RESTRICTED
WORLD TRADE G/SCM/M/9
13September 1996
ORGANIZATION(96-3565)
Committee onSubsidies andCountervailing Measures
MINUTES OFTHE REGULAR MEETING
HELD ON1-2MAY 1995
(Mr.O.Lundby (Norway), Mr.V.doPrado (Brazil))
1. TheCommitteeonSubsidiesandCountervailingMeasuresheldaregularmeetingon1May1995.
Thefollowing agenda wasadopted:
Page
A. Rules ofProcedure 1
B. Permanent Group ofExperts (Article 24.3) 2
C. Notifications byCountries inTransformation (Articles 29.2and29.3) 4
D. Semi-annual Reports ofCountervailing Duty Actions (Article 25.11 - 5
G/SCM/N/12 andAddenda)
E. Preliminary andFinal Countervailing Duty Actions (G/SCM/N/14 and15) 6
F. Notifications ofSubsidies Linked toPrivatization Programmes (Article 27.13) 6
G. DateandProcedure forSpecial Meeting toReview NewandFullSubsidies 7
Notifications (Article 26.1)
H. Notification ofCompetent Authorities (Article 25.12) 7
I. Review oftheOperation ofArticle 8.2(a) 8
J. Formats forUpdates ofArticle 8.3Notifications 9
K. Procedures forArbitration Under Article 8.5(G/SCM/W/5) 10
L. Status ofMembers inAnnex VII 10
M. Simplification ofDataRequirements andStandardization ofFormats - 11
Advice toWorking Group onNotification Obligations andProcedures
(G/SCM/W/376)
N. Format fortheAnnual Review andReport oftheCommittee 11
O. Other Business 12
P. Election ofOfficers 12
A. Rules ofProcedure
2. TheChairman proposed thattheCommittee adopt thedraftrules ofprocedure contained in
documentG/SCM/W/143/Rev.1dated18March1996.HeunderstoodthattheSecretariatwouldcontinueG/SCM/M/9
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itspractice ofissuing anannotated draftagenda approximately fourtosixweeks inadvance ofregular
meetings asitdidfortheTokyo Round Committee.
3. TheCommittee sodecided.
B. Permanent Group ofExperts
4. TheChairman noted thatdocument G/SCM/W/365 contained draftrulesofprocedure forthe
Permanent Group ofExperts ("PGE"). These draftruleswerenowbefore theCommittee forreview
andcomment.
5. Aspokesman forthePGEstated thatindrafting rulesofprocedure thePGEhadincorporated
theconcerns oftheCommittee tothemaximum extent possible. ThePGE operated under two
fundamental constraints indrafting theRules. First, thePGEhadonlyfivemembers, allofwhom
hadother employment. Second, thePGEwasrequired tomeetstrict deadlines. Thus, thePGEtried
todesign Rules ofProcedure thatwould enable ittorespond quickly withahighquality product in
aneffective manner.
6. Therepresentatives ofAustralia andtheECqueried whether itwaspossible under Article 24.3
tohavelessthanthefullcomplement offivePGEmembers taking decisions, otherthanincircumstances
where anexpert could notparticipate forreasons suchasillness. IntheviewofCanada there should
belessthanfivemembers hearing anissueonlywhere therewereunavoidable situations suchasconflicts
ofinterest. Canada suggested thatalistofstand-by PGEmembers might beuseful where aninsufficient
number ofexperts were available. Argentina agreed thatallfivePGE members should participate
ineachmatter. Therepresentative oftheUnited States preferred thatthePGEoperate inadivision
orsubset ofthewhole.
7. Therepresentative oftheUnited States indicated thattheprocess ofselecting Experts torespond
toaparticular request forassistance should beunpredictable.
8. Therepresentative ofHong Kong enquired astohowcomments from experts notdirectly
involvedinaproceedingwouldbetakenintoaccountandwhethersuchcommentswouldalsobereflected
inthereports ofthePGE.
9. Therepresentative ofAustralia suggested thattheRules should refertotheDSBdraftCode
ofConduct. Therepresentatives ofIndia, Mexico andPakistan opposed inclusion oforreference to
thedraftCode ofConduct inthese Rules untilsuchatimeastheCode ofConduct wasfinalized. The
representatives ofArgentina andVenezuela praised thedraftRules fornotincorporating theDSBCode
ofConduct. Therepresentative oftheUnited States suggested thatthedraftRules address theissue
ofappearance ofconflict; Argentina disagreed.
10. Therepresentative oftheECconsidered thatbecause PGE members were independent by
definition, theyshould notautomatically beexcluded merely because theywerenationals ofaparticular
party. However, itmight benecessary todefine more precisely thepotential rules ofconflict. The
representativesofMexicoandPeruconsideredthatnationalsofaparticularcountryshouldnotparticipate
inadecision taken bythePGEwhen thatcountry hadacasebefore theGroup ofExperts.
11. Therepresentative ofAustralia considered thatunanimity orconsensus would bethebestform
ofdecision-making forthePGE. Shenoted thatthePGEwasnotnecessarily required tocome toa
conclusion. Therepresentatives ofArgentina andECconsidered thatthePGEwasrequired totake
adecision, byvoteifnecessary. Ifthere werenottobeconsensus decision-making, there should be
permission fordissenting views, partly because ofpossible subsequent useoftheadvisory opinion.G/SCM/M/9
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Therepresentatives ofKorea, Switzerland andtheUnited States considered thatconsensus decision-
makingwasdesirable.TherepresentativeofVenezuelafavouredconsensusdecision-makingwithrespect
topanel procedures butnotwhere anadvisory opinion wassought byaMember. Therepresentative
oftheUnited States added thatifthere were tobevoting itshould notbemade public.
12. Therepresentatives ofAustralia andJapan queried whytheperiod forthePGEtoprovide an
opinion attherequest ofapanel wassoshort, given thatapanel had90daysinwhich toreport to
allMembers.
13. Therepresentative ofAustralia considered thatArticle 13should permit theextension ofany
timeperiod bymutual agreement oftheparties.
14. TheCommitteeallowedthePGEtoconsiderthecommentsofdelegationsovernightandresumed
itsdiscussion ofthedraftRules ofProcedure thefollowing day.
15. ThePGEspokesman stated thatthePGEhadreviewed thecomments ofdelegations andwere
drafting language toaccommodate them. ThePGEwould inthismeeting respond tosome ofthekey
issues raised bydelegation.
16. With respect toconfidentiality, thePGE spokesmen stated thatunder their contracts PGE
members were WTO officials prohibited from communicating unpublished information. ThePGE
would spellthisoutunder thegeneral duties andresponsibilities ofexperts. With respect toduties
andresponsibilities, thePGEhaddiscussed theneedforRules ofConduct atsome length before drafting
Rule2.ThePGEwasconscious thatproposed horizontal Rules ofConduct hadnotyetbeenadopted
butconsidered thatsome safeguards nevertheless werenecessary atthisstage. Conflicting views had
beenexpressed intheCommittee andfurther elaboration ofthese rules seemed likely onlytocause
problems. Moreover, Article 38allowed forlateramendments totheRules ifnecessary.
17. With respect tocollegiality anddecision making, thePGE spokesman stated thatthePGE
envisioned thesystem towork inthefollowing manner. Upon receipt ofarequest from apanel, the
members ofthePGEwould check among themselves immediately toseeifanyone wasprecluded from
participating. Amember could beprecluded forexample byconflicts orother serious matters under
theRules. ThePGEwould expect tobenotified atthetimeapanel requested itsassistance ifeither
oftheparties intended toobject toanyMember onthebasis ofnationality. Onthebasis ofthis
information, thePGEwould determine ifallfivemembers wereabletoparticipate. Ifanyoneofthe
fivemembers wasunable toparticipate thenthePGEwould automatically gotothree members, in
order toavoid thepossibility ofatwo-two deadlock. Amember unable toparticipate forreasons other
thanconflict ornationality would continue toreceive thedocuments andwould beconsulted butwould
notparticipate inthedecision-making. Decision-making would bebyconsensus wherever possible.
Ifconsensus proved impossible thePGEcould resort tovoting butthatwould notbepublicly reported.
There would benoformal dissenting opinions. Where therequest wasfromamember foranadvisory
opinion andtherewerediffering views, thePGEwould trytowrite itsreports togivethebestguidance
totherequesting member.
18. Regarding participation bynationals ofaparty toadispute, thePGEspokesman stated that
thiswasanissue onwhich views were expressed onbothsides. ThePGEhaddecided tomaintain
thetextlargely unchanged forthefollowing reasons. First, exclusions ofnationals wasnotmentioned
intheSCM Agreement. Second, exclusion ofnationals would beinconsistent withArticle 4ofthe
SCMAgreementifitpreventedthePGEfromaddressingtheissueofprohibitedsubsidieswhenrequested
byapanel under Article 4.5.TheExperts wereindependent andwerealready under constraints under
Rule2about accepting orseeking instructions from anysource. Nevertheless, theRules didoffer
thepossibility foraparty tothedispute toobject totheparticipation ofanational expert. However,G/SCM/M/9
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suchanobjectioncouldnotbeallowedtopreventthePGEfrommeetingitsobligationsunderArticle4.5.
Theabsence ofaprovision suchasArticle 19(2) would create anincentive forMembers toexpress
objections soastoprevent theparticipation ofthePGEandtheiradvice ontheexistence ofaprohibited
subsidy.
19. ThePGESpokesmen nextaddressed Rule26regarding confidentiality andthestatus ofadvisory
opinions toMembers. ThePGEdidnotwanttodiscourage Members fromseeking theadvice ofthe
PGE, butatthesametimeitwasconscious thathaving theadvice oftheExperts could create asituation
inregard toArticle 4inwhich oneoftheparties hadinformation notinthepossession oftheother
parties. There wereviews expressed thatthisopinion wasthesoleproperty oftheMember requesting
theopinion. There werenoviews expressed intheother direction. Thus, thePGEhadreverted to
thetextofArticle 24.4oftheSCM Agreement, which indicated thatsuchadvisory opinions willbe
confidential. Theadvisory opinion would befortheexclusive useoftheWTO Member requesting
itandthePGEwould takenoaction toreveal itsexistence orcontent toanyone other thantheparty
itself.
20. Therepresentative ofCanada queried theinconsistency between allowing objections tonationals
sometimes yetdisallowing them where theresult would betodisqualify more thantwomembers.
Hequestioned theneedforanobjection onnationality grounds given thatthePGEmembers acted
intheirindependent capacity, andproposed removing theprovision from thetextuntilsuchtimeas
thenationality issue could beresolved. TheEUagreed.
21. ThePGESpokesmen recognized acertain inconsistency resulting from theneedtobalance
theconcern ofmany Members regarding theparticipation ofnationals ofparties toadispute andthe
operational needs ofthePGE. Thestrong preference ofthePGEwould havebeentohavenoexclusion
onnationality grounds, because PGE members were independent. However, thedraftRules area
compromise totrytobridge thegapbetween Members. Inanyevent, since there isunlikely everto
betwopersons ofthesame nationality serving onthePGE, andsince objections onthegrounds of
nationality could beraised onlywhere thePGEmember wasanational ofaparty, theproblem of
disqualificationofmorethantwoPGEmemberswillonlyariseifmembersareexcusedforotherreasons.
22. Therepresentatives ofMexico andPerureiterated theirviewthatunder nocircumstances should
nationals ofaparty beallowed toparticipate inamatter involving thatparty.
23. TheChairman stated thattheCommittee looked forward toreceiving anewversion ofthedraft
Rules ofProcedure shortly. TheCommittee should move quickly tohavethePGEoperational incase
apanel decided toseekanadvisory opinion from thePGEorthePGEwascalled todischarge any
oftheother functions provided forintheAgreement.
24. TheCommittee tooknoteofthestatements made.
C. Notifications byCountries inTransformation (Articles 29.2and29.3)
25. TheChairman recalled thatMembers intransformation toamarket economy thatsought a
transition period forprohibited subsidy programmes covered byArticle 3wererequired tonotify the
subsidies by"theearliest practical dateafterthedateofentry intoforce oftheWTO Agreement".
Hungary andPoland hadmade notifications pursuant tothisprovision (G/SCM/N/9/HUN+Corr.1
andG/SCM/N/9/POL+Corr.1).
26. Therepresentatives ofArgentina, Australia, Canada, New Zealand andThailand sought
clarification regarding thestatement intheHungarian notification thatit"includes alsoproducts and
subsidies thatarecovered byHungary 'sschedule toGATT 1994therefore notfalling under Article 3G/SCM/M/9
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oftheAgreement onSubsidies andCountervailing Measures. They areindicated inthissubmission
fortransparency purposes". Therepresentative ofNewZealand reiterated NewZealand 'sviewthat
thetransitional provisions ofArticle 29didnotconstitute andshould notbeseenasanykindof
derogation from commitments onexport subsidies under theAgreement onAgriculture.
27. Therepresentative ofHungary stated thatasregards theagricultural export subsidy notification
theseproducts andsubsidies wereincluded inHungary 'sschedule toGATT 1994.Hungary considered
thatthesubsidies contained intheschedule werenotprohibited subsidies under Article 3oftheSubsidies
Agreement. However, thelastsentence ofthefirstparagraph onthefirstpageofthenotification stated
"thisnotification iswithout prejudice tothelegalstatus ofthemeasures notified". Hungary didnot
consider itsnotification ofagricultural subsidies totheSCM Committee asameans toderogate from
itscommitments totheGATT andtheWTO.
28. Therepresentative ofAustralia asked thatHungary address the"necessity" ofthese measures
interms ofArticle 29.1. Therepresentatives ofArgentina andAustralia requested thatbothHungary
andPoland provide information regarding thetimetable forbringing themeasures intoconformity with
theSCM Agreement.
29. Therepresentative ofPoland stated thathisgovernment wasaware oftheprovisions of
Article 29.2which established timelimits forbringing these programmes intoconformity withthe
restoftheAgreement.
30. TheCommittee tooknoteofthestatements made anddecided thatquestions would beposed
andanswers provided inwriting.
D. Semi-annual reports ofcountervailing dutyactions (Article 25.11 -G/SCM/N/12 andAddenda)
31. TheChairman noted thatarequest forthesemi-annual report forthesecond halfof1995was
circulatedtotheMembersinG/SCM/N/12,andidentifiedtheMembersthathadrespondedtotherequest.
Henoted thatnoreports hadbeenreceived from thefollowing 65Members: Antigua andBarbuda,
Argentina, Bahrain, Bangladesh, Belize, Benin, Botswana, Brunei Darussalam, Burkina Faso, Burundi,
Cameroon, Central African Republic, Costa Rica, Côte d'Ivoire, Djibouti, Dominica, Ecuador,
ElSalvador, Fiji,Gabon, Ghana, Grenada, Guatemala, Guinea Bissau, theRepublic ofGuinea, Guyana,
Haiti,Hungary,Indonesia,Israel,Jamaica,Kenya,Kuwait,Lesotho,Liechtenstein,Macau,Madagascar,
Malawi, Maldives, Mali, Mauritania, Morocco, Mozambique, Myanmar, Namibia, Nicaragua, Nigeria,
Pakistan, thePhilippines, Qatar, SaintKittsandNevis, SaintLucia, SaintVincent andtheGrenadines,
Senegal, Sierra Leone, SriLanka, Suriname, Swaziland, Tanzania, Togo, Tunisia, Uganda, United
Arab Emirates andZimbabwe.
32. TheChairman recalled thatthedateforsubmitting semi-annual reports setoutintherequest
was26February 1996. Hewasgreatly disappointed thatsomany Members hadasyetnotfiledtheir
reports. Many ofthese Members hadnotified countervailing dutylegislation andthere wasnoway
fortheCommittee toknow whether these Members hadtaken action and/or hadduties inforce unless
notifications weremade. Further, thenotifications didnotinallcases contain allinformation required
bytheformat approved bytheCommittee.
33. Therepresentatives ofAustralia, Canada, theEC,NewZealand, andtheUnited States shared
theconcernoftheChairmanregardingshortcomingsincompliancewiththisandotheroftheAgreement's
notification requirements. TheECandtheUnited States indicated thatnon-compliance withnotification
requirements wasaproblem thatwould havetobeaddressed bytheMinisters inSingapore. The
representative ofArgentina stated thatmostofthenon-notifying Members hadnottaken anyaction,
sotheissue ofnon-compliance withthisnotification requirement wasnotofsufficient magnitude toG/SCM/M/9
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warrant discussion bytheMinisters inSingapore. Argentina waspreparing itsnotification, which had
beendelayed foradministrative reasons; Argentina hadtaken aCVmeasure onpeaches fromtheEC.
34. Therepresentative oftheECstated thatforthose Members thathadtaken noaction, submission
ofanotification wasamatter ofthree lines. Ifthiswasnotdone, howcould theCommittee know
thatwhen there wasanaction tobenotified itwould benotified?
35. Therepresentative ofAustralia enquired astowhythetables onduties andundertakings in
forceandmeasures revoked werenotincluded inthesemi-annual report ofMexico. Therepresentative
ofMexico stated thishisdelegation would submit suchtables totheSecretariat.
36. TheCommittee tooknoteofthestatements made.
E. Preliminary andFinal Countervailing Duty Actions (G/SCM/N/14 and15)
37. Nostatements were made regarding these notifications.
F. Notifications ofSubsidies Linked toPrivatization Programmes (Article 27.13)
38. TheChairman noted thatArticle 27.13 oftheAgreement provided thatcertain subsidies that
weregranted within anddirectly linked toaprivatization programme ofadeveloping country Member
andwhich were dulynotified totheCommittee were notsubject totheprovisions ofPartIIIofthe
Agreement. Theformat forsuchnotifications wasdeveloped inthePreparatory Committee andadopted
bytheCommittee (PC/IPL/11). Brazil hadmade anotification pursuant tothisprovision indocument
G/SCM/N/13/BRA.
39. Thedelegate ofBrazil stated thehisdelegation wasaware thatthisnotification didnotcontain
alltheinformation required intheformat forprivatization notifications. Nevertheless, thenotification
hadbeenpresented ingood faithwithaview toproviding some basic information ontheBrazilian
privatization programme. Hisdelegation would welcome anycomments andquestions Members might
haveregarding thenotification.
40. Therepresentative oftheECstated thatthepurpose ofnotifications under Article 27.13 was
toenable developing country Members toobtain exemption from theremedies ofPartIIIofthe
Agreement. Consequently suchnotifications hadtocontain sufficient information toenable other
Members toevaluate whether thenotified subsidies complied withArticle 27.13. Forthisreason the
Committee hadadopted anotification format forthesenotifications. Brazil 'snotification didnotfollow
thisformat. Questions 1,2and3required thatthenotifying Member provide acopy ofthelaw
establishing theprivatization programme, acopyoftheprogramme itselfandacopyofthelawunder
which thesubsidies aregranted. None ofthese were provided inBrazil 'snotification. Question 4
required adescription ofthespecific formofthesubsidies. Thetwocategories ofsubsidies covered
byArticle 27.13 weredirect forgiveness ofdebtsandsubsidies tocover social costs. Brazil 'snotification
neither specified thesubsidies involved inprivatizing particular enterprises norhowtheywould fit
intotheabove categories. Itdidrefertoafinancial streamlining ofsome unspecified stateenterprises
prior toprivatization andgave examples ofsome measures which could beapplied. These were
considered nottoinvolve subsidization because allegedly ahigher market pricewould bepaidbyfinal
buyers thanwould bethecaseintheabsence ofgovernment intervention. However, noevidence had
beenprovided todemonstrate thattheexamples given were notsubsidies under Articles 1and2of
theAgreement. Inanyevent thenotification hadnotspecified thesubsidies forwhich exemption from
PartIIIremedies wassought asrequired byArticle 27.13. Question 5required thenotifying Member
tospecify thelimited period oftimeoftheprivatization programme andthesubsidies granted; inBrazil 's
notification, theduration oftheprogramme wasdescribed asindeterminate. Question 6required anG/SCM/M/9
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explanation ofhowthesubsidies weregranted within anddirectly linked totheprivatization programme.
Since thesubsidies inquestion werenotspecified thisrequirement hadnotbeenmet. Therefore, the
Community tooknoteoftheinformation contained inG/SCM/N/13/BRA butdidnotconsider that
itformed thebasis forawaiver from theprovisions ofPartIIIwithregard toanysubsidies granted.
41. Therepresentative oftheUnited States praised Brazil 'sefforts andobjectives intheareaof
privatization. However, theUnited States wasconcerned thatthenotification didnotcomply with
theformat andthatitwasdifficult from thenotification todetermine whether theprovisions of
Article 27.13 weresatisfied. Copies oflegislation establishing theprivatization programme andthe
subsidies provided within thatcontext hadnotbeenprovided. Norwasthereadescription oftheforms
ofthesubsidies used, howsuchsubsidies would cover social costs andhowlimited induration the
subsidies ortheprivatization programme would be.DidBrazil intend tosubmit anewcomplete
notification ortotakeother actions regarding thenotification?
42. Therepresentatives ofAustralia, Canada andSwitzerland expressed concerns similar tothose
oftheECandUnited States.
43. Therepresentative ofBrazil stated thathewould forward thecomments tohisauthorities and
hoped tohaveanswers tothecomments andquestions assoonaspossible.
44. TheCommittee tooknoteofthestatements made.
G. Date andProcedure forSpecial Meeting toReview New andFullSubsidies Notifications
(Article 26.1)
45. TheCommittee agreed toholdtwospecial sessions toreview subsidy notifications. Thefirst
session would beheldintheweek of22July1996 andthesecond intheweek of28October 1996.
TheChairman would seekvolunteers tobereviewed inthefirstsession; ifthere were insufficient
volunteers, hewould resort toarandom lottery toselect thenotifications tobereviewed inthefirst
session. Allremaining notifications would bereviewed inthesecond session. Written questions
regarding thenotifications subject tothefirstreview would besubmitted 10June. Oralquestions for
which written responses were desired would besubmitted subsequently inwriting.
46. Therepresentative oftheECnoted thepossibility ofholding athirdspecial session ifitproved
necessary. Therepresentative ofArgentina stated thatsuchameeting might bedifficult inlightof
preparations forSingapore.
47. Therepresentative ofArgentina reserved therighttorevert atfuture meetings tonotifications
thatdidnotinclude allsectors andwhich didnotcomply withArticle XVI:1. TheChairman stated
hisunderstanding thatthereview ofnotifications didnotexhaust thediscussion ofnotifications and
anissue could always beintroduced intheagenda ofameeting oftheCommittee.
H. Notification ofCompetent Authorities (Article 25.12)
48. TheCommittee decided thattheSecretariat would establish andcirculate alistidentifying the
name, address, telephone andfaxnumbers oftheauthorities competent toinitiate andconduct
countervailing dutyinvestigations. TheSecretariat would issuearequest forthisnotification inviting
Members tonotify by30June1996thecomplete name, address, telephone andfaxnumber ande-mail
address, ifapplicable, oftheauthorities withthecompetence toinitiate andconduct investigations.
Members would submit thisnotification once, butshould theinformation change Members would
update orcorrect theirnotification.G/SCM/M/9
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49. Therepresentative ofKorea noted thatneither anotification oflawsandregulations under
Article32.6noranotificationofinvestigatingauthoritiesunderArticle25.12(a)wassufficienttoproperly
implement theprovision ofArticle 25.12(b) oftheAgreement requiring notification ofthedomestic
procedures governing theinitiation andconduct ofcountervailing dutyinvestigations. Heproposed
thatbefore thenextmeeting theSecretariat study ways toimplement Article 25.12(b).
I. Review oftheOperation ofArticle 8.2(a)
50. TheChairman noted thatfootnote 25toArticle 8.2(a) oftheAgreement provided that,"[n]ot
laterthan18months afterthedateofentry intoforce oftheWTO Agreement, theCommittee shall
review theoperation oftheprovisions ofparagraph 2(a)with aview tomaking allnecessary
modifications toimprove theoperation oftheseprovisions. Initsconsideration ofpossible modifications
theCommittee shallcarefully review thedefinitions ofthecategories setforth inthissubparagraph
inthelightoftheexperience ofMembers intheoperation ofresearch programmes andthework of
other relevant international organizations." Asof30June1996, 18months would havepassed since
thedateofentry intoforce oftheWTO Agreement. Thus, thiswasthelastregular meeting within
theperiod setforthintheAgreement forreviewing theoperation ofthenon-actionable research category
insubparagraph 8.2(a). There hadperhaps beenlessactivity withrespect tosubparagraph 8.2(a) of
theAgreement thanthedrafters hadanticipated when theyincluded footnote 25intheAgreement.
Inparticular, there hadbeennonotifications todateofnon-actionable research subsidies pursuant to
Article 8.3.Inlightofthislimited experience, itwasnotclearwhatmodifications might beappropriate
toimprove theoperation ofArticle 8.2(a).
51. TheECnoted thatfootnote 25stated thatthereview would beconducted notonlyinthelight
oftheexperience ofMembers intheoperation ofresearch programmes butalsointhelightofwork
inother relevant international institutions. Hadanyrelevant work beencarried outinother relevant
international institutions?
52. Therepresentative oftheSecretariat stated thatthere hadbeenameeting intheOECD ofa
Group ofNational Experts onScience andTechnology Indicators totalkabout thedefinition ofresearch.
TheGroup metonceandproduced apaper. Hedidnotbelieve anyfurther work hadbeendoneby
thatGroup.
53. Therepresentative oftheUnited States stated thathisGovernment hadattached particular
importance toensuring thatNote25wasincluded inArticle 8.2.However, insofarastherehadbeen
nonotifications itwasdifficult toreview theoperation ofArticle 8.2(a) inthatcontext. Norhadthe
United States hadanyexperience withrespect toallegations ofnon-actionable treatment forresearch
anddevelopment subsidies inthecountervailing dutycontext. TheCommittee should avoid imposing
upon itself additional unnecessary work where itcould notbedone properly. Thus, while the
United States would notinsist onanyparticular activity inreference tothisparticular footnote, itwas
hoped thatattheappropriate timetheCommittee would review thestatus andoperation oftheentirety
ofthenon-actionable subsidy provisions because athorough andwell-prepared review would berequired
inanticipation oftherequirements ofother provisions oftheAgreement.
54. Therepresentative ofCanada agreed thatthisprovision could onlyreally beoperative ifthere
wassome experience withtheoperation ofArticle 8.2(a), andtodatetherehadbeennosuchexperience.
Bydiscussing theissue today andmaking these observations theCommittee hadineffect conducted
thereview. TheCommittee might consider areview oftheentire provision atsome point aftersome
experience hadbeenacquired.G/SCM/M/9
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55. Therepresentatives ofAustralia andMexico proposed thattheCommittee report totheCouncil
forTrade inGoods thatinlightofthelackofexperience todatethatMembers haddecided todefer
consideration oftheissues untilexperience hasbeengained.
56. Therepresentative oftheECstated thattheECwould raisenoimpediment toreviewing this
provision atalaterdateonceithadstarted operating.
57. TheCommittee tooknoteofthestatements made andconsidered thatforthepresent ithad
concluded thereview oftheoperation ofsubparagraph 8.2(a) envisioned byfootnote 25.IfMembers
sodesired, theCommittee could revert tothisissue atafuture date.
J. Formats forUpdates ofArticle 8.3Notifications
58. TheChairman recalled thataWorking Party hadbeenworking onaformat forannual update
notifications regarding notified non-actionable subsidies under Article 8.3.However, workhadbecome
stalemated ontheissueofhowmuch detail should becontained inupdate notifications andtheWorking
Party hadsuspended itsmeetings forseveral months. TheWorking Party subsequently hadreconvened
andhadreached agreement atleastinatechnical sense onaverysignificant portion ofthetext,as
reflected inG/SCM/W/390. There were, however, several areas where suchtechnical agreement was
notreached andinthose areas thepaper contains theChairman 'stext.
59. TheChairman noted thatthefundamental question atissue washowmuch detail torequire
andatwhatlevel, i.e.,project-specific versus programme-wide. Certain Members heldtheopinion
thatonlywithextensive detail onaproject-level basiscould compliance withthecriteria ofArticle 8.2
bemonitored onanongoing basisasnotified programmes wereimplemented. Other Members believed
thatcompliance withthecriteria would onlybeassured bythecontrol mechanisms which weredesigned
intonotified programmes whose non-actionable status would havebeendetermined bytheCommittee
andthatannual updates should notbesodetailed astoconstitute annual re-justifications ofnon-
actionability.
60. Thepaper before theCommittee wasaproposed compromise between these twopositions.
Theessence oftheproposal wasthat,forallnotified programmes, information ontotalexpenditures
under theprogramme would berequired, aswould information onanychanges intheprogramme 's
nature and/or operation. Inaddition, foreachnotified programme, asample ofindividual projects
would beselected forwhich detailed financial information would berequired. Itappeared thatthere
wasbroad agreement onthegeneral concept ofsampling asabasis forthedetailed dataonindividual
projects inanupdate notification. Moreover, allMembers, withoneexception, appeared toaccept
themethod ofselecting thesample ofprojects proposed inthepaper, namely alottery conducted by
theWTO Secretariat from alistofallprojects under notified programme. IntheWorking Party
discussions, however, further refinements wereproposed astothesampling method aswellasonvarious
other aspects ofthepaper andnoagreement wasreached withrespect tothepaper asawhole. Further
drafting suggestions hadbeensenttotheSecretariat andcirculated totheWorking Party tofacilitate
thediscussion heretoday.
61. Therepresentative oftheECcould notaccept thataveryhighstandard oftransparency should
berequired ofaMember wishing toavailitselfoftheprovisions ofArticle 8when toomany Members
didnotseefittoensure theminimum transparency mandated byArticle 25.Further, although the
ECwanted anupdate format soastoprovide clarity regarding theoperation ofArticle 8,another
essential element toachieve thatclarity, rules regarding arbitration, wasnotyetinplace. TheEC
considered thebasic approach ofsampling proposed inthepaper tobeaworkable one. However,
taking intoaccount theforegoing circumstances theECwasnotinaposition toagree totheproposed
format atthistime.G/SCM/M/9
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62. Therepresentative ofKorea stated hisdelegation 'sconcern about therandom selection method
forprojects tobenotified indetail. Such asystem wasbased onsuspicion among Members. The
basis oftheWTO system wasmutual trustamong Members. Nevertheless, Korea would accept the
lottery method ifallother Members agreed toit.
63. Therepresentative oftheUnited States agreed thatthedraftformat offered aworkable basis
forcompleting thework here. Itshould beconsidered whether thereference inIII(7) tospecificity
intheselection ofanassisted region wastheappropriate waytoaddress theprovisions contained in
theregional development provisions ofArticle 8.2.However, thiswasnotaninsuperable obstacle.
64. Therepresentative ofVenezuela stated thatthelottery should becarried outpublicly.
65. TheCommittee tooknoteofthestatements made anddecided torevert tothismatter atafuture
meeting.
K. Procedures forArbitration Under Article 8.5(G/SCM/W/5)
66. TheChairman recalled thatlastyearapaper containing proposed arbitration procedures under
Article 8.5(G/SCM/W/5) wasconsidered bytheCommittee. Although thepaper wassupported by
almost alldelegations itwasnotadopted bytheCommittee. Theprimary concern preventing thepaper's
adoption related tolanguage thatwould givearbitrators theoption, ifanissueorquestion hadnotbeen
raised intheCommittee review process andtheexplanation forthiswasdeemed insufficient, toterminate
thearbitration withrespect tothatissue. Thislanguage represented anattempt toestablish anacceptable
balance between legalcertainty withrespect tothenon-actionable status ofanotified programme and
flexibility ontheability toseekarbitration withrespect tothatstatus. TheChairman concluded that
further informal consultations onthesubject would notbeproductive unless progress wasfirstmade
among individual interested Members toresolve thedeadlock, andindicated thathewould notconvene
further consultations untilhereceived some positive signfromMembers thatprogress wasbeing made
onabilateral orsmall group basis. Heinformed theCommittee thatsome Members hadundertaken
informal work onthisissueandthatthiswork appeared tobemoving inapositive direction. Hehoped
thatthisinformal work would continue toprogress sothatinthenotsodistant future informal
consultations onthisissue could resume.
67. TheCommittee tooknoteoftheChairman 'sstatement.
L. Status ofMembers inAnnex VII
68. TheChairman stated thatArticle 27.2provided certain special anddifferential treatment to
Members identified inAnnex VIIoftheAgreement. Specifically Members identified inAnnex VII
were notsubject totheprohibition ofexport subsidies bound inArticle 3.1(a) oftheAgreement.
However Annex VII(b) oftheAgreement applied tocertain Members onlyuntilsuchtimeastheir
GNPpercapita reached US$1,000 perannum based ondatafromtheWorld Bank. AMember identified
inAnnex VIIwhose GNP percapita roseabove US$1,000 perannum became subject tothesame
transition provisions inArticle 27.2(b) asother developing country Members -thatis,itwasrequired
toeliminate itsexport subsidies within eightyears ofdateofentry intoforce oftheWTO Agreement.
TheChairman informed theCommittee that,according todatainthe1996World Bank Atlas, theGNP
percapita oftheDominican Republic, Guatemala andMorocco, which Members were identified in
Annex VII(b), exceeded US$1,000 percapita perannum.
69. Therepresentative ofKorea queried whether aMember which graduated fromAnnex VII(b)
would haveeightyears fromthedateofentry intoforce oftheWTO Agreement, oreightyears from
thedateitsGNP percapita exceeded US$1,000, toeliminate Article 3.1(a) subsidies?G/SCM/M/9
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70. Therepresentative ofAustralia queried whatwould happen iftheGNP percapita perannum
ofaMember identified inAnnex VII(b) climbed above US$1,000 andsubsequently dropped below
thatfigure again.
71. TheChairman noted thatAnnex VII(b) stated thattheMembers identified therein would be
"subject totheprovisions which areapplicable toother developing country Members according to
paragraph 2(b)ofArticle 27when GNP percapita hasreached $1,000 perannum". Article 27.2(b)
provided that"[t]he prohibition ofparagraph 1(a)ofArticle 3shallnotapply to...other developing
country Members foraperiod ofeightyears fromthedateofentry intoforce oftheWTO Agreement
...". Thus, onitsfacethedateofentry intoforce oftheWTO Agreement appeared tobetherelevant
date. Heopened thefloor forconsideration byother Members.
72. Therepresentative ofArgentina considered thatthisdiscussion already hadtaken place inother
fora. Under Article 27.4oftheSubsidies Agreement thedateofentryintoforceoftheWTO Agreement
wastherelevant date. Thedisciplines andtheconcessions inmarket access forgoods andservices
constituted adynamic process. AMember joining theWTO halfway through theprocess could not
claim asofthetimethatMember joined arighttotheeight-year transition period.
73. Therepresentative ofCanada stated thataMember which slipped from onecategory tothe
other didnotsuddenly getanadditional eight years tophase outexport subsidies. Thetimeframe
wasstructured fromthedateofentry intoforce oftheWTO Agreement, notfromthetimeacountry
became aMember orfrom thetimeaMember moved from onecategory toanother.
74. TheCommittee tooknoteofthestatements made.
M. SimplificationofDataRequirementsandStandardizationofFormats-AdvicetoWorkingGroup
onNotification Obligations andProcedures (G/SCM/W/376)
75. TheChairman noted thattheChairman oftheWorking Group onNotification Obligations and
Procedures hadaddressed aletter totheChairman ofthisCommittee (G/SCM/W/376) suggesting that
thisCommittee might want toconsider (a)theidentification ofanyformat/questionnaires currently
inusewhich seekinformation going beyond thespecific requirements oftheAgreement and(b)
suggestions astoanyadditional areaswhere formats/questionnaires could bedeveloped. TheChairman
noted thattheCommittee hadmade averysubstantial effort todevelop appropriate notification formats
andquestionnaires. Other thanformats forupdate notifications regarding non-actionable subsidies,
hewasnotaware ofanyadditional questionnaires thatmight berequired, norwasitclear thatthe
CommitteewouldwanttoreopenissuesregardingitsexistingformatsatleastuntilsuchtimeasMembers
hadsome experience withtheexisting formats.
76. Therepresentatives oftheECandJapan stated thatastheCommittee hadonlyjustcompleted
thedevelopment ofvarious questionnaires itseemed premature tore-examine them atthisstage.
77. TheCommittee tooknoteofthestatements made.
N. Format fortheAnnual Review andReport oftheCommittee
78. TheChairman recalled thatatameeting oftheGeneral Council heldon16April 1996, the
Chairman oftheGeneral Council hadmade astatement concerning theformat forreports ofstanding
WTO bodies (WTO/L/145). Pursuant totheprocedures oftheCommittee adopted atitsfirstmeeting,
theSecretariat prepares adraftoftheannual report oftheCommittee which isthenconsidered and
adopted bytheCommittee atitsOctober regular meeting, withappropriate revisions toreflect events
atthatmeeting. Reports areessentially factual reviews ofthestatus ofimplementation oftheAgreement,G/SCM/M/9
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including Members 'compliance withthevarious notification obligations, asummary ofthevarious
matters discussed intheCommittee meetings andasummary ofdecisions taken bytheCommittee as
wellasacompilation report insummary fashion thecountervailing actions taken byMembers.
Ambassador Rossier hadsuggested thattheannual reports oftheWTO Committees include anindication
ofissues andproblems which havebeenidentified intheCommittee andrecommendations, ifany.
TheChairman sought theviews oftheCommittee onAmbassador Rossier 'sproposal.
79. TheCommitteedecidedthattheSecretariatwouldprepareadraftannualreportoftheCommittee
inaccordance withtheformat previously followed. However, inlight oftheissues relating to
implementation andtheusethattheMinisterial Conference might make ofthereport, thedraftreport
would becirculated totheCommittee bylateSeptember orearly October. Itfurther decided that,
inorder fortheAnnual Report tobeavailable ingoodtimeforSingapore preparations, thenextregular
meeting oftheCommittee would beheldon23-24 October rather thaninthelastweek ofOctober.
O. Other business
80. Nomatter wasraised under "Other business".
P. Election ofofficers
81. TheCommittee elected MrVictor doPrado ofBrazil asChairman andMs.Michelle Slade
ofNewZealand asVice-Chairperson oftheCommittee.