WORLD TRADE  
ORGANIZATION  RESTRICTED 
G/C/M/108 
31 January 2012 
 (12-0640) 
Council for Trade in Goods  
  
 
MINUTES OF THE MEETING OF THE COUNCIL FOR TRADE IN GOODS 
7 NOVEMBER 2011 
 
Chairperson: H.E. Ambassador Jüri SEILENTHAL (Estonia) 
  
 The meeting of the Council for Trade in Goods was convened by airgram WTO/AIR/3848 
and WTO/AIR/3848/Corr.1; the proposed agenda for the meeting was contained in document 
G/C/W/660.  The meeting proceeded on  the basis of the following agenda. 
 
I.  NOTIFICATION OF REGIONAL TRADE AGREEMENTS ............................................. 3  
II.  MARKET ACCESS COMMITTEE ISSUES ........................................................................ 3  
A.  C
OMMITTEE ON MARKET ACCESS – PERIODIC REPORT OF THE COMMITTEE  ............................ 4  
B.  INTRODUCTION OF HARMONIZED SYSTEM 2002  CHANGES INTO WTO  SCHEDULES OF 
TARIFF CONCESSIONS – REQUESTS FOR EXTENSION OF THE WAIVER  ....................................... 4  
C.  INTRODUCTION OF HARMONIZED SYSTEM 2007  CHANGES INTO WTO  SCHEDULES OF 
TARIFF CONCESSIONS – REQUESTS FOR A WAIVER  .................................................................... 4  
D.  INTRODUCTION OF HARMONIZED SYSTEM 2012  CHANGES INTO WTO  SCHEDULES OF 
TARIFF CONCESSIONS - COLLECTIVE REQUEST FOR A WAIVER  ................................................. 4  
E.  AMENDMENT TO THE PROCEDURES LEADING TO THE CERTIFICATION OF HS2007  
CHANGES  .............................................................................................................................. ...... 5 
F.  PROCEDURE FOR THE INTRODUCTION OF HARMONIZED SYSTEM 2012  CHANGES TO 
SCHEDULE OF CONCESSIONS USING THE CONSOLIDATED TARIFF SCHEDULE 
DATABASE  .............................................................................................................................. .... 5 
III. EUROPEAN UNION ENLARGEMENT:  PROCEDURES UNDER 
ARTICLE XXVIII: 3 OF GATT 1994 .................................................................................... 5  
A.  ENLARGEMENT OF THE EUROPEAN UNION 1 MAY 2004 ............................................................ 5  
B.  ENLARGEMENT OF THE EUROPEAN UNION ON 1 JANUARY 2007 ............................................... 6  
IV.  EUROPEAN UNION - REQUEST FOR A WAIVER ON ADDITIONAL 
AUTONOMOUS TRADE PREFERENCE S GRANTED BY THE EUROPEAN 
UNION TO PAKISTAN ........................................................................................................... 7  
V.  ARGENTINA'S IMPORT RESTRICTING POLICIES AND PRACTICES – 
STATEMENTS BY THE EUROPEAN UNION, THE UNITED STATES, 
SWTIERLAND, TURKEY AND JAPAN ............................................................................ 10  
VI.  WORK PROGRAMME ON ELE CTRONIC COMMERCE ............................................. 14  
VII. NOTIFICATIONS OF ACTIONS TA KEN UNDER THE 1999 WAIVER FOR 
PREFERENTIAL TARIFF TREATMENT FOR LEAST-DEVELOPED COUNTRIES ..................................................................................................................... ...... 18 G/C/M/108 
Page 2  
 
  VIII. CANADA - REQUEST FOR AN EXTENSION OF THE WAIVER FOR THE 
CARIBBEAN INITIATI VE: CARIBCAN ........................................................................... 20  
IX.  EUROPEAN UNION - REQUEST FOR AN EXTENSION OF THE WAIVER 
FOR THE APPLICATION OF AUTONOMOUS PREFERENTIAL TREATMENT TO THE WESTERN BALKANS ............................................................... 22  
X.  BRAZIL'S AUTOMOTIVE TAX MEASURES - STATEMENT BY THE 
REPUBLIC OF KOREA ........................................................................................................ 22  
XI.  UKRAINE'S IMPLEMENTATION OF CUSTOMS VALUATION 
LEGISLATION - JOINT STATEMENT BY THE EUROPEAN UNION AND NORWAY ........................................................................................................................ ........ 26 
XII. ECUADOR MIXED TARIFFS - QUESTI ONS FROM THE UNITED STATES, 
EUROPEAN UNION, CANADA AND JAPAN ................................................................... 28  
XIII. EUROPEAN UNION - RULING OF THE EUROPEAN COURT OF JUSTICE 
OF  6 SEPTEMBER 2011 RELATING TO  THE DETECTION IN HONEY OF 
POLLEN CONTAINING DNA FROM MO N810 GENETICALLY MODIFIED 
MAIZE - STATEMENT BY ARGENTINA ......................................................................... 29  
XIV. TRANSITIONAL REVIEW UNDER PARAGRAPH 18 OF THE PROTOCOL 
OF ACCESSION OF THE PEOPLE'S REPUBLIC OF CHINA ...................................... 32  
XV. ADOPTION OF THE ANNUAL REPORTS OF THE COUNCIL'S 
SUBSIDIARY BODIES .......................................................................................................... 41  
XVI. ADOPTION OF THE ANNUAL REPORT OF THE COUNCIL FOR TRADE 
IN GOODS TO THE GENERAL COUNCIL (G/C/W/659) ............................................... 42  
XVII. OTHER BUSINESS ................................................................................................................  42 
  G/C/M/108 
 Page 3 
 
 
   When adopting the Agenda, the Chairperson informed the Council that in a communication 
dated 3 November 2011, China submitted in documen t G/C/W/661, information regarding Annex 1A 
of its Protocol of Accession.  He also informed the Committee that he carried out consultations in 
respect of the appointment of the Chairperson of the ITA Committee and that he would report to the Council under "Other Business".  
 
The agenda was so agreed. 
 
I. NOTIFICATION OF REGIONAL TRADE AGREEMENTS 
1.1 The Chairperson recalled that, under the wo rking procedures agreed by the Committee on 
Regional Trade Agreements (CRTA), following adopti on by the General Council of the Transparency 
Mechanism, the Council for Trade in Goods (CTG ) was to be kept informed of Members' 
notifications of new regional trade agreements.1  He informed the CTG that the following regional 
trade agreements had been notified to the RTA Committee:  
 (A) FREE TRADE AGREEMENT BETWEEN PERU AND THE EFTA STATES 
  (WT/REG295/N/1 AND WT/REG295/N/2) 
 
 (B) FREE TRADE AGREEMENT BETWEEN THE EUROPEAN UNION AND THE   REPUBLIC OF KOREA (WT/REG296/N/1) 
 
 (C) FREE TRADE AGREEMENT BETWEEN GUATEMALA AND THE SEPARATE 
  CUSTOMS TERRITORY OF TAIWAN, PENGHU, KINMEN AND MATSU   (WT/REG297/N/1) 
 
 (D) FREE TRADE AGREEMENT BETWEEN PERU AND THE REPUBLIC OF 
 KOREA (WT/REG298/N/1) 
 
 (E) FREE TRADE AGREEMENT BETWEEN COLOMBIA AND THE EFTA STATES 
  (WT/REG299/N/1) 
 
 (F) FREE TRADE AGREEMENT BETWEEN INDIA AND JAPAN (WT/REG300/N/1) 
 
 (G) FREE TRADE AGREEMENT BETWEEN CANADA AND COLOMBIA  
  (WT/REG301/N/1) 
 
 (H) FREE TRADE AGREEMENT BE TWEEN THE EUROPEAN UNION AND 
PAPUA NEW GUINEA / FIJI (WT/REG302/N/1) 
 
1.2 The Council took note of the information. 
 
II. MARKET ACCESS COMMITTEE ISSUES 
2.1 The Chairperson noted that the Market Access Committee had forwarded six items for 
consideration to the Council for Trade in Goods an d suggested that they be taken up in the order 
which they are listed in the Airgram. 
 
                                                      
1 See documents WT/REG16, WT/L/671 and G/C/M/88. G/C/M/108 
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  A. C
OMMITTEE ON MARKET ACCESS – PERIODIC REPORT OF THE COMMITTEE  
2.2 The Chairperson drew Members' attention to  the periodic report of the Committee on Market 
Access contained in documents G/MA/257 and G/MA/ 257/Corr.1.  The report was factual in nature, 
and reflected the work undertaken in the Market Access Committee.   
 
2.3 The Council took note of the periodic report.   
 
B. INTRODUCTION OF HARMONIZED SYSTEM 2002  CHANGES INTO WTO  SCHEDULES OF TARIFF 
CONCESSIONS – REQUESTS FOR EXTENSION OF THE WAIVER  
2.4 The Chairperson drew Members' attention to the draft waiver decision circulated in document 
G/C/W/653/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/808 and would expire on 31 December 2011.  The one year extension of the waiver decision 
contained in document G/C/W/653/Rev.1 was consider ed at the formal meeting of the Committee on 
Market Access that took place on 14 October 2011.  It had been forwarded by  that Committee to the 
CTG for action.  He proposed that the Council approve the draft waiver decision contained in 
G/C/W/653/Rev.1and forward it to the General Council for adoption.  2.5 The Council approved the draft waiver deci sion contained in document G/C/W/653/Rev.1 and 
agreed to forward it to the General Council for adoption. 
 
C. INTRODUCTION OF HARMONIZED SYSTEM 2007  CHANGES INTO WTO  SCHEDULES OF TARIFF 
CONCESSIONS – REQUESTS FOR A WAIVER  
2.6 The Chairperson drew Members' attention to the draft waiver decision circulated in document 
G/C/W/654, 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/809 
and would expire on 31 December 2011.  The one year extension of the waiver decision was 
considered at the formal meeting of the Comm ittee on Market Access that took place on 14 October 
2011.  It had been forwarded by that Committee to the CTG for action.  He proposed that the Council 
approve the draft waiver decision contained in G/C/W/654 and forward it to the General Council for 
adoption.  
2.7 The delegate from the Dominican Republic confirmed that her delegation asked to be 
included in the Decision relating to this extension for the period stretching from 1 January 2007 to 31 
December 2012.  2.8 The Council took note of the statements made , approved the revised version of the draft 
waiver decision including the Dominican Republic in its Annex, and agreed to forward the revised 
version (G/C/W/654/Rev.1)to the General Council for adoption.  
 D. I
NTRODUCTION OF HARMONIZED SYSTEM 2012  CHANGES INTO WTO  SCHEDULES OF TARIFF 
CONCESSIONS - COLLECTIVE REQUEST FOR A WAIVER  
2.9 The Chairperson referred the Council to the co llective draft waiver decision circulated in 
document G/C/W/655/Rev.1 which was drawn up in  connection with the introduction of HS2012 
changes into WTO schedules of tariff concessions.  The draft waiver decision allows those Members 
listed in its Annex to suspend the application of the provisions of Article II of GATT 1994 from 
1 January 2012 until 31 December 2012. He informed  the CTG that this collective request for a 
waiver was considered at the formal meeting of  the Committee on Market Access that took place on  G/C/M/108 
 Page 5 
 
 
  14 October 2011 and had been forwarded by that Co mmittee to the CTG for ac tion. In the interim, 
Honduras and the Dominican Republic had requ ested to be included in the Annex.  
 2.10 The delegates of Honduras and the Dominican Republic stated that their delegations meant to 
implement the changes to the HS 2012 from 1 January 2012; therefore they wanted Honduras and the 
Dominican Republic, to be included in the list of countries contained in document G/C/W/655/Rev.1. 
 2.11 The delegates of Mexico and Pakistan also stated that they wanted to be included in the 
Annex to the draft waiver decision as their governme nts meant to implement the relevant changes to 
the HS 2012 from 1 January 2012.  
  
2.12 The Council took note of the statements ma de, approved the draft waiver decision with the 
inclusion of Honduras, the Dominican Republic, Mexi co and Pakistan in the Annex and agreed to 
forward to the General Council for adoption, a re vised version of the draft waiver decision in 
document  G/C/W/655/Rev.1, including Honduras, the Dominican Republic, Mexico and Pakistan in 
the annex.  
 E. A
MENDMENT TO THE PROCEDURES LEADING TO THE CERTIFICATION OF HS2007  CHANGES  
2.13 The Chairperson drew the Council's atte ntion to document G/MA/W/108 containing the 
"Amendment to the Procedures leading to the Cer tification of HS2007 Changes" and noted that this 
Amendment was considered at the formal meeting of the Committee on Market Access that took place 
on 14 October 2011 and had been forwarded by that Committee to the CTG for action.  
 2.14 The Council agreed that the amendment pro cedures as approved by the Committee on Market 
Access in document G/MA/W/108 be forwarde d it to the General Council for adoption. 
 
F. PROCEDURE FOR THE INTRODUCTION OF HARMONIZED SYSTEM 2012  CHANGES TO 
SCHEDULE OF CONCESSIONS USING THE CONSOLIDATED TARIFF SCHEDULE DATABASE  
2.15 The Chairperson turned to document G/MA/W/109 which contained the "Procedure for the 
Introduction of Harmonized System 2012 Chan ges to Schedule of Concessions Using the 
Consolidated Tariff Schedule Database".  This Proce dure was considered at the formal meeting of the 
Committee on Market Access that took place on 14 October 2011 and had been forwarded by that 
Committee to the CTG. 
 2.16  The Council agreed that the Procedure for the Introduction of Harmonized System 2012, as 
approved by the Committee on Market Access, in document G/MA/W/109,  be forwarded to the 
General Council for adoption. 
 
III. EUROPEAN UNION ENLARGEMENT:  PROCEDURES UNDER ARTICLE XXVIII: 
3 OF GATT 1994  
3.1 The Chairperson informed Members that under this agenda item, the Council was to consider 
a request for extension of the time period for the w ithdrawal of concessions for the two enlargements 
of the European Union that took place on 1 May 20 04 and on 1 January 2007, respectively.   
 
A. ENLARGEMENT OF THE EUROPEAN UNION 1 MAY 2004   
3.2 The Chairperson drew Members' attention to document G/L/695/Add.14 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 EU 
indicated that it would not assert that Members who had submitted a claim pursuant to G/C/M/108 
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  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 EU's withdrawal of concessions, provided that the claiming WTO Member withdrew concessions no later than 99 months after the EU's  modification of concessions.  He recalled that the 
General Council had on four earlier occasions, on the basis of similar communications from the EU, 
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 nine occasions, namely at its meetings of 
12 July 2006, 30 January, 21 May and 23 November 2007, 22 May and 18 November 2008, 29 June 
and 30 October 2009;  21 May and 30 November 2010; and 26 May 2011.   
 
3.3 The representative of the European Union said that while negotiations had been finalized, the 
setting of the banana tariff for the EU-25 did not  yet have legal force as the Geneva agreement on 
bananas has not yet entered into force.  The ratif ication was pending by the EU's WTO partners.  The 
EU had therefore circulated a communication aime d at extending the period in which Members are 
allowed to withdraw substantially  equivalent concessions.  He  noted that the message itself was 
identical to the one which the CTG endorsed when extending the period for withdrawal in the CTG of 
26 May 2011.  3.4 The Council took note of the statement made a nd also of the EU communication contained in 
document G/L/695/Add.14.  It agreed on the extension of the deadline as set out in the EU's document 
G/L/695/Add.14.   
 B. E
NLARGEMENT OF THE EUROPEAN UNION ON 1 JANUARY 2007   
3.5 The Chairperson drew Members' attention to document G/L/821/Add.9 which concerned the 
accession to the European Union on 1 January 2007 of Bulgaria and Romania.  In this 
communication, the EU 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 EU's withdrawal of concessions, provided that the claiming WTO Member withdrew concessions no later than 66 months after the EU's modification of concessions.  He recalled 
that the Council for Trade in Goods had extende d the deadline on nine occasions, namely at its 
meetings of 21 May and 23 November 2007, 22  May and 18 November 2008, 29 June and 
30 October 2009; 21 May and 30 November  2010; and  26 May 2011.  3.6 The representative of the European Union informed the Council that the negotiations 
following the EU's 2007 enlargement were still on-going.   The EU had reached agreement with most 
of WTO Members with whom it entered into negotia tions and had proceeded  to the ratification of 
several agreements.  However, due to still on-going  negotiations as well as the time required to ensure 
the entry into force of the agre ements already reached, another extension to the period in which 
Members are allowed to withdraw substantially equivalent concessions was necessary.  The EU had therefore circulated a communication aimed at extending the period in which Members are allowed to withdraw substantially equivalent concessions.  Th e message itself was similar to the one which the 
CTG endorsed when extending the period for withdrawal in the CTG of 26 May 2011. 
  3.7 The Council took note of the statement made a nd also of the EU communication contained in 
document G/L/821/Add.9.  It agreed on the extens ion of the deadline as set out in the European 
Union's document G/L/821/Add.9.  
  G/C/M/108 
 Page 7 
 
 
  IV. EUROPEAN UNION - REQUEST FOR A WAIVER ON ADDITIONAL 
AUTONOMOUS TRADE PREFERENCES GRANTED BY THE EUROPEAN UNION TO PAKISTAN  
4.1 The Chairperson drew the C ouncil's attention to document G/ C/W/640/Rev.1 circulated by the 
European Union containing a request for a waiver for the application of ad ditional autonomous trade 
preferences granted by the EU to Pakistan. 
 4.2 The delegate of the European Union recalled  that the EU had tabled the request for this waiver 
which allowed granting of additional autonomous trad e preferences to Pakistan almost one year ago 
now.  The EU presented a revised request updating its request given the time that had passed since its 
introduction, which addressed concerns of those Members  who had expressed systemic concerns on 
this initiative.  He recalled that this request was part of the envi saged short, medium and long-term 
measures to help underpin Pakistan's recovery from the disaster, as requested by the European 
Council on 16 September 2010.   
4.3 The EU considered that trade enhancing meas ures, in addition to humanitarian aid, would 
considerably accelerate the recovery of Pakistan fro m the natural disaster.  Du e to the severity of the 
crisis in 2010 which still had an enormous impact on Pakistan's ec onomy, an exceptional substantial 
response was needed.  The EU therefore invited the WTO Members to rapidly agree on its request 
also in view of the current floods that hit the country again this year.  The request which was first discussed at the CTG meeting in November 2010 would provide preferences to Pakistan in the form 
of temporary suspension of import duties on 75 expor t items from Pakistan.  The EU was aware that 
any such trade concessions, especially  in sensitive sectors such as te xtiles, might have an impact on 
other supplier countries.   4.4 Precisely for the reason above, the EU had been very careful in the selection of products 
suggested for temporary liberalization.  His delega tion made great efforts to take into account the 
interests of other WTO Members, especially LDCs, by not proposing for liberalization some of the 
most sensitive products.  While containing a meaningful  offer to assist Pakistan, the impact on other 
supplier countries was further reduced as the waiver the EU was seeking would initially be limited to 
two years.  The EU had also continued to consult with Members to explore the different options in 
view of building a consensus.  He said that the re vised proposal struck a balance in terms of products 
covered and the duration between le nding support to Pakistan and minimizing to the largest extent 
possible, negative effects on other Members.  4.5 The EU's revised proposal also addressed c oncerns of Members who had expressed systemic 
concerns on this initiative.  He called on Members to  lend their support to this revised waiver request 
which now took into account concerns that had b een expressed during the consultations since last 
year.  4.6 The delegate of Morocco expressed the solidarity of  his country with Pakistan in the distress 
is had experienced.  Morocco supported the principl e of humanitarian actions  which would enable 
Pakistan  to meet the economic and trade conseque nces of the flood that hit that country.  Morocco 
had listened, with interest, to the statement by the EU  on the steps it had taken and particularly what it 
called consultations and the selection  of goods subj ect to the waiver so as not to affect other 
countries.  His delegation had some difficultie s in understanding the selection that was made, 
particularly because it had not been consulted ahead of time and there had been very little 
communication.  Morocco would have wished that the selection of goods be the subject  of intense 
consultation and dialogue processes and not only focused  on the position of one or another country as 
to whether it would  or would not accept it.  His de legation had hoped the select ion  would take  into 
consideration, the economic sectors concerned since  the  textiles sector  in Morocco was a strategic 
one, employing tens of thousands of people.  Thus, his delegati on would have hoped that the EU G/C/M/108 
Page 8  
 
  would have consulted them consider ing that they had  a special status  politically, economically and in 
trade terms, so as to ensure that Morocco would not  be affected by the aforementioned selection of 
products. His statement was  intended  to indicate that Morocco did  have difficulties in understanding 
certain measures;  and that it accepted the EU's statem ent that this waiver was for a limited period.  
Nevertheless, Morocco  wanted to launch an appeal  that in future, whether talking about the EU or 
any other trade power,  there should be greater  transparency, greater dialogue and greater 
consideration taking care of the concerns of all.   
 4.7 Humanitarian consideration in trade was needed, particularly for developing countries; but it should not affect nor ignore other developing countr ies. Thus, Morocco accepted the EU proposal in 
order to be in solidarity with the people of Pakistan , but hoped that in the future it would not be faced 
with a fait accompli and that the sensitivities and concerns of other countries would not be neglected 
and ignored.  4.8 The delegate from Bangladesh stated that, in principle, they supported the proposal, however, 
they had some concerns relating to the waiver and needed specific  instructions from the capital. 
 4.9 The delegate from Brazil stated that si nce the severe floods, Brazil had joined the 
international community in assistance efforts whic h sort to alleviate the losses sustained by the 
Pakistani people.  Brazil would have  never hesitated to help Pakistan  overcome a national tragedy.    
He stated that the EU request was still being give n positive and careful consideration by the Brazilian 
government.  As recognised by the EU itself in its introductory text to the waiver request, unilateral 
autonomous trade preferences were not systemically appropriate means to address humanitarian crisis 
situations.  In addition, with respect to specific trade concerns arising from the proposal, Brazil noted 
that some Brazilian exports to the EU might be si gnificantly affected by the proposed waiver.   
 
4.10 Over the past few weeks, Brazil had actively e ngaged in talks with the EU in order to resolve 
outstanding concerns and hoped that those concerns  which had been clearly stated by the Brazilian 
government both in Geneva and in Brussels, w ould  be favourably considered by the EU.  
Nevertheless, at the present stage Brazil  was comp elled to express reservation to the waiver request. 
 4.11 The delegate of  Vietnam recalled the initial position his delegation had expressed when the 
request for a WTO waiver was brought to the CT G agenda., when Vietnam expressed concern over 
the legitimacy of the measure and the unwanted e ffects on other exporting economies but  indicated 
its readiness to discuss with the parti es concerned, ways to overcome them. 
 4.12 He indicated that he was pleased to inform the Council that Vietnam's consultations with the 
EU had been concluded and the concerns had been addressed to some extent by both delegations.  He 
thanked the EU for the constructive discussion a nd exchange and welcomed the revised proposal 
presented by the EU.  4.13 Finally, he stated that Vietnam believed th at with the approval of the proposal, the request 
would  be carried out in the proper manner to bring about real benefit to Pakistani people. 
 
4.14 The delegate of Argentina said that his de legation welcomed in principle any measure which 
could help offset the measures of a natural disaster  of this magnitude.  Nevertheless, there were a 
number of sensitive lines, and althoug h his delegation did provide its ge neral support, they wanted  to 
have more detailed consulta tions to look at the specific aspects of concern. 
 
4.15 The delegate of Peru expressed its author ities' solidarity with the Pakistan people and 
government in terms of the difficult situation they  had  faced because of the floods and hoped that 
there would  be a rapid recovery and a return to economic activity.  As always, Peru was prepared to 
work for this cause but felt  it was an un-precedent measure which affected various products being  G/C/M/108 
 Page 9 
 
 
  exported by Peru to the EU ; it also affected sma ll and medium-sized enterprises and poor families.   
Peru shared the concerns expressed by Brazil and Bangladesh because despite consultations, there had 
been  no consideration  of the minimum requireme nts presented by  her delegation. Peru therefore 
asked that these requests be dealt w ith immediately so that Peru could also be able to provide the co-
operation required by  the people of Pakistan.  Her delegation was interested in continuing the 
consultation process. 
 
4.16 The delegate of Indonesia welcomed the re vised waiver proposal in an attempt to find an 
acceptable solution for all Members and appreciated the initiative ta ken by the EU delegation to 
informally share this modification ahead of this  Council meeting.  However, his capital was still 
analysing it and no definite reaction had been receiv ed from Jakarta. His delegation wanted to closely 
consult with the EU delegation informally on this matter in the future. 
 
4.17 The delegate of the United States reiterat ed  her delegation's  support to the EU waiver 
request. 
 
4.18 The delegate from Norway also reiterated his delegation's support to the EU waiver request. 
 
4.19 The delegate from Pakistan flagged that as st ated by the EU, Pakistan experienced a flooding 
devastation again this year,  especially in the provi nce of Sindh, an area where cotton, rice and sugar 
cane is grown.  This event compounded the misery of the affected population. 
 
4.20  He recalled that on 30 November 2010 when  the EU initiative was placed on the agenda of 
this Council for the first time, the Council had un animously recognized that Pakistan was facing an 
unprecedented situation and there was general support for the waiver.  Some countries also expressed 
their concerns, including systemic ones and Pakistan expressed its deep appreciation to the WTO 
membership for expressing their solidarity with Pakistan.   
 4.21 The revised request for a WTO waiver circulated on 28 October 2011 and contained in document G/C/W/640/Rev.1, addressed systemic concerns by stating that this case would  not be a precedent for any Member in future.  This had he lped to move Members to drop their systemic 
concerns to date.  There was now some converg ence on this issue, however, some Members' had 
asked further consultations with the EU. 
 4.22 The draft waiver decision provided in paragr aph 2 that  the EU shall examine the possibility 
of adjustments in case a Member considered that its benefits under GATT 1994 might be impaired unduly as a result of the waiver.  In other words, th ere was a window to address trade concerns even 
after implementation of the proposed measure.   
 4.23 He thanked Morocco, Vietnam, US, Norway and the other Members who supported Pakistan earlier on 30 November 2010 and thereafter. There were  some trade concerns remaining and Pakistan 
believed there was a consensus on the systemic issues which certain Members faced earlier. His delegation was available for consultations to try to arrive at a convergence as soon as possible and 
requested that Members use their good offices to  contribute towards solving the differences.  
 4.24 The delegate of the European Union tha nked delegations for their comments and indicated 
that this had been quite an exceptional if not un ique initiative.  The EU was at a stage where its 
motivations were widely understood and widely supported; and that was very positive.  He indicated  
that during the consultation process the EU invited,  on several occasions, comments and consultations 
by and with all Members which had direct interest in what the EU had proposed.  The EU had done its 
best to respond to the consultations  requests and would have liked this process to move forward to the 
GC after today's meeting; but it was clear that some complexity remained and there also were delegations interested in further consultations with the EU.  The EU  would engage in consultations G/C/M/108 
Page 10  
 
  with those Members who had requested these consulta tions in order to consider further their support 
to the waiver including Morocco who, although s upporting the waiver, had expressed concerns that 
the dialogue was not somehow sufficient.  His delega tion  wanted all the Members to feel that there 
was a real intention to have full consultations and ta ke into consideration to the extent possible, the 
interests of other countries; in that spirit his delegation had   submitted  its revised proposal. 
 
4.25 He noted that there was clearly a significant growing consensus around the proposal.  But indicated  that further consultations were needed and that the EU wanted to  go one step further and 
hold consultations with the delegations that had so re quested with a view to finalize the process with a 
unanimous agreement on this waiver request as soon as possible. 
 
4.26 The Chairperson indicated that he was open to hold consultations if necessary. The Council 
took note of the statements made and agreed to revert to this issue at its next meeting. 
 
V. ARGENTINA'S IMPORT RESTRICTING POLICIES AND PRACTICES – 
STATEMENTS BY THE EUROPEAN UNION, THE UNITED STATES, 
SWTIERLAND, TURKEY AND JAPAN 
5.1 The Chairperson informed the Council that the delegation of the European Union, in a 
communication dated 26 October 2011, requested the incl usion in the agenda of this meeting the item 
"Argentina's Import Restricting Policies and Practices - Statements by the European Union, the United 
States, Switzerland, Turkey and Japan".  
 
5.2 The delegate of the European Union stated th at this agenda point was requested by a number 
of Members in order to reiterate their concerns  over Argentina's import restricting policies and 
practices.  While the system of non-automatic licenc es was at the heart of what was a broader import 
substitution policy, other import restricting practices such as unjustified blockage of goods in customs 
and export import balancing requir ements were also in place.  Numerous newspaper quotes from 
Argentina's political leadership confirmed that the sole intention of these practices was to restrict 
imports and the non-automatic licensing (NAL) system  was a central element of Argentina's import 
substitution policy.  When it was first introduced in  September 2008, it covere d 38 products but  had 
been extended to over 600 products  covering a very wide range from textiles and footwear, toys, 
tyres, iron pipes, machinery, mechanical applia nces, base metals, electronic machinery, mobile 
phones, premium cars and auto parts just to name a few.  These represented nearly 16 per cent of EU's 
exports to Argentina, a value of over €1 billion.    5.3 Despite numerous complaints from Argentina's trading partners, the NAL system continued to 
be operated in an abusive and trade distortive ma nner with significant delays in issuing licences and 
lacking in transparency. 
 5.4 The NAL system was just one of the measur es used by Argentina to implement an import 
substitution policy.  Argentina was increasing the use of other informal measures that were imposed 
by its authorities such as making imports subject  to commitments on trad e balancing requirements 
with a view to reducing import,  commitments in order to increase production in Argentinian facilities 
and making commitments to comp ensate imports with exports. 
 5.5 The automotive sector had been particular ly targeted by such import/export balancing 
requirements.  At the end of 2010, the Argentinian mi nistry for industry requested, mainly informally, 
car importers to reduce imports by 20 per cent and balance their imports a nd exports; one dollar of 
imports for one dollar of exports compared with the previous year and to buy or export more locally 
produced goods.  Many importers had reported cases where the absence of an agreement on plans for 
the export/import rebalancing and us ing local goods instead had resulted in undue delays on issuing 
import licences and even subsequent blockages of g oods at customs had occurred.  As a consequence,  G/C/M/108 
 Page 11 
 
 
  the car manufacturers were forced to agree on e xport investments plans with Argentinian authorities 
to be able to import cars into Argentina.  5.6 Other import restricting practices under Ar gentina's import substitution policy included new 
information requirements which had never been published, unjustified blockages at customs and 
undue delays of homologation of a number of import ed products at customs. Such measures had a 
noticeable trade distortive effect and were not accepta ble.   All these practices raised serious concerns 
in terms of Argentina's WTO obligations and contradicted Argentina's political commitments 
undertaken in the G20 context, not to introduce new trade-restrictive measures. 
 
5.7 He also indicated  that the EU and several other WTO Members, from both developed and 
developing countries, had tried in this Council and in the Committee on Import Licensing to, on one 
hand, receive meaningful replies from Argentina on th eir questions regarding the NAL system and, on 
the other, receive concrete reassurances that the concerns regarding such system would be addressed. 
His delegation had not yet received meaningful or sa tisfactory replies to its concerns and questions.  
 
5.8 Argentina's import restricting practices were of  very serious concern to the EU;  the EU had 
raised them both bilaterally and multilaterally on  numerous occasions since 2009.  His delegation 
sought clarification from Argentina on how it planned to address these concerns that were affecting 
the EU and other WTO Members' exports.  
5.9 The delegate of the United States recalled that  at the CTG meeting held in March 2011, the 
US presented four specific questions regarding Arge ntina's import licensing regime for which it 
requested responses prior to the May meeting.  As noted in the CTG meeting minutes, Argentina 
claimed it would respond at the meeting of the Impor t Licensing Committee in April.  However, since 
no such response was provided at that meeting, th e US again put forward its questions and reiterated 
its request for complete and thorough responses.   
 5.10 The US first requested Argentina to indicate the legal basis under the WTO for its use of these 
import licensing procedures.  She noted that the US had repeatedly requested such justification and 
was yet to receive a response.   
5.11 She stated that Argentina continued to ma ke the claim that its import licensing procedures 
were legitimate.  However, given the discretionary  and opaque way in which the licensing procedures 
were administered and in light of the concerns hi ghlighted by several Members in both this Council  
as well as in the Committee on Import Licensing, the US  disagreed with such claims.  If Argentina 
was going to continue to assert that its import licen sing procedures were legitimate, the US requested 
that Argentina provide a full and complete expl anation regarding  the specific-WTO consistent 
measure the procedures were being used to impl ement and the legal basis for use thereof.   
 5.12 Secondly, the US requested that Argentina provide information concerning the time period for 
approving licences together with an explanation concerning the length of time for approval and 
information regarding the reported requirement that companies commit to export or establish 
production facilities in Argentina in order to obta in an import licence.  Many US exporters had 
registered complaints with the US government that Argentinean customs officials were taking 
considerably longer than the 60 days permitte d under the WTO Agreement on Import Licensing to 
process import licences. She furthered that US co mpanies had also complained that Argentinean 
officials required a commitment to export a specific amount or to invest domestically in order to 
obtain an import licence.  Her delegation would appr eciate it if Argentina could  explain how such 
requirements were consistent with WTO rules.  5.13 Thirdly, she asked that Argentina indicat e what specific steps it was taking to address the 
trade distorting effect of its import licensing regime.   G/C/M/108 
Page 12  
 
  5.14  She finally asked Argentina to comment on the various news reports and local reports 
coming out of Argentina indicating Argentina's plans to exclude certain trading partners from the effects of these requirements.  As her delegati on had previously explai ned, Argentina's import 
licensing procedures were severely impacting companies' ability to import foreign goods into Argentina.  Not only were companies concerned about  the added costs and uncertainty associated with 
exporting to Argentina as a result of these measures, they were al so concerned about the negative 
effects of products being sold increasingly on th e gray market due to distortions created by 
Argentina's import procedures.  5.15 This problem had developed into a significant trade barrier.  The US would therefore continue 
to raise the matter where appropria te, until Argentina indicated its seriousness to work together in 
order to solve the problem.  5.16 The delegate of Switzerland reiterated the c oncerns of her delegation relating to Argentina's 
import licensing procedures expressed  since 2010 in various WTO bodies.  She noted that the  market 
access problems of Swiss/Argentine industries had b een solved bilaterally during the second half of 
2010, but indicated that the situation had unfortuna tely worsened this year, which explained why 
Switzerland wished to be added on the list of speakers on this agenda item.    5.17 According to Swiss industries, the rules to ob tain an import licence in Argentina were in fact 
supplied in a discretionary way and  Argentin a had progressively been extending the scope of 
products subject to NALs.  In this respect, Resolution 45/2011 published on 15 February 2011, 
extended the scope by another 200 pr oducts resulting in a total amount  of approximately 600 products 
subject to NAL.  The excessive delays in the issu ance of those licences had also affected the Swiss 
industry.  It seemed that the unofficial requirement, aimed at improving Argentina's trade balance, had 
been made to allow for imports of products into Ar gentina: either the importer had to prove that its 
exports exceeded these imports or that there was no Ar gentinean equivalent to the goods in question.   
 5.18 According to Swiss industries, this requirem ent also applied to products outside the scope of 
the NAL regime and the recently introduced elect ronic system to request licences had not improved 
the situation to import into Argentina.  As a resu lt of these measures, there had been long delays in 
imports and there still  lacked predictability and cer tainty.  Switzerland urged Argentina to bring its 
import licensing regime in conformity with its WTO obligations. 
 5.19 The delegate of Japan echoed the EU, US  and Switzerland and recalled  that Japan had 
expressed its concerns on various occasions in this Council with regard to Argentina's NAL scheme.  
He referred to the list of issues which included substantial delays in the issuance of import licences, 
increased product coverage of the NAL requirements that seriously affected a number of Japanese 
companies and, the reduction in import licences fo r automobiles  and the linkages of licences to 
export commitments or local investment commitments.  The G-20 leaders in their Summit 
Communiqué  in Cannes once again, expressed their collec tive will to avoid protectionism, reaffirming 
their standstill commitment not to introduce an y new protection measures until the end of 2013 as 
well as their commitment to rollback any new protection measures that may have arisen. 
 
5.20 Since Argentina was a member of the G-20,  Japan requested  that Argentina improve the 
current situation as soon as possible. 
 
5.21 The delegate of Turkey echoed the previous speakers and recalled that Turkey's concern 
regarding the import licensing system with Argentina was last brought up at the meeting of  the 
Committee on Import Licensing  on 14 October 2011.  Turkey  had questioned the import licensing system of Argentina on the basis of factual data as  well as on complaints received from its exporters.  
As explained at that meeting, Turkey had serious  concerns over the consequences of those measures 
that had been in place for a long period. He regrette d the response given by Argentina stating that the  G/C/M/108 
 Page 13 
 
 
  ratio of the number of tariff lines subject to no n-automatic import licensing to the overall tariff lines 
was 7 per cent and  noted that Argentina claimed that the decrease in the imports was due to the 
economic crisis and that there was no underlying prot ectionist tendency. This did not satisfy Turkey's 
concerns.  Turkey believed that it was not the econom ic crisis but the expansion of the NAL system 
which had seriously hit, in particular, Turkey's electric household appliances sector.  Turkish exports 
to Argentina of washing machines, air conditioners, refrigerators and other products had almost come 
to a halt.  The statement made by Argentina at the last meeting that the 60 days' time-limit was 
respected in the issuance of licen ces was not the case.  His authorities continued to receive reports 
from exporters that obtaining import licences could take from four to twelve months.  This 
contradicted the rules prescribed in the WTO Agre ement on Import Licensing and claimed that there 
was no doubt about the fact that delays in the i ssuance of import licences turned the system, in 
practice, into a prohibition.  5.22 He stated that the claim of not having protectionist tendencies was far from convincing..  
Several sources indicated that the government of Argentina had tightened existing import restrictive 
measures as part of a so-called trade balancing regi me: the requirement to export in order to import 
was one of those restrictive measures that had b een introduced most recently.  Thus, neither the 
rationale nor the application of Argentina's import licensing regime was in line with the WTO rules 
and principles.  He invited Argentina to bring its measures in line with its WTO obligations and 
reserved Turkey's rights to come back to th e issue in other Committee or Council meetings. 
 
5.23 The delegate of Peru stressed her delegation' s concerns regarding Ar gentina's approval of 
Resolution 45/2011 last February which related to  a number of NALs applied to various products.  
Peru was concerned by the lengthy periods it takes to grant import licences; and this dissuades trade, 
particularly the textile sector which involves a number of SMEs and a high employment area.. She 
invited Argentina to address all the preoccupations  raised by the Members, particularly those 
concerning the temporary nature of the system, and to envisage the elimination of the non-automatic 
nature of these licences over the next few months. 
 
5.24 The delegate of Canada supported the previ ous statements and reitera ted the importance of  
transparency and consistency, particularly with the commitments taken in the G-20 context regarding 
combatting protectionism and the obligations contai ned in the WTO Agreement on Import Licensing.   
 
5.25 Canadian exporters had registered concerns a bout the lack of clarity in the administration of 
Argentina's NAL and with the extension of this measu re to a broader scope of products as stipulated 
in Resolution 45/2011; also with th e increased application of other informal requirements.  Argentina 
had failed to provide detailed answ ers to previous  questions; thus, she encouraged Argentina to 
expeditiously provide further information on its NAL system. 
 5.26 The delegate of Colombia echoed the concer ns expressed by the previous speakers and sought 
from Argentina, a satisfactory response to these preoccupations.  These import licensing measures had 
negative effects on bilateral trade and his author ities received  frequent complaints from Colombian 
exporters which did not  consider the procedures to be transparent. His delegation hoped  this 
procedure would  be revised in the near future a nd would explore various different ways of finding a 
solution to  these problems and concerns. 
 
5.27 The delegate of Argentina thanked the dele gations for their statements and  concerns and 
indicated that the issue was being currently addressed  in the relevant WTO committee.  His delegation 
would continue working in the said Committee with the delegations that had expressed concerns and 
would provide the necessary responses.  He had take n note of the other issues which were raised and 
would convey them to his capital.  G/C/M/108 
Page 14  
 
  5.28 The Chairperson invited the Council to ta ke note of the statements made, and invited 
Argentina and delegations that had expressed concer ns, to continue with their discussions to seek a 
solution to the concerns that had been raised by various Members.  He also  invited delegations to 
inform the Council of the outcome of such consultations.  
5.29 The Council took note of the statements made. 
 
VI. WORK PROGRAMME ON ELECTRONIC COMMERCE 
6.1 With regard to the conduct of the Work Pr ogramme on Electronic Commerce, the Chairperson 
recalled that in December 2009, Ministers in Gene va agreed to continue with the institutional 
arrangements then in place for this work, namely th at the Councils for Trade in Services, Trade in 
Goods and TRIPS, and the Committee on Trade an d Development (CTD) would examine and report 
on aspects of electronic commerce relevant to thei r respective areas of competence, and that the 
General Council would play a central role in th e entire process, keep the Work Programme under 
review and consider any trade-relate d issue of a cross-cutting nature.   
6.2 He also indicated that in document WT/G C/132, dated 13 July 2011, Cuba, Ecuador and 
Nicaragua requested the Secretariat to circulate their joint draft proposal with a triple-symbol 
document WT/GC/W/635, G/C/W/650, WT/COMTD/W/179, as a formal working document in the General Council, the Goods Council and the CTD, a nd to include the issue on the Agendas of these 
three bodies at their next meetings. The Plurinationa l State of Bolivia and the Bolivarian Republic of 
Venezuela subsequently asked to be  added as co-sponsors of the proposal. He then opened the floor to 
delegations.  
 6.3 The delegate of Cuba on behalf of th e countries submitting the aforementioned document 
drew the Council's attention to the issue of the e fficient participation of developing countries in e-
commerce as a means of combatting poverty.  The tr iple symbol document, dated the 14 July 2011, 
was introduced to the General Council in July 2011.   
 6.4 The sponsors considered this proposal as objective and clear, including a number of incontestable arguments on  the goals the system seek s to produce.  It also  responded to the mandate 
of 12 December 2009 mentioned by Chairperson where the need to inject new energy into this  work 
was stressed; he also recalled the guidelines a dopted by the General Council on 25 September 1998. 
The tabled proposal  offered a diagnosis of the current situation regarding e-commerce and 
communications in developing countries, particularly , the limited access thereof by micro and SMEs 
and their limited ability to take advantage of the new technologies for the benefit of their people in 
order to combat poverty.  The document also c ontained a number of proposed activities which WTO 
Members could carry out in the multilateral trading system and in particular  the Committee on Trade 
and Development,, the forum in which Members put forward ideas regarding new aspects of this work 
programme.    6.5 There were two main axes to this proposal. Fi rst, the protection of the rights and principles all 
states in the multilateral system had and this was in reference to non-discrimination amongst all these. 
The second axes was the promotion of e-commerce as a support tool through which international trade 
flows could be strengthened and thereby further stre ngthen development as part  of the Doha Round.  
The proposal had  value added since it included a number of solutions and guarantees concerning  e-
commerce and access to telecommunications, including public internet sites as a means to further development without discrimination.  The proposal also referred to access to technology as a means to 
furthering development in developing  and least-developed countries.   
 
6.6 He noted that two discussion sessions had alr eady been held under the aegis of the Deputy 
Director General relating to e-commerce,  also related to the draft Ministerial Decision which the  G/C/M/108 
 Page 15 
 
 
  sponsors of the proposal intended to submit  at th e next Ministerial Conference (MC8).  He recalled 
that a Pakistani initiative led to the establishment  of a drafting group, open and transparent  which 
had already met on two occasions.  He hoped that at th e next session, there would be a high level of 
consensus and  encouraged all  Members to participate and contribute to that draft.   He stated that the 
sponsors of the proposal wanted  to ensure that th e work of the drafting group under the CTD could be 
furthered and to ensure that the debate could be br oadened in scope; they did not want the debate to 
only take place in in the CTD, but also in the C ouncil for Trade in Services, the TRIPS Council and 
the Goods Council.  6.7 The delegate of Ecuador supported Cuba's stat ement and added that a number of developing 
countries had come together with a draft proposal which they wanted taken into account.  The draft 
proposal mentioned a number of concerns of developing countries.  The e-commerce work programme dealt not only with services-related issu es but also those that affected other WTO bodies 
such as the Goods Council where th ere was a very specific mandate which indicated  that the Council 
should deal with market access related issues a nd e-commerce product related market access as well 
as rules of origin, s  duties, tariff classification and othe r  issues.  In this vein he provided an example 
on  tariff classification as to whether products which were sent electronically but not  physically could  
or had  to be characterized or portrayed  as goods , services,  intellectual property or if these were 
completely separate. This issu e needed to be tackled.  
 6.8 Secondly, he stated that if products were classified with the assumption that they were goods, 
then it was necessary to suggest that they were subject to the GATT 1994 and not the GATS; but if 
those products were subject to the GATT 1994 that would mean that the products in question which 
were sent by electronic means should perhaps be subject to tariff lines and rules.   6.9 He stated  that if Members, on a temporary b asis, agreed that tariffs should not be applied to 
these products, , as the1998 moratorium implied, then  Members  might also assume that the language 
suggested that electronic goods should be considered to  be imports, and if they were considered to be 
imports, they should be subject to GATT Article II.  Thus, this was another issue to be considered and 
clarified  by Members who could go further and state that the GATT and the GATS had different 
approaches.  GATT 1994 was based on MFN and na tional treatment principles, which were  
unconditional; thus  if Members understood that th ey had a commitment under the GATT they also 
had to ensure non-discrimination and national treatme nt. To the contrary, GATS did not  operate in 
that way;  GATS did assume national treatment but only for specific commitments taken on in 
relation to specific services, positive schedules, but  there was no unconditional principle, all depended completely on the commitments which had b een taken.  In Ecuador's view, these questions 
had not been dealt with since 1998 and corresponded to  this Council .  The proposal submitted along 
by Ecuador and other developing countries, rai sed some of these concerns, if developed  and 
developing countries had not yet managed to deal w ith these, Ecuador's view was that  now was the  
time to start that process or to take it up again as was established in the 2009 Ministerial mandate.   
 6.10 The delegate from Venezuela noted that the proposed text was the result of combined efforts 
to agree a common position with respect to e-commer ce after long debates as reported  by Pakistan. 
He hoped to get an agreement in the coming  days, thanked those who had take n part in the various 
meetings and made  suggestions, many of which were already part of the revised text which was 
presented the previous week.  6.11 He indicated that delegations were aware that all the work had focused on preserving the 
objectives of the work programme on e-commerce of 1998.  Reference had been made to the language 
in   the 2009 Ministerial Declaration, as requested by delegations.  However, the declaration to be 
presented to the  MC8 might  put new life and empha sis into this work, particularly the will to 
revitalize the developmental dimension and the basic WTO principles such as non-discrimination. 
 G/C/M/108 
Page 16  
 
  6.12 The delegate from the United States recalled th at she had raised this issue at the last CTG 
meeting as a reminder to what  Ministers agreed at MC7 to reinvigorate the work programme on e-
commerce, a  work programme  available for Members to advance issues of their interest.  The CTG, 
CTS, CTD and the TRIPS Council  had  issues that Members might pursue under the existing work programme.  They had advanced issues in the CTS but so far had not advanced in the CTG.  She 
welcomed Ecuador, Cuba and Nicara gua's initiative of  submitting a proposal to reinvigorate the work 
programme.  6.13 The proposal put forward by these Members recommended a number of actions including technology transfer, technical assistance, training for small businesses and mechanisms to report cases 
of discrimination.  She stated that  the problem was that none of these issues had been examined in any 
detailed way in the relevant Committees or Counc ils.  The proposal raised numerous  issues of 
importance for the CTS, but it had not yet been s ubmitted to that Council for  examination.  The 
proposal suggested that the increase in means of  conducting business electronically contributed to a 
digital gap.  It also described gaps in e- commerce and internet connectivity as arising from 
discriminatory access to information technology an d telecommunication services.  Her delegation 
disagreed with this premise stating that there was no reason that competing technologies or models to 
engage in business electronically could not be trad e and innovation enhancing.  She furthered that 
companies were quite interested in supplying technologies on a commercial basis to enhance 
connectivity as they had been doing for the past de cade.  She claimed it was misleading to suggest 
that charges for asymmetric traffic flows and fee wa iver agreements between providers that exchange 
large amounts of traffic were discriminatory.   
 6.14 The proposal also discussed a high cost of broadband access as a barrier to e-commerce in developing countries, but failed to acknowledge the sturdy decline in cost per megabyte over the past 
decade.  She noted that a significant barrier to the upt ake of internet services in countries tended to be  
a result of the lack of competition within those ma rkets or internet policies that tended to dissuade 
people from accessing internet.   6.15  She added that the proposal also reco mmended that governments ne gotiate bilateral trade 
agreements to enable direct international connecti on to the internet. Her delegation believed that this 
would be unnecessary since companies and not gover nments were the primary negotiators of these 
commercial arrangements.  A key element, most rele vant from a trade perspective to the availability 
of reasonably priced broadband, was the investment climate and the rules regarding competitive entry.  
Her delegation supported work in the WTO explor ing the correlations between unlimited foreign 
investment in the telecom sector, presence of an independent regulator  and availability of 
competitively priced broadband again, an issue th at was more appropriately addressed in the Council 
for Trade in Services. 
 6.16 She stated that a clear implication of such a thesis was that to attract investment and promote 
competition, undertaking commitments in these areas, the WTO could help achieve these goals - a positive agenda directly in the mandate of th e WTO, which this proposal was silent on. 
 
6.17 Finally, the US noted that the proposal did not tackle on one of the most important aspects of 
the work programme which was ma intaining the current practice of not imposing customs duties on 
electronically transmitted products. She stated that maintaining such a practice would continue to 
allow e-commerce to thrive in a market free of cu stoms duties.  For the proposal for a Ministerial 
decision, she understood that it was being considered  under a different process and therefore stated 
that it was not necessary to discuss that particular matter in this Council. 
 
6.18  The delegate from Nicaragua  echoed Cuba, Ecuador and Venezuela and  highlighted that the 
objective of the proposal was to deal with the ine qualities that exist in the e-commerce sector and the 
needs felt by developing countries and LDCs re garding technological progress. His delegation  G/C/M/108 
 Page 17 
 
 
  believed that this would strengthen the WTO general rules in terms of  e-commerce;  the current work 
programme should deal effectively and without di scrimination with the concerns of developing 
countries and LDCs.  As a mechanism contributing to  the fight against poverty and to develop SMEs, 
Nicaragua thanked those countries that had offered their support to the proposal and which had also 
made comments on it with a view to having a stre ngthened work programme to be presented to the 
MC8. 
 6.19 The delegate of Argentina thanked the pr oponents for their comments and explanations and 
pointed out that Argentina in principle, supported th e text as  his delegation had been participating in 
the informal meetings of the drafting group where some changes had been made and  agreed. He 
underscored the flexibility of the proponents in te rms of including concerns expressed by other 
Members.  6.20 With respect to one of the points under debate  in the informal drafting group and in general in 
the working groups, Argentina would support the establishment  of a working group. 
 
6.21 The delegate of the European Union noted  that his delegation had had several drafting 
sessions for formulating and defining the text for MC8.  The EU was optimistic, since it had seen a 
real willingness from all the sides involved in this exercise to reach a final text and manage to bridge several gaps, notably referring to the wording on the moratorium, the non-imposition of customs duty 
on electronic transactions, the preservation of the mandate of the work programme on e-commerce 
which was now perceived as being something that n eeded to be maintained, stronger focus on SMEs, 
with references to small producers,  to non-discr imination, predictability, transparency and also 
towards an enhanced role for the CTD for reviewing the work programme.  He also drew attention to 
several elements highlighted by  the US, notably the importance of including a reference to 
electronically delivered software; thus, the EU was  still working on the revised proposal.  The EU  
would continue discussions on some outstanding areas pa rticularly the degree of the revamping of the 
institutional framework which needed to be furthe r discussed since there  were still some positions 
distanced from each delegation.  As far as the EU w as concerned, he stated that it had engaged in a 
dialogue with the proponents on the different aspects related to their submission, notably the importance of underlining the development aspect.  T hus, the EU would continue participating in the 
drafting exercise that will take place throughout the co ming weeks in view to finalizing this exercise 
by the middle of November 2011.  He noted that there were , mid-term and long-term issues and 
errors that needed to be addr essed in the framework of the wo rk programme on e-commerce; a  
continued engagement in this dialogue af ter the Ministerial would be necessary. 
 6.22 The delegate of Australia expressed the s upport of his delegation to the continuation of a 
balanced and comprehensive work programme on e-commerce not only at the MC8 but beyond; 
Australia was ready to engage in more intensiv e discussions on e-commerce.  His delegation was of 
the view that there was still a lot for Members to discuss under the e-commerce work programme as 
defined by Ministers in 1998 and, to date, there had been very few proposals in the CTG on this issue.  6.23 Since an increase in proportion of internati onal trade and transactions had been completed 
electronically, Australia supported extending the current moratorium on customs duties for electronic 
transmissions.  His delegation supported the work  being done under the auspices of the General 
Council;  any suggestions in the CTG should take into account the on-going work.   
 6.24 Australia considered the proposal submitted by  Cuba and other delegati ons  as an elaboration 
of the development aspects of the broader e-co mmerce work programme.  The broader e-commerce 
work programme should be retained as agreed by Ministers in 1998. His delegation had questions as 
to how the proposal would work in practice, an is sue that could be discussed at the next dedicated 
session.  G/C/M/108 
Page 18  
 
  6.25 The delegate of India thanked the sponsors for the proposal for the text and acknowledged  
Pakistan's role as facilitator in the drafting group where tremendous progress had taken place and 
invited India, without taking any specific position on the issue, suggested that the drafting group get ahead with its work for the MC8.    
6.26 Concerning post-MC8 work, India had expr essed concern on the role of the CTG in the e-
commerce working programme, and believed that ther e should be more proposals in this Council, 
especially highlighting critical areas which were alr eady pointed out in terms of Rules of Origin, 
Customs Valuation and various GATT articles. Indi a had six or seven specific areas under the work 
programme for the CTG and highlighted the importan ce to  put in proposals in the post-MC8 in these 
specific areas.  India was also looking at having some specific proposals, post MC8, on various areas 
and hoped the CTG could come up with specific areas on e-commerce.  6.27 The delegate of El Salvador thanked the proponents for the presentation  and highlighted the 
importance of reinvigorating the work programme on e-commerce on the basis of the mandate given 
by Ministers in 2009.  Her delegation was in favour  of any initiative intended to strengthen the work 
of the WTO  in terms of e-commerce.  With resp ect to the proposal, her delegation found it important 
to get an agreement on the language to be used in the Ministerial Declaration.   
 6.28 With respect to the developmental dimension to be included in the Ministerial Declaration, 
and extension of the moratorium, his delegation w as prepared to work with the proponents and other 
delegations within the framework of the on-going work under the auspices of the GC. 
 6.29  The delegate of the Dominican Republic th anked the proponents for their initiative extending 
the scope of the existing text on the work programme .  She also thanked Pakistan for its role as a 
facilitator to create convergence on the text that w as circulated.  The concerns expressed by the US 
delegate with respect to aspects that were lacking in  the text could be solved by adding them to the 
existing text.  With respect to the WTO committees, in addition to the CTG, her delegation felt that 
the language could be strengthened, something that could also be done  in other committees, so as to 
strengthen and revise the work programme. The CTD could be the proper body for continued work: 
her delegation supported the ex tension of the moratorium. 
6.30 The Chairperson thanked delegations for thei r statements and encouraged them to continue 
their efforts to find consensus on a draft decision on e-commerce for MC8. He proposed that the 
Council takes note of the statements made and also of the communication contained in document G/C/W/650 and G/C/W/650/Add.1. He also indicated  that reference to this discussion would be 
included in the Annual Report of this  Council to the General Council.  
 
6.31 The Council took note of the statements. 
VII. NOTIFICATIONS OF ACTIONS TAKEN UNDER THE 1999 WAIVER FOR 
PREFERENTIAL TARIFF TREATMENT FOR LEAST-DEVELOPED COUNTRIES 
7.1 The Chairperson announced that under the age nda item  "Notification of Actions Taken Under 
the 1999 Waiver for Preferential Tariff Treatment for Least developed Countries", there were two 
notifications in documents G/C/W/651 and G/C/W/656 containing, respectively, India's notification of 
Preferential Treatment for LDCs and China's Duty -Free Quota-Free Scheme for LDC Products. These 
notifications were also made to the Committe e on Trade and Development (CTD), under the 
provisions in the Transparency Mechanis m for Preferential Trade Arrangements. 
7.2 In this regard, he recalled that the C ouncil, at its meeting in March 2001 (document 
G/C/M/47), agreed to a method for handling notifica tions under the 1999 Waiver on Preferential Tariff 
Treatment for LDCs.  Accordingly, such notifi cations would be referred by the CTG to the Sub- G/C/M/108 
 Page 19 
 
 
  Committee on Least-developed countries for Members'  consideration and advice. The Sub-Committee 
would then report back to the CTG on its discussions.  It was clear that this approach did not preclude the CTG from engaging in discussions of any matter in regard to the 1999 Waiver.    7.3  The delegate of India stated that desp ite its developmental imperatives and domestic 
sensitivity, India had shown great commitment to  Paragraph 36 and Annex F of the Hong Kong 
Ministerial Mandate by implementing its DFQF sche me.  The DFQF scheme, christened as the Duty 
Free Tariff Preference Scheme (DFTP), was a nnounced on 8 April 2008 during the India-Africa 
Forum Summit of African Heads of States in New Delhi and it entered into force on 8 August 2008.  
The scheme was open to all LDCs and provided duty free and preferential duty access on 94 per cent 
of India's tariff lines on products of export interest to LDCs.  The rules of origin for  products  wholly 
obtained stipulated a change in tariff heading w ith a 30 per cent value addition.  The five years 
implementation period, begun  in 200 8 and would be completed by the end of 2012.  The scheme was 
notified to the WTO on 12 September 2011 with a ll its details  including  product coverage and 
regulations governing them.  It was available on th e website of both the Department of Commerce and 
the Customs websites.  The Department of Comme rce as well as the officials of the Permanent 
Mission of India  had carried out outreach both in New Delhi and in some LDC capitals to 
disseminate information on the scheme.  India remain ed committed to engage with all stakeholders 
both with a view to clarify issues as well as to  facilitate exports from the beneficiary LDCs. 
 7.4  India was conducting internal deliberations to explore the possibilities of increasing the 
product coverage and simplification of the rules of or igin.  He encouraged other Members, especially 
the developed ones, to also implement the long de layed DFQF schemes and take a transparent stance 
of notifying immediately all the tariff lines on whic h they provided clear and unrestricted market 
access to LDCs;  this wa s the only way of ensuring the full inte gration of LDCs into the multilateral 
trading system.  
7.5  The delegate of the United States e xpressed her delegation's appreciation to India's 
notification and asked India to provide some impor t statistics for imports by  LDCs under the program, 
either by tariff heading or tariff line over the life of  the program and, also that India provide a list of 
the excluded products. With regard to the assertion th at details were available on the Department of 
Commerce website she was unsure as to whether this was the kind of information that was also e 
included.  Her delegation sought from India information on this issue.  
 7.6  In response the delegate of India said that on import statistics, India was actually working out 
with the WTO Secretariat since this information al so had to be notified under the PTA mechanism.  
He noted that the deadline to provide the statistic s was January 2012 and India would do it as soon as 
the statistics were compiled and would also share the information with the US delegation.  On the list 
containing the products excluded, he stated that there were 326 lines at the HS 6-digit level which were excluded and which represented 6 per cent of the total coverage.   
 7.7  The delegate of China said that its notif ication on the DFQF scheme for LDCs, submitted on 
19 October 2011, clearly indicated on the cover page that the scheme came into effect on 1 July 2010 
and was renewed on 1 January 2011.  China's DFQF  scheme for LDCs covere d products of 4788 tariff 
lines, as could be seen in the notification of more th an 100 pages.  It accounted for 60 per cent of the 
total tariff lines and the trade volume under these ta riff lines in 2010 was $42.2 billion accounting for 
98.7 per cent of China's total imports from LDCs. China further committed itself to extending such 
treatment to 95 per cent of total tariff lines in the next few years.  Moreover, at the G-20 leaders' 
Summit last week in Cannes, the Chinese president further announced that China's DFQF scheme for 
LDCs would be expanded to 97 pe r cent of its total tariff lines. 
 7.8  The delegate of the United States thanked China for notifying its preference program for 
LDCs; her delegation would like China to provide  import statistics for imports by LDCs under the G/C/M/108 
Page 20  
 
  program, either be tariff heading or tariff line over the life of the program and also to indicate where 
the s LDC programme was provided for in China's tariff schedule.  7.9  In response the delegate of Ch ina stated that these questions would  be forwarded his capital. 
 
7.10  The delegate from the European Union we lcomed India and China's DFQF schemes for LDCs 
and the notifications they made under the tran sparency mechanism for preferential trade 
arrangements.  His delegation was currently studyi ng these notifications under the PTA transparency 
mechanism and looked forward to considering them fu rther under what would be the future dedicated 
session of the CTD. 
 
7.11  The delegate of Zambia expressed her dele gation's appreciation to the delegations of India 
and China for the efforts they were making toward s facilitating exports from LDCs and welcomed the 
steps the two countries were taking to further expa nd the product coverage. She  also thanked India 
for the indication they made towards simplification of  rules of origin and  urged other Members that 
were in a position, to do so and, sought the deve loped countries Members that were yet to implement 
DFQF access to do so. 
7.12 The Chairperson proposed that the CTG take  note of the statements made and forward India 
and China's notifications to the Sub-Committee on Least-developed countries.  The Sub-Committee 
was required to report to the CTG after it has exhausted the discussions on these notifications.  
7.13 The Council took note of the statements and agreed to forward the notifications to the Sub-
Committee on Least developed countries for action. 
VIII.  CANADA - REQUEST FOR AN EXTENSION OF THE WAIVER FOR THE 
CARIBBEAN INITIATIVE: CARIBCAN  
8.1 The Chairperson moved to document G/C/W/657 containing a request, background 
information and a draft waiver decision submitted by Canada for the extension of its existing waiver 
for the Commonwealth Caribbean Countries Initiative - CARIBCAN-. 
 8.2  The delegate of Canada stated that Canadi an foreign policy had long recognized the special 
relationship between Canada and the Commonw ealth Caribbean which pre-dated Canada's 
confederation and which continued to date..  In 1986 in recognition of this special relationship, 
Canada responded positively to the request by the Commonwealth Caribbean countries to institute a 
package of trade and development assistance m easures to assist in meeting their economic 
development goals:  the CARIBCAN.  The ma in objectives of CARIBCAN were to enhance 
Commonwealth Caribbean trade and export earnings to improve the trade and economic development 
prospects of the region, promote new investme nt opportunities and encourage enhanced economic 
integration and co-operation within the western he misphere.  Canada was granted a waiver under the 
WTO Agreement to unilaterally extend, beginning on 15 June  1986, duty free access to Caribbean 
markets for most commodities originating in the 18 Commonwealth Caribbean countries.  This waiver 
was subsequently extended in 1996 and again in 2006(documents L/6102, WT/L/185 and WT/L/677).   
 8.3  The duty-free treatment provided under CARIBCAN had been shown to promote the expansion of trade and the econo mic development of beneficiarie s.  Between 1986 and the present 
day, no Member had expressed concerns or any difficulty nor had any Member sought consultations 
on any matter arising out of the implementation of the provisions of the CARIBCAN.  In light of the continuing relevance of the considerations underlying CARIBCAN, Canada asked Members to 
approve its request to renew for a two year peri od, the waiver covering the Commonwealth Caribbean 
countries initiative so as to enable Canada to c ontinue extending during that period, duty free access 
to the Canadian market.  Over the next two years,  Canada would continue to work with Caribbean  G/C/M/108 
 Page 21 
 
 
  countries to expand trade and investment libera lization in the hemisphere, including through 
multilateral negotiations at the WTO and on-going b ilateral trade negotiations between Canada and 
the Caribbean community, the CARICOM.    8.4  His delegation hoped that during this period, sufficient progress would be achieved so that the 
importance of preferential unilateral market access schemes, such as CARIBCAN, would be lessened. 
 8.5  The delegate of Barbados on behalf of CARIBCOM  members thanked  Canada for its 
submission (G/C/W/657) requesting an extens ion of the waiver covering the CARIBCAN 
programme. The CARIBCAN initiative which recognized  the special relationship between Canada 
and the Commonwealth Caribbean, represented a pos itive approach to assisting the Commonwealth 
Caribbean countries in supporting their development objectives.  In light of the recent global economic and financial crisis, such  initiatives were even a more cr itical component to ensuring that 
the Caribbean economies could continue to sustain themselves.  She recalled that Canada and the 
members of the Caribbean community were currently  engaged in negotiations aimed at developing a 
comprehensive reciprocal free trade agreement.  This free trade agreement would be fully WTO 
compatible whereas, at the same time, would maintain a developmental dimension for small economies.  Barbados and the rest of the CA RICOM region thanked the WTO membership for 
favourably considering this request for an  extension of the waiver covering the 
CARIBCOM/CARIBCAN programme for an additiona l two year period, until 31 December 2013. 
 
8.6  The delegate of  Jamaica endorsed the stat ement made by Barbados on behalf of CARICOM.  
Document G/C/W/657 provided an overview for the rational for the establishment of CARIBCAN 
and the key developments that had taken place within  the scope of the agreement since its inception in 
1986.  Jamaica as well as its Commonwealth Caribb ean partners, could attest the contribution of 
CARIBCAN to the national development and regional integration agenda. Jamaica had realized trade 
and investment benefits deriving from the CARI BCAN arrangement which had made an especially 
valuable contribution to the growth of SMEs engaged, inter alia , in agro-processing and non-
traditional exports.  His delegation was pleased that  the commercial  and economic relations between 
CARIBCAN, CARICOM and Canada were leading  towards the shaping of a reciprocal free trade agreement which would  be truly development or iented in scope.  The continued operation of 
CARIBCAN at this time had particularly signifi cant challenge, to encourage trade and economic co-
operation at the global level; this was particularly  important for the members of the Commonwealth 
Caribbean which were small vulnerable economies. His delegation was confident that this Council 
would endorse the request for renewal of the CARIBC AN waiver so that it could be transmitted to the 
GC for final approval.  
8.7 The delegate of Trinidad and Tobago joined the previous delegations in thanking Canada for 
its submission in G/C/W/657 aimed at extending the waiver covering th e CARIBCAN programme.  
Canada was a major trading partner for Trinidad  and Tobago and his authorities considered the 
preferences granted under the CARIBCAN project very  important to the continued growth of his 
country's economy, particularly given the  current  precarious world economy.   The approval of this 
request was an urgent matter in order to allow uni nterrupted exports to the Canadian market while a 
more permanent arrangement was being put in place.   
 8.8 The Council took note of the statements made a nd agreed to forward the draft waiver decision 
in document G/C/W/657 to the General Council for adoption. 
 G/C/M/108 
Page 22  
 
  IX. EUROPEAN UNION - REQUEST FOR AN  EXTENSION OF THE WAIVER FOR 
THE APPLICATION OF AUTONOMOUS PREFERENTIAL TREATMENT TO THE WESTERN BALKANS 
9.1 The Chairperson drew the Council's atten tion to documents G/C/W/658 and Addendum 1  
containing, respectively, the request from the Eur opean Union and the draft waiver decision for the 
extension of the current waiver to the Western Balkans.   
 
9.2 The delegate of the European Union stated that since 2000, the EU had granted the Western 
Balkans exceptional trade preferences, suspending ta riffs on basically all imports originating in this 
region.   This scheme had been the subject of a WTO waiver, granted originally in 2000 and extended 
in 2006, which was to expire on 31 December 2011. 
 9.3 The original preferential scheme ran until e nd of 2010 and the EU had launched the process 
of renewing this regime for five more years.  At the time, the necessary legislation was in the final stage of the adoption process under the EU's ordina ry legislative procedure, which required the 
endorsement both of the European Parliament and of the European Council The process was likely to 
finish soon.  9.4 The EU had been by far the Western Balkans'  first trading partner while the Western Balkans 
only represented a small fraction of the EU's imports ,   not exceeding 1 per cent of the total EU 
imports. Over the past years, the Western Balk ans had made significant progress towards economic 
development.  However, the region required conti nued  support from the EU in order to ensure the 
sustainability of its socio-economic development.   9.5 Terminating the trade preferences would have a negative impact on the overall economic 
performance of the Western Balkans, with conseq uent negative repercussions on their domestic 
reform and transition processes. Moreover, give n the current worldwide economic slowdown, the 
Western Balkans' economic recove ry could be seriously jeopardized.  In line with its WTO 
obligations, his delegation had submitted a request for the extension of the current waiver for an 
additional five years, this meant until 31 December 2016.  9.6 The Council took note of the statement made a nd agreed to forward the draft waiver decision 
contained in document G/C/W/658/Add.1 to the General Council for adoption. 
 
X. BRAZIL'S AUTOMOTIVE TAX MEASURES - STATEMENT BY THE REPUBLIC 
OF KOREA 
10.1 The Chairperson informed the Council that in a communication dated 26 October 2011, the 
Republic of Korea requested the Secretariat to include  in the agenda of this meeting, the issue of 
"Brazil's Automotive Taxes and Measures".   10.2 The delegate of Korea stated that Brazil's rece nt automotive tax measure was, in the view of 
his delegation, inconsistent with Brazil's obliga tions under the WTO Agreement. Korea raised this 
issue along with other delegations at  the 14 Octo ber meeting of the Committee on Market Access.  
No remedial measure had been taken by Brazil to solve the issue; thus, Korea had brought it to the 
Council for Trade in Goods.  
 10.3 On 15 September 2011, Brazil announced an automotive tax measure under which industrial 
tax rates for automobiles would be increased by 30 pe r cent.  The measure appeared to be designed to 
slow imports of automobiles and to promote investme nt in Brazil.  According to the measure and in 
order to avoid this tax, three conditions had to be met:  (i) for more than 65 per cent of their 
production, car manufacturers must use domes tically produced components which included  G/C/M/108 
 Page 23 
 
 
  components produced in MERCOSUR  and Mexico,;  (ii) certain core manufacturing processes had to 
be conducted in Brazil and, (iii) at least 0.5 per cen t of the total revenue had to be reinvested in 
research and innovation.  10.4 Korea believed that such a measure contra dicted Brazil's obligati ons under: (1) the GATT 
national treatment principle; (2) the SCM Agreem ent; (3) the GATT most-favoured nation principle, 
and (4) the TRIMS Agreement.    10.5 Firstly, he stated that under the national treatment principle, imported products shall not be subject to internal taxes in excess of those applie d to like domestic products .  Secondly, under the 
SCM Agreement, subsidies contingent on the use of domestic products were categorized as a 
prohibited subsidy.  Thirdly, under the MFN principl e, any advantage granted to one country should 
be accorded immediately and unconditionally to  all Members.  Fourthly, under the TRIMS 
Agreement, a trade-related investment measure th at required the purchase or use of domestic products 
was prohibited.  In Korea's opinion, a careful re view of all relevant WTO Agreements and facts 
corroborated Korea's view on Brazil's measure at issue. 
 10.6 Such a view, he added,  was shared by Brazilian lawyers, as quoted  by "Latin Lawyer" of 23 September..  Brazilian lawyers were of the view that "the new regime could be considered as a 
violation of the WTO rules, which could lead to a dispute against Brazil before the WTO".  They also 
had expressed the concern that Brazil chose "prot ectionism, which is exactly what Brazil fights 
against at the WTO dispute settlement body when other countries seek to protect their industry". 
 10.7 It was well known that the global economy was still struggling to recover and due to 
economic uncertainties for the future, some countries might be tempted to resort to protectionism.  Nevertheless, Korea's view was that, as history had shown, this was not the right solution to economic 
hardships.  As several delegations had already in dicated under agenda item 5. This view had been  
echoed and underscored by the G-20 leaders who sent a strong message against protectionism at Cannes.  A protectionist measure adopted by one Member could have a systemic impact as it was 
highly contagious  His delegation was concerned  about Brazil's measure since it was widely recognized as one of the major players in the multilateral trading system.  
10.8 The timing of the measure was regrettable as the MC8 was fast approaching and the common 
understanding was that MC8 might prove the value of the WTO as the multilateral trading system. 
 10.9 He informed the Council that  on 20 Oct ober 2011, Brazil's Supreme Court ruled that the 
immediate tax increase was unconstitutional since at least 90 days were requi red before such tax 
increase could come  into effect.  Under the ruling, the automotive tax measure could go into effect in 
December 2011.  His delegation welcomed this decision as it could provide some breathing room for domestic and foreign businesses.  However, Korea h oped and expected that the Brazilian government  
would take the ultimate decision to fully revoke th e measure in an expeditious manner.  As Brazil 
mentioned during the 14 October meeting of th e Committee on Market Access, the automotive tax 
measure had been announced as a temporary measure set  to expire at the end of 2012.  However, the 
temporary nature of the measure neither change d the legality of the measure nor provided any 
reassurances.  To the contrary, it made Korea more concerned about the possible systemic implications since  a temporary measure, WTO incons istent, could be harder to get rid of, given the 
time-consuming procedure of formal WTO dispute settlement.  
10.10 He also indicated  that according to a re cent news report, Brazil' s Finance Minister had 
signalled the possibility of reinforcing the protectionist dimension of the measure by raising the local content requirements starting in 2013.  Korea also had reportedly advocated the positive effect of the 
tax measure, with an explanation that it would en courage more investment in Brazil.  Korea was G/C/M/108 
Page 24  
 
  disappointed by this view  and hoped that the re port was not true. In conclusion, Korea would 
continue to work closely with Brazil and other Me mbers  to expeditiously resolve this matter.  
 10.11 The delegate of Japan supported the Korean statement and noted that protectionist measures 
were increasing as a result of the rapid change in international economic conditions, including 
exchange rate fluctuations.  Japan believed that a protectionist measure would have a negative impact 
on world trade and economy. Countries,  in line with  the commitments made at the highest level in 
various fora, might collectively tackle protectionism..  The G-20 leaders had expressed their collective will to avoid protectionism, while reaffirming th eir standstill commitment not to introduce any new 
protectionist measures and their commitment to rollb ack any new protectionist measures that might  
arise.  In this regard, Japan sh ared the  concerns expressed by Korea on the recent Brazilian measures 
towards increasing industrial-product tax on imported car s, as his delegation  had already expressed at 
the last Market Access Committee meeting.   10.12 According to media reports, the Brazilian gove rnment had postponed its implementation until 
mid-December, in line with the verdict of the Brazilian Federal Supreme Court.  However, the 
Brazilian government still intende d to implement the Order of 30 per cent increase on industrial 
products tax, namely the IPI tax stipulated by th e Government Order No. 7567.  This Order indicated 
that the increase of IPI was applicable only to  cars with a high content of imported parts and 
components, excluding the ones produced or imported on the following conditions:  (i) more than 65 per cent of their parts and components originated in MERCOSUR countries; (ii) gross profit at the 
minimum 0.5 per cent to be invested in innovation, research and technical development activities in 
Brazil; and (iii) the production process to be entrus ted to domestic companies in some stages.   
 10.13 He noted that among those requirements, the local content requirement was the most problematic.  The purpose of this measure appeared  to be the protection of domestic industry and 
employment as well as promotion of investment in Br azil.  In Japan's view the third measure allowed 
discriminatory treatment of cars imported and produced on the basis of local content ration, which appeared to be inconsistent with the relevant WTO provisions as follows: 1. This measure did not 
seem to be consistent with the MFN principle a nd national treatment under Articles I and III of GATT 
1994, respectively, because they were not applied to  cars produced domestically in Brazil or imported 
from MERCOSUR members and Mexico. 2. The local content requirement to avoid additional IPI tax 
payment also did  not seem to be consistent with  Article 2 of the TRIMS Agreement and; 3. The 
exemption of additional IPI tax payment by this measure might be regarded as prohibited subsidies 
within the meaning of Article 3(b) of the Ag reement on Subsidies and Countervailing Measures. 
 10.14 Japan was concerned about this measure in te rms of both its possible inconsistency with the 
aforementioned WTO Agreements and of the economic impacts on global trade.  These kinds of 
measures contradicted the collective commitme nts, including the recent message from the G-20 
leaders to resist from all forms of protectionist me asures that affected the multilateral trading system 
under the aegis of the WTO.  Furthermore, even if this measure was temporary as Brazil indicated 
during  the last meeting of the Committee on Mark et Access, there seemed to be no commitment to 
eliminate this measure by end of 2012.  Japan was concerned that acquiescence of this measure would 
send a wrong signal and encourage protectionist measures in other Members. 
 10.15  Therefore, Japan sought clarification from Brazil on the background of this measure and its 
consistency with the WTO Agreements.  Japan wish ed to continue the discussion on this issue with 
Brazil both bilaterally and multilaterally. 
 
10.16 The delegate of the European Union shared the concerns expressed by the previous speakers 
about the Brazilian decision to grant a tax advantage to vehicles containing at least 65 per cent local 
content.  The measure appeared to be incompa tible with basic WTO non-discrimination principles 
since Brazil would be treating domestic products in  a more favourable way than imported goods and,  G/C/M/108 
 Page 25 
 
 
  was also at odds with the overall G-20 commitment to refrain from taking protectionist measures.  
The EU was of the view that Brazil had taken this measure in response to the surge of vehicle imports 
recorded in 2011.  However, this should not jus tify the use of measures  incompatible with WTO 
rules.  His delegation was ready to discuss this matte r further with Brazil and work together with other 
affected Members in order to reme dy the situation as soon as possible. 
 
10.17 The delegate of Australia echoed the previous speakers and reiterated the concerns raised in 
the Market Access Committee on 14 October this year.  Australia had both, systemic and commercial 
concerns regarding the nature of the measures and its WTO consistency.  In  Australia's view, the 
measures appeared to be discriminatory and favour ing domestic and regional production counter to 
Brazil's GATT obligations.  Australia would follow th is issue closely both in Geneva and in Brasilia. 
 10.18 The delegate of Hong Kong, China register ed systemic concerns on Brazil's measures, 
requirement of local content, production and in vestment requirements which appeared to be 
protectionist in nature and might be inconsistent with the MFN and national treatment principles.  He 
urged Brazil to bring the measures in confor mity with the relevant WTO Agreements. 
 
10.19 The delegate of the United States shared ma ny of the concerns already noted by other 
Members about Brazil's tax increase on imported autos.  The US would monitor this issue very 
closely. 
 
10.20 The delegate of Canada th anked Brazil for the information it had made available to date 
concerning the recent changes to its manufacturers' w holesale tax applicable to the automotive sector.  
Although the changes to the IPI were meant to be temporary, Canada was concerned that Brazil had 
decided to apply what many considered a trade rest rictive measure.  As a member of the G-20 group 
of countries, Canada supported the commitment made by leaders and reconfirmed only last week, to 
resist trade protectionism.  In this light, Canada  encouraged Brazil to abide by its commitments 
undertaken in the G-20 context to refrain from impl ementing new restrictive measures and to quickly 
dismantle those that had been put into effect, incl uding this temporary measure on the automotive IPI. 
 10.21 The delegate of Colombia echoed the concer ns expressed by the previous speakers regarding 
the possible effects of Decree 7567 of December 2 011.  Colombia also had  a number of similar 
concerns regarding the impact on its exports and asked  Brazil to provide an adequate explanation on  
this issue . 
 
10.22 The delegate of Chinese Taipei thanked Korea fo r raising this issue; his delegation shared the 
systemic concerns expressed by previous speakers at this meeting and also in the Market Access 
Committee.  Chinese Taipei sought justification from Brazil regarding the consistency of the measure 
with its WTO obligations and the G-20 commitment.   He urged Brazil to bring the measure in 
compliance with WTO Agreements. 
 
10.23 The delegate of Brazil thanked  delegati ons which took the floor for their respective 
statements.  He recalled that Korea had already expressed its view on this matter at the meeting of the 
Committee on Market Access  held on 14 October.  On that occasion, his  delegation  made 
preliminary remarks that he would expand in the CTG.  10.24 He clarified that both relevant legislativ e acts had been published in a fully transparent 
manner in Brazil.  The complete texts including a fairly detailed explanati on of their rationale was 
available to the public through the internet.  He re minded Members of the provisional nature of these 
legislative measures; that the in centive regulated by Decree 7567 would expire in December 2012.  
He noted that the exceptional circumstances which led Brazil to modify temporarily its tax regime for the automotive sector could also have justified th e adoption of trade remedies provided for in the 
WTO Agreement on SCM with a potentially high trade restricting impact.  Instead, Brazil had chosen G/C/M/108 
Page 26  
 
  to put in place positive incentives which were not protec tionist in intent but rather aimed at promoting 
investment, innovation as well as research and devel opment in a particularly key industry.  These 
objectives were in fact the same ones that, right afte r the onset of the 2008 global financial crisis, led 
to massive governmental support mostly in the form of grants and loans that were channelled to the 
auto industry in several key world markets.  The auto industry had in fact become the most heavily 
subsidised sector in the world economy;  this was no secret. 
 10.25 Brazil's ebullient domestic auto market was compounded by the appreciation of Brazil's currency, the Real, and resulted in a substantial increase of car imports. Car imports in Brazil had 
jumped from $2.6 billion in 2006 to $10.8 billion in 2010; whereas exports had shrunk from $7.3 
billion to $6.9 billion for the same period.  He not ed that from Korea alone, imports on tariff lines 
under the subheading 870322 had risen from approxima tely $44 million to more than $1.2 billion 
during the three-year period between 2008 and 2010.  From nearly all Brazil's trading partners, import 
figures had been on the upswing over the past three year s.  Exporting countries with interest in the 
Brazilian automotive market would continue to benefit from the overall economic scenario in the 
country and were likely not to lose competitiven ess in a rapidly expanding Brazilian market. 
 10.26 Since  more than one delega tion had referred to a decision adopted by Brazil's Supreme Court 
on 20 October this year, a clarification was required.   Thus, he indicated  that the decision by the 
Supreme Court had not considered at all, the subs tantive provisions of the legislative Acts.  The 
decision had simply ruled that those legislative Ac ts would enter into force on 15 December, exactly 
three months after they were published in the offici al gazette in Brazil as is required by Brazil's tax 
legislation.  Brazil was ready to discuss the measures it had adopted with all the interested 
delegations.   10.27 The Chairperson invited  the Council to take note of the statements made.  
 10.28 It was so agreed. 
 
XI. UKRAINE'S IMPLEMENTATION OF CU STOMS VALUATION LEGISLATION - 
JOINT STATEMENT BY THE EUROPEAN UNION AND NORWAY 
11.1 The Chairperson recalled that at the Counc il's meetings on 31 January, 21 March and 26 May 
2011, the delegation of the European Union made a st atement on its own behalf and on behalf of the 
Norwegian delegation on the "Implementation of Cust oms Valuation Legislation by Ukraine."  In a 
communication dated 26 October 2011, the EU delegati on requested to include the same issue as an 
agenda item of this meeting.    
11.2 The delegate of the European Union on behalf  of his own delegation and that of Norway, 
delegation  welcomed the  improvements achieved by Ukrainian Customs Authorities; there was now 
a better management of customs operations, specifi cally in the conduct of risk management and 
customs control procedures.  Regarding   customs va luation, a long standing concern which had been 
raised on many occasions in different fora, Ukra ine was seriously addressing the difficulties the EU 
and Norway had expressed and the decreasing number of complaints received in the last months 
proved that.   However, reports from trade operato rs indicated that the situation on the ground was 
still posing some challenges; for instance customs authorities continued to refuse the recognition of 
the transaction value declared by importers and arb itrary decisions were still being made.  The EU and 
Norway hoped that the recent positive trends would continue, and believed  that there would be no 
need to include this issue on  the agenda of future meetings of this Council.  He called on Ukraine to 
continue working to ensure this.  
 11.3 The delegate of Norway supported the previous statement.  
  G/C/M/108 
 Page 27 
 
 
  11.4 The delegate of the United States thanked the EU and Norway for their joint statement.  Her 
delegation had also seen improvements in custom s procedures and a decline in complaints from 
exporters.  However, the US continued to have con cerns about the rejection by customs officials of 
the declared value and the use instead of prices  from a database.  All WTO Members should be 
following the requirements set in the CVA and applying such methods in a clear and transparent 
manner in order to disrupt trade as little as possible.   The US was engaging in bilateral discussions 
with Ukraine concerning its ri sk assessment analysis methodology and looked forward to learning 
more about the risk management procedures.  Her delegation looked forward to continued co-
operation with Ukraine to resolve these issues and elim inate uncertainty often faced by US exporters.  
Concerning the recent adoption by Ukraine's Verkhovna  Rada of amendments to the customs code, 
her delegation looked forward to reviewing the amendment and wonde red if it would be translated 
and would appreciate a response from Ukraine concerning this matter.  11.5 The delegate of Switzerland welcomed  the improvements in Ukraine's customs 
administration, but invited Ukraine to instruct thei r local customs authorities to apply the rules in a 
transparent, uniform and consistent manner. 
 
11.6 The delegate from Canada thanked the EU, No rway, US and Switzerland for their statements 
and their update on the situation in Ukraine.  His delegation had witnessed improvements in the 
practices of the Ukrainian customs authorities, and en couraged Ukraine to continue working to bring 
its practices into full conformity and to instruct its customs authorities to enforce the law in a manner 
fully consistent with its obli gations in the WTO Agreements. 
 11.7 The delegate of Ukraine thanked the EU, Norw ay, Switzerland and US for their interest in the 
implementation of customs valuation legislation in his country.  Consultations on this issue, held 
during 2011 between Ukraine and the Members concer ned, both in Geneva and Kiev, together with 
the notification mechanism, served to promote better interpretation and understanding of the 
Ukrainian law and its application.    11.8 Ukraine was working to ensure a proper ri sk management to prevent fraud and corruptive 
practices by way of various instruments which had been discussed in the Committee on Customs 
Valuation.  As to the legislation, Ukraine had brou ght it into conformity with the requirements of the 
CVA.  Accordingly, the WTO methodology was now fully implemented into Ukraine's national 
legislation and, currently, the main valuation met hod was based on transaction value.  According to 
the customs administration statistics, a total volume of applications of the said method during the first nine months of 2011, was 90.6 per cent, a figure whic h matched standard international practice in this 
field. 
 
11.9 Ukrainian customs administration was constan tly improving its control and works to install 
more trade facilitating systems. It had established a working dialogue with all operators and business 
association representatives in Ukraine. He indicated that WCO customs valuation experts had visited 
the appropriate Ukrainian institutions and had an  opportunity to verify that Ukraine's customs 
valuation legislation and its applica tion were in conformity with the international obligations to which 
Ukraine was bound. His authorities remained open for further contacts and was ready to provide 
information and answers to written questions posed to them.  
11.10 The Council took note of the statements made. 
 
 G/C/M/108 
Page 28  
 
  XII. ECUADOR MIXED TARIFFS - QUESTION S FROM THE UNITED STATES, 
EUROPEAN UNION, CANADA AND JAPAN 
12.1 The Chairperson stated that in a communication dated 27 October 2011, the United States 
requested the Secretariat to include the issue of "Ecuador Mixed Tariffs" as an agenda item. 
 
12.2 The delegate of the United States  thanked Ecuador for the replies it had recently provided 
to Members in document G/C/W/645, and for the additional information regarding Presidential 
Decrees 367 and 372.  These Decrees changed Ecuador's  tariff schedule for footwear and textiles and 
apparel products, from an a pplied rate of 30 per cent ad valorem , which also reflected Ecuador's 
binding, to a mixed tariff of 10 per cent ad valorem  plus $6 per pair of shoes and, 10 per cent ad 
valorem plus $5.50 per kilo of tex tiles or apparel, respectively.   
 
12.3 Despite the additional information provided, Ecuador had not answered the specific question 
concerning what was the ad valorem  equivalent (AVE) for over 300 tariff lines covered by the 
decrees, or the methodology and calculations used to  calculate it.  Ecuador's current mixed tariff 
scheme, if implemented as Ecuador had described, would exceed its 30 per cent tariff bindings for any footwear imports valued at, or less than $29.00 per pa ir and any textiles and apparel imports valued at, 
or less than, $27.00 per kilo. The discrepancies in how  the current mixed tariff system was equivalent 
to an ad valorem  tariff of 30 per cent in footwear, textiles and apparel remained.   
 12.4 She requested Ecuador to provide in writing,  the AVE for each of the tariff lines covered by 
Presidential Decrees 367 and 372, and the methodology and calculations it had used to determine the 
AVE for these tariff lines.  
 
12.5 The United States also noted that Ecuador's replies had not addressed the reasons why it had 
modified its tariffs on these items and requested Ecuador 's insight on this issue.  Rather than repeating 
the same questions at every CTG meeting, as he r delegation had done in the absence of responses 
from Ecuador, she respectfully requested specific answers on the AVEs, the methodology for the 
AVEs, and on the reasons why Ecuador's tariff sch edule had been modified. Written responses before 
the next meeting of the CTG would be highly appreciated.  
 
12.6 The delegate of the European Union echoed th e US statement and stressed that a change from 
ad valorem  tariffs to mixed tariffs implied systemic c oncerns for WTO rules.  Changes to Member's 
tariff bindings had to be assessed to determine whether other Members' rights had been affected by 
such changes.   In 2010, Ecuador had not notif ied the two decrees, or the resolution which had 
changed ad valorem  tariffs to mixed tariffs; thus, the EU i nvited Ecuador to be fully transparent on 
this issue, so that a proper assessment could be conducted if other Members' rights were affected.  At the time the EU did not possess the informati on necessary to make such assessment.   
 
12.7  The EU requested additional information on this change from Ecuador, particularly (i) if 
there was a specific duration for which Ecuador was pl anning to implement the new tariff structure on 
these items and, (ii) the AVE for each of these tariff lines and the methodology used to calculate the 
AVEs to ensure that bound tariffs were not exceeded. 
 
12.8 The delegate from Canada supported the stat ements made by the US and EU and thanked 
Ecuador for the information it had provided in document G/C/W/645, as well as for the 
supplementary information provided.  However, his delegation continue d to be of the view that the 
information provided did not truly answer the ques tions that were submitted, he therefore again 
requested Ecuador to provide additional informa tion concerning its compound duties, including   
(1) the information on why Ecuador modified its tari ffs on these items; (2) whether or not there was a  G/C/M/108 
 Page 29 
 
 
  specific duration for which Ecuador was planning to implement the new tariff structure on these 
items; (3) the AVE for each of the tariff lines with the methodology and, (4) any supporting 
calculations that it had used to determine the AVE.  12.9 The delegate from Japan echoed the concerns expressed by the US, the EU and Canada.  On 
several occasions in this Council, Japan had alread y expressed its systemic concern regarding the use 
of a mixed tariff system for certain goods such as te xtiles, footwear and apparel. Japan did appreciate 
the efforts of the Ecuadorian dele gation to provide materials and e xplanations, but regretted to note 
that Ecuador had not provided Members with c onvincing explanations on the methodology or 
calculation method to translate the mixed tariff rates into the AVE.  
 
12.10  Consequently, Japan was unable to get rid of the concerns that the mixed tariff rate might be 
above and beyond the bound rate. He then requested  Ecuador to clarify this point with convincing 
explanations so that his delegation could remove  this issue from the Agenda as soon as possible. 
 
12.11 The delegate from Switzerland echoed the inte rventions by the US, EU, Canada and Japan; 
Switzerland too had systemic concerns. 
 12.12 The delegate from Ecuador re iterated that Ecuador had met its  transparency obligations under 
GATT Article X, which stated that Members shall promptly publish such measures before 
implementation. His authorities had done so and no ted that there was no other obligation.  Thus, 
Ecuador did not share the opinion that it had to notify something else.   
 12.13 He indicated that since the last Council meeting, trade flow of products that had originated in the territory of Members that flagged the issue and were covered by the measure had either remained 
at the same level or increased.  The statistics could be found in the minutes of previous meetings and 
in specific documents that had been circulated.  
 12.14 Finally, he pointed out that Ecuador had acted  in line with its rights and obligations, had taken 
note of the issues raised and would convey them to capital.   12.15 The Council took note of the statements made. 
XIII.  EUROPEAN UNION - RULING OF THE EUROPEAN COURT OF JUSTICE OF  
6 SEPTEMBER 2011 RELATING TO THE DETECTION IN HONEY OF POLLEN 
CONTAINING DNA FROM MON810 GE NETICALLY MODI FIED MAIZE - 
STATEMENT BY ARGENTINA 
13.1 The Chairperson informed the Council that , in a communication dated 27 October 2011, the 
delegation of Argentina requested the Secretariat to  include in today's agenda an item concerning the 
"Ruling of the European Court of Justice of 6 Se ptember 2011, Relating to the Detection in Honey of 
Pollen Containing DNA from MON810 Genetically Modified Maize”.    13.2 The delegate of Argentina expressed the concerns  of his authorities with respect to the ruling 
of the EU Court of Justice of 6 September 2011 C ase C44209 which concerned the detection in honey 
of pollen containing DNA from MON810 genetically m odified maize; this would impact marketing 
and labelling of honey in the EU.  According to th e ruling, pollen had been interpreted as being an 
ingredient of honey and not a natural compone nt; this was in conflict with FAO/CODEX Alimentarius  
(CODEX STAN 12-1981 rev. 2001) and was not in line either with the WTO agreements on SPS and 
TBT.  
 
13.3 According to what the EU said in the SPS meeting on 19-20 October, this ruling meant that 
pollen coming from genetically modified plants might be approved as an ingredie nt in honey, if honey G/C/M/108 
Page 30  
 
  was to be sold in the EU.  The ruling applied both to European and imported honey.  If honey 
contained genetically modified pollen which was a pproved in a country other than an EU Member 
State, the honey could not be imported into the EU .  For urgent and seri ous reasons and economic 
injury which were subsequently described , Argentina raised its concern at the 52
nd meeting of the SPS 
on 19-20 October and was supported by various delegations exporters  of honey.  Argentina would 
also raise the issue before the TBT Committee on 10 -11 November this year.  The trade implication 
was highly important given the volume of trade i nvolved and which was comparatively greater than 
any other restriction for the following reasons: (i) commercially the EU was the main export 
destination of Argentinian honey, 30 per cent of Argentine production of honey and 25-30 per cent of 
imports were covered by this trade.  Thus,  the legal uncertainty led to a significant drop in trade 
flows; (ii) socially, this affected directly 35,000 officially registered be e keepers; (iii) from the 
development dimension, there had been a drastic  reduction in demand and an impact on family 
agriculture and small producers, as well as on th e regions and areas depending on this activity.  
Moreover, it harmed small producers who had manage d to become part of the international trading 
system.  
 
13.4 Argentina believed this ruling was not consistent with the SPS or with the TBT Agreement.  It 
violated the harmonization principle contained in  the SPS Agreement and was against the reference 
value for international standards of internationa l bodies, the three sisters mentioned in the SPS 
Agreement.  It did not take any account of the CODEX Alimentarius  standard on honey.  The ruling 
also undermined the necessity principle and the n eed of adopting measures strictly based on science 
and made the measure more restrictive than necessary since there was no principle of proportionality.  
These kind of measures discouraged technology inno vation by attacking GMOs without taking into 
consideration that this was the main option to combat world hunger.  The adoption of strictly scientifically based measures had to prevail over mere  legal considerations wh ich were contradictory 
and adopted solely with a view to inte rpret the various cumulative legislation. 
 
13.5  He also highlighted the serious imbalance th at existed in international trade in goods and said 
this ruling was a de facto restricting access to the EU market for agricultural products.  This new type 
of measure deepened the existing imbalance in in ternational trade in foodstuffs and agricultural 
products, especially bearing in mind that this sector  was protected not only by subsidies and import 
restrictions, but also the object of a proliferation of SPS and technical restrictions, as it had been 
pointed out in the Ministerial Declaration of the 36
th meeting of the Cairns Group in Saskatoon, 
Canada on 9 September 2011.  Because of this gr owing imbalance, there was a change in the 
relationship between rights and obligations of WTO rules undermining the advantages acquired and 
competitive conditions between national and fore ign producers to the prejudice of exporters, 
particularly from developing countries.   
 
13.6 Argentina also wanted to highlight the inc ongruence of encouraging trade facilitation in the 
Doha Round and the adoption of rulings like the one  at stake, which also contradicted the Doha 
mandate.  Argentina was concerned that trade facilitation had become biased when it excluded 
agricultural products exported by developing countries. There should be some coherence between, on 
the one hand, the topics promoted by the Doha  Round and the G-20 commitments not to introduce 
new commercial restrictions, and on the other ha nd, specific restrictive measures selected and 
effectively adopted.  Argentina urged the EU to r espect the WTO rules and in  consequence asked that 
the current work to define the implementation of th e ruling should not lead to a restrictive measure on 
honey exports to EU. This was an urgent matter requiring a satisfactory solution so as to allow Argentina to resume its exports of honey to the EU. 
 
13.7 The delegate of Uruguay thanked Argentina fo r having included this issue on the agenda of 
this meeting and on the agendas of  other relevant bodies in the WTO. Uruguay had systemic and trade 
concerns, thus it shared and supported Argentina' s statement.  This ruling was causing major 
economic and other injuries to micro and small produ cers in Uruguay. He then urged the EU to take  G/C/M/108 
 Page 31 
 
 
  the necessary measures to return tr ade stability and predictability to this sector and avoid having this 
decision leading to an unnecessar ily restrictive trade measure.  
 13.8 This type of measure had no rationale or scientific basis and might be rejected because it could have a major impact on growing a secure food area.  Meeting the food security requirements for 
the future meant creating conditions for competitiv e and environmentally responsible agricultural 
activities.  This responsibility might be maintained but not undermined by th e adoption of measures 
having an important impact on trade and food produc tion, which led to major questions with respect 
to the effective capacity to meet the gr owing needs for the food in the world. 
 
13.9 The delegate of Canada shared the con cerns raised by Argentina and Uruguay.  The 
judgement of the European Court of Justice cr eated uncertainty and trade disruptions including 
Canadian exporters of honey to the EU.  In dealing with this Court decision, Canada requested the EU 
to take expeditious action to prevent trade disr uptions and assure consistency with the EU's WTO 
obligations.  
13.10 The delegate of Mexico reminded the C ouncil that, as pointed out in the SPS Committee 
meeting, Mexico was a major producer and exporter of honey.  Mexico joined Argentina and others 
with respect to the EU Court of Justice decisi on which interpreted that honey containing traces of 
GMOs might be catalogued as GMO.  This decision wa s inconsistent with what was laid out in the 
SPS Agreement.  Her delegation had understood that th e EU was working to define the way in which 
this would be implemented.  Therefore, she urged the EU to keep Members informed of the actions 
related to its implementation, since 55 per cent of  honey consumed in the EU came from third world 
countries.  Mexico also urged the EU to consider  the implications and consequences of this legal 
decision and ensure that any measure agreed to implement it would not become an unjustifiable restrictive measure for exports of honey from third world countries to the EU. 
 
13.11 The delegate of the United States expressed th at her delegation also believed that the ruling 
by the Court of Justice of the EU was problematic for all approvals under these regulations, and 
looked forward to a prompt resolution that could ensure that there were no disruptions to trade in  bio-tech agricultural commodities to the EU.  
13.12 The delegate of the European Union thanked the previous speakers for having explained their 
concerns regarding this issue.  He noted that  the Commission was making all possible efforts to 
coordinate and guide actions by the EU Member States and economic operators in the follow-up to 
this ruling. He furthered added that on 28 Se ptember 2011 the Commission had already met with 
other non-EU countries as well as EU Member States to  analyse the problem in detail, and facilitated 
a list of GMOs not authorized in pollen.  The co llaboration of industries towards having the full scope 
authorisation covering use in pollen, was funda mental to minimize possible impact on honey 
producers whether in the EU or outside, since they were equally impacted by this ruling.    13.13 He informed the Council that the Commi ssion had called on EU Member States and other 
countries to facilitate data on the impact in their c ountries, to assess the magn itude of the problem and 
to take the necessary measures.  The Commission had also requested the European Food Safety 
Authority on scientific advice on the safety of po llen produced in GMO maize MON810. This request 
had been rapidly processed by the European Food  Safety Authority and its opinion should be 
available soon.  
13.14 The Council took note of the statements made.  
 
 G/C/M/108 
Page 32  
 
  XIV.  TRANSITIONAL REVIEW UNDER PARAGRAPH 18 OF THE PROTOCOL OF 
ACCESSION OF THE PEOPLE'S REPUBLIC OF CHINA  
14.1 The Chairman recalled that in  accordance with paragraph 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.  CTG subsidiary  bodies were required to transmit their reports to 
the Council for Trade in Goods.  First, he gave Members an opportunity to make general comments 
on those reports, and subsequently proposed that th e Council takes note of the Reviews that had been 
carried out in the CTG subsidiary bodies.  He then  moved to the CTG's own report.  The Council was 
required to review the information to be provided by China in designated parts of Annex 1.A of the 
Protocol. 
 
14.2 He added that the following subsidiary b odies had carried out the Transitional Review:  
Market Access – the report was contained in doc ument G/MA/258:  Agriculture - the report was 
contained in document G/AG/27;  Customs Valu ation - the report was contained in document 
G/VAL/66;  Import Licensing - the report was contained in document G/LIC/23;  Rules of Origin - 
the report was contained in document G/RO/72;  Anti-Dumping - the report was contained in 
document G/ADP/21;  Subsidies and Countervailing Measures - the report was contained in document 
G/SCM/140;  Safeguards - the report was contained in document G/SG/96;  and TRIMs - the report 
was contained in documents G/L/963; SPS - the re port was contained in document G/SPS/57.  He 
asked Members for general comments on those Review s. He noted that the report from the Committee 
on Technical Barriers to Trade had not been finalized  at the time of the Council meeting as the TBT 
Committee was meeting that week.  
 14.3 The Council took note of the reports from the subsidiary bodies.  The Chair of the Committee 
on Technical Barriers to Trade would submit the report directly to the General Council.   
 
14.4 The Chairman recalled that China was requi red 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/661.  He also drew Members' attention to the questions from Japan in document G/MA/W/106. The Chair gave the floor to China to introduce its submission.  
14.5 The representative of China stated that he pr eferred to respond after other Members had taken 
the floor. 
 14.6 The representative of Japan  stated that, on the 10
th anniversary of China's accession to the 
WTO and final Transitional Review Mechanis m (TRM) under the Protocol of Accession, his 
delegation wanted to highlight not only the role of the TRMs, which had ensured transparent review 
of China's efforts to comply with its obligations, but  also China's efforts to answer the questions posed 
by Members.  However, Japan cons idered that China had not fully responded to the questions, like in 
the Committee on Market Access on 14 October 2011, where Japan raised some issues concerning 
export restrictions and export taxes and China suggest ed that these be taken up to this Council.  He 
then indicated that the Chinese government had issu ed export restrictions on several raw material 
products, including rare earths, tungsten, antimony, indium, molybdenum, tin coke, etc.  In rare 
earths, China's Ministry of Commerce (MOFCOM) had announced that, according to its policy, the 
total amount of export quotas was confined to approximately 8,000 tons in 2010, marking a 40 per cent decrease when compared to 2009.  The total am ount for 2011 was expected to be approximately 
the same as for 2010.  Moreover, ferroalloys had recently been included in the coverage of export 
quotas; and, as a result, the amount of quotas for ra re earth had decreased significantly.  China's 
explanations that these measures were taken to prot ect exhaustible natural resources were contradicted 
by the increased amount of Chinese domestic consumption of these products.  Thus, these measures appeared to benefit domestic users of the metals.  Japan also recalled that China's export duties on  G/C/M/108 
 Page 33 
 
 
  various raw materials, including rare earths, t ungsten, antimony, indium, molybdenum, tin, fluorite, 
and hydrogen fluoride had been rai sed several times since November 2006 and requested explanations 
from China as to how and whether it had plans to eliminate those export restrictions.  14.7 On China's implementation of export licensi ng on coal, Japan indicated that, whereas a 
sufficient number of export licenses used to be issued  in terms of China's export amount of coal, the 
number of export licenses had decreased over the past few years.  This trend might hamper smooth trade flow of coal.  China's domestic production and c onsumption of coal seemed  to be in expansion, 
but it was unclear if the export licensing measures on  coal had been adopted in conjunction with the 
restrictions on domestic production a nd/or consumption, as stipulated in GATT Article XX (g).  This 
raised concerns with regard to the consistency of such measures with GATT Article XI; thus, China 
should clarify how it justified export licensing on coal under the GATT. Moreover, while China was 
committed to eliminating export taxes-with the exce ption of those which are listed in Annex 6 in 
China's Protocol of Accession- it had raised export ta xes on coking coal and had levied taxes on steam 
coal and anthracite since August 2011.  China shoul d also explain how it justified its export taxes in 
relation to its commitment upon accession, and indicate any plans to review the export licensing 
measures and imposition of export taxes on coal.   14.8 Japan recalled that in March 2006, MOFCOM  had announced export prohibition on natural 
sand and on 5 January 2007 it announced that this  would take effect from March 2007. China had 
explained that the purpose of the prohibition was to preserve natural resources and that, in parallel, 
production and consumption of natu ral sand had also been restricted. China should provide detailed 
explanation on its measures, including legislativ e measures and quantitative restrictions on domestic 
production and consumption of na tural sand.  The Japanese industry sector had not only submitted 
inquiries on the particularities of the measures, but al so requested their repeal .  On several occasions 
Japan had posed questions on the WTO consistency of China's export prohibition on natural sand but 
had not received sufficient explanations from China. 
 14.9 On export taxes on fertilizers and their raw ma terials, Japan indicated  that since 2008 China 
had levied its export taxes on fertilizers and their ra w materials as follows:  China levied 100 per cent 
special export tax on 32 items of the chemical fer tilizers and their raw materials from 20 April to 30 
September 2008; a total of six items including phos phate rock, were added to the list of the above 
items, making them subject to the 100 per cent special export tax on May 2008; currently, a total of 
eight items had been levied;  and, during periods of  high demand, China had levied 75 per cent special 
export tax on items such as urea and ammonium phosphate, in addition to a 35 per cent export tax 
levied during such periods.  Since these products we re not listed in Annex 6 of the Protocol, Japan 
was concerned that the aforementioned measures were  inconsistent with the commitment to abolish 
export taxes in accordance with section 3, Article 11 of China's WTO Protocol of Accession.  Despite 
several inquiries by Japan regarding China's futu re plans to eliminate these export taxes on the 
aforementioned TRM and TPR, China had not provided  any concrete explanation.  Therefore, he 
requested China to provide e xplanations on this issue.  
 14.10 As to Trade Related Investment Measures (TRIMs), Japan recalled that at the TRIMs 
Committee on 4 October it recognized China's effort s in recent years to simplify the verification 
processes for investment projects, but had indicated that China had to further improve the application 
of the system, especially in rural areas, through e nhancing transparency and predictability on the 
implementation and through a substa ntial elimination of remaining foreign capital restrictions under 
the "Law on Management of Foreign Investment in Commercial Sectors". Japan was also concerned 
that performance requirements on local content or on  technology transfer still remain as impediments 
for foreign investors in China.  Japan had also poi nted out that, in spite of China's commitments in 
paragraph 7.3, Part I of the Protocol of Acce ssion and paragraph 203 of China's Working Party 
Report, China was still imposing technology transf er requirements in the new-energy vehicles 
production by "Access Regulations for New-Energy Vehicle Manufacturers and Products".  At the G/C/M/108 
Page 34  
 
  TRIMS Committee meeting, Japan asked China to clar ify the consistency of this measure with its 
Protocol of Accession but had not yet received concrete explanations.  14.11  With regard to the Committee on Agriculture, Japan indicated that Section11.3 of Part 1 of 
the Protocol of Accession stipulated that China should eliminate all taxes and charges applied to 
exports unless specifically provided for in Annex 6 of the Protocol or applied in conformity with the 
provisions of Article VIII of GATT 1994.  At  the Committee meeting in September 2011, Japan 
expressed its concerns on China's introduction of ex port taxes and charges on agricultural products in 
terms of volatility of world food prices and request ed for China's view on the consistency with the 
Protocol of Accession and the relevant WTO provi sions concerning export taxes and charges.  
 
14.12 With regard to the forthcoming meeting of the Committee on Technical Barriers to Trade 
(TBT), Japan looked forward to receiving from China,  comprehensive responses regarding standards, 
conformity assessment procedures, regulation for information security and "Regulations of the 
People's Republic of China on Certification and Accreditation" and "Measures for the Administration 
of Certification Bodies" in China.  Even though th is was the final occasion to review China's progress 
in fulfilling its accession commitments, Japan woul d continue monitoring China's progress in the 
standing committees.    14.13 The delegate of Mexico recalled that her dele gation had made its concerns apparent in several 
Committees, but in particular at the Committee on Cu stoms Valuation where it had serious concerns.  
Mexico recognized the initiatives undertaken by the Chinese government to ensure China's full 
integration into the multilateral trading system and to comply with its Protocol of Accession.  In spite 
of significant reforms which over the last ten years led China to a thriving economy, Mexico had concerns on the industrial policies aimed at promoting national industries and the increasing 
government intervention in the economy; these coul d distort international trade.  Government 
intervention in the operation and design of inv estment strategies of the Chinese state-trading 
enterprises also caused concern.  China had made significant progress in certain areas, such as the 
steel sector, where plans to incr ease mergers between companies, a reduction or cancelling of credits 
and the closure of a number of small plants had b een implemented in order to reduce the capacity of 
state trading enterprises.  However, the Mexican pr ivate sector remained concerned by the continuing 
governmental intervention in setting levels of produc tion and exports of its trade-owned enterprises; 
this caused distortion in international trade of steel .  The Chinese government also intervened in other 
sectors such as automotive, chemicals construc tion, machinery and equipment, information 
technology, iron and steel and nonferrous meta ls where, given the 2008 crisis, the Chinese 
government had implemented a number of stimulus packages.  Mexico recognized the efforts carried 
out by China in order to improve transparency to  its practices and commercial measures. However, 
the Mexican private sector was still concerned th at there were significant short-comings on the 
transparency of the Chinese industrial policies, which were still based on significant government 
intervention.  In some sectors, in particular leat her and footwear, there were concerns about potential 
government participation in the ownership of ente rprises as well as lack of information about the 
government's participation.  Mexico requested the Chinese authorities to continue its efforts towards 
the full implementation of the WTO obligations, as was agreed in China's Protocol of Accession. 
 
14.14 The delegate of the United States recalled that the TRM was created  largely because China 
was admitted to WTO membership before it had revised all of its trade-related laws and regulations to 
become WTO-compatible, and because China was allo wed a variety of transition periods before it 
took on certain WTO obligations.  Active monitori ng of China's implementation progress through the 
TRM was considered an important mechanism to help  ensure that China succ essfully integrated into 
the WTO's open, market-oriented and rules-based trading system and to help ensure that WTO 
Members benefited fully from liberalized trade with China.  During the initial phase-in period 
following its accession to the WTO, China implem ented a set of sweeping commitments, including 
reducing tariffs, eliminating non-tariff barriers that denied national treatment and market access for  G/C/M/108 
 Page 35 
 
 
  goods and services imported from other WTO Members, and making legal improvements in 
intellectual property protections and in transparency .  These actions deepened China's integration into 
the international trading system, facilitating and strengthening China's rule of law and economic 
reform.  Trade and investment also expanded dr amatically between China and its many trading 
partners.  
 
14.15 Nevertheless, even though China had taken many impressive steps to reform its economy 
since joining the WTO ten years ago, the overall pict ure remained complex, given a troubling trend in 
China toward increased state inte rvention in the Chinese economy in recent years.  She noted that 
frequently, trade frictions with China could be tr aced to China's pursuit of industrial policies that 
relied on excessive, trade-distorting government inte rvention intended to promote or protect China's 
domestic industries and state-owned enterprises and th at this government intervention reflected the 
fact that China's movement away from a centra lly planned economy toward a free-market economy 
governed by rule of law remained incomplete.  To  date, all of the committees that report to this 
Council had conducted their TRMs, with the excep tion of the Committee on Technical Barriers to 
Trade. In the statements that the United States made before those committees, it noted the progress 
that China had made in implementing the Protocol  of Accession commitments and in complying with 
the obligations that China had taken on under the many agreements that make up the WTO 
Agreement during its first 10 years of WTO member ship. However, the United States also noted 
many areas of on-going concern, evidencing a troubli ng trend toward increased state intervention in 
China's economy. Her delegation wanted to highlight, at the meeting, some of the key on-going issues 
that it raised in the TRMs before the Council's subsidiary bodies.  
 14.16 She recalled that, before the Committee on Ag riculture, the United States noted that national 
treatment in connection with China's application of its value-added tax (V AT) had been a concern for 
some time.  It appeared that sales of agricultura l commodities produced and sold by farmers in China, 
such as wheat, cotton and corn, were exempted from the VAT and that sales of agricultural inputs 
produced and sold in China, such  as seed, pesticide, herbicide, agricultural machinery and certain 
fertilizers, were also exempted fro m the VAT.  However, when these same products were imported, it 
appeared that they were assessed the VAT at the ra te of 13 per cent. Her delegation also noted that 
China's TRQ system for bulk agricultural commod ities continued to be impaired by inadequate 
transparency, inordinately benefited state tradi ng enterprises rather than the private sector, and 
suffered from low fill rates for many of the commod ities. In addition, it was difficult to provide an 
assessment of whether China had adhered to its co mmitments with regard to agricultural subsidies 
because it appeared that, even after 10 years of WTO membership, China had failed to notify all of its 
subsidies to the WTO, as required by Article 25 of the Agreement on Subsidies and Countervailing 
Measures (Subsidies Agreement).  The United States ur ged China to reconsider its use of non-tariff 
barriers, like its discriminatory application of th e VAT to agricultural products, which created an 
uneven playing field in China to the detriment of fo reign producers and their products. She also urged 
China to take immediate steps to improve transparen cy, both with regard to its TRQ regime and its 
use of subsidies.   
14.17 She recalled that before the Committee on Tr ade-Related Investment Measures (TRIMs), the 
US had explained that even though China had revised  many laws and regulations on foreign-invested 
enterprises to eliminate WTO-inconsistent requireme nts relating to export performance, local content, 
foreign exchange balancing and technology tran sfer, some of those measures continued to 
"encourage" the use of local content or technology transfer, without formally requiring it. Moreover, 
enterprises from the United States and other Memb ers continued to report that some Chinese 
government officials, who typically retained a high degree of discretion when reviewing investment applications, still considered factors such as local  content and technology transfer when deciding 
whether to approve an investment even in the absence of a measure expressly encouraging it. She 
indicated that the auto sector was one sector that  the US highlighted as having been particularly G/C/M/108 
Page 36  
 
  plagued by this type of government intervention, a nd the latest manifestation could be seen in a series 
of problematic actions being taken by the Chinese g overnment related to the so-called "new energy 
vehicles", or NEVs. Another sector impacted by troubling investment restrictions was the steel sector.  However, these two sectors were by no means the only a ffected sectors.  In a number of other sectors, 
her delegation and other Members had become incr easingly concerned over the last few years about 
new restrictions on investment being proposed and implemented by China. Often, these restrictions 
were accompanied by other problematic industrial po licies, such as the increa sed use of subsidies, 
preferences for using domestic rather than impor ted goods, and the development of China-specific 
standards. Many of these investment restrictions c ould be traced to the five-year plans that guided 
China's industrial development. She urged China to reconsider its heavy reliance on investment 
restrictions as a tool of industrial policy and to re view its existing investment restrictions, particularly 
with regard to NEVs, in light of its WTO co mmitments and make appropriate revisions where 
necessary.  
14.18 Before the Committee on Market Access, her delegation noted that serious market access 
problems had arisen over the last 10 years as a result of various Chinese government industrial 
policies, and that many of these problems had involved fundamental WTO obligations, such as 
national treatment, non-discrimination and transpar ency.  The United States referenced four WTO 
compliance matters that could not be resolved th rough dialogue and led to the initiation of dispute 
settlement proceedings, including 
China - VAT on Integrated Circuits (DS309), China - Measures 
Affecting Imported Auto Parts (DS339, DS340 and DS342), China - Publications and Audiovisual Products 
(DS363) and, most recently, China - Export Restraints on Raw Materials (DS394, DS395 and DS398). 
With regard to the last of these WTO cases, China - Export Restraints on Raw Materials, she indicated 
that the complainants had challenged China's export r estraints as applied to a representative sample of 
nine raw materials and that a WTO panel had recently  rejected all of China's defences and ruled in 
favour of the complainants.  The United States urged China to abandon its use of export restraints not 
only on these nine raw materials, but also other raw materials, including rare earths, tungsten and 
antimony.  
14.19 She recalled that before the Committee on Import Licensing, her delegation addressed a 
variety of import licensing requirements being imposed  by China that raised questions about China's 
commitment to implementation of the Agreemen t on Import Licensing Procedures. Her delegation 
specifically referenced China's import licensing sy stem for iron ore, China's regime for issuing 
Quarantine Inspection Permits (QIPs) for products su ch as poultry, pork and beef, and China's regime 
for issuing Automatic Registration Forms (ARFs) fo r poultry, pork, soybeans and dairy products. The 
United States urged China to take a path that would promote rather than restrict trade and specifically 
to abandon its use of restrictive import licensing pr ocedures for iron ore; and, eliminate its QIP and 
ARF regimes.  
14.20 She indicated that before the Committee on Sa nitary and Phyto-sanitary Measures (SPS), her 
delegation noted that over the last ten year s China's regulatory authorities had imposed non-
transparent SPS measures apparently lacking a scientific basis that restricted imports of a number of 
key US agricultural exports and that, in many instan ces, the US efforts to resolve China's underlying 
concerns were hindered by China's inability to provi de relevant risk assessments or its science-based 
rationale for maintaining its import restrictions. She stated that examples of problematic SPS 
measures currently in place included a ban on US b eef products, zero tolerance standards for certain 
pathogens in imported raw meat and poultry that were generally considered  unachievable and were 
apparently not applied to domestic raw meat a nd poultry, and lengthy bans on poultry from various 
US states in response to cases of low-pathogenic avia n influenza.  The United States urged China to 
fully embrace the disciplines of the SPS Agreement and ensure that its SPS measures were based on 
international standards or science-based risk analysis procedures.   G/C/M/108 
 Page 37 
 
 
  14.21 She also indicated that be fore the Anti-Dumping Committee, her delegation noted that while 
China had made significant progress in developing  a legal framework for its anti-dumping regime 
over the past ten years, it had more to do to make  its anti-dumping investigative and decision-making 
processes fully transparent and procedurally fair fo r all parties, as envisioned by the Anti-Dumping 
Agreement. The United States later noted before the Subsidies Committee that these same concerns 
applied to China's countervailing duty regime. Separately, the US also drew attention to the fact that, 
in recent years, China had initiated anti-dumpi ng and countervailing duty  investigations under 
troubling circumstances. The United States added th at some of these investigations had generated 
WTO disputes in which multiple WTO violations had b een alleged, including claims of inconsistency 
not only with fundamental obligations  relating to transparency and procedural fairness, but also key 
aspects of the injury determinations. The United States had initiated two of those disputes, one 
involving grain-oriented electrical steel (DS414) and the other involving broiler products (DS427). 
14.22 As to the Committee on Subsidies and Count ervailing Measures, her delegation emphasized 
that it was particularly troubling that, throughout  its first ten years of WTO membership, China 
appeared to have made frequent use of subsidies th at were prohibited by the Subsidies Agreement. To 
date, the United States had br ought three separate WTO cases cha llenging scores of Chinese central, 
provincial and local government subsidies as prohibi ted. While China either repealed the challenged 
measures or eliminated the challenged benefits in those measures after being challenged at the WTO, 
there were concerns that China continued to  face WTO challenges alleging significant use of 
prohibited subsidies at every level of government  even after ten years of WTO membership. As 
pointed out, the Subsidies Agreement's disciplines  were clear and straightforward, and it was 
unacceptable for China or any other Member to main tain prohibited subsidies.   Her delegation also 
highlighted another troublesome problem in the subs idies area: despite being one of the top traders 
among WTO Members, China had a poor record of compliance with its transparency obligations 
under the Subsidies Agreement.  China continued to  maintain an opaque subsidies regime, and until 
last month it had submitted only one of its require d subsidies notifications under Article 25 of the 
Subsidies Agreement since joining the WTO ten year s ago. That notification, submitted in 2006, was 
incomplete as it failed to notify any subsidi es provided by provincial and local government 
authorities, as well as numerous cen tral government subsidies. China did submit a new notification in 
October 2011 after the US took the extraordinary step of submitting a coun ter notification under 
paragraph 10 of Article 25 of the Subsidies Agreement, but China's new notification was again 
incomplete. 
14.23 With regard to the Customs Valuation Committ ee, she indicated that her delegation noted that 
it appeared that China's implementation of its ob ligations under the Agreement on Implementation of 
Article VII of the General Agreem ent on Tariffs and Trade 1994 (the  Customs Valuation Agreement) 
had been inconsistent from port to port, both in te rms of customs clearance procedures and valuation 
determinations. The US specifically highlighted Chin a's improper use of "reference pricing" for many 
high technology products, China's automatic adding of  royalties and license fees to the dutiable value 
of goods such as computers that include pre-insta lled software, and China's assessment of duties on 
digital products based on the imputed value of the content rather than the value of the underlying 
carrier medium. The United States urged China to ta ke immediate steps to ensure that its customs 
valuation measures were fully and uniformly implemented.  
14.24 The US had described concer ns before several committees a bout the efforts that China had 
made to comply with a series of commitments from its Protocol of Accession that were designed to 
ensure that trade with China would be predictable and transparent. First, with regard to China's 
commitment to publish all laws, regulations and ot her measures pertaining to or affecting trade in 
goods or services, her delegation  noted that while China had complied with this commitment in many 
respects, it still did not appear that China publis hed measures that provide "internal guidance." 
Second, with regard to China's commitment to publish measures for comments before implementing 
them, China had made improvements over the years, but it appeared that China had still not G/C/M/108 
Page 38  
 
  institutionalized a notice and comme nt mechanism for all Chinese agen cies. Third, with regard to 
China's commitment to make available all laws, regulations and other me asures pertaining to or 
affecting trade in goods or services in one or more  WTO languages, it appeared that China had made 
only limited progress in implementing this commitment.  
14.25 In conclusion, the US delegate stated that overall, while China had made noteworthy progress 
in implementing the Protocol of Accession commitme nts and in complying with obligations that it 
took on under the many agreements that make up the WTO Agreement, more work lied ahead if 
China was to fully integrate into the WTO's open, market-oriented and rules-based trading system and 
if other WTO Members were to benefit fully from lib eralized trade with China. The United States was 
committed to continuing its engagement with China, both here at the WTO and bilaterally, in order to 
achieve these objectives. 
14.26 The representative of the European Uni on indicated that China's WTO accession was 
probably the most defining economic development th e world had witnessed over the last decade and 
the ninth and final Transitional Review Mechanis m (TRM) provided the EU with the opportunity to 
review the implementation of China’s commitment s since joining the WTO by the end 2001. Since 
then, China's exports had increased 6-fold in just over a decade, ma king China the world's number one 
exporting nation. China was also the EU's second larg est trading partner, while the EU was China's 
biggest export market and number one trading partne r. He highlighted the tremendous efforts China 
had done in the run-up to and in the years follo wing its WTO accession. First of all, the EU 
acknowledged that China had implem ented its tariff reductions according to the schedule. Accession 
to the WTO had also given a new impetus to Chin ese law-making because of the specific consultation 
and publication obligations that WTO membership entails. The EU had learnt that in the process, 
China reviewed over 2000 pieces of laws and regulations  at the central level alone, in addition to tens 
of thousands more at the provincial level; this wa s complemented by a nation-wide awareness-raising 
and information campaign.    
14.27 Despite these huge efforts and impressive achie vements, it was important to note that WTO 
membership was not a one-off event but a commitme nt that required on-going work, especially in a 
fast developing country like China that was catch ing up rapidly and very actively regulating its 
markets, often in very short time. In fact, it ought to  become an in-built reflex to ensure that its rules 
and legislation respect WTO rules and basic princi ples such as non-discrimination, transparency, and 
national treatment. That was applicable to each  and every WTO Member, but especially leading 
trading nations ought to lead by example. Given China's size – already the world's number one 
exporter and soon also the world's biggest economy,  all that it does or does not do, had an impact on the rest of the world, including in the case of domestic and internal market regulations.   
 14.28 Despite the impressive progress China had made  since 2001 in integrating to the rules-based 
world trading system, WTO Members were still confr onted with some important areas of concern and 
significant challenges remained in realising the bene fits of many of the commitments that China had 
de jure  implemented.  He noted that his delegation, like many others, had taken active part in this 
TRM in a number of CTG sub-committees, incl uding the Committees on SPS, Market Access, 
TRIMS, Anti-dumping, Subsidies and Countervailing measures where the EU had made statements 
and presented written submissions.  The EU was surp rised that China, in some of these Committees, 
had thanked those Members who had re mained silent during the TRM.  In  this regard, he recalled that 
transparency was an essential element of the WTO,  that the scrutiny provided for by the TRM was 
part of China's Protocol of Accession, and that each and every WTO Member, regardless of its size, 
had an equal right to exercise its rights.   
14.29 With regard to the Committee on Market Acces s, the EU encouraged China to reconsider 
procedures, to engage in a substantive review of  its Compulsory Certification scheme and to act 
responsibly as a WTO Member who is a significant raw materials consumer and producer worldwide.  G/C/M/108 
 Page 39 
 
 
  The EU appreciated China's concerns with regard to sustainable management of natural resources and 
encouraged  environmental considerations in this fi eld but considered that export restrictions were not 
the appropriate and WTO consistent approach to  achieve these objectives. The EU had repeatedly 
endeavoured to find a constructive solution thro ugh dialogue but because of the reticence of the 
Chinese party to engage in such dialogue, had to r esort to WTO litigation.  His delegation expected 
the final ruling in this dispute in December and hoped China would be willing to engage with it in 
finding a systemic solution to export restrictions on many raw materials.   14.30 In the TRIMS Committee, the EU had raised  China's investment approval process where, 
despite efforts to enhance tran sparency, further streamlining was needed. His delegation also 
highlighted many restrictions on foreign investment , including complete bans on foreign investment 
in certain sectors, reflecting the government's continuing role as a very active manager of the 
economy, as well as some local content requirement s. He called on China to implement all of its 
investment measures in a way that ensu res transparency and predictability.  
 
14.31 As to the Committee on SPS, the EU's main con cerns related to transparency such as access to 
legislation and procedures, SPS notifications we re coming in big volumes and in Chinese only 
therefore, possibilities for real commenting remain limit ed. On administrative procedures for export 
applications, the EU noted general slow progress.  Another concern related to the fact that Chinese 
legislation was not yet aligned to several internati onal standards; in this context, the EU raised 
differences between the Chinese list of authorized food additives and processing aids and the list 
considered safe by international standard-se tting bodies.  Additionally, China had not given a 
scientific justification for this deviation. China s hould continue its efforts to fulfil the responsibilities 
deriving from its WTO membership in this area.   14.32 In the context of the Committee on Subsidies and Countervailing Measures, the EU had raised 
the issue of notifications, recalling that WTO Memb ers were under the obligation to submit regular 
notifications of subsidies in the area of trad e in goods under the SCM Agreement (ASCM).  His 
delegation was interested in hearing China's intenti ons in this respect.  With regard to the Committee 
on Anti-dumping (AD), the EU emphasised  its concerns relating to the na ture and standards applied in 
Chinese proceedings related to the use of anti-dumpi ng instruments, highlighting that AD proceedings 
should be initiated only if all WT O conditions were met, regard less of any retaliatory motive 
whatsoever.  
 14.33 In conclusion, the EU felt that, ten years after its accession to the WTO, China had moved 
from being an emerging economy to a global economi c power and its WTO membership had certainly 
not been alien to this transformation. The EU recognized and welcomed China's continuous efforts 
over the past ten years to implement its WTO commitm ents and encouraged it to continue in the same 
path, so as to ensure that its domestic rules a nd legislation faithfully respect WTO rules and basic 
principles such as non-discrimination, transparency , and national treatment.  The EU looked forward 
to continuing this review in the remaining m eetings of the WTO bodies, such as the Committee on 
Technical Barriers to Trade (TBT) and the General Council.  
14.34 The delegate of China thanked Japan, the US , Mexico and the EU for their statements and 
expressed the appreciation of his delegation for the constructive silence of all other Members that 
might not have been willing to take the floor unde r this agenda item ever or at the TRM.  He 
expressed that China had spared no efforts to fulfil most comprehensively and seriously, its 
tremendous commitments made upon its accession to th e WTO on 10 November 2001.  Since then, 
China had reduced tariffs, eliminated all non-tariff m easures, and made available the right to trade to 
all individuals and businesses which drastically lowered the threshold for people engaging in trade.  
With the duly and complete implementation of tariff reduction commitments each year in the transitional period, China's average tariff on goods  had reduced from 15.3 per cent at the time  of 
accession to 9.8 per cent in 2011; this was lower th an the average tariff level of other developing G/C/M/108 
Page 40  
 
  country Members.  China had overhauled 2300 laws, re gulations and departmental rules at the central 
level and 190,000 trade-rela ted regulations, policies and measures at  the local level. As the biggest 
developing country of the world and a stalwart suppo rter of the multilateral trading system, China had 
done its best endeavours to fulfil its WTO obligatio ns and promote transparency, liberalization and 
trade facilitation internally and abroad.  In th e same vein, it submitted to the Goods Council, 
document G/C/W/661 containing the information requ ested in Annex 1A of China's Protocol of 
Accession.  China looked forward to furthering eff ective discussions with other Members during this 
final TRM and in the future at the re gular meetings of the Goods Council. 
 14.35 The Chinese delegate thanked Japan for resp ecting the division of labour between this 
Council and the Committee on Market Access and fo r having submitted their questions to the latter 
prior to this Council.  Some of the verbal questi ons by other delegations had already been addressed 
in previous reviews under the subsidiary bodies of this Council or at other various arenas, including 
through bilateral talks. China's deliberations, clarif ication and argument had be en clear and consistent 
and it would be inappropriate to reopen those topi cs and repeat China's position already stated in 
previous transitional reviews this year.   
 14.36 In response to Japan's written question on th e export restrictions and export tariff on some 
nonferrous raw materials, the Chinese delegate indi cated that rare-earths, tungsten, molybdenum, 
antimony, tin, and other nonferrous raw material s were non-renewable and exhaustible natural 
resources.  China was also facing serious resour ce depletion and environment pollution challenges 
during the exploitation of the above-mentioned raw materials; therefore it had imposed both export 
restrictions and strict control of domestic mining and production on such raw materials so as to protect the environment through improving the ra tional exploitation and utilization of resources as 
such.  This policy and practice fully complied with  WTO rules.  With regard to rare-earths he 
indicated that it was widely known that China had a bout 30 per cent of global reserves of rare-earths 
but had produced and supplied 95 per cent of the world's total demand and, accordingly and 
undoubtedly, endured most of the pollutions.  It wa s unsustainable, unrealistic  and unfair to expect 
China to meet the majority of the global demand for rare-earths in the long run with relatively a much 
smaller proportion of global reserves.  Thus, China adopted restrictive measures for the exploitation, production and export of rare-earth s considering environmental pr otection and economical use of 
limited resources.  He noted that those measures we re implemented in a way fully consistent with 
WTO rules and agreements, including the national treat ment principle. He furthered that in 2010, 
China produced 89,000 tons of rare-earths, a yea r-on-year decrease of 31 per cent.  The decrease of 
production was proportionate to the adjustment of export quotas and all available data disapproved the 
alleged statement of Japan that there had been an increase of production of rare-earths in China 
despite export measures in place.  Furthermore, in  2011, the export quotas of rare-earths were 24,000 
tons and the export volume only accounted for 34 pe r cent of export quotas. China believed that the 
decreasing export of rare-earths wa s mainly caused by market power rather than the adjusted export 
quotas.  14.37 Regarding coke and natural sand, the Chinese delegate stated that that China had taken 
consistent and WTO-compliant export measures to promote the rational exploitation of resources and 
protect the environment.  Unsurprisingly, its c oke reserve accounted for about 22 per cent of the 
world's total while its production ta kes were one third of the world's total.  China noted that reduced 
export in the past years had taken place in the context of the plummeting world demand for coke, 
mainly due to the negative impact of the global financ ial crisis.  China had tried its best to provide far 
bigger export quotas than the volume of realized export in order to safeguard and promote free trade. 
China's coke export quotas totalle d 10 million tons in 2010, which was significantly higher than the 
33.5 million tons of export realized in the same year.  With regard to natural sand, he reminded 
Members that China had notified in 2007, under qu antitative restrictions notification category, its 
export measure on natural sand, which was offi cially put into effect on 1 March 2007.  
  G/C/M/108 
 Page 41 
 
 
  14.38   On questions concerning the export quot as and export tariff of coal, the Chinese delegate 
stated that China's analysis had proved again that  the decreasing coal export volume from China was 
not caused by the adjustment of coal export quotas .  The over-exploitation of coals had resulted in 
increasingly depleting resources for consumption and severe damages to the environment in China. 
Therefore, it was justified and imperative for China to  adopt export measures on coal fully in line with 
the WTO rules.  He also indicated that China calcu lated and decided its total coal export quotas, based 
on a comprehensive consideration of domestic s upply and demand, global market demand and quotas 
used in real terms in the previous year.  Additiona lly, in recent years coal price in the global market 
had always been lower than that in the domestic market and, as a natural response to the market 
situation, the trade volume of coal agreed under Sino-Japan Long-term Agreement had been reduced 
substantially.  Moreover, due to the same unf avourable export market conditions, Chinese coal 
enterprises were showing less and less interest in coal export business, resulting in a huge decrease of 
export volume from 45.43 million tons in 2008 to 19,03 million tons in 2010, a drop of 58.1 per cent.  
As a result of this, the Chinese government modera tely adjusted its coal export quotas from 47.7 
million tons in 2008 to 45 million tons in 2010, a drop of only 5.7 per cent.  Facts and data had proven 
that the coal export quotas provided were consisten tly and drastically higher than actual coal export 
volume in recent years; thus, China's export measur es had little to do with the decrease of export to 
Members like Japan.  14.39 With regard to the questions from Japan on ex port tariffs of chemical fertilizers and other raw 
materials, the Chinese delegate expressed that Ch ina had an enormous population with little arable 
land, thus it was always a cardinal task for China to feed its 1.3 billion people.  As an important 
agricultural means of production, chemical fertili zer had played an important role in increasing 
agricultural output and farmers' income. China did make several adjustments to the export tariff of 
related products during 2008-2010 and was willing a nd ready to conduct further discussions with 
concerned Members so as to exchange accurate in formation in the future.  Japan's written assertion 
that "China has raised export taxes on coking coal and has levied taxes on steam coal and anthracite 
since August 2011" was incorrect given that nothing had changed since August 2011. Thus, China would refrain from taking further comment s on this problem on this occasion.  
 14.40 China concluded by stating that it had c overed everything in hand and reassured Members 
that it was ready and willing to continue discussions  at all appropriate arenas in the future.  The 
Chinese delegate thanked the Secretariat for its wo rk during the past ten years in China's TRM.  
 14.41 The Chairman proposed that the Council take note of the information provided by China in its 
submission and its responses to the questions rai sed by Members.  Regarding the form of the 
Council's report of the Review, he proposed proceed ing in the same manner as in previous years.  
This meant that a brief factual report would be prep ared, with references to the documents and attach 
to the report, the portion of the minutes of this me eting relating to the Transitional Review.  This 
report, as well as the reports of the subsidiary bo dies, would then be transmitted to the General 
Council.    14.42 The Council so agreed. 
 XV. ADOPTION OF THE ANNUAL REPORTS OF THE COUNCIL'S SUBSIDIARY 
BODIES  
15.1 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.    G/C/M/108 
Page 42  
 
  15.2 The Chairman proposed that the Council ta ke note of the reports of the following 
Committees: (i) Committee on Trade Related Investment Measures, document G/L/964;  
(ii)  Committee on Agriculture, document G/L/965;  (iii)  Working Party on State Trading Enterprises, 
document G/L/971; (iv) Committee on Antidum ping Practices, document G/L/966;   
(v)  Committee on Safeguards, document G/L/972;  (vi)  Committee on Subsidies and Countervailing 
Measures, document G/L/970;  (vii) Committe e on Market Access, document G/L/967;   
(viii)  Committee on Rules of Origin, document G/L/975;  (ix)  Committee on Technical Barriers to Trade, document G/L/962;  (x)  Committee on Import Licensing, document G/L/968 and Corr.1;   (xi)  Committee on Customs Valuation, documen t G/L/974;  (xii)  Committee on Sanitary and  
Phyto-sanitary Measures, document G/L/969;  (xiii)  Committee of Participants on the Expansion of 
Trade in Information Technology Products, , docum ent G/L/973/Rev.1;  and (xiv)  the Independent 
Entity, document G/L/976.  15.3. The Council so agreed. 
 XVI.  ADOPTION OF THE ANNUAL REPORT OF THE COUNCIL FOR TRADE IN 
GOODS TO THE GENERAL COUNCIL (G/C/W/659) 
16.1 The Chairperson moved to the draft Annual Re port of the Council circulated in document 
G/C/W/659 and Corr.1.  In accordan ce with the "Procedures for an annual overview of WTO Activities 
and for Reporting under the WTO" (WT/L/105) wh ich was adopted by the General Council on  
15 November 1995, it was agreed that "The respecti ve sectoral Councils shoul d report in November 
each year to the General Council on the activities in the C ouncil as well as in the subsidiary bodies" and 
that the reports of the sectoral C ouncils 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 GATT 1947 Council reports to the CONTRACTIN G PARTIES".  He noted that the draft report 
would be updated in light of the meeting and sugge sted to go through the draft section by section. 
 
16.2 The Chairperson stated that the Committee shoul d take note of statements  made and agreed to 
adopt the report, subject of course to the updating a nd revision which would be required to take account 
of the Council's work at this meeting.  16.3 The Council so agreed
2. 
 
XVII.  OTHER BUSINESS 
17.1 The Chairperson turned to the first item  under "Other Business" which referred to the 
implementation of Mongolia's waiver on accession commitment on export raw material.  He drew the 
Council's attention to document WT/GC/W/638 - G/C/W/652 containing information from Mongolia on the impact that the maintenance of an expor t tax on raw cashmere had on the overall performance 
of the sector.    
17.2 The delegate of Mongolia noted that at  its accession to the WTO, Mongolia took a 
commitment to phase out and eliminate the export duties on raw cashmere within the period of  
ten years which took into account special circumstances in the cashmere sector and other economic and social challenges in Mongolia.  He recalled th at the General Council in 2007 waived Mongolia's 
obligations and extended the impl ementation of the commitments for an additional five years until 
2012.  He noted that cashmere was one of th e most important export products in Mongolia 
constituting 6.3% of GDP and remained the main source of income for one third of the total 
population, and contributed 16% in total employment.  He stated that the maintenance of the export 
                                                      
2 The Annual Report to the General Council was circulated in document G/L/978  G/C/M/108 
 Page 43 
 
 
  tax on raw cashmere had a significant impact on increasing the production and exports of finished 
products, improving the income of poor rural hou seholds and helped the government to address the 
issue of increasing value-added in the cashmere sect or.  Mongolia informed the Members that with a 
view to fulfilling its accession commitment and as part of overall liberalization measures by the government of Mongolia, the export tax on raw cashme re had been eliminated in 2009.  Mongolia 
expressed its deep appreciation and gratitude to all Members for the support of its request for a waiver 
of the commitment.  17.3 The Chairperson invited the Council to take note of document G/C/W/638 and of the 
statements made. 
 
17.4 It was so agreed. 
 B.  Appointment of the new Chair of the ITA Committee   
17.5 The Chairperson informed the Council that he had carried out consultations with Members of 
the Expansion of Trade in Information Technology Pr oducts (ITA) Committee; as a result of these, he 
indicated that there was agreement that Mr Zahary MD ALI (Malaysia) would be appointed as the new 
Chairperson of the ITA Committee. 
 
C.  Date of the Next Meeting  
17.6 The Chairperson informed the Council that the date of the next CTG meeting was scheduled 
to take place on Monday, 19 March 2012 a nd that the agenda would close on  
Thursday, 8 March 2012.  
17.7 The meeting was adjourned. 
 
 
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