RESTRICTED  WORLD TRADE  
ORGANIZATION  G/C/M/95 
3 December 2008 
 
 (08-5914) 
Council for Trade in Goods  
  
MINUTES OF THE MEETING OF THE COUNCIL FOR TRADE IN GOODS 
18 NOVEMBER 2008 
 
Chairperson: H.E. Ambassa dor Karen Tan (Singapore
) 
  
 The meeting of the Council for Trade in Goods was convened by airgram WTO/AIR/3280 
and the proposed agenda for the meeting was c ontained in document G/C/W/607.  The meeting 
proceeded on the basis of the following agenda.  
I.
 NOTIFICATION OF REGIONAL TRADE AGREEMENTS.............................................2  
II. MARKET ACCESS MATTERS .............................................................................................3  
A. COMMITTEE ON MARKET ACCESS – PERIODIC REPORT OF THE COMMITTEE ...............................3  
B. INTRODUCTION OF HARMONIZED SYSTEM 2002  CHANGES INTO WTO SCHEDULES OF 
TARIFF CONCESSIONS – REQUESTS FOR EXTENSION OF THE WAIVER ..........................................3  
C. INTRODUCTION OF HARMONIZED SYSTEM 2007  CHANGES INTO WTO SCHEDULES OF 
TARIFF CONCESSIONS – REQUESTS FOR A WAIVER ......................................................................3  
III. 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........................................................................................................................ ........3
 
IV. EUROPEAN COMMUNITIES ENLARG EMENT:  PROCEDURES UNDER 
ARTICLE XXVIII:3 OF GATT 1994.....................................................................................4  
A. ENLARGEMENT OF THE EU ROPEAN COMMUNITIES ON 1 MAY 2004............................................4  
B. ENLARGEMENT OF THE EU ROPEAN COMMUNITIES ON 1 JANUARY 2007.....................................6  
V. FREQUENCY OF NOTIFICATIONS OF STATE TRADING ENTERPRISES 
UNDER ARTICLE XVII OF GATT 1994  AND THE UNDERSTANDING ON 
THE INTERPRETATION OF ARTICLE XVII OF GATT 1994 .......................................6  
VI. ISSUES RELATED TO TRADE IN TEXTILES ..................................................................7  
VII. TRANSITIONAL REVIEW UNDER PARAGRAPH 18 OF THE PROTOCOL 
OF ACCESSION OF THE PEOPLE'S REPUBLIC OF CHINA........................................9  
VIII.  CONSIDERATION OF ANNUAL REPORTS OF SUBSIDIARY BODIES OF THE COUNCIL FOR TRADE IN GOODS.........................................................................14
 
IX. ADOPTION OF THE ANNUAL REPORT OF THE COUNCIL FOR TRADE IN GOODS TO THE GENERAL COUNCIL......................................................................14
 
X. OTHER BUSINESS................................................................................................................1 5 
A. STATEMENT ON BEHALF OF THE INTER NATIONAL TEXTILES AND CLOTHING BUREAU .............15  
B. DATE OF THE NEXT MEETING ....................................................................................................15  G/C/M/95 
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I. NOTIFICATION OF REGIONAL TRADE AGREEMENTS 
1.1 The Chairman
 recalled that, under the working procedures agreed by the Committee on 
Regional Trade Agreements following adoption by  the General Council of the Transparency 
Mechanism, the Council for Trade in Goods was to be  kept informed of Members' notifications of 
new regional trade agreements.  She informed the CTG that the following regional trade agreements 
had been notified to the RTA Committee:  A. Agreement between Japan and Indonesia for an Economic Partnership in document 
WT/REG241/N/1; 
 
B. Free Trade Agreement between the European  Communities and Bosnia and Herzegovina in 
document WT/REG242/N/1; 
 C. Free Trade Agreement between  Iceland and the Faroe Islands in document WT/REG243/N/1; 
 
D. Agreement between Brunei Darussalam and Jap an for an Economic Partnership in document 
WT/REG244/N/1; 
 E. Free Trade Agreement between Ukraine and Azerbaijan in document WT/REG245/N/1; 
 
F. Free Trade Agreement between Ukraine and Belarus in document WT/REG246/N/1; 
 G. Free Trade Agreement between Ukraine and Kazakhstan in document WT/REG247/N/1; 
 H. Free Trade Agreement between Ukraine and the Former Yugoslav Republic Of Macedonia in 
document WT/REG248/N/1; 
 I. Free Trade Agreement between Ukraine and Moldova in document WT/REG249/N/1; 
 J. Free Trade Agreement between Ukrain e and Russian Federation in document 
WT/REG250/N/1; 
 
K. Free Trade Agreement between Ukraine a nd Tajikistan in document WT/REG251/N/1; 
 L. Free Trade Agreement between Ukraine and Turkmenistan in document WT/REG252/N/1:  
M. Free Trade Agreement between Ukraine a nd Uzbekistan in document WT/REG253/N/1; 
 N. Common Economic Zone in document WT/REG254/N/1;  O. Economic Partnership Agre ement between the European Communities and the CARIFORUM 
States in document WT/REG255/N/1; and 
 
P. Free Trade Agreement between the EFTA St ates and the SACU States in document 
WT/REG256/N/1. 
 1.2 She proposed that the Council tak es note of the information presented. 
 
1.3 The Council so agreed
. 
  G/C/M/95 
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  II. MARKET ACCESS MATTERS 
2.1 The Chairman  noted that the Market Access Comm ittee had forwarded three items for 
consideration to the Council for Trade in Goods.    A. 
COMMITTEE ON MARKET ACCESS – PERIODIC REPORT OF THE COMMITTEE  
2.2 The Chairman  drew Members' attention to the peri odic report of the Committee on Market 
Access contained in document G/MA/216.  As the repo rt was factual in nature, and reflected the work 
undertaken in the Market Access Committee, she s uggested that the Council takes note of it.   
 2.3 The Council so agreed
. 
 
B. INTRODUCTION OF HARMONIZED SYSTEM 2002  CHANGES INTO WTO SCHEDULES OF TARIFF 
CONCESSIONS – REQUESTS FOR EXTENSION OF THE WAIVER  
2.4 The Chairman  drew Members' attention to the draft waiver decision circulated in document 
G/C/W/601/Rev.1, which had been made in connection with the introduction of HS2002 changes into 
WTO schedules of tariff concessions.  The current  waiver decision was contained in document 
WT/L/712 and was to expire on 31 December 2008.  Th e one year extension of the waiver decision 
had been the subject of consultations in the Mark et Access Committee where it was considered at the 
formal meeting that took place on 16 October 2008.  It  had been forwarded by that Committee to the 
CTG for action.  She proposed that the Council approves the draft waiver decision contained in 
G/C/W/601/Rev.1 and forward it to the General Council for adoption. 
 
2.5 The Council so agreed . 
 C. 
INTRODUCTION OF HARMONIZED SYSTEM 2007  CHANGES INTO WTO SCHEDULES OF TARIFF 
CONCESSIONS – REQUESTS FOR A WAIVER  
2.6 The Chairman  drew Members' attention to the draft waiver decision circulated in document 
G/C/W/602, which had been made in connection with the introduction of HS2007 changes into WTO schedules of tariff concessions.  The current waiv er decision was contained in document WT/L/713 
and would expire on 31 December 2008.  The one year extension of the waiver decision was 
considered at the formal meeting that took place on 16 October 2008 and had been forwarded by that 
Committee to the CTG for action.  She proposed that  the Council approves the draft waiver decision 
contained in G/C/W/602 and forward it to the General Council for adoption. 
 2.7 The Council so agreed
. 
 
III. 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  
3.1 The Chairman  recalled the Council's consideration of the three waiver requests presented by 
the United States for the African Growth and O pportunity Act, the Caribbean Basin Economic 
Recovery Act and the Andean Trade Preference Ac t.  The United States had submitted revised waiver 
requests for these three progra mmes in documents G/C/W/508/Rev.1, G/C/W/509/Rev.1, and 
G/C/W/510/Rev.1.   At the previous meeting of the CT G, it was agreed to revert to this matter at this 
meeting.    3.2 The representative of the United States
 informed the Council that his delegation had been 
having consultations with Members since the last m eeting to address their concerns.  There had been G/C/M/95 
Page 4  
 
  legislated changes concerning these waiver progra mmes and, although his delegation was not in a 
position to submit new waiver language  for consideration at this meeting, it hoped to be in a position 
to share this language with Members at the next meeting of the Council.  3.3 The representative of Paraguay
 recalled that his delegation maintained a keen interest in 
resolving this matter which had occupied the atte ntion of the Council for some time and was making 
every effort towards this end.  He informed the Council that the Pr esident of Paraguay, Don Fernando 
Lugo, who began his first term on 15 August, visited President Bush in the White House in October.  
Also, at Paraguay's invitation, a US Congressiona l delegation of nine Congressmen, led by Elliot 
Engel, Chair for the Sub-committee of the Western Hemisphere, visited Asunci on.  The delegation of 
Paraguay reiterated its willingness and open mindedn ess to finding appropriate solutions which would 
help it join the consensus and reso lve this matter once and for all. 
 3.4 The Chairman
 proposed that the Council takes note of th e statements made and reverts to this 
matter at the next meeting of the Council. 
 
3.5 The Council so agreed . 
 
IV. EUROPEAN COMMUNITIES ENLARGEMENT:  PROCEDURES UNDER 
ARTICLE XXVIII:3 OF GATT 1994  
4.1 The Chairman  informed Members that under this age nda item, the Council was to consider a 
request for extension of the time period for th e withdrawal of concessions for the two recent 
enlargements of the European Communities.    A. 
ENLARGEMENT OF THE EU ROPEAN COMMUNITIES ON 1 MAY 2004.    
4.2 The Chairman  drew Members' attention to docum ent G/L/695/Add.8 which concerned the 
accession to the European Union on 1 May 2004 of Cyprus, the Czech Republic, Estonia, Hungary, 
Latvia, Lithuania, Malta, Poland, the Slovak Republic  and Slovenia.  In this communication, the EC 
indicated that it would not assert that Members who had submitted a claim pursuant to Article XXIV:6 of GATT 1994 were precluded fro m withdrawing substantially equivalent 
concessions under Article XXVIII:3 of GATT 1994 becau se this withdrawal occurred later than six 
months after the EC's withdrawal of concessions, provided that the claiming WTO Member withdrew 
concessions no later than 63 months after the EC's modification of concessions.  She recalled that the 
General Council had on four earlier occasions, on the basis of similar communications from the EC, 
extended the deadline for withdrawal of concessions  referred to in Article XXVIII:3 of GATT 1994, 
namely, at its meetings in October 2004, and in March, June, and Decembe r 2005.  Similarly, the 
Council for Trade in Goods had exte nded the deadline on five occasions, namely at its meetings of 
12 July 2006, 30 January, 21 May and 23 November 2007 and 22 May 2008.   
 4.3 The representative of the European Communities
 said that his delegation was offering to 
extend the period to withdraw subs tantially equivalent concessions w ith respect to the modifications 
of the schedule of the EC and the new Member St ates for the 2004 enlargement.  He reassured the 
Members that almost all the agreements with co untries that had recognised claims on the 2004 
enlargement had been finalised, signed and had been applied since a few years back.  It was only on 
the recognised claims of two countries for one part icular product that there had been a delay in 
negotiations.  Therefore, his delegation was obliged to extend the period of negotiations again.  He 
assured Members that his delegation was working in tensively with the Members concerned to find a 
solution. 
 
4.4 The representative of Colombia  noted that this was the tenth request by the EC for an 
extension of the period in which Members were required to withdraw s ubstantially equivalent  G/C/M/95 
 Page 5 
 
 
  concessions under Article XXVIII.3 of GATT 1994.  This matter had been pending since May 1994 
when the EC notified the list of concessions for the 10 new Members initiating negotiations under 
Article XXVIII.  The EC recognised Colombia as a substa ntial provider of bananas.  However, to date 
Colombia still had not received any compensation fo r undermining their access to that market.  After 
lengthy negotiations, Colombia, jointly with other inte rested parties, arrived at an agreement with the 
EC on 27 July 2008 to resolve all the issues related to bananas.  That agreement provided for 
compensation.  However, to date the EC had not give n effect to this agreement.  She requested that 
the EC adhere to their agreement on bananas so th at the Council would no longer have to deal with 
this matter.  
4.5 The representative of Ecuador
, in line with Colombia's statem ent, recalled that his country, as 
a substantial provider of bananas, had lost market share to the EC because of  the enlargement of the 
EU. Like Colombia, Ecuador still had not received corresponding compensation.  On 27 July 2008, an  
agreement was reached which should have provide d a definitive solution to this problem.  His 
delegation asked the EC to give effect to this ag reement and bring it into effect at the appropriate 
time. 
 4.6 The representative of Costa Rica
 supported the statements of Colombia and Ecuador.  
Because of both the 2004 and 2007 EC enlargemen ts, his delegation urged the EC to ratify the 
agreement reached in July 2008 so that this agenda item could be concluded. 
 
4.7 The representative of the European Communities  understood the concerns of Colombia, Costa 
Rica and Ecuador, and indeed their sense of frustrati on that this long standing issue was not finally 
and definitely settled.  His delegation and the e xporting countries had been working very hard to 
develop a comprehensive agreement on bananas that could be inserted into the Doha Development 
Agenda Modalities on agriculture and also address the issue of compensation for enlargement.  Before 
the July Ministerial, the EU would have been r eady for a free standing agreement under the terms the 
Director General had proposed.  However, the La tin American countries, the producers of bananas, 
had rejected this.  Therefore the EC had to change  tack and thus worked on a solution that would be 
acceptable only as part of a successful DDA outcome .  This had been clearly explained to the 
countries involved.  Hence, the agreement reached on 27 July was dependent on the DDA coming into 
force.  Unfortunately the negotiations on modalities fa iled so that the agreement could not be initiated.  
While the countries involved suddenly had become interested in a free standing solution again, his 
delegation remained of the position that the deal unde r the terms agreed could only be adopted if the 
DDA succeeded.  Of course his delegation hoped this would happen before the end of this year, but if 
this was not the case, his delegation remained co mmitted to reaching an agreement in a multilateral 
context.  His delegation was assessing the situation a nd would engage the Latin American suppliers to 
discuss the particular terms of that agreement. 
 4.8 The representative of Costa Rica
, in response to the EC, recalled what his delegation had said 
on this matter as stated in the minutes of the July 2008 meeting of the General Council.  4.9 The representative of Ecuador
 also referred to his delegation's intervention in the minutes of 
the July 2008 meeting of the General Council  
 4.10 The Chairman
 proposed that the Council takes note of th e statements made and also of the EC 
communication contained in document G/L/695/Add.8.  As she did not note any objections to the EC request, she proposed that the Council agrees on the ex tension of the deadline as set out in the EC's 
document G/L/695 Add.8.   
 4.11 The Council so agreed
. 
 G/C/M/95 
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  B. 
ENLARGEMENT OF THE EU ROPEAN COMMUNITIES ON 1 JANUARY 2007   
4.12 The Chairman  drew Members' attention to docum ent G/L/821/Add.3 which concerned the 
accession to the European Union on 1 January 2007 of Bulgaria and Romania.  In this 
communication, the EC indicated that it would not assert that Members who had submitted a claim pursuant to Article XXIV:6 of GATT 1994 were precl uded from withdrawing subs tantially equivalent 
concessions under Article XXVIII:3 of GATT 1994 becau se this withdrawal occurred later than 
six months after the EC's withdrawal of concessions, provided that the claiming WTO Member withdrew concessions no later than 30 months after the EC's modification of concessions.  She recalled that the Council for Trade in Goods had ex tended the deadline on th ree occasions, namely at 
its meetings of 21 May and 23 N ovember 2007 and 22 May 2008.   
 
4.13 The representative of the European Communities
 said that these negotiations were currently 
ongoing.  His delegation was confident that it would be  able to reach agreemen t with all its partners 
soon.  Nevertheless some further time for nego tiations was necessary and th at was why the EC had 
circulated a message aimed at extending the period  in which Members were allowed to withdraw 
substantially equivalent concessions.  The messag e itself was similar to the one which the CTG 
endorsed when extending the period for withdrawal six months ago.  4.14 The Chairman
 proposed that the Council takes note of th e statements made and also of the EC 
communication contained in document G/L/821/Add.3.  She further proposed that the Council agrees 
on the extension of the deadline as set out in th e European Commission's document G/L/821/Add.3.  
 
4.15 The Council so agreed . 
 
V. FREQUENCY OF NOTIFICATIONS OF STATE TRADING ENTERPRISES UNDER 
ARTICLE XVII OF GATT 1994 AND THE UNDERSTANDING ON THE 
INTERPRETATION OF ARTICLE XVII OF GATT 1994  
5.1 The Chairman  drew Members' attention to a recommendation adopted by the Working Party 
on State Trading Enterprises for a change in the fre quency of notifications in document G/STR/6.   
The Chairperson of the Working Party could not be present to introduce this recommendation but provided a statement which she read on her behalf:    
 On 11 November 2003, the Working Party on State Trading Enterprises adopted the 
recommendation contained in document G/STR/5 regarding the frequency of notifications. 
This recommendation, approved by the CTG on 26 November 2003, modified the frequency 
of state trading notifications so that new a nd full notifications on state trading are now due 
every two years instead of every three years. It also eliminated the requirement of updating 
notifications in the intervening years. The ne w frequency of notifications as contained in 
G/STR/5 was to be implemented for a trial phase of four years, commencing on 30 June 
2004.  Paragraph 4 of the recommendation directs the Working Party to review the situation 
with regard to compliance with the new notificati on obligation at the end of the four year trial 
phase.  The objective of this review was to de termine whether to extend the application of the 
recommendation, either as presently drafted or in a modified form, for a further period.  
 
 Accordingly, the Working Party held inform al consultations in May 2008 in order to 
explore the Membership's views in this r espect. The debate focused on whether the 
modification of the frequency of the notifica tions has improved Members' compliance with 
the notification obligation, whether the a pplication of that recommendation should be 
extended for a further specified period or indefi nitely, and whether such extension should be 
made on the basis of the substance of the recommendation as presently drafted or in a modified form.    G/C/M/95 
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   The Working Party observed that as the period of the application of the current 
recommendation was too short to obtain the necessary clarity as to whether the frequency of notifications applied as of the year 2004 has improved the compliance with the notifications 
obligation, the Working Party informally concl uded that it would be desirable to extend the 
application of this recommendation for two additional years until 30 June 2010 and it was 
agreed that the formal adoption of the r ecommendation would take place at the regular 
meeting of the Working Party on 3 October 2008.  Based on that, the Working Party adopted a recommendation to this effect at its regular  meeting on 3 October 2008 and referred it to the 
CTG for action.  Thereby, the Working Party recommends to the Council that:  
 
(a) This extension shall enter into force as of the year 2008, with a new and full 
notification being due on 30 June 2010;  and 
(b) The guidelines for completing the questionnaire section of the Questionnaire on State 
Trading are those contained in G/STR/3/Rev.1. 
 Additionally, after a trial period of two years, commencing on 30 June 2008, which is 
the date of the expiry of the recommendation contained in G/STR/5, the Working Party shall 
review the situation, with regard to comp liance with the notification obligation and the 
frequency of notifications, with a view to dete rmining whether to extend the application of 
this recommendation, either as presently drafted or in a modified form, for a further period.   
 5.2 In the absence of comments, the Chairman
 proposed that the Council takes note of the 
Working Party Chairperson's statement and appr oves the recommendation of the Working Party on 
the frequency of notifications contained in document G/STR/6. 
 5.3 The Council so agreed
. 
 VI. ISSUES RELATED TO TRADE IN TEXTILES  
6.1 The Chairman
 recalled that, at the previous meeti ng of the CTG, the discussion had focused 
on a new submission made by Turkey, contained in document G/C/W/599.  This new submission 
envisaged that, as a first step, the WTO Secretariat,  with the contribution of interested Members, 
would compile studies already conducted by selected  organizations such as UNCTAD, the OECD and 
the IMF on the post-ATC era and that, as a second step, the studies compiled would be elaborated in 
detail in a workshop or workshops organized in co-operation between the WTO and such selected 
organizations.  At the meeting, it was agreed that Members would consult bila terally and plurilaterally 
as much as possible and that the Council would revert to this item at this meeting.    6.2 The representative of Turkey
 recalled that his delegation had tabled a proposal for a 
comprehensive paper on the textiles and clothing s ector after the termination of the Agreement on 
Textiles and Clothing in the Council some time ago.  Most recently, his delegation had circulated a 
communication in document G/C/W/599, dated 21 May 2008 which contained a two stage programme.  The first stage of this programme w ould be a compilation of studies already conducted 
by international institutions in order to assess th e post ATC period.  The second stage would be to 
organise a workshop in collaborati on with related international ins titutions in order to elaborate on 
related studies.  In this regard  his delegation had suggested the OECD's ongoing analysis of the 
economic impact of the phase out, in 2005, of quant itative restrictions under the ATC to be taken up 
by the WTO Members in co-operation with the OECD Secretariat.  A round of discussions took place at the last CTG meeting on the basis of this proposal.  His delegation understood that, despite the spate of comments of a large group of Members w ho encouraged the Council to proceed in this 
agenda item, there were still some systemic concerns .  In spite of the fact that the proposed text was 
straight forward, constructive a nd flexible enough to go further, three Members still maintained G/C/M/95 
Page 8  
 
  concerns which his delegation had difficulties unde rstanding.  The workshop proposed was far from 
being connected to the DDA process or to any commitment on any of the WTO Agreements.  It was 
worth reiterating that the workshop would aim at achieving a comprehensive dialogue amongst 
Members and a better understanding of the policy e nvironment in this sector without, of course, 
ignoring the trade and development perspective.  Although his delegation did not agree with the 
systemic concern raised by some Members, it also  did not see any point in prolonging this discussion 
unnecessarily and taking the time of the Members more  than necessary in the CTG.  Instead, his 
delegation would seek to table a new document at th e next CTG meeting in order to discuss the main 
findings of those studies conducted by internationa l institutions including the OECD. Therefore his 
delegation proposed that the Council reverts to  this agenda item at its next meeting. 
 
6.3 The delegation of El Salvador
 reiterated the importance of this sector his country, bearing in 
mind that it represented about 40% of its exports.  As the delegate of Turkey had said, this item had 
been on the agenda for several years and it was unfort unate that the CTG had not been able to arrive 
at a conclusion or a solution on the matter.  Turkey's submission contained a balanced and 
constructive proposal to compare all the studies on the sector, and hold a workshop to promote 
dialogue among interested countries, bearing in mind the importance of the sector for many developing countries.  Therefore, his delegation hop ed for a favourable reply to this proposal and 
looked forward to seeing the new Turkish proposal at the next meeting.  6.4 The representative of Jordan
 said that his delegation also attached great importance to this 
sector which constituted the top export products of Jordan.  He reiterated his delegation's support for 
the Turkish proposal and look forward to discussing th e document that would be submitted at the next 
meeting.  He asked Members to consider it positively.  6.5 The representative of Turkey
 invited all interested Members to contribute to this study which 
it intended to submit at the next meeting of the CTG. 
 6.6 The representative of Pakistan
, in reiterating the importance of the sector for his country's 
economy, informed Members that textiles and clothi ng exports covered more  than two thirds of 
Pakistan's total exports.  His dele gation believed that the current trading system and trading rules were 
more or less successful after 40 years of a differentiated trade and multilateral trading system.  His 
delegation had shown its c oncerns and consulted with Turkey, but still maintained that there was no 
justification to single out one sector in the overa ll trade in goods, especially if that sector had 
remained subject to differentiated treatment for 40  years.  However, his delegation would welcome 
the Turkish proposal at the next CTG meeting and o ffered its services, even for consulting, in the 
preparation of this submission. 
 
6.7 The representative of Tunisia  supported the statements from El Salvador and Jordan and 
noted the importance that his delegation attached to the sector.  His delegation had always supported 
this proposal.  It was pleased to  see the new steps being taken by Turkey and it was willing to 
coordinate with Turkey to present a new document at the next meeting.  
6.8 The Chairman
 proposed that the Council takes note of th e statements made and reverts to this 
item at its next meeting.  In the meantime, she en couraged Members to meet with a view to getting a 
better appreciation of each other's positions, so that  the council would eventually be in a position to 
move forward on this issue.  
6.9 The Council so agreed
. 
  G/C/M/95 
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  VII. TRANSITIONAL REVIEW UNDER PARAGRAPH 18 OF THE PROTOCOL OF 
ACCESSION OF THE PEOPLE'S REPUBLIC OF CHINA  
7.1 The Chairman  recalled that in accordance with paragra ph 18 of the Protocol of the Accession 
of the People's Republic of China in document WT /L/432, this Council was to report to the General 
Council on the Transitional Review.  As a first step , CTG subsidiary bodies we re required to transmit 
their reports to the Council for Trade in Goods.  As a first step, she would give Members an 
opportunity to make general comments on those repo rts, and would subsequently propose that the 
Council takes note of the Reviews that had been carri ed out in the CTG subsidiary bodies.  She would 
then move on to the CTG's own report.  The Counc il was required to review the information to be 
provided by China in designated parts of Annex 1.A of the Protocol. 
 
7.2 She added that the following subsidiary bo dies had carried out the Transitional Review:  
Market Access – the report was contained in doc ument G/MA/217:  Agriculture - the report was 
contained in document G/AG/25;  Customs Valua tion - the report was contained in documents 
G/VAL/62;  SPS - the report was contained in doc ument G/SPS/50;  TBT - the report was contained 
in document G/TBT/24;  Import Licensing - the report  was contained in document G/LIC/19;  Rules 
of Origin - the report was contained in document G/RO/66;  Anti-Dumping - the report was contained 
in document G/ADP/17;  Subsidies and Countervailing Measures - the report was contained in document G/SCM/125;  Safeguards - the report was contained in document G/ SG/85;  and TRIMs - 
the report was contained in documents G/L/859.  She asked Members if they had general comments 
on these Reviews.   
 
7.3 The representative of the European Communities
 stated that his delegation was concerned 
about the lack of co-operation from China in this Transitional Review Mechanism and was 
disappointed by the lack of Chinese replies.  Transparency was an essential element of the WTO 
Membership and it applied to all WTO Members.  The scrutiny provided for by the Transitional 
Review Mechanism had been approved by China as part of its Protocol of Accession.  The WTO 
Accession was the starting point, not the end point of the Members' contribution to the WTO system and therefore his delegation hoped that China would give detailed replies to all questions that his 
delegation and other Members had raised in the subsidiary committees.  The EC had re-submitted 
written questions on export restrictions, circulat ed in document G/C/W/605, that had been left 
unanswered in the Market Access Committee.  He focu sed on a few areas of particular concern to his 
delegation, although this was by no means an e xhaustive list of its concerns.  With respect to 
transparency:  he stressed the importance of China fully implementing its commitments in its Protocol 
of Accession to provide for a reasonable period fo r comments to the appropriate authorities before 
measures effecting trade in goods were implemente d.  China's certification system for a range of 
sectors appeared to be trade restrictive.  The EC urged China to develop and implement a certification 
system in such a way so as to avoid unnecessary barri ers to trade.  The EC was concerned about the 
progressive expansion of this system to new products .  The EC continued to have serious concerns 
about the thirteen proposed implementing rules for the proposed re-certification for various 
information technology products for information secu rity requirements.  Pursuant to the notified 
drafts, such products would be subject to the pro cedures and would have to comply with the Chinese 
standards or encryption-references.  Foreign owne d companies established in China were not granted 
the same rights in standard setting technical co mmittees as all other companies in China.  Their 
involvement was restricted to a non-voting service status.  Several other industrial sectors such as steel, ship building, petrochemical, pharmaceuticals, cosmetics, etc. were long-standing issues raised 
on several occasions.  His delegation's concerns also  related to issues such as intellectual property, 
raised in the framework of the Council for Trade- Related Aspects of Intellectual Property Rights, 
pricing and registration procedures, joint-venture limitations, subsidies, local content requirements 
and technical barriers.  G/C/M/95 
Page 10  
 
  7.4 The representative of the United States
 recalled that this was the seventh TRM for China. The 
US believed that the TRM continued to be a useful  mechanism.  The TRM helped to provide needed 
additional transparency for China's trade regime  so that Members could better understand and assess 
the progress China had made in adopting and complyi ng with WTO disciplines.  In his delegation's  
written submissions before this Committee, it had ra ised questions that had been previously asked 
during transitional reviews conducted by subsidiary bodies, but China had not responded to them.  He 
highlighted a few of his delegation's concerns.  His delegation had raised its concerns regarding 
export restrictions on raw materials in the Market  Access Committee.  China continued to maintain 
export quotas, export quota bidding, minimum ex port prices and export duties on numerous raw 
material inputs that were particularly important to US industry.  WTO rules prohibited export quotas, 
export quota bidding and minimum export prices.  The same was true for most of the export duties 
that China also used to discourage exports.  Chin a had made a commitment in its WTO Protocol of 
Accessions circumscribing its use of export duties.  It  was long past time for China to get rid of its 
export restrictions on raw materials.  China should  have eliminated them when it acceded to the WTO 
nearly 6 years ago.  His delegation wanted to see a level playing field, where competition was fair.  
However, with China's export restrictions, th e US and other WTO Members were significantly 
disadvantaged.  The export restrictions artificially  raised world raw material prices and lowered 
China's domestic prices.  That gave a substantia l artificial advantage to China's downstream producers 
over US and other foreign downstream producers.  Before the Market Access Committee, his 
delegation had raised these same concerns and asked  questions specifically about two raw materials 
that had recently been subjected to particularly extreme export restrictions – yellow phosphorous and 
refined metal lead.  China did not respond to these questions, so his delega tion resubmitted them to 
the Council for Trade in Goods.  His delegation looked forward to China's responses to these 
questions today.  7.5 He added that other questions submitted to the CTG were originally submitted in connection 
with the Transitional Review in the Subsidies Co mmittee.  During that Review, his delegation had 
highlighted a number of serious concerns.  In pa rticular, his delegation noted China's continuing 
failure to notify any sub-central government s ubsidy programmes, and information it received 
indicating that China maintained and continued to put in place numerous prohibited subsides, 
especially at the sub-central government level.  Th ese were indeed serious matters, and his delegation 
again urged China to take swift action to r esolve these matters in ac cordance with its WTO 
obligations.  Before this Council,  his delegation had re-submitted questions that dealt with the 
Chinese government's recent efforts to re-centralise control over land admi nistration.  It appeared that 
China had made this change in an attempt to ensure that land use-ri ghts were allocated in accordance 
with state industrial development policies rather th an market principles.  His delegation would like to 
learn more about this area.  At the Review in the Subsidies Committee, China indicated that it had not 
had enough time to prepare its responses to these que stions.  So, his delegation hoped to hear China's 
responses today.  7.6 Finally, he noted significant US concerns a bout matters that fell within the jurisdiction of 
other committees that reported to this Council.  In the area of sanitary and phytosanitary standards, 
China continued to maintain a number of measures that were non-transparent and appeared to lack 
scientific bases, such as BSE-related bans, pathogen standards, residue standards and avian influenza 
bans.  In the investment area, China continued to maintain various restrictions on foreign investment 
and continued to subject new investments and merger s and acquisitions to vague standards, such as 
national economic security.  In the customs valua tion area, China did not seem to uniformly follow 
WTO rules.  The practices of China's Customs Admi nistration still seemed to vary from port to port, 
both in terms of customs clearance procedures and va luation determinations, and in some cases these 
practices gave rise to WTO concerns.  In the area of  technical barriers to trade, China continued to 
pursue the development of unique national standard s, despite the existen ce of well-established 
international standards, apparently with the objective of protecting domestic companies from  G/C/M/95 
 Page 11 
 
 
  competing foreign technologies and standards.  All of these matters raised serious concerns for his 
delegation and it looked forw ard to China's responses. 
 7.7 The representative of Switzerland
 also raised an issue that her delegation had previously 
raised in the Committee on Market Access.  She repor ted that, in May 2008, China had raised export 
taxes on yellow phosphorous to 120 per cent and seeme d to have applied since then an effective high-
minimum export price.  Yellow phosphorous was an essential input for many industries, like the textile industry, the construction sector, the electroni c industry and the chemical industry.  This issue 
was of deep concern to Switzerland a nd had been raised in several meetings, even at the highest level.  
Furthermore, her delegation had a more technical, b ilateral meeting on this issue last week for which 
she thanked the Chinese delegation.  Her delegati on's assessment was, however, that the export duty 
on yellow phosphorous was not consistent with Chin a's obligation in its Accession Protocol.  China 
had committed itself therein to not levy export dutie s beyond the level specified in Annex 6 of the 
Protocol for a list of 84 products, including yello w phosphorous.  The maximum level of the export 
tax on yellow phosphorous according to Annex 6 w as 20%.  The export tax was applied on yellow 
phosphorous but not on other industrial produc ts using yellow phosphorous or on downstream 
products.  In this way, the measure severely disad vantaged industries outside of China.  Chinese 
companies producing products using yellow phosphor ous did not have to pay the export tax and 
therefore enjoyed a much lower domestic price.  According to her delegation's information, the 
present export tax would expire on 31 December 2008 at which time China would again be in 
conformity with its WTO obligations.  However,  her delegation had heard that China would not 
decrease its export taxes or only partially reduce them from 120 per cent to 95 per cent.  It also 
seemed that the export tax would stay in place until end December 2009.  Her delegation regretted if 
this was the case.  Switzerland asked the Chinese de legation when it intended to bring itself into WTO 
conformity on this issue, i.e. when would it reduce the export tax on yellow phosphorous to a maximum level of 20 per cent and when would it eliminate the export price. 
 
7.8 The representative of China
 did not wish to re-open the Reviews carried out in the subsidiary 
bodies on the issues identified by th e previous speakers.  Generally speaking, he did not agree with 
the comment by the EC delegate that China lacked  co-operation in this TRM and did not respond to 
the questions raised by Members.  As Member s could see from the minutes of the CTG subsidiary 
bodies, detailed information, explanations and po sitions were provided by the Chinese delegation to 
the questions addressed to it.  He referred to the questions resubmitted in documents G/C/W/603 and 
Add.1 and G/C/W/605 from the US and EC respectivel y.  For example, on the export regulation that 
the US and EC raised before the Committee in Market Access, his colleague had responded very 
clearly that, although the Chinese delegation was willi ng to exchange views on those questions in that 
Committee, it was not appropriate to deal with e xport issues in the Committee on Market Access in  
view of the Committee's TRM mandate.  The Chinese Accession Protocol, in Annex 1A stated:  
"issues concerning export administration were to be taken up by the Council for Trade in Goods".  His 
colleague in the Market Access Comm ittee also told the EC that th e Chinese delegation did not agree 
that any question could be raised in the Transiti onal Review of the relevant committees and councils 
without due regard to their respective mandates.    
7.9 Regarding the question from the US delega te on China's land and administration system, 
raised in the Committee on Subsidies and Count ervailing Measures, the Chinese delegation did 
respond clearly.  It said that it did not see the releva nce of those questions to the mandate of that 
Committee.  In fact, to that response, his delegation ad ded that it doubted the relevance of this issue of 
land and administration to trade in goods, of which this Council was responsible.  In conclusion, the 
Chinese delegation had always engaged seriously and with full co-operation from the relevant 
authorities back in the Capital on the TRM.  He him self travelled to Geneva for this one-day meeting 
from Beijing.  The discussion under the agenda item of  the transitional review should be, and this was 
the wording from the Accession Protocol, "to review the implementation by China of the WTO Agreement and the provisions of this Protocol".  The discussion should not be a discussion on general G/C/M/95 
Page 12  
 
  issues, such as the land administration system.  There was a mechanism in this organization for 
enhancing the mutual general understanding of the economic and trade regimes and policies of the 
Members.  He concluded that he would take up detailed questions fro m Members in the second part of 
the review.  
7.10 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 therein.  China had s ubmitted this information as circulated in document 
G/C/W/608.  She also drew Members' attention to the following documents to which delegations had 
already referred: questions from the US in docum ents G/C/W/603 and Addendum 1; questions from 
the EC in document G/C/W/605;  and ques tions from Japan in document G/C/W/606. 
 7.11 The representative of China
 informed Members that his delegation's communication, 
submitted as required under Anne x 1A of the Protocol, outlined in detail China's export 
administration regime.  He did not have much more to add to the information provided.  
 
7.12 The representative of Japan  appreciated China's communication but asked that, next year, it 
be submitted well in advance of the Council's meeting.   Her delegation had raised three issues in its 
submission, all related to China's export restrictive measures.  She mentioned a few of the questions in 
the document.  First, Japan expressed its concern regarding China's exporting licensing measures that 
China justified on the basis of GATT Article XX.  Sh e asked China to explain which sub-paragraph of 
Article XX did it justify its export licensing measures on a product-by-product basis.  China also 
mentioned in the past that it implemented st ringent restrictions on domestic production and 
consumption.  In this connection, her delegation w ould like China to explain its justification with 
concrete data.  Japan also expressed its concern re garding China's export taxes on products, such as 
agriculture products and fertilizers.  Her delega tion understood that China imposed export taxes on 
products not listed in Annex 6 of the Accession Prot ocol.  She asked China to explain the purposes 
and necessities of these export taxes, particularly on  products not listed in A nnex 6 of the Protocol.  
China's report said that China would submit to the WTO a new and full notification of quantitative restrictions for the year 2008 which would refl ect details of these export non-tariff measures, 
including quota bonding.  Her delegation looked forward to receiving this notification and asked when that notification would be made.  Japan was also concerned with China's export prohibition on natural 
sand and asked how China justified it with regard to Article11 of the GATT.  If China justified it 
under Article XX(d) of GATT, she asked for a detailed  explanation of China's restrictive measures on 
domestic production and consumption of natural sand.  She also asked for data of the latest trends in 
domestic production and consum ption of natural sand. 
 
7.13 The representative of China
 focused his explanation and responses on the background 
situation in China instead of going into specifi c products.  The Chinese Government was becoming 
more and more aware of the importance and ur gency of environmenta l protection and energy 
conservation while developing its economy.  Th is was a common concern of the international 
community.  It was not difficult to see that the rapi d development of the Chinese economy in the past 
three decades had also brought about heavy pressure  on the environment, and in certain areas the 
situation was fairly serious.  Members might well be aware of the concept of scientific outlook on 
development which was advocated by the Chinese G overnment.  It was natural that the measures 
adopted for such purposes were also reflected on exports.  In the Transitional Reviews of the 
subsidiary Committees that reported to this Counc il, some Members raised questions and concerns 
regarding China’s industrial policies.  As a matte r of fact, the utmost objective of the industrial 
policies was also to achieve environmental protectio n, energy conservation and emission reductions.  
In these areas China was fully aware of its respon sibilities towards the world.  It took note of 
Members' concerns expressed today on the measur es effecting exports, but he clarified that the 
measures were not isolated to specifically or intentiona lly target exports.  Rather they were part of the 
Chinese Government's efforts to address the pressing concern for environmental protection, energy  G/C/M/95 
 Page 13 
 
 
  conservation and emission reductions, which these days  were the daily talk of Chinese people.  These 
measures were also accompanied by restrictiv e measures on domestic produc tion and consumption. 
For example, in the Comprehensive Work Sche me on Energy Reservation and Emission Reduction, 
promulgated by the State Council, it was stipulat ed that while implementing the various measures 
affecting the export of energy-intensive and high polluting products, any initiative to establish new 
projects of high energy consumption and high pollu tion must be reviewed in conjunction with the 
local government’s undertaking to meet the targets for energy saving, emission reduction and outdated production capacity elimination.  Obsolete  production capacity in industries of electricity, 
steel, construction inputs, electrolyte aluminium, iron alloy, calcium carbide, coke, coal, tabulate glass 
must be eliminated and local governments must cl ose down those enterprises falling into the above 
categories.  Another example was the Chinese Govern ment's significant, recent increase, on 1 August 
2007 of the resource tax rate on zinc, lead, copper, tungsten, by 400% or 500%.  There were also 
other domestic restriction measures on production and consumption concerning specific products like 
coke, etc. which were elaborated in previous Reviews.  These measures were still in place and he, 
therefore, would not repeat them today. 
 
7.14 It was his delegation's belief that those meas ures affecting exports of certain natural resource 
products had been implemented where strict domest ic production and consump tion restrictions were 
also put in place. They were part of the overa ll programme to achieve sustainable and scientific 
development of the Chinese economy.  They were ta ken, bearing in mind China's obligations in the 
WTO, specifically in Article XI, Annex 6 of the Accession Protocol, a nd paragraph 162 of the 
Working Party Report which basically said that measures having the effect of export restriction in 
exceptional cases may be adopted to the extent that they were consistent with WTO rules.  With 
regard to Japan's question on Chinese measures conc erning agriculture related products, these were in 
response to the shortage of foodstuffs which many Members, particularly developing Members, were 
facing.  China had the largest population in the world, and it was not difficult to understand its 
concerns for maintaining a stable and sufficient dom estic supply of foodstuff at prices affordable to 
the general public.  The measure concerning chemical  fertilizers was also due to shortage of supply 
concerns.  But it was seasonal and would be adjust ed at an appropriate time.  Regarding the 
transparency of export-related measures, the primar y concern in the EC's questions, he did not see the 
problem.  In the past 7 years, China had provide d detailed information regarding export tariff and 
non-tariff measures.  It submitted its annual QR notification to the Committee on Market Access 
which listed, according to 8 digit tariff lines, a ll China's non-tariff measures covering both imports 
and exports, including the quota volume when applicab le.  It also provided annually to this Council 
information required by Annex 1A of the Accession Protocol describing, in detail, China's export 
administration regime. Furthermore, all the info rmation regarding export administration in China 
could be acquired on the internet, at the web-site of the Ministry of Commerce.  In the last two Trade 
Policy Reviews, a large amount of information on China's export administration regime was also 
covered.  Regarding the export prohibition of na tural sand, the export prohibition also aimed at 
protecting the environment and eco-system, as the mining of natural sand caused severe damage to river beds and water quality.  For silica sand, si nce the processing technology of polycrystalline 
silicon was not advanced in China, purity of refined silicon was quite low and most silicon was 
wasted in the processing.  This caused not only poll ution but wasting of natural resources. Currently, 
China was not in favour of domestic natural sand mi ning and silica sand refinery and most of these 
products were imported.  To c onclude, he hoped that Members w ould understand the challenges and 
pressures of a large developing country like China to protect its environment and conserve its natural 
resources to achieve sustainable development.  His delegation took note of Members' specific 
concerns and would keep in touch through bilateral communications.   
 
7.15 The representative of the European Communities
 asked a follow-up question to China on 
export restrictions.  The EC fully understood and sh ared China's environmental concerns.  However, 
the levy of export taxes actually reduced the domestic price for domestic users so it was not clear how G/C/M/95 
Page 14  
 
  this would help the environment.  Therefore, if the concern was the environment, why did not China 
levy the same taxes on domestic producers that were applied on exports.  7.16 The representative of China
 reiterated that the Chinese government was also implementing 
very strict domestic restrictions on production an d consumption.  One of the examples he gave was 
the increase in the resources tax rate on a number of the mineral products.   
 7.17 The Chairman
 proposed that the Council take note of the information provided by China in its 
submission and in its responses to the questions ra ised by Members.  Regarding the form of the 
Council's report of the Review, she proposed proceedi ng in the same manner as last year.  This would 
mean that a brief factual report would be prepared with references to the documents, and attached to 
the report, the portion of the minutes of this meeti ng which related to the Tr ansitional Review.  This 
report, as well as the reports of the subsidiary bo dies, would then be transmitted to the General 
Council.    
7.18 The Council so agreed
. 
 
VIII.  CONSIDERATION OF ANNUAL REPORTS OF SUBSIDIARY BODIES OF THE 
COUNCIL FOR TRADE IN GOODS 
8.1 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 agreements  in Annex 1A of the WTO 
Agreement were required to submit annually a fact ual report to the Council for Trade in Goods, and 
the Council was to take note of these reports.    8.2 In the absence of comments, she proposed that Council take note of the reports of the 
following Committees:  (i) Committee on Market A ccess, document G/L/865;  (ii) Committee of 
Participants on the Expansion of Trade in Info rmation Technology Products, document G/L/867 and 
Corr.1;  (iii) Committee on Agriculture, document G/L/856;  (iv) Committee on Customs Valuation, document G/L/863;  (v) Committee on Sanitary and Phytosanitary Measures, document G/L/866;  (vi) Committee on Technical Barriers to Trade,  document G/L/871;  (vii) Committee on Import 
Licensing, document G/L/868;  (viii) Committee on Rules of Origin, document G/L/870;  
(ix) Committee on Anti-Dumping Practices, document G/L/861;  (x) Committee on Subsidies and 
Countervailing Measures, document G/L/869;  (xi)  Committee on Safeguards, document G/L/862;  
(xii) Committee on Trade-Related Investment Meas ures, document G/L/860;  (xiii) Working Party on 
State Trading Enterprises, document G/L/857;  and (xiv) the Independent Entity, document G/L/864. 
 
8.3 The Council so agreed
. 
 
IX. ADOPTION OF THE ANNUAL REPORT OF THE COUNCIL FOR TRADE IN 
GOODS TO THE GENERAL COUNCIL  
9.1. The Chairman  drew Members' attention to the draft report of this Council circulated in 
document G/C/W/604.  In accordance with 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, it was agreed that "T he 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, 
containing an indication of actions and decisions taken, with cross re ferences to reports of subordinate 
bodies and could follow the model of the GAT T 1947 Council reports to the CONTRACTING 
PARTIES".  The draft report would be upda ted in light of today's meeting.   
  G/C/M/95 
 Page 15 
 
 
  9.2 The representative of the European Communities  asked for confirmation that the report would 
reflect the results of today's meeting.  9.3 The Chairman
 proposed that the Council agree to adopt the report, subject to the updating and 
revision which would be required to take account of the Council's work at today's meeting. 
 
9.4 The Council so agreed.  
X. OTHER BUSINESS 
A. 
STATEMENT ON BEHALF OF THE INTER NATIONAL TEXTILES AND CLOTHING BUREAU  
10.1 The representative of Hong Kong, China  informed Members that the International Textiles 
and Clothing Bureau, of which the representative of  Hong Kong, China was the current Chair, had 
held a meeting in Goa, India. On behalf of th e ITCB Members, he drew Members' attention to a 
communiqué adopted by the Council at that meeting.  This communiqué set out, among other things, ITCB Members' views on NAMA negotiations, NTBs and Aid for Trade.  It would be circulated to 
Members of the CTG shortly.1  
 B. D
ATE OF THE NEXT MEETING  
10.2 The Chairman  informed Members that the next meeti ng of the Council was scheduled to take 
place on Tuesday, 24 March 2009.  The agenda for that meeting would close on Friday, 
13 March 2009.   
 
10.3 The meeting was adjourned . 
 
__________  
                                                      
1 This document was circulated in document G/C/W/609, dated 20 November 2008.