RESTRICTEDWORLD TRADE
ORGANIZATIONG/IT/M/15
10 February 1999
(99-0494)
Committee of Participants on the Expansion of Trade
in Information Technology Products
MINUTES OF THE MEETING OF 11 DECEMBER 1998
Chairman:  Ambassador R. Saborío Soto (Costa Rica)
Agenda of the Meeting  Page
1. Review of product coverage ......................................................................................... 1
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Introduction
The Chairman stated that the proposed agenda for this meeting was circulated in WTO/AIR/991
on 1 December 1998.  He asked if there were any other matters to be added to the agenda.  Since no
requests were made, the agenda was adopted.
1. Review of product coverage
1.1 Ambassador Saborío stated that he had been asked by the Chairman of the Committee,
Mr. Harvey, who had left Geneva to take up other duties in his home country, to chair this meeting.
He recalled that at the previous meeting of the Committee on 20 November 1998, the Chairman had
offered a "proposal" put forth by a number of delegations dated 19 November 1998.  At that time, theChairman had stated that this "proposal" was recently put before the Committee and that there were
delegations that supported the "proposal", those that opposed it, and still others that needed more time
to take a definitive position on it and discuss it with their industries.  He also noted that delegations
that could accept the proposal and might need extended staging were invited to submit tables of
extended staging by 4 December.  Additionally, he stated that there was a draft Decision, Draft IV,
that should have been considered with the proposal and that today's meeting was being convened to
take up again the review of product coverage.  He noted that since the previous meeting of theCommittee, the Secretariat had received one request for extended staging, from Romania, which was
circulated informally to delegations on 9 December.  As he saw the situation, quite significant progress
had been made with respect to the ongoing review of product coverage.  He would like to check the
situation as it now stood with respect to the proposal dated 19 November.  Therefore, he asked
delegations to comment on the proposal and to state their position with respect to it.  This would allow theCommittee to get the necessary overview of the situation and  to determine how to proceed.
1.2 The delegate of Romania stated that his delegation could accept the proposal of 19 November.
He noted the substantial progress made thus far in the negotiations and thought that participants were
close to the final point.  Furthermore, there appe ared to be a common will to adhere to a coverage
proper to the ITA, as defined in Singapore.  His delegation had stated its opinion in informal bilateral
meetings, in particular as regards the difficulties of including consumer electronics in the ITA II.  At
the beginning, ITA was defined as an instrument for the liberalization of IT products.  Nonetheless,G/IT/M/15
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with respect to the proposal, he could accept it with some consumer electronic products included.  The
Romanian delegation thus showed flexibility compar ed to its original position.  However, it would be
difficult for Romania to go further.  He encouraged other participants who had difficulties in
accepting the proposal, to proceed under the same mutual understanding of flexibility so as to reach a
consensus.  Additionally, he pointed out that the next Ministerial meeting would present an
opportunity to discuss the issue of further liberalization of industrial products.
1.3 The delegate from the European Communities st ated that his delegation had helped formulate
the proposal of 19 November.  He noted that it was a difficult process to reach agreement on such a
proposal, as there were products excluded that the EC  would prefer to be included and, on the other
hand, products included which the EC did not like.  This applied in particular with respect to the
inclusion of consumer electronics.  Nonetheless, the proposal was acceptable to his delegation.  He
furthermore noted that while a significant amount of time had been spent on this issue of productcoverage, his delegation considered it important to deal with the other aspects of the Committee's
work in the coming year, notably on non-tariff measures and classification.
1.4 The delegate of Switzerland stated that his delegation could accept the proposal as is.
Although it was not a perfect outcome, it did reflect a result that could give a clear signal to meet new
challenges.  He noted the interest of some delegations to include consumer electronic products, but in
his view the inclusion of these items would leave the narrow frame-work of an approach focussing on
IT products that was defined in Singapore and would lead to a more general tariff negotation.  He
noted also the interest in having a symposium on information technology and would endorse this idea.
Finally, with respect to non-tariff measures, he no ted the importance of continuing the work in this
area.
1.5 The delegate from Japan stated that there were products on the list that his delegation did not
support, and other products that he would have preferred to be included.  However, in the interest of
compromise, his delegation could accept the proposal of 19 November.  He also stressed Japan'sinterest in looking in future at issues other than the review of product coverage.
1.6 The delegate of Iceland noted that there was much time and effort spent in the negotiations on
the review of product coverage.  Iceland was of the opinion that the Committee should continue the
work based on the  proposal of 19 November, whic h Iceland could accept.  In principle, Iceland
opposed the inclusion of consumer electronics.
1.7 The delegate of Chinese Taipei expressed disappointment that agreement could not yet be
reached despite much effort in the past months.  His delegation could accept the proposal of
19 November on condition that for sensitive items l onger staging was possible.  His delegation would
submit the staging matrix very soon.
1.8 The delegate of the Czech Republic, speaking also on behalf of the Slovak Republic ,
supported the statements made by Romania and the EC.  He could support the package of products on
the table which represented a compromise to reach a final version.  Although his delegation had
opposed the inclusion of some consumer electronics, it had shown flexibility and could accept this
final version.  He indicated that he would submit a request for extended staging when the package was
finalized.  With respect to the future work of the Committee, he was ready to look at other areas, not
just at the review of product coverage.
1.9 The delegate of Turkey noted that the proposal of 19 November represented a compromise
solution and that her delegation could accept and support it.G/IT/M/15
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1.10 The delegate of Korea believed that a cooperative spirit and flexibility of participants was
needed to successfully conclude the ITA II proce ss.  Korea agreed with the compromise proposal of
19 November and would submit extended staging requests for a limited number of sensitive products.
1.11 The delegate of Poland stated that his delegation could agree to the proposal which was a
compromise. Poland would request extended staging for some products on the list.1.12 The delegate of Costa Rica stated that his delegation had worked hard to come up with a
package of products that would expand IT coverage and was consistent with the list contained in
Ministerial Declaration.  He noted that the expansion of product coverage was originally designed to
include IT products, and that the proposal should reflect this.  The final package was an attempt by
participants to reconcile the differences.  His delegation showed flexibility as to the inclusion of some
consumer electronic products and was prepared to move ahead on the basis of this package.  He
furthermore pointed out that para. 3 of the Annex to the Ministerial Declaration also noted work on
non-tariff measures which was no less important than the review on product coverage.
1.13 The delegate of Malaysia stated that since the products that Malaysia had requested were not
included in the proposal, he remained unable to ag ree to the list.  His delegation would continue to
oppose the list unless there was substantial change reflecting the products requested by Malaysia.  If
this list were to remain the basis for the ITA II negotiations, Malaysia would want to be left out from
this exercise.
1.14 The delegate of Australia stated that he could accept the proposal, and stressed Australia's
interest in pursuing the broader agenda on non-tariff measures which was mandated and given equal
weight to product expansion in the Annex to the Ministerial Declaration.
1.15 The delegate of Israel noted that the proposal contained items that his authorities had wished
to be left out, and excluded some of the items they would have liked to see in a final package.
However, in the interest of a successful conclusion of the negotiations, they agreed to be flexible and
could accept the list, bearing in mind the need for ex tended staging for sensitive items.  He stated that
it was important for his delegation that all members of the ITA be on-board.
1.16 The delegate of Norway noted the substantial progress that had been achieved thus far, and
that the proposal represented a modest but balanced package.  Norway could accept the proposal of 19
November even though some products of interest to  Norway were not on the list.  He shared the
concern expressed by others over the further incl usion of any consumer electronic products in the
package.  As for the work programme, he expressed an interest in the early initiation of work on the
classification issues and on issues relating to Article XXVIII.  He urged participants to show the
necessary flexibility to allow for a successful conclusion of the ITA II negotiations.
1.17 The delegate of Singapore said that the 19 November proposal represented a compromise
solution that he could support.1.18 The delegate of Hong Kong, China noted that the ITA represented an important trade
liberalization step since the completion of the Uruguay Round.  To demonstrate Hong Kong, China's
commitment to this initiative, it had bound tariffs for IT products at zero immediately on 1 July 1997.
Hong Kong, China had also adopted a flexible and liberal approach to the ITA II negotiations, which
provided a good opportunity to expand the product coverage.  His delegation appreciated the effortsof many participants in putting forward proposals and revising them to accommodate the positions of
other participants with the aim of facilitating an early conclusion of the negotiations.  In the spirit of
cooperation and in order to contribute to the momentum generated by the ITA, Hong Kong, China
agreed to accept the proposed package of 19 November as a basis for the conclusion of the ITA II
negotiations.G/IT/M/15
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1.19 The delegate of Canada stated that his was one of the delegations involved in trying to put the
package together.  The proposal was a modest yet balanced package that he hoped would advance the
ITA, and if it were agreed to, one that would se nd the message that the WTO could deliver.  His
delegation could accept the package as is, noting that it was a compromise.  He also considered it
important to move ahead on the other work,  i.e. on non-tariff measures, both in regards to standards
and other areas on classification and on the symposium.
1.20 The delegate of Estonia stated that the proposal was a compromise and that his delegation
could accept it.  He hoped that consensus could be reached. 1.21 The delegate of El Salvador stated that he hoped to see this work successfully concluded, but
that the list contained some items that his delegation had wished to be excluded.  However, in the
spirit of finding an acceptable compromise, his delegation was continuing to examine the proposal,
and would communicate its final position soon.
1.22 The delegate of the United States stated that her delegation, which had been involved in
trying to forge a compromise and consensus, could accept the proposal.   She noted that the proposal
included items that the US did not like, yet excluded others the US would have liked to see in the
package.  The coverage was narrowed substantially in many areas to accommodate the concerns of
trading partners.  The US had noted a positive signal from many delegations.  She noted that the US
had negotiated in good faith with the other participants in the product review.  She recalled theimportance of forging a consensus and trying to accommodate the needs of other participants.
Additionally, like others, she noted the importance of the work programme, especially regarding non-
tariff measures and would like to see additional work done in 1999 to ensure that non-tariff measures
did not impede the free-flow of IT products.  Also she noted the significant interest in holding a
symposium which could send an important signal about the WTO's activities in this area.  Withrespect to the proposal, she noted that there was no one country that was good in all the areas of IT,
and that countries had chosen to join the ITA to i ndicate their interest in information technology.  It
was important to look at the balance of the sector as a whole and to reach consensus.
1.23 The delegate of the Philippines stated that her delegation was not yet in a position to accept
the proposal of 19 November as the necessary domestic procedural requirement of consultation with
the domestic industry in the form of holding public hearings, had not yet been fulfilled.  It was
intended to proceed with these procedural requirements in the new year.
1.24 The delegate of India recalled that in the case of ITA I, a proposal of a list of information
technology products prepared by the Quad had been placed for acceptance on an as is basis by other
Members.  India had gone along with that package on the clear assurances that the package would beof benefit to India.  The benefits did not materialize, and this was not surprising as some participants
had shown a marked propensity to take actions that served to deny benefits of the ITA I to countries
like India.  However, what was significant was that the same process was being repeated.  A package
was being offered to India, one in which India's clearly stated concerns had not been addressed at all.
She recalled that at the last meeting itself, her delegation had stated its apprehension that the proposal
of 19 November had been created in a one-sided way with a deliberate design.  Both in terms of the
substance and the procedures, there has been a deliberate design to ignore India's concerns.  Theproposal had not addressed India's concerns and in her view served to upset the balance of rights and
obligations.  But before conveying her views on the substantive aspects of the proposal, she thanked
those participants that had at least owned up to the proposal at this meeting.  She recalled, first, that
Romania, and supported by others, had stated that the proposal represented substantial progress.  She
stated that as far as India was concerned, no progress had been made, as the product coveragecontinued to include products about which her delegation had expressed serious reservation.  She
recalled further that Romania, supported by others, had stressed that it was important to adhere to the
definition of IT products and that limited derogations for consumer electronic products could beG/IT/M/15
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considered by them.  She wondered why derogations in the proposal in respect of security-related
products had not been mentioned.  She pointed out that it was ironic that many high technology IT
products remained excluded from the proposed list because certain participants would like to continue
to protect their domestic industry through tariffs;  these included optical fibre, optical fibre bundles,
and micro-processor based controller cards.  On the other hand, specific products had been proposed
for inclusion which appeared to be contrary to the intention and beyond the framework envisaged forthe ITA.  In her delegation's view, the Committee did not have the right to derogate from its mandate
given by the Ministers at Singapore, and referred, in this context, to paragraph 7 of the document on
Implementation of the Ministerial Declaration on Trade in Information Technology Products.  Third,
she noted that some participants had stated that there was scope for considering extended staging.
However, she noted that it would not be feasible, besides being inappropriate, to discuss any staging
proposals, the draft Decision or the attached Clarification list until such time as the list of products to
be covered under a possible ITA II was finalised.  It was clear that the last meeting of the Committeehad not foreseen a consensus on product coverage, and it was quite clear that there was no consensus
in this meeting.  India could not go along with th e proposal for product coverage introduced at the last
meeting.  In this context, she reminded the Committee that paragraph 3 of the Annex on Modalities
and Product Coverage attached to the Ministerial Declaration provided for decision by consensus, and
there was no consensus on product coverage in this Committee.  She added that in the light of whathad been stated by her the issue was not really relevant, but that she would like it explained as to why
the electronic matrix on staging made available by the Secretariat to some participants had not been
sent to her delegation.  Fourth, she noted that some participants had made suggestions for making
further attempts to reach a consensus on product coverage.  In her delegation's view, unless a
fundamental change in the proposed product coverage was feasible, it would be futile to continue withthe process.  Fifth, her delegation shared the comment made by Israel that all participants should be
on board, and referred to paragraph 3 of the Modalities and Product Coverage document which stated
that any agreement on review of product coverage must be on the basis of consensus.  Her delegation
could not join in any proposal to carve-out Malaysia.  She noted that Norway had suggested that it
would be appropriate to give a message through the conclusion of an ITA II that the WTO coulddeliver;  however, clearly such delivery could not  be at the cost of some developing country
Members.  Finally, with respect to the work prog ramme, India could go along with consideration in
this Committee on all other aspects of the work programme, and would emphasize that no single
aspect should be singled out for specific attention.
 1.25 The delegate of Romania stated that his comments were not meant to change the assessment
made by the delegation of India.  He pointed out that his delegation had come to the view that it
would be of great benefit to join in a consensus.  Referring to the definition of coverage of the IT
products in the Singapore Declaration, he thought that flexibility should be shown and he could
accept certain consumer electronic products.  Furthermore, he believed that products linked to security
issues were a different issue, as these products were based on information technology and therefore
should fall under the coverage of the agreement.
1.26 The Chairman summarized on the basis of the comments made and the briefing he had
received from Mr. Martin Harvey, the former Chairman of the Committee, as follows:  the Committee
of Participants on the Expansion of Trade in Information Technology Products has conducted overthe past year a review of additional tariff concessions on information technology products called forunder paragraph 3 of the Annex on Modalities and Product Coverage to  the Ministerial Declaration
on Trade in Information Technology Products (WT/MIN(96)/16).  The review has been conductedin accordance with paragraph 7 of the decision regarding Implementation of the MinisterialDeclaration on Trade in Information Technology Products (G/L/160) and the Procedures forConsultations on and Review of Product Coverage attached thereto.G/IT/M/15
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 1.27 The participants also undertook consultations regarding implementation, including
clarification of coverage of products listed in Attachments A and B of the Ministerial Declaration.The outcome of those consultations is reflected in the listing “Clarification of Certain Products inthe Ministerial Declaration on Trade in Information Technology Products” of 20 November 1998.
1.28 The Committee has also conducted consultations, pursuant to paragraph 3 of the Annex to
the Ministerial Declaration regarding non-tariff measures.  In this regard, the Committee hasundertaken constructive work in the area of standard s, and will continue its efforts to ensure that
non-tariff measures do not impede the free flow of information technology products.
1.29    The Committee has also conducted consultations regarding divergences in classifying
information technology products, including those classification issues identified during the review ofproduct coverage.  Noting the work already undertaken with respect to semiconductormanufacturing and testing equipment and printed circuit board/printed wiring board manufacturingequipment, the Committee reaffirms the modalities set forth in paragraph 5 of the Annex to theMinisterial Declaration.  In this context, the Committee shall keep in mind possible future changesin the Harmonized System nomenclature.
1.30 Recognizing that one of the aims of the Ministerial Declaration on Trade in Information
Technology Products is to encourage the technological development of the information technologyindustry on a world-wide basis,  the Committee shall explore ways and means to ensure that
participants are apprised of the main challenges and opportunities in the sector.  Based on aproposal of a delegation, the Chairman, in collaboration with the Committee and the Secretariatshall explore the convening of a symposium on information technology that would involve membersof the information technology community and the Committee at an appropriate time in 1999.
1.31 In accordance with paragraph 10 of the decision regarding Implementation of the Ministerial
Declaration on Trade in Information Technology Products, participants shall continue to consideradditional procedures to address the concerns of small- and medium-sized exporting participantsregarding their rights under Article XXVIII, bearing in mind that a review will be conducted by theCouncil for Trade in Goods five years from the date of entry into force of the WTO Agreementpursuant to paragraph 1 of the Understanding on the Interpretation of Article XXVIII ofGATT 1994.
1.32 With respect to the review of product coverage, he noted that a number of participants had
indicated that they were prepared to accept the proposal of 19 November 1998; these were thedelegations of Romania;  the European Communities; Switzerland; Japan; Iceland; Chinese Taipei;
Czech Republic; Slovak Republic; Turkey; Korea; Poland; Costa Rica; Australia; Israel; Norway;
Singapore; Hong Kong, China; Canada; Estonia; and the United States.  They also have indicated the
importance they attach to the work program, and to additional opportunities to consider productexpansion.  He noted, furthermore, that the delegations of India and Malaysia have indicated thatthey cannot accept the proposal;   the delegations of El Salvador and the Philippines needed moretime for consideration.
1.33 He stated that the Committee noted the progress made thus far with respect to the review of
product coverage, and the significant support for the proposal of 19 November 1998.  He noted thegreat amount of work done in the Committee during the year in order to reach this stage of thenegotiations.  Based on this overview of the situation, the Chairman proposed that the Committeecontinue its work and reconvene in the week of 22 February 1999.G/IT/M/15
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1.34 The delegate of India stated that she could agree to other aspects of the Chairman's summary
but would note clearly that there was no consensu s in the Committee on the proposal under discussion
as required by paragraph 3 of the Annex on Modalities and Product Coverage.  Furthermore, she
reserved her delegation's rights with respect to the proposal on the symposium, as she had no
instructions on the matter at this time.
1.35 The Committee took note of the statement by India.
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