Chairman  stated that the next meeting of the Council for Trade in Goods was scheduled 
for 13 March 2007.  The agenda would close on Friday, 2 March 2007. 
 
__________