WORLD TRADE
ORGANIZATIONWT/GC/W/107
3 November 1998
(98-4261)
General Council Original:  English
PREPARATIONS FOR THE 1999 MINISTERIAL CONFERENCE
General Council Discussions on Implementation Issues
26 October 1998
Communication from the United States
At the September 1998 WTO General Council meeting, Members agreed to pursue a
discussion of the issues identified in paragraph 9 of the May 1998 Ministerial Declaration, beginningwith agenda item 9(a)(i): “issues including those brought forward by Members, relating to
implementation of existing agreements and decisions.”   In August 1998, the U.S. Administrationpublished an extensive request for public comments in the Federal Register with respect topreparation for the 1999 Ministerial, drawing attention to the specific issue areas identified in the May
1998 Declaration.  The following provides an initia l review of implementation issues of concern to
the United States or views with respect to issues raised by other Members. We are still receiving and
reviewing comments and conducting consultations, but wish to contribute to the discussion that willtake place on October 26-27.
The United States agrees with other Members that full and effective implementation of the
Agreements concluded in the Uruguay Round must remain a top priority for the WTO as we preparefor the forward agenda that Ministers will consider  in November 1999.  In the light of experience to
date, several points emerge:  (1) we can identify areas where affirmative action is needed by nationalgovernments to comply with existing agreements and decisions (e.g., enacting domestic legislation),including in some cases where work can be facilitated by respective WTO bodies;  (2) some problems
related to implementation will require further clarification, including possibly through negotiation; (3)
since transition periods for most agreements will be ending by 2000, a more concerted effort by allpartners is called for to ensure compliance on schedule; and (4) further attention to technicalassistance, in particular setting objectives with recipients, is necessary if such assistance is to fulfillthe desired results of facilitating implementation.
The following is an initial and preliminary review of implementation concerns as outlined in
the various Agreements.  We note that we will have further opportunity to supplement our views andthat some issues which others may regard as implementation issues may be addressed in subsequentscheduled discussions of the General Council.
Agriculture
WTO members are generally implementing the commitments under the Uruguay Round
Agreement on Agriculture, and the Committee on Agriculture is functioning as an effectivemechanism for monitoring implementation and identifying issues of concern.  In some cases,Members have successfully used the multilateral setting to find solutions to current problems.However, our experience to date has identified a number of areas for improvement, including severalWT/GC/W/107
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implementation issues such as those enumerated below that likely require additional clarification and
establishment of new disciplines.
Tariff Rate Quota Administration:  In the area of market access, we share the concern of
others that the lack of specific disciplines developed to implement tariff rate quotas (TRQs) may have
stifled market access opportunities in some markets.
• We should ensure that TRQ administration is given a  high priority in the upcoming
negotiations given its impact on scheduled commitments.
Tariff Bindings: In some instances tariffs are applied at levels below bound rates, including
through tariff regimes that appear to be complex, non-transparent and discriminatory.
• We should agree that an important objective in the upcoming negotiations will be to improve
and expand market access opportunities by lowering bound tariff rates to eliminate the
disparity between applied and bound rates and by ensuring that the market access resultsprovide greater certainty and transparency in the operation of tariff regimes.
Export Subsidies: Experience to date has dem onstrated significant difficulties in preventing
the circumvention of export subsidy commitments, e.g., the activities of certain state trading
enterprises as well as the problems raised regarding the subsidization of component products inrelation to existing commitments on further processed products.
• Tighter rules should be elaborated to prec lude the circumvention of export subsidy
commitments so that there is a fully shared understanding of what is permitted and precluded
by commitments on export subsidies.
Notifications:  We need to improve the transparency, comprehensiveness and timeliness of
existing notification requirements (e.g., more timely annual notifications on subsidy levels, TRQ fill
rates and more comprehensive descriptions of domestic support policies).
• We should streamline the reporting requirements in some areas to facilitate timely
notifications.   We note that this has been an issue in the Committee but without resolution or
agreement to move forward.  The Council should facilitate progress in this area.
Food Aid / Security of Food Supplies: At the Special Session in September, some delegations
raised concerns with respect to food security and the fact that efforts to discipline trade-distorting
subsidies could undermine the interests of those countries with serious food security concerns.  TheUnited States notes that WTO Members pledged at Marrakesh and Singapore to conclude negotiationson a new Food Aid Convention.
• Discussions are actively underway in another forum to conclude an agreement before the
current Food Aid Convention expires at the end of June 1999.  The United States attaches
importance to completion of this new Convention as part of our overall commitment to fulland effective implementation.
Export Credit Guarantees: As was noted by certain delegations at the September Special
Session, it has not yet proved possible to reach agreement on disciplines on the provision of export
credits and similar arrangements as foreseen in Article 10.2.
• The United States has been active participant in the OECD negotiations and we have
submitted a proposal to establish international disciplines on export credit guarantees.  WeWT/GC/W/107
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encourage other participants to submit negotiating proposals so we can intensify the pace of
those negotiations.
Agreement on Sanitary and Phytosanitary Measures (SPS)
The United States attaches priority to full and effective implementation of the provisions of
the Agreement and looks forward to a comprehensive review of outstanding implementation issuesthrough the Agreement’s review in the SPS Committee.
• Delegations should be prepared to discuss this matter further in the context of the next
discussions in the General Council on the mandated negotiations and the built-in agenda
given the increasing importance of SPS measures to international trade.
Agreement on Technical Barriers to Trade (TBT)
The TBT Committee has been active in monitoring  compliance with the Agreement.  It  just
completed its mandated three-year review and conducted a meeting of officials responsible forinformation exchange and the management of the enquiry points obligated by the Agreement.  Thesediscussions identified a number of practical problems important to ensuring effective implementationwhich should be easily addressed in the short term.
Notification:  The Agreement contains many procedural obligations that enhance transparency
and the effective operation of the Agreement.
• We suggest that the Committee advise the Council on the status of notifications pursuant to
Article 15.2 on the steps Members have taken to establish domestic procedures for
compliance.
• The Committee should undertake additional streamlining of the notification process, including
through the promotion of electronic information exchange.
Conformity Assessment Procedures:  The current Agreement encourages  Members to
recognize conformity assessment procedures performed by bodies located in Member countries.
Negotiation of mutual recognition agreements is only one way to accomplish this result;  there areother avenues which are potentially less burdensome, such as relying upon a supplier’s declaration ofconformity or providing for national treatment under accreditation programs.
• Further information on Members’ experience in relying (or not) on a supplier’s declaration of
conformity, or other approaches to unilateral recognition, will facilitate implementation of the
existing Agreement, and determine whether any additional clarification is warranted.
International Standards:  A major concern to Members participating in the review is the lack
of  transparency and discriminatory treatment in international standards development.
• Intensification of the Committee’s current work program in this area should result in
improvements based on the existing Agreement.  There is no reason why such work should be
held up pending preparation of the WTO’s post-1999 agenda.
Trade in Services
The work on services is proceeding in various ways:  from implementation of the Basic
Telecommunications Agreement which has been in force for nearly one year, to ratification of theFinancial Services Agreement concluded last December, to the active program of work led by theWT/GC/W/107
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GATS Council on rules issues and liberalization.  The United States attaches high priority to the
fullest possible implementation of these two landmark agreements, and the work of the GATSCouncil.
Work of the GATS Council
Rule Writing:  Rule writing (on safeguards, subsidies, and procurement) is work left
unfinished from the Uruguay Round.  Discussions thus far have shown that there is a wide divergence
of views as to whether an Article XIX-type safeguard provision for services is workable.  A similarquestion could be asked with respect to whether the current rules for industrial subsidies in the goodsarea are adaptable to the services context.
• Members should reach an early conclusion to their deliberations as to whether rules on
safeguards and subsidies would be workable.
• A rationalization of the work on procurement, particularly given the Singapore working group
on transparency, might be an efficient way to address increasing burdens on resources.
Preparing for the Mandated Negotiations:  The GATS Council has a process underway to
prepare for the mandated negotiations that will be launched at the 3rd Ministerial Conference.   The
sectoral information exchange has been extremely positive and, when completed in December 1998,should provide Members with substantial analytical work.  The GATS Council will then proceed to anassessment of trade in services with respect to the objectives of the Agreement, including those
related to developing countries.  At its November meeting, the GATS Council will have its first broaddiscussion of domestic regulation, in preparation for development of appropriate disciplines to ensure
that domestic regulation does not unnecessarily restrict trade.  Experience to date has shown that there
is a need to enhance working relationships between domestic regulatory authorities and tradenegotiators to facilitate progress.  Results on these issues with respect to one sector -- accountancy --have been disappointing.
• The GATS work will enable Members to address a number of concerns raised with respect to
the development dimension of the GATS, including the results secured thus far with respect
to movement of persons and improved access to distribution channels and informationnetworks.
• We should consider convening seminars involving regulators and trade negotiators to
facilitate more effective implementation and better preparation for further negotiations.
Basic Telecommunications Agreement
This Agreement has been in force for nearly one year.  Practical steps are needed to address
the technical assistance needs in this area. The International Telecommunications Union (ITU) andmany Members’ telecommunications agencies have been busy responding to countries’ increasingrequests for assistance in regulatory reform efforts that are both associated and unassociated with theWTO Basic Telecommunications Agreement.  The need for technical assistance appears to be widelyand deeply felt, in the developing and also the indu strialized world, regarding, e.g., the establishment
of an independent regulator; the setting of cost -oriented, non-discriminatory interconnection prices;
the prevention of anti-competitive practices; and the establishment of transparent governmentregulations.
• We suggest that the WTO Services Counc il convene an “Information Session on
Telecommunications Services Agreement Technical Assistance Sources and Needs” in the
near future.  The session’s purpose would be to share views on the results of the AgreementWT/GC/W/107
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thus far and, in particular, to discuss what technical assistance efforts already have been
undertaken and what is needed in the future.
• An “Information Session on Te lecommunications Services Agreement Technical Assistance
Sources and Needs” would help inform the current deliberations of the GATS  Council on
whether and, if so, how to finalize a cooperation agreement proposed by the ITU.
• The Information Session also would provide for useful dialogue on the availability and
demand for technical assistance in support of regulatory reform, e.g., with respect to the Basic
Telecommunications Agreement’s Reference Paper principles.
Financial Services Agreement
To date, a relatively small number of Members have ratified the protocol.  The U.S.
Administration is in the final stages of necessary domestic consultations and expects to ratify the
protocol shortly.  Particularly in view of global economic conditions, it is important that all Memberstake all necessary steps to meet the January 29, 1999, deadline and ensure that their commitmentsenter into force on schedule, on March 1, 1999.
TRIPS
The priority TRIPS implementation issue over the next year is the preparation by developing
country WTO Members for the full implementation of their TRIPS obligations no later than January1, 2000.  While a number of countries have taken steps to begin the process of conforming their laws
to the TRIPS Agreement with the deadline in mind, we remain concerned that many Members have
yet to inform the Council of the actions that they  are taking to bring their respective regimes into
compliance.
In this regard, we note that important steps have just been taken with respect to technical
cooperation related to the TRIPS agreement.  Specifically, the WTO and WIPO recently announced anew joint initiative to provide enhanced technical assistance to those Members that request assistanceas they prepare to fully implement their obligations by January 1, 2000.  We understand that there isadequate funding and staff in both organizations to accomplish this task.  The United States expectscountries to take full advantage of this program, where necessary, to ensure that their efforts to comeinto compliance with the agreement are as successful as possible.  We are concerned that few
countries have yet to take advantage of this assistance, and we will not be sympathetic to claims that
implementation cannot be met because of a lack of assistance.
• To ensure that this opportunity for technical assistance is not missed by individual members,
the United States suggests that the Secretaria t, working with the TRIPS Council, develop a
preliminary assessment of progress by developing countries made to date toward
implementation of their TRIPS agreement obligations.
Agreement on Customs Valuation
More than 50 developing countries are scheduled to implement the Agreement by the end of
2000, if not over the next year. The challenge of technical assistance directed toward implementationis often a matter beyond ad hoc teaching seminars and involves longer term “infrastructure”development requiring follow-through: i.e., changes in laws and regulations, as well as what oftenamounts to a fundamental restructuring of the system of customs administration.  A second issue ofincreasing concern that affects implementation of this agreement is the increased use by some
Members of a questionable valuation methodology, sometimes combined with a preshipmentWT/GC/W/107
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inspection regime, as a substitute for more selective trade remedies, or to otherwise raise broad market
access barriers in response to fears about increased import penetration.
• The Committee is currently attempting to promote “individualized” technical assistance
geared toward implementation needs and performance.
• An immediate priority should be to translate the information provided by individual
developing countries on their implementation needs, and by the Secretariat on past
multilateral, regional and bilateral technical assistance activities, into a more activeassessment of where countries are with respect to implementation and what technicalassistance resources are available to focus on their specific needs.  This process should begeared toward ensuring that no WTO Member that is currently taking advantage of thetransition period will not be able to implement on schedule because its needs were ignored.
• Members should be prepared to consider approp riate ways to address the misuse of valuation
methodologies short of dispute settlement procedures, given the important relationship
between valuation and market access.
Agreement on Rules of Origin
Harmonization Negotiations: The United States shares the concerns raised by others that
completion of the work program to harmonize nonpreferential rules of origin was not achieved within
the three years set forth in the Agreement.  Two main problems emerged with respect to progress.First, the complexity and amount of technical work was far greater than originally anticipated.  Asdeliberations began by the WTO Committee on some of the product-specific issues, it soon becameclear that such work could not be conducted properly until all of the technical work was completed bythe World Customs Organization.  Second, there is no common understanding among Members as tothe implications of the future discipline to “equa lly apply” the harmonized rules of origin for “all
purposes.”
• The Council should request from the WCO a cale ndar of future WCO technical work and
determine whether any additional steps are needed to enhance prospects for progress on the
technical work.
• The Council may have to consider, pending further discussions in the Committee, whether the
divergent views on the scope of application of the to-be-completed harmonization agreement
can be resolved by further consultations with other WTO Committees or will require furthernegotiation.
Procedural Obligations of the Agreement:  Often overlooked because of the focus on the
harmonization effort are the Agreement’s important procedural disciplines designed to capture “best
customs practices” (e.g., within 150 days of a request, Members must provide to private tradersbinding assessments of origin they would accord to a particular good) and provide transparency to
traders.  Early results of a Secretariat survey indicate a potentially significant lack of compliance withthese obligations, including among developed country Members.
• Urgent and immediate attention to this area is needed to renew confidence as the broader
work on the harmonization work program proceeds.WT/GC/W/107
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Agreement on Preshipment Inspection
For the past two years a working party has examined the operation of this agreement, which
presents the unusual situation whereby Members’ compliance with the Agreement’s obligations are
contingent on the behavior of private entities (i.e., preshipment inspection companies).  The
Agreement did not provide for a Committee, and there is likely to be little interest in the creation of
another Committee.  However, there appears to be broad agreement within the Working Party that the
absence of any regular monitoring by a WTO body has been unacceptable.  Some Members have
taken the view that this should be a responsib ility for the Council on Trade in Goods, while others
have suggested either the Committee on Market Access or Committee on Customs Valuation should
undertake such work.  Resolution of this issue may be related to whatever emerges from the ongoing
CTG efforts on trade facilitation.
• The Council needs to provide some direction re garding regular monitoring of the Agreement,
recognizing that many Members want to avoid the establishment of another free-standing
WTO Committee.
Market Access Committee
Loose Leaf Work Program:  The ongoing loose leaf exercise will consolidate into a single
document all Uruguay Round (and earlier) tariff concessions, 1996 updates to the Harmonized System
tariff nomenclature and bindings, and any other modifications to the WTO schedule (e.g.,participation in the Information Technology Agreement (ITA)).   These consolidated schedules willimprove the transparency of existing WTO tariff obligations by eliminating the need to look in severaldocuments to determine a tariff binding in current HS  nomenclature, as is the current situation.  The
loose leaf schedule will be the basis for conducting future tariff negotiations in the WTO, such as themandated negotiations on agriculture.  A key ingredient in the loose leaf work program is how to bestorganize the resources available to the Secretariat and member countries to facilitate the timelypreparation of the updated schedules.
Integrated Data Base:  Considerable effort has been made in the past year to simplify the
reporting formats and software so that all Members can comply more readily with the mandatory
reporting requirements established by the General Council in July 1997.  The simplified data base isknown as the PC-IDB (or PC- Integrated Data Base).  The Secretariat also is making softwareavailable to facilitate the preparation of the data electronically.  Thus far, only a limited number ofcountries have complied.  Further action is needed to facilitate the timely presentation of thisinformation.  The tariff data are needed to ensure that Uruguay Round obligations are in fact beingmet.  The trade data also will be needed to develop a “base” to determine principal and substantialsuppliers for future tariff negotiations.  The Secretariat also is making software available to facilitatethe preparation of the data electronically.
• The Committee needs to develop, on an urgent basis,  procedures to assist Members in
preparing an updated version of their respective tariff bindings so that all WTO tariff
obligations are in a single, electronic document (the so-called “loose leaf” schedules).
• Every Member needs to fulfill its existing obligation to report annual trade and tariff data to
the WTO.
Trade-Related Investment Measures (TRIMs)
Measures maintained or instituted by WTO Me mbers with respect to investment should be
consistent with those Members obligations under the TRIMs Agreement.  We are becomingincreasingly concerned that many countries which have notified TRIMs to the TRIMs CommitteeWT/GC/W/107
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have not provided information on the steps that they are taking to phase out such TRIMs by the
agreed deadline of January 1, 2000.  To date, no country has shared information with respect to itsdomestic plans or processes to remove TRIMs, notwithstanding repeated requests by the UnitedStates, supported by other countries and the Chairman of the Committee.  The transition provided inthe Agreement was part of an overall balance in the Uruguay Round negotiations, which we know that
all governments intend to respect fully.
• In order that Members might be assured that the obligations of the TRIMs Agreement will be
fully respected in a timely fashion, all Members which have notified TRIMs to the Committeeshould provide information, before the end of April 1999, on the steps that they are taking to
phase out existing TRIMs by the January 1, 2000 deadline.
Subsidies and Countervailing Measures
The SCM Committee has made reasonably good progress in implementing through
clarification and elaboration those provisions where further work was either explicitly called for by
the terms of the Agreement or was deemed appropr iate by the Members.  More specifically, the
Committee has agreed upon formats for the notification of subsidies under a variety of Agreement
provisions;  the Informal Group of Experts completed work on a number of recommendations
concerning the calculation of subsidies; and the Committee established a Permanent Group of
Experts, as mandated by Article 24 of the SCM Agreement (even if it has not been possible to finalize
agreement on rules of procedure for this body).
An important implementation issue is adherence by developing countries, and countries in
transition from centrally planned to market economies, to requirements to phase out or eliminatecertain otherwise-prohibited subsidies by a date certain.  The drafters of the Agreement did notprovide for tailored or ongoing notification requirements with respect to these provisions, thereby
making it difficult to determine the quality of co mpliance and reducing the incentive to do away with
such measures in an incremental and orderly fashion.  The United States and certain other Membershave attempted to integrate questions about this into their review of general subsidy notificationsmade under Article 25 of the Agreement, but the information supplied has been incomplete.
Finally, in regard to Article 25 notifications, the record is akin to the half-full, half-empty
glass metaphor.  In sum, the track record of subsidy notifications is much improved over the pre-WTO record, but risks slipping if shortcomings aren ’t addressed.  (Already, delays in the submission
of notifications threaten to backlog and complicate the review process.)
• With respect to the situation where developing countries and countries in transition from
centrally planned to market economies are subject to requirements to phase out or eliminate
certain otherwise-prohibited subsidies by a date certain, they should  inform the Committee oftheir intentions sufficiently ahead of the deadline to provide other Members with an assurancethat their obligations will be met in a timely fashion.
• On notifications, the United States and some other Members have suggested that
implementation could be improved by modifying the notification/review process such that
updating notifications are eliminated and full notifications are made every other year,permitting a regular cycle in which subsidies are notified in the first year and reviewed in thesecond, etc.
Agreement on Textiles and Clothing (ATC)
Council debate thus far suggests that there ar e strong differences of view with respect to
implementation. Developing countries have registered complaints that while the implementation hasWT/GC/W/107
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been entirely consistent with the rules, it has no t resulted in a substantial increase in commercial
opportunities.  The United States reaffirms that U.S. implementation of the ATC is in accord with itsterms and the Agreement has, in fact, led to improved access to the U.S. market.  In addition, Article 7of the ATC commits all Members to “achieve improved access to markets for textile and clothingproducts.”  Through a combination of high tariffs and non-tariff measures, some of which have no
justification, improvements in many cases have not been made.  While the ATC expires in 2004,
when quota regimes are no longer permitted, improved market access for textiles will not have beenundertaken by all Members, creating an unbalanced situation for those who have fully complied withthe textile integration program and the phase out of the MFA.  Finally, the United States underscoresthat  provisions of Article 5 designed to deal with illegal transshipments have not been rigorouslyfollowed.
• The ongoing problem of illegal transshipments should be addressed through exporting
Members’ more rigorous implementation of the provisions of Article 5 of the ATC.
• As appropriate, Members should take steps to ensure that an unbalanced market access
situation is not created in 2004 for those who ha ve fully complied with the textile integration
program.
CONCLUSION
The above review is intended to stimulate de bate about how best to move forward on the
WTO’s agenda as we prepare for the 1999 WTO Ministerial.  Our review was not intended to be
exhaustive, but rather to highlight for other Members’ consideration four broad themes which have
emerged from our preliminary analysis of implementation issues.  In the view of the United States,this review illustrates the need for ongoing atte ntion, vigilance and creativity in meeting existing
obligations as we look toward the WTO’s future.  At the same time, the challenges of implementation
are certainly within the realm of the manageable and do not stand as an impediment to pursuingadditional work and liberalization if that is the consensus of Members.  The four broad themes whichwe have identified preliminarily can be summarized as follows.
· First, we have identified areas where more attention by Member governments is needed to
comply with existing agreements and decisions (e.g., enacting domestic legislation) and, insome cases, this work can be facilitated by respective WTO bodies.
· Second, we have identified problems related to implementation that require further
clarification of provisions in Agreements and in  practice.  Moreover, our review finds that we
should consider further whether in some cases the transparency or notification provisionscould be revised to be more responsive to the needs and interests of governments andstakeholders while being less of an administrative burden to those providing the information.
· Third, since transition periods for most agreements will be ending by 2000, a more concerted
effort by all partners is needed to ensure compliance on schedule.
· Finally, we have identified a number of areas where further technical assistance is required
and available, but Member governments do not appear to be taking full advantage of such
resources to fulfill the desired results of facilitating implementation.
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