RESTRICTEDWORLD TRADE
ORGANIZATIONWT/GC/M/45
2 August 1999
(99-3242)
General Council
15 July 1999
MINUTES OF MEETING
Held in the Centre William Rappard
on 15 July 1999
Chairman:  Mr. Ali Mchumo (Tanzania)
Subjects discussed: Page :
1. Accession of Bosnia and Herzegovina.....................................................................................2
(a) Communication from Bosn ia and Herzegovina..........................................................................2
2. Committee on Balance-of -Payments Restrictions..................................................................4
(a) Consultations wi th Bangladesh............................................................................................... ....4
3. Committee on Budget, Finance and Administration .............................................................4
(a) Reports..................................................................................................................... ...................4
4. Waiver under Article IX of the WTO Agreement .................................................................6
(a) Peru – Agreement on Implementation of Article VII of the GATT 1994 – Request for
waiver......................................................................................................................... .................6
5. Work Programme on Electronic Commerce..........................................................................6
6. Promotion of the institut ional image of the WTO ...............................................................11
7. Frequency and scheduling of WTO meetings.......................................................................13
8. Observer status for internationa l intergovernmental  organizations..................................13
9. Five-year review of the exemption provided under Paragraph 3 of the
GATT 1994 ...................................................................................................................... ........18
10. Participation of acceding countries as observers in the prep aratory work for the
1999 Ministerial Conference ..................................................................................................22
11. United States restrictions on imports of lamb from Australia............................................23
12. Change in United States trade relations with Mongolia......................................................2413. Review of procedures for the circulation and derestriction of WTO documents .............24
14. Submission of end-of-year reports by WTO bodies.............................................................24
15. Attendance of international intergovernme ntal organizations as observers at the
1999 Ministerial Conference ..................................................................................................24
16. Establishment of the Global Trust Fund for WTO Technical Cooperation......................25WT/GC/M/45
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1. Accession of Bosnia and Herzegovina
(a) Communication from Bosnia a nd Herzegovina (WT/ACC/BIH/1)
The Chairman drew attention to the communication from Bosnia and Herzegovina in
document WT/ACC/BIH/1 requesting accession to the WTO Agreement, and invited the
representative of Bosnia and Herzegovina to introduce this item.
The representative of Bosnia and Herzegovina, speaking as an observer , said that as a country
where civilisations and cultures met, mixed and traded, Bosnia and Herzegovina had always been
open to the rest of the world.  As a result of war, the economy had collapsed to some 20 per cent of
the pre-war situation.  However, a skilled workforce was ready to contribute to the revival and
development of the country.  The time had now come to  look ahead, and to create the conditions for a
prosperous future through wider economic co-ope ration and transparent relations in a globalizing
world.  In the years since the reconstruction programme had started, there had been an encouraging
turnaround, and considerable success in rebuilding the main infrastructure.  However, structural
improvement and better functioning of the infrastructure would not alone be sufficient to move the
country toward a market economy. The forthcoming Summit on Stability Pact in South-Eastern
Europe would lay solid foundations for security, political and economic development in the region.Its decisive implementation and financial assistance would yield lasting political stability and
economic sustainability.  Full membership in the WTO was an imperative step in the same direction.
His Government had made a firm political comm itment to realize economic reforms, including
privatization, transition to a market-oriented economy, further changes in foreign trade and custom
policies, establishment of a more solid banking system, and an attractive environment for foreigninvestment.  During the past five years, intellectual property protection legislation had already
developed in compliance with the TRIPS Agreement through co-operation with WIPO and the
European Patent Institute.  The Accession of Bosnia and Herzegovina to the WTO would support
efforts to create sustainable economic growth, which would lead to better living standards for the
people of Bosnia and Herzegovina.  In applying for accession, his Government was fully conscious ofits responsibilities and the amount of work that lay ahead, and was committed to accelerating the
accession process to the maximum extent possible.  WTO accession was a top priority on his
Government's trade policy agenda.  Meeting the responsibilities involved would require focused
technical assistance, not only from the WTO Secretariat but from its Members, and his Government
was counting on Members' co-operation and goodwill as it went through the difficult process of
accession.
All delegations who spoke welcomed and supported the application of Bosnia and
Herzegovina for accession to the WTO, and supported the establishment of a working party.
The representative of Myanmar, on behalf of the ASEAN Members
, said that the participation
of Bosnia and Herzegovina in the WTO, first as an observer and then as a Member, would be
mutually beneficial and would boost the efforts of that country to rebuild its economy.  It was
ASEAN's fervent hope that there would be no unrealistic demands on Bosnia and Herzegovina or on
any other applicant for accession.
The representative of Turkey said that Bosnia and Herzegovina's application for accession
should be accepted as a confirmation of its determination to consolidate its reform process and clear
evidence of its desire to integrate into the inte rnational economic community.  Turkey was developing
its relations and cooperation with Bosnia and Herzegovina at both a bilateral and regional level, and
looked forward to participating in its accession process.
The representative of Pakistan said that this was an historic occasion for a war-ravaged
country that was moving towards entering the mainstream of the global economy.   Pakistan hopedWT/GC/M/45
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that the accession process would proceed smoothl y and that no undue demands would be placed on
Bosnia and Herzegovina in that process.
The representative of the European Communitie s said that his delegation looked forward to
the early accession of Bosnia and Herzegovina, and was ready to work closely with that Government
in a way that would ensure that accession contributed to the reconstruction and transition of the
economy, as well as to the closer integration of that country in the international economy.
The representative of Hungary, on behalf of the CEFTA countries and Latvia , said that these
countries followed with sympathy the efforts of Bosnia and Herzegovina to rebuild its economy, and
noted that an ambitious reconstruction programme was in progress and that efforts were under way to
make the transition to a market economy.  The accession of Bosnia and Herzegovina would contributeto achieving these goals, and the successful reconstruction of that economy would contribute to
regional stability in the area.
The representative of Japan said that the early accession of Bosnia and Herzegovina to the
WTO would not only contribute to achieving economic reform and development in that country, but
would also contribute to the development of the multilateral trading system.
The representative of Brazil hoped that the accession of Bosnia and Herzegovina would be
fully consistent with the purposes and objectives of the WTO and would contribute to further
stabilization in the region.
The representative of Slovenia said that his delegation looked forward to participating in the
process of accession of Bosnia and Herzegovina in a constructive manner and was prepared to provide
any assistance requested in that regard.
The representative of Jamaica said that his delegation joined those Members supporting the
application of Bosnia and Herzegovina to accede to the WTO.
The General Council took note of the statements and of the expressions of support, and
agreed to establish a working party with the following terms of reference and composition:
Terms of reference:
"To examine the application of the Government of Bosnia and Herzegovina to accede to the
WTO Agreement under Article XII, and to submit to the General Council recommendations which
may include a draft Protocol of Accession."
Membership
Membership would be open to all Members indicating their wish to serve on the Working
Party.
Chairman:
The General Council authorized its Chairman to designate the Chairman of the Working Party
in consultation with representatives of Members and with the representative of Bosnia and
Herzegovina.
The Chairman invited the representative of Bo snia and Herzegovina to consult with the
Secretariat as to further procedures, in particular regarding the basic documentation to be considered
by the Working Party.  He also invited Bosnia and Herzegovina, on behalf of the General Council, toWT/GC/M/45
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attend meetings of the General Council and, as appropriate, meetings of other WTO bodies as an
observer during the period when the Working Party is carrying out its work.
The General Council took note of the statement.
2. Committee on Balance-of-Payments Restrictions
(a) Consultations with Bangladesh (WT/BOP/R/46 and Add.1)
Mr. Jodko (Poland), Chairman of the Committee on Balance-of-Payments Restrictions, said
that the Committee had conducted consultations with Bangladesh under the simplified procedures for
regular consultations with developing countries and the Understanding on the Balance-of-Payments
Provisions of the GATT 1994.  Members had expressed sympathy for the natural disaster suffered byBangladesh in 1998.  They had considered that the conditions of Article XVIII:B had been met, and
had continued to express the desire for clarification of the criteria used, and the rationale behind, the
restriction of imports, noting that balance-of-payments measures were intended to control the general
level of imports.  Bangladesh had been encouraged to submit a timetable for the phase-out of the
restrictions, as required by the Understanding, as soon as possible.  Following the conclusion of the
consultations, the Government of Bangladesh, in a communication in document
WT/BOP/R/46/Add.1, had informed the Committee of certain measures to be taken, or being taken,
by it, and of its agreement with the Committee's proposal that full consultations be held at the same
time as the Trade Policy Review scheduled for May 2000.
The General Council took note of the statement and of the communication in
WT/BOP/R/46/Add.1, and adopted the report on the c onsultations with Bangladesh (WT/BOP/R/46).
3. Committee on Budget, Finance and Administration
(a) Reports (WT/BFA/39 and 40)
The Chairman drew attention to the two reports of the Committee on Budget, Finance and
Administration contained in documents WT/BFA/ 39 and 40, and invited Mrs. Dubois-Destrizais
(France), Chairperson of the Committee, to introduce the reports.
Mrs. Dubois-Destrizais (France), Chairperson of the Committee on Budget, Finance and
Administration, said that the Committee had met on 19 March, 22 April and 16 June, and had taken
note of the cash situation, outstanding contributions and the contributions of the observer countries as
at 31 January and 31 May 1999.  Recalling that WTO Members with more than three years of arrears
at 1 January 1999 for assessments since 1988 became, as of that date, inactive Members, the
Committee recommended that the General Council urge those Members to liquidate their arrears.
Since the circulation of the report in WT/BFA/39, Cameroon and Solomon Islands were no longeramong those Members.  In view of the accession of Latvia to the WTO, the Committee recommended
to the General Council that a pro rata  contribution to the 1999 budget amounting to Sw F 53,748 be
assessed on Latvia.  The Committee also recommended that the General Council assess an amount of
Sw F 37,666 on the Government of Latvia as an advance to the Working Capital Fund.  The
Committee heard the reports of the Secretariat concerning the establishment of the WTO Secretariatand personnel management questions, and Members expressed their concern at the prospect of a top-
heavy organization.  While accepting that the Secretariat should have a certain autonomy in personnel
matters, Members suggested that consultations should take place between the Members and the
Secretariat prior to any major change of the stru cture and balance of the latter.  The Committee also
examined the draft recommendation to reduce the minimum contribution to the WTO budget fromWT/GC/M/45
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0.03 per cent to 0.015 per cent.  This question had been discussed at length since 1998.  With the
exception of one Member, which reserved its position, a consensus had been reached in favour of the
reduction from 0.03 per cent to 0.015 per cent.  The Secretariat had been authorized to calculate
contributions for the budget estimates for 2000 on that basis.  The Member that had reserved its
position had agreed in principle to the proposed reduction, but preferred to take a definitive decisionon this matter in connection with the consideration of the budget for 2000.
On 16 June, the Committee had examined the final position of the 1998 budget and had noted
that the budget deficit amounted to some Sw F 2.2 million.  This deficit was the net result of
overspending of Sw F 6.95 million and underspending  of Sw F 4.71 million under various sections
indicated in paragraphs 10 to 25 of the report in  WT/BFA/W/33.  The surplus account, for its part,
showed an excess of income over expenditure of Sw F 6.48 million.  In accordance with WTOregulations, the Secretariat would submit proposals on the use of this surplus at a later date, probably
when the budget estimates for 2000 were submitted.  Thus, the Committee recommended the approval
of transfers between budgetary sections of a total of Sw F 4 ,604,427 for the WTO and Sw F 71,451
for the Appellate Body, which were necessary to cover, by savings, excess expenditure over approved
appropriations in respect of the sections indicated in paragraphs 27 and 41, respectively, of the reportin WT/BFA/W/33.  The Committee had examined the budget estimates for 2000 of the International
Trade Centre (UNCTAD/WTO).  The total budget proposed for the UN and the WTO amounted to
Sw F 29.5 million, representing a 1.4 per cent increase over the 1998-1999 budget.  After deduction of
miscellaneous income, the WTO contribution would amount to Sw F 14.5 million.  The Committee
would study these estimates in greater detail at the meetings scheduled for the autumn of 1999, duringwhich the entire budget for the year 2000 would be examined. She drew attention to the points
requiring decision by the General Council in para graphs 9 and 10 of WT/BFA/39 and in paragraph 15
of WT/BFA/39.
The representative of Jamaica said that his delegation hoped that the matter of the minimum
contribution of the WTO budget could be concluded without further delay, and encouraged the
Budget Committee to continue the oversight of personnel functions in the WTO Secretariat so that
there was greater transparency, including in the area of recruitment and promotion.  Regarding the
framework for preparing the budget for the year 2000 in the light of the change in the management
and possible new structure of the WTO senior management, he wondered whether the Committee had
an overview of the strategic direction of the Secretariat.  He recalled that roughly two and a half years
earlier, the then Director-General had prepared a policy document for consideration by Members sothat there would be a relationship between the prio rities within the budget and the directions of the
General Council.
The representative of Haiti made a statement
1 regarding the participation of least-developed
countries at the 1999 Ministerial Conference.
The Chairperson of the Budget Committee said that the Committee was entirely in the hands
of the General Council and would not take any initiat ive on its own.  Regarding the preparation of the
budget for 2000 and the special situation the organization was in at present regarding senior
management, the Committee would respect its timetable and the Secretariat would prepare a proposedbudget on which the Committee would begin discussions in early September.  The budget should not
include any new elements and should not anticipate any outcome of the 1999 Ministerial Conference
or any negotiations that might be launched, and the Committee would not take any particular initiative
regarding any reorganization.  Thus, it would be a b udget based on continuity, and would not contain
any new measures.
                                                     
1The statement was subsequently circulated in document WT/GC/(99)ST/4.WT/GC/M/45
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The General Council took note of the statements, approved  the Budget Committee's specific
recommendations in paragraphs 9 and 10 of its report in WT/BFA/39 and in paragraph 15 of its report
in WT/BFA/40, and adopted the reports.
4. Waiver under Article IX of the WTO Agreement
(a) Peru – Agreement on Implementation of Article VII of the GATT 1994 – Request for waiver
(G/L/311, G/C/W/155)
The Chairman drew attention to the request from Peru for a waiver regarding the Agreement
on Implementation of Article VII of the GATT 1994 contained in document G/L/311, and to the
related draft decision in document G/C/W/155, and invited Mr. Roger Farrell (New Zealand),
Chairman of the Council for Trade in Goods, to report on the consideration of this matter by thatCouncil.
Mr. Farrell (New Zealand), Chairman of the Council for Trade in Goods, reporting on the
Council's consideration of this request, said that the Council had agreed to forward the draft decision
in G/C/W/155 to the General Council for adoption.
The General Council took note of the report and, in accordance with the Decision-Making
Procedures under Articles IX and XII of the WTO Agreement agreed in November 1995 (WT/L/93),
adopted the draft decision (WT/L/307).
5. Work Programme on Electronic Commerce
The Chairman recalled that at the Special Session of the General Council on 24 and
25 September 1998, a Work Programme on Electronic Commerce was established.  Paragraph 1.2 of
the work programme provided that the General Council "shall play a central role in the whole processand keep the work programme under continuous review through a standing item on its agenda".  At its
meeting on 15 June 1999, the General Council had conducted an interim review of progress in
implementation of the work programme, and the delegation of Australia had recently submitted a
communication on electronic commerce (WT/GC/25).  He recalled that the work programme
established a deadline of 30 July 1999 for the relevant WTO bodies to report or provide information
to the General Council on their respective work regarding implementation of the work programme.
Thus, the further reports on progress and work concerning electronic commerce due by 30 July wouldbe examined at the next regular meeting of the General Council scheduled for 6 October 1999.  One
such report, from the Committee on Trade and Development, had already been prepared and would be
circulated in document WT/COMTD/19.
The representative of Australia said that the paper in document WT/GC/25 focussed on four
broad principles which Australia believed embraced the most important elements of the Work
Programme.  They were:  (i) that WTO Members should express support for a minimalist, industry-
led regulatory approach;  (ii) that electronic transmis sions should remain duty-free;  (iii) that existing
WTO rules, which were consistently technology-neutral, should be applied to electronic commerce as
far as possible, thus obviating the need to classify electronic commerce as a distinct regulatorydomain in international trade;  and (iv) that the WTO should help developing countries take advantage
of the potential of electronic commerce as a trade facilitation tool, devoting particular attention to the
development of and access to infrastructure, access to technology, technical assistance, and trade
policies and commitments relating to services, investment, and tariffs and non-tariff measures.
Implementation of the work programme in various WTO bodies had already given rise to numerouspoints of commonality among Members.  The four principles he had outlined had emerged logicallyWT/GC/M/45
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from the results of the work programme thus far, and could form the basis of further work and the
practical application of that work.
The representative of Japan said that his delegation welcomed the papers tabled by Australia,
the European Communities, and the joint proposal by Singapore and Indonesia.  Japan had tabled its
own proposal, which consisted of three points.  The first related to the treatment of digital contents
transmitted electronically, which should be examined further, so that the principles of most-favoured-
nation, national treatment and the general elimination of quantitative restrictions could be applied.
The second was that Members should maintain the current practice of not imposing customs duties on
electronic transmissions.  Developed countries should help developing countries to participate in
electronic commerce-related markets through, for example, the provision of relevant information.
Third, measures for privacy and consumer protection had legitimate policy objectives in and ofthemselves;  however, a balanced approach was necessary to ensure that such measures did not
develop into unnecessary regulations, in view of the need to develop a free trading environment.
The representative of Jamaica said that technol ogy neutrality involved both the hardware and
the application, and the intellectual property that applied to the application.  It was important that
Australia flesh out what technology neutrality could mean in terms of issues that had been raised, for
example, by Japan in its questions during the trade policy review of the United States and the use of
the Internet.  Before accepting the principle of an industry-led regulatory approach, it was necessary
to have a clear understanding of the different sectors of the different industries and the new
technologies that might be applied in digital transmissions.  Under the first principle in Australia'spaper, reference was made to the possible need to strengthen the GATS provisions on anti-
competitive practices.  It would be useful to flesh out what these practices might be, and how they
impinged on the principle of industry-led regulatory approach.  While Jamaica was more inclined to
less intrusive governmental regulations, this should not be stated as a principle without a full
understanding of the points Jamaica had raised.  The second issue related to duty-free treatment.There had been a number of studies related to tax questions within national jurisdictions, where the
issue of the nexus between the sender and the receiver and how to identify the point at which the tax
should be levied raised important questions.  Since there was genuine concern by administrations in
the countries most advanced in the use of electronic commerce for exchanging goods and services,
and since further conceptual and empirical work remained to be done in this area, those promoting the
continuation of duty-free treatment should recognize the implications of the erosion of the tax base by
the diversion of the transfer of goods and services outside of the normal channels without anycompensation to support the infrastructure for such commerce or the adjudication of disputes.
Regarding the third principle and the structural and cost impediments to electronic commerce
development, it would be useful if Australia could provide information on the nature of the issue in
respect of Internet data services and the applicability of GATS rules to these services.
The representative of Australia said that the four principles tabled were elaborated in a paper
already tabled in the Council for Trade in Services in document S/C/W/108.  On the question of
technology neutrality, Australia's view was that WTO Agreements did not contain provisions
distinguishing among different technological means of supply, but his delegation would willingly
continue to discuss this matter in the bodies in which it had already been raised.
The representative of the United States said that the reports of the various subsidiary bodies
participating in the work programme had been encouraging.  These bodies had succeeded in
identifying where WTO disciplines applied, where further clarification was necessary, and what the
issues for further discussion were.  This was the aim of the work programme.  When consensusemerged on certain items, it would be useful to consider ways to formalize this in the context of the
Ministerial Conference and the recommendations th e General Council had to deliver to Ministers.
Examination of the Indonesia/Singapore proposal, Australia's proposal and Venezuela's proposal
might be a useful start for considering options, and her delegation looked forward to seeing Japan'sWT/GC/M/45
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proposal.  Where ongoing work was necessary, both before and after the Ministerial Conference, the
United States was open to discussing the most effective working methods.  The General Council had
to continue to oversee the work of subsidiary bodies in this area, and electronic commerce issues had
to be examined against the backdrop of existi ng commitments and agreements.  Regarding the
proposals made, the United States supported making both permanent and binding the standstill onduties on electronic transmissions, and supported efforts to achieve consensus on additional principles
relating to electronic commerce.  The standstill did not treat the issue of domestic taxes.  Her
delegation hoped that the Community could make adjustments to the principles it had outlined in this
area, that would reflect US concerns, so that he r delegation could work with the Community and its
member States to build consensus around them.  Gi ven the breadth of the issues the Community had
proposed, it would be useful to consider on which issues consensus might be achieved before the
Ministerial Conference, and which issues would require significantly longer deliberation.  The UnitedStates welcomed the communicati on from Singapore and Indonesia, which was clearly the result of
creative thinking on how to ensure that a liberal environment for electronic commerce was maintained
and expanded.  Her delegation would like to consult closely with other Members on whether this
provided a basis for further work between now a nd the Ministerial Conference.  The United States
was encouraged by Singapore's and Indonesia's recognition that electronic commerce was not
necessarily all services, and that the key issue to be addressed in classification was how best to ensure
fair, open and transparent market access. Her delegation was also encouraged by those Members'
endorsement of continuing the standstill on duties on electronic transmissions.  The United States
agreed with Indonesia and Singapore that it was useful to examine what existing service commitments
covered the range of electronic commerce activities, and whether additional commitments orclarification of existing commitments would best support the growth of electronic commerce.  This
might be particularly relevant to Internet access and network services, which were at the heart of
electronic commerce.  Similarly, the United States agreed that ensuring the applicability of the GATS
Telecommunications Annex to ensure non-discriminatory access by Internet service providers to the
public telecommunications network would help promote effective market access for electroniccommerce, and looked forward to discussing the scope of applicability of the Annex further with
Indonesia, Singapore and others.
Regarding technology neutrality, she said that one of the most important areas of possible
consensus emerging from the work programme was the applicability of technology neutrality to
electronic commerce, and she noted that one Member had questioned the broad applicability of this
principle.  The principle of technology neutrality would limit the ability of WTO Members to treat aservice differently based on the technology used.  This principle was not a new, plurilateral concept,
but rather one with longstanding roots in th e GATT.  The Tokyo Round Agreement on Technical
Barriers to Trade (TBT) and the WTO TBT Agreement expressly confirmed the application of this
long-standing principle.  First, technology-neutral scheduling was similar to the principle behind
tariff-binding.  Just as tariffs did not vary according to the mode of conveyance of the relevant good,so the scheduling of a service should not vary accord ing to the technology used for its delivery.  She
cautioned that Members should not go as far as the Community had proposed, to determine
categorically that "likeness of 'like services' for the purposes of GATS m.f.n. and national treatment
obligations does not depend on whether the services are delivered electronically or not."  Rather, a
determination of likeness should only be established on a case-by-case basis.  Second, technologyneutrality was firmly rooted in both the WTO and Tokyo Round TBT Agreements.  Article 2.8 of the
WTO TBT Agreement and paragraph I of the Code of Good Practice contained in Annex 3 to that
Agreement, as well as Article 2.4 of the Tokyo Round TBT Agreement, set forth a clear preference
for the use of standards introduced in terms of performance, rather than design or descriptive
characteristics.  In the same way that performance-based standards did not specify the method ordesign used to achieve this standard, technology-neutral scheduling would not define the particular
technology used to deliver a service.  Thus, by affirming the principle of technology neutrality,
Members were simply elaborating on the important  and long-standing WTO principles currently
applicable to all Members.  She associated her delegation with Australia's statement on this point.WT/GC/M/45
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The representative of Pakistan said that his delegation looked forward to receiving the reports
of the four subsidiary bodies on implementation of the work programme.  Time would be needed to
study the contents of these reports and to consider them in an integrated manner.  However, his
delegation wanted to make some preliminary points.  First, there was an urgent need for an objectivestudy of the developmental implications of the standstill on customs tariffs on electronic commerce,
since Members might be required to take a position on the standstill issue at the upcoming Ministerial
Conference.  Second, there might be a need to study further certain elements of the work programme,
for example, in relation to the issues being ex amined by the Committee on Trade and Development.
If such a need was identified and agreed upon, the relevant bodies could be asked to continue their
work in the specified areas.  Finally, in the endeavour to study different trade-related aspects of
electronic commerce, Members had to ensure that work being carried out in other organizations wasnot duplicated, especially on issues on which the WTO might not have the necessary competence.
Specifically, in regard to the intellectual property aspects of electronic commerce, Members had to
take into account the comprehensive programme of work being undertaken in WIPO, and should
follow developments in WIPO in relation to electronic commerce rather than embarking on a parallel
work programme in the WTO.
The representative of India said that in the first paragraph of its paper, Australia alleged that
four broad principles flowed from its analysis of on the various elements of the work programme.
However, the various subsidiary bodies had been considering in detail all areas of the work
programme, and it was premature to conclude that these four principles could underpin future work onelectronic commerce in the General Council.  Her delegation would examine Australia's proposal in
detail and would revert to it at a subsequent meeting.  Regarding technology neutrality, it had been
recognized in the subsidiary bodies that this issue was not as simple as had been alleged by some
delegations.  India supported Pakistan's statement that the General Council should not duplicate work
that had been done in WIPO and elsewhere.  The relevant WTO bodies should continue to studyvarious aspects of electronic commerce so that Me mbers could consider the outcome of that work.
The representative of Brazil said that his delegation had procedural and systemic concerns
about the treatment of this matter.  It had not been clear what the focus of discussion under this item
would be.  There were two parallel tracks – one in the regular meetings of the General Council, and
one in the special sessions of the General Council in  preparation for the Ministerial Conference.  The
problem was that both led up to the Ministerial Conference.  The work programme mandated the workin the regular meetings, but there was overlap with what was happening in the special meetings.  His
delegation was concerned that work was being duplicated, and asked for clarification about how to
proceed, so that it could come to the various meet ings knowing what the focus would be and could
prepare accordingly.
The representative of Malaysia said that this was an important subject that required
considerably more study.  There were still large areas of divergence among Members.  One area that
needed to be definitively decided was the question of classification, without which there would not be
much progress.  The possible extension of the standstill on duty-free treatment of electronic
transmissions was a subject that Malaysia, and other developing countries, would have to examinefurther.  It would be difficult for Ministers in Se attle simply to agree to another extension of this
standstill.  His delegation agreed with Pakistan that some urgency should be given to this aspect, now
that there had been a call for such an extension.  Regarding how to carry fo rward work on this matter,
the idea of a Working Group would have to be carefu lly studied.  His delegation looked forward to a
continuing discussion of electronic commerce when the reports of the other subsidiary bodies wereready.
The representative of Hong Kong, China said  that his delegation was grateful for the
contributions that had been made to this exercise by various delegations, particularly to Singapore andWT/GC/M/45
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Indonesia for their positive and clear paper, which contained many elements his delegation could
support.  Considerable work had been done by the various bodies, in particular in the Council for
Trade in Services, where it had been commonly acknowledged that most, if not all, of the contents of
electronic transmissions were services.  Hong Kong, China welcomed the US intervention and the
expressed desire to move forward, to resolve those areas where Members could reach consensus andto identify those areas where further work was needed.  It would also welcome detailed US input on
the various matters that had been raised.  Regarding technology neutrality, his delegation had found
the US statement somewhat difficult to follow and hoped that it would be provided in writing, if
possible prior to the next meeting of the Council for Trade in Services.
The representative of Argentina said that his delegation would express its opinion on this
matter when all of the reports from the subsidiary bodies were received.
The representative of Uruguay said that his delegation agreed with the statements by Brazil
and Argentina.  It was important to clarify the procedural issue.  This subject could only be dealt with
in greater detail once all of the reports had been received.
The representative of the United States, in response to Malaysia, clarified that the US was
seeking a permanent and binding commitment on duty-free cyberspace.  In response to Hong Kong,
China, she restated her delegation's position on technology neutrality contained in her earlier
intervention under this item, and noted that it was not only the United States that had made a point
regarding technology neutrality at the present meeting.
The representative of the European Communities said that the present discussion would
perhaps be best pursued on another occasion, either in the present or another forum.  His delegation
was not in a position at the present meeting to respond to a number of the points made.  The recent
report of the Committee on Trade and Development showed that the proper development of electroniccommerce could be conducive to the development process.  Members should revert to the points made
at the present meeting when they were better prepared to do so.
The representative of Hong Kong, China said that his delegation firmly believed in the
technology neutrality of WTO agreements, and certainly of the GATS.  This was a very complicated
subject, and his delegation would study carefully the statement by the United States.
The representative of Malaysia said that his delegation would not be able to agree to a
permanent and binding moratorium on customs duties on electronic transmissions until this issue had
been discussed further.  This issue was closely related to that of classification, which was another
issue that would have to be discussed.
The representative of Mexico said that the General Council, in its regular meetings, should
meet its obligations under the work programme by looking at the various issues that electronic
commerce raised in terms of the contractual legal framework of the WTO.  The review of the
information collected would be useful in helping Members to better understand the problems involved
in electronic commerce.  However, recommendations that Members might wish to make on electroniccommerce issues should be looked at in the context of the General Council's preparatory work for the
1999 Ministerial Conference.  Members should not confuse what was review and collection of
information, with any wishes in terms of future co mmitments – be they temporary or permanent – that
did not fall within the work programme.  The latter should be considered in the context of the special
sessions of the General Council, which was the forum in which his delegation would express its viewson other Members' wishes regarding electronic commerce.
The Chairman said that once the General Council had received all of the reports of the
subsidiary bodies, it could consider the procedural question raised by Brazil.WT/GC/M/45
Page 11
The General Council took note of the statements and agreed  to revert to this item at its next
meeting.
6. Promotion of the institutional image of the WTO (WT/GC/W/158 and Corr.1)
The Chairman recalled that at its meeting on 15-16 February 1999, the General Council had
an extensive discussion of a proposal by Venezuela on this matter (WT/GC/W/142 and Corr.1), and
that on 15 June 1999 it had a further, and very useful, discussion on the basis of a Note by the
Secretariat (WT/GC/W/158) that had been prepared on Venezuela's request.  The gist of the
discussion at the June meeting seemed to be that this was a matter that would most effectively be dealt
with at the national level.  Since several Members had expressed an interest at the June meeting inexchanging national experiences and in exploring the idea of establishing national committees, he
suggested that informal consultations on this subject be held before the end of July.  As he had a
number of pressing issues to attend to, he intended to invite Mr. Suzuki (Japan) to chair these informal
consultations and to report back to the General Council.
The representatives of Egypt, India
, Malaysia  and Hong Kong, China  said that as Members
were under pressure of time with many ongoing meetings on issues that should receive higher
priority, the informal consultations proposed by the Chairman should be postponed.
The representative of Egypt said that his delegation agreed that the responsibility of informing
the public on WTO matters lay with Member governments.  As stated in previous meetings, his
delegation had difficulties with some of the suggestions on promotion of the image of the WTO as
described in the Secretariat Note.  One difficulty related to the approach of giving priority to
addressing the positive aspects of the multilateral trading system and ignoring the difficulties and
problems thereof.  That approach should be more balanced.  With regard to possible activities toimprove the image of the WTO, his delegation would oppose any decision with financial implications,
as well as any suggestion that would interfere with internal affairs, such as contact with officials in
capitals.  Only proposals that had no financial implications should be considered, such as WTO
participation in book fairs if it were self-financing.  One had to be consistent, and he noted that for the
past few weeks, the Technical Cooperation Divi sion had not been able to respond positively to
developing countries' requests for technical assistance due to the lack of funds.  That situation would
remain unchanged unless additional funding was received.  This was an area where the image of theWTO could be improved.  Unless Members addressed the difficulties developing countries were
facing in implementing agreements, as well as their concerns, the image of the WTO would not
improve, regardless of all the ideas and publicity proposals described in the Secretariat Note.
The representative of India recalled that at previous meetings he had expressed doubts on the
efficacy of advertising or marketing techniques to improve the image of the WTO.
The representative of Malaysia said that his delegation was among those who had expressed
difficulties with Venezuela's proposal.  While Malaysia did not object to holding informal
consultations, in which his delegation would participate, these should take place after the MinisterialConference.  With regard to the proposals in th e Secretariat Note, his delegation would not agree to
proposals with financial implications, or to proposals that would meddle in the internal affairs of
WTO Members.  It was perturbing that WTO funds for technical assistance were fast depleting, thus
limiting the Secretariat's capacity to extend meaningf ul assistance to developing countries, such as
limiting to once every two years the participation of developing countries in WTO trade policycourses.  The WTO's limited resources should be allocated to more pressing needs, rather than to a
proposal whose efficacy was not proven.WT/GC/M/45
Page 12
The representative of Hong Kong, China said there was room for the Secretariat to do more to
promote the WTO to the general public and the media, by providing stronger technical support to
Member governments in formulating their domestic publicity programmes.  His delegation had no
major objection to informal consultations on this matter, but urged Members to reconsider the timing
of such consultations, so as to avoid imposing further burdens on Members, especially those withsmall delegations.
The representative of Venezuela supported the Chairman's proposal.  With respect to
comments by previous speakers, he wished to clarify that in making the proposal, it had not been
Venezuela's intention to hide any possible existing shortcomings in the organization, but simply to
ensure that the functioning and the objectives of the WTO were more broadly known.  In this regard,
the Secretariat could create instruments that could be used by countries to further disseminateknowledge about the WTO.
The representative of the United States said that her delegation supported the proposal that the
Secretariat explore ways to develop positive and effective informational materials within the bounds
of existing resources.  However, many of the options and strategies presented in the Secretariat paperwere high-cost options.  While this was an institutional issue, it was also a national issue that each
WTO Member should address with its domestic constituency.  In many ways, it was an issue of the
attitude Members should have with respect to increasing transparency and openness in the
organization and providing ways for stakeholders to be heard.  Improving the organization and
content of the WTO website and exchanging information on the types of informational and educationmaterials that would be helpful in their interactions with their national constituencies would be useful
steps the Secretariat could take, and would not be costly.  These efforts would complement efforts to
improve access to information on the WTO, and institutionalize a consultative process with non-
governmental organizations and other international organizations.
The representative of Pakistan supported the Chairman's proposal, but said there was no great
urgency regarding this question.  The limited time Members had should be spent on substantive
issues.  The best service to the organizati on would be to achieve a good outcome at the
1999 Ministerial Conference, for which Members had to prepare intensively.  The informal
consultations proposed should not take too much time , and should not lead to a diversion of financial
resources from other, more worthwhile programmes, particularly those relating to technical
assistance.
The representative of Mexico said this issue was important, since there was a considerable
degree of misinformation about the work and the objectives of the WTO, both in Mexico as well as
internationally.  In promoting the image of the WTO,  it was clear that the challenges or the problems
should not be hidden.  However, if the existing misinformation was not clarified, Membergovernments would have greater difficulty in making their general public understand why they were
negotiating within the WTO framework.  With regard  to the Secretariat Note, the description of the
activities undertaken by the Secretariat in this area was useful, since not all delegations were aware of
this.  Some of the ideas contained in that document were not viable, but others could be easily
implemented,  and it was up to Members to decide on their implementation.  With regard to theChairman's proposal, because of a forthcoming seminar to be held in Mexico to inform its public
opinion on such matters as WTO activities and the Ministerial Conference, his delegation preferred to
hold the informal consultations between now a nd the October General Council meeting.  While
Members had to attend many meetings at the present time, a half-day consultation to have a first
overview of the problems raised by this issue would allow the General Council to take a moresystematic decision on this matter, if necessary.
The representative of Switzerland said that two elements arose from the discussion.  One
related to the cost of implementing of the proposals , and this should be examined in consultations toWT/GC/M/45
Page 13
examine this aspect.  The other related to the degree of urgency of the issue.  In this respect, his
delegation was concerned by the fact that consideration of this issue might be postponed because of
more pressing work, since there was always pressing work in the organization.  Moreover, one should
be careful in postponing problems considered less urgent, but which nonetheless were important and
might have considerable political impact on the results of the work of the WTO.  He fully agreed withMexico's analysis of the situation and with its approach to the follow-up of this work.  A minimum of
time should be devoted to this matter over the next few weeks, so as not to put off the consideration of
this serious and relatively urgent issue.
The representative of Mauritius said that his delegation supported the Chairman's proposal
and wished to participate in the informal consultations.
The representative of Canada said that this work was important, but only part of broader work
on commitments Ministers had agreed to in the Geneva Ministerial Declaration to strengthen support
for the multilateral trading system.  He agreed with Egypt that there was more to strengthening
support for the multilateral trading system than simply improving the institutional image of the WTO,
although that should not be neglected.  With regard to the Secretariat Note, a number of usefulsuggestions warranted further consideration.  However, Members had the principal responsibility in
promoting the image of the WTO, and Canada would not agree to implementing proposals with
budgetary implications.  However, within those constraints, Canada was ready to examine the
Secretariat proposals, and in particular the idea of exchanging information and experiences among
Members in this area.  Canada supported Mexico's suggestion to hold one informal consultationbefore the October meeting of the General Council.
The representative of Turkey agreed that this issue was important.  The fastest, most efficient,
and cheapest way to improve the WTO's image would be to enhance its website.  His delegation had
some ideas as to how to further develop the website and would share them with Members in theinformal consultations.
The Chairman said that the idea of holding informal consultations seemed to be agreed by all.
He suggested that Mr. Suzuki consult with delegations on the exact timing of these consultations.
The General Council took note of the statements and agreed  to conduct informal consultations
on this matter among interested delegations.
7. Frequency and scheduling of WTO meetings
The Chairman recalled that at the General Council meeting on 15 June 1999, the delegation of
Mexico, on behalf of the Informal Group of De veloping Countries, had introduced a submission
(document Job No. 2122) on this matter.  It was ag reed that this matter would be subject to informal
consultations and that the General Council would revert to it at its next meeting.  It was his intention
to conduct these consultations with interested delegations at the earliest opportunity, based on the
submission from Mexico, and to report back to the General Council.
The General Council took note of the statement and agreed  to revert to this matter at a future
meeting, in the light of the consultations to be held.
8. Observer status for international inter governmental organizations (WT/GC/22/Rev.1)
The Chairman recalled that this matter had been discussed in formal and informal meetings of
the General Council on several occasions, and most recently at the General Council meeting onWT/GC/M/45
Page 14
15 June, at which a communication from the United States (WT/GC/22) had been considered.  He
drew attention to a recent communication from the Un ited States containing a revision of the earlier
document (WT/GC/22/Rev.1).
 The representative of the United States recalled that at the June General Council meeting,
Members had considered a US proposal for a decision by the General Council that would facilitate
moving forward on the many requests for observer status from international intergovernmental
organizations.  Some 22 delegations had commented on the US proposal – some had agreed to the text
and others had suggested changes.  In an effort to move this issue forward, her delegation had invited
all delegations who had spoken at the June General Council meeting to participate in an informal
consultation on the proposal.  The revised proposal contained in WT/GC/22/Rev.1 was the result of
that discussion.  On 25 June, her delegation had sent the revised proposal for comments to alldelegations who had spoken on this item at the June meeting, and had followed up with telephone
calls to those who had not responded.  As far as her delegation was aware, no delegation had
expressed opposition to the text now before the General Council.  Her delegation sincerely hoped that
Members would be able to adopt the guidelines set out in the text.  She clarified that the revised
proposal was in no way intended to be a substitute for the guidelines in Annex 3 to the GeneralCouncil's rules of procedure, but rather was intended to complement those guidelines and further
clarify the intention of WTO Members.  She also clarified that the guidelines in paragraphs (a) and (b)
of the proposal were not intended to be cumulative.  The text was intended to be read as creating a
presumption in favour of granting observer status to organizations that met the criteria in either
paragraphs (a) or (b).  The General Council had before it pending requests from a number ofinternational intergovernmental organizations, as did a number of WTO subsidiary bodies.
Observership, where requested, would facilitate cooperation between the WTO and these
organizations.  The lack of action on additional guidelines, such as those suggested by the United
States, was delaying agreement in the General Council and in other bodies, including the Committee
on Trade and Development, the Committee on Regional Trade Agreements and the Council for Tradein Goods, on numerous requests for observership, and the time had come to unblock this situation.
She urged Members to agree to the proposal, so that all of the pending requests for observer status
could be considered as soon as possible.
All delegations who spoke expressed appreciation for the United States' revised proposal and
for that delegation's efforts to advance this matter.
The representative of Mexico said that unfortunately, and through no fault of the United
States, his delegation had not been able to participate in the consultations on this matter.  Mexico
could support the revised proposal with one amendment:  in the third paragraph from the end of the
document, in the last line, the text should read "regions on WTO issues", and the words "under
discussion in the wider WTO context" should be deleted.  His delegation had other considerations toexpress, but could agree to adopt the text with this amendment.
The representatives of Korea, Japan
, Hungary , Brazil , Australia , Switzerland , European
Communities, Canada , Norway , New Zealand , Israel  and  Chile  said that their delegations could
support the revised proposal as it stood.
The representative of Korea said that the revised proposal generally reflected the views of
Members at the June General Council meeting and provided a basis for granting observer status not
only to intergovernmental organizations of an economic nature, but also to those of a non-economic
nature, where certain conditions were met.  The granting of observer status to the latter organizations,i.e. political, social or environmental organizations,  should be considered on a selective basis, for the
following reasons.  First, distinctions between economic and non-economic matters were often
artificial, and did not properly describe the activities of certain organizations.  Second, some
international intergovernmental organizations of a political, social or environmental nature might haveWT/GC/M/45
Page 15
interests in WTO activities.  If those organizations could successfully demonstrate clear linkages
between their activities and those of the WTO, observer status should be granted.  Lastly, given the
nature of privileges enjoyed by observers, i.e. the right to speak and receive WTO documents, the
granting of these privileges to non-economic organizations on a selective basis would not be a
significant burden on the Secretariat.  Members had to be open-minded and flexible in order tounblock the current situation and form a consensus on this matter.  The granting of observer status
should always be made on a case-by-case basis.
The representative of Egypt said that the revised text was an improvement over the earlier
text.  His delegation had not been able previously to convey its remarks on the revised text and
wanted to make a suggestion regarding paragraph (b).  Since the issue of observership should not be
looked at exclusively from the standpoint of benefit to the WTO, his delegation proposed the deletionof the text in paragraph (b) after the word "trade" in the second line.
The representatives of Brazil, Australia
, European Communities , Canada , Norway , New
Zealand, Israel  and Chile  said that their delegations could accept the amendments proposed by
Mexico and Egypt.
The representatives of Ghana and Mauritius  said that their delegations could support the text
as amended by Mexico and Egypt.
The representative of Japan said that, as mentioned in the penultimate paragraph of the
revised proposal, the proposal was aimed at facilitating the General Council's consideration of
requests for observer status and at complementing the existing guidelines in Annex 3 to the General
Council's rules of procedure.  Japan hoped that the General Council could come to an expedited
agreement on the revised proposal.
The representative of Pakistan said that his delegation continued to have difficulties with the
revised proposal.  First, there were substantive textual difficulties, one of which had been identified
by Egypt.  Paragraph (b) was phrased in a manner that could lead to subjective and arbitrary decision-
making and might lead to further confusion.  Regarding the approach of the proposal, Pakistan would
prefer a package approach rather than a "starting-point" approach, that would include a text of this
kind as well as an explanation of how these criteria would apply to the existing applicants.  Once there
was an understanding on the latter element, the current logjam could be broken.
The representative of Hungary appealed to all Members who might still have minor problems
with the text to be flexible, since the proposal did not change the guidelines provided in Annex 3, but
rather sought to make the procedures more clear.  Any further delay in taking this modest step would
send a false message to the outside world that the WTO was a closed organization.
The representative of Myanmar, on behalf of the ASEAN Members , said that these countries
considered this to be an important issue, and since they had only recently received the revised
proposal in document WT/GC/22/Rev.1, they needed further time to study it.  ASEAN's position on
this issue was quite clear and had been stated at the June General Council meeting.  That position hadnot changed.  A decision should not be taken at the present meeting, since many delegations needed
more time to digest the proposal.
The representative of Brazil said that the revised proposal was a clear improvement over the
previous draft.  Neither paragraph (a) nor (b) could be read independently of Annex 3.  One of the
points in that Annex referred to whether the organization had been associated in the past with the
work of the contracting parties to GATT 1947.  Thus, paragraphs (a) and (b) had to be read in
conjunction with Annex 3.  He urged delegations to reflect carefully on what was a good compromise
in this area.WT/GC/M/45
Page 16
The representative of Australia said the fact that this issue had been on the General Council's
agenda for so long did not reflect well on this body's decision-making abilities.
The representative of Switzerland said that the amendments that had been proposed did not
seem to be essential to the text, and he hoped that all Members would be able to show the necessary
flexibility to adopt the text at the present meeting.
The representative of Canada said that the point made by Egypt that benefit was a two-way
street was an important one, on which Members should  reflect.  This matter had been a long-standing
item on the General Council's agenda, on which considerable time had been spent, and the proposed
guidelines would allow for progress on this issue in the various bodies addressing it.
The representative of the United States said that her delegation appreciated the constructive
suggestions made by delegations to meet their particular concerns with the revised text.  The United
States could accept both Mexico's and Egypt's sugg ested amendments.  However, her delegation was
concerned that the ASEAN Members had said they needed more time to consider the text, andexpressed the hope that their concerns could be satisfied by the present discussion and the support
expressed for the proposal at the present meeting.
The representative of Norway agreed with Hungary that the failure to decide on this matter
was a black mark on the organization.  Members should try to finalize this matter at the present
meeting and to show that decisions could be taken in the WTO.
The representative of New Zealand said that the revised proposal would assist a case-by-case
consideration of requests for observer status .  New Zealand hoped that Members could reach
agreement on the revised proposal at the present meeting, given the improvements that had been madein the text and the length of time this issued had been before the General Council.
The representative of Chile said that adoption of the revised proposal at the present meeting
was important, since it would make it possible to solve this problem and to improve the organization's
image.
The Chairman said that it seemed there was overwhelming support for the revised proposal as
amended, and appealed to Members to be flexible, so that agreement could be reached on this matter
at the present meeting.  This would send a positive message to the international community, and he
urged delegations to support the proposal.
The representative of Myanmar, on behalf of ASEAN Members , said that these countries
were merely asking for more time to consider the revised proposal further.  They were at present
consulting intensively among themselves, and would like to take the floor again on this item before
the present meeting adjourned.
The representative of Pakistan said that his delegation continued to have concerns about the
application of the contents of the proposal.  While his delegation was aware of the need to bring
closure to this issue, it was not in a position to go along with any decision at the present meeting.
The Chairman said that the idea would be to agree on the guidelines and subsequently to
consult on the application of those guidelines to the pending requests for observer status.
The representative of Pakistan said that the guidelines came in a certain context, and were not
an issue in and of themselves.  While agreement on this issue was close, further time was needed for
reflection.WT/GC/M/45
Page 17
The Chairman said that providing further time for reflection would mean that the earliest a
decision could be taken on this matter would be October, which was very close to the Ministerial
Meeting.
The representative of Australia said that his delegation was not clear as to the relevance of
Pakistan's concern to this particular proposal.  His delegation had understood the proposal to be a
starting-point to enable Members to look more pr ecisely at the various requests for observership.
Pakistan seemed to be saying that Members should take decisions on all of the applications before any
other decisions were taken, and Australia was concerned about the logic of that suggestion.
The representative of Canada said that Members should not await October to take a decision
on this issue, since there would be benefit to all in having observers in the General Council and in
other WTO bodies.  He proposed that Members agr ee provisionally to follow the approach suggested
in the proposal unless any Member, by, for example 31 July, stated an objection to it.  This would
give Members two weeks to reflect on the proposal.
The representative of Egypt suggested that anot her approach would be to maintain this item
on the General Council's agenda for the October meeting and to try to finalize the guidelines at the
present meeting.  In the informal consultations , Members could examine the application of these
guidelines and begin consideration of all pending requests for observer status.  At the General Council
meeting in October, it would be decided whether these guidelines should be maintained.
The representative of Pakistan said that the informal consultations could continue notionally
along the lines provided by the guidelines, and the entire matter would come together at the October
General Council meeting, at which time the entire package would be decided on.  His delegation was
amenable to Canada's approach, but felt that Egypt's approach was more logical.
The representative of Myanmar, on behalf of the ASEAN Members , said that in light of the
fact that the United States, among others, had accepted the proposed amendments, it would be useful
to pursue the question put by Pakistan regarding the application of these guidelines to pending
requests for observer status.
The representative of Switzerland said that his delegation had understood Pakistan's position
as not excluding the possibility of taking a decision on this matter at the present meeting, as proposed
by Canada.  Egypt's proposal was also good, but was not the simplest.  Members should try to take a
decision along the lines suggested by Canada.
The representative of Japan said that both approaches had merit.  However, his delegation
preferred Canada's approach because it was more simple.
The representative of Hungary said that Members should take advantage of this opportunity to
take a small step forward.
The Chairman said that there seemed to be gr owing support for Canada's suggestion that the
General Council agree to the supplementary guidelines in document WT/GC/22/Rev.1, as amended,
subject to any Member indicating its opposition to the proposal by 31 July 1999.  If there was no
objection by that date, the proposal would be considered as agreed.  In the meantime, further informal
consultations would be held to examine, against those guidelines, the pending requests for observerstatus in the General Council from international intergovernmental organizations.  He further
proposed that that the General Council take note of the statements and agree to revert to this matter at
a future meeting in light of the informal consultations to be held.WT/GC/M/45
Page 18
The General Council so agreed.
9. Five-year review of the exemption provided under Paragraph 3 of the GATT 1994
(WT/GC/W/228)
The Chairman recalled that the exemption provided under paragraph 3(a) of the GATT 1994
was, according to paragraph 3(b) of the GATT 1994, to  be reviewed five years after the date of entry
into force of the WTO Agreement, in order to examine whether the conditions which created the need
for the exemption still prevailed.  The exemption would thereafter be reviewed every two years for as
long as it was in force.  He drew attention to the communication from the United States in document
WT/GC/W/228 that addressed this question.
The representative of the United States recalled that paragraph 3(b) of the GATT 1994
required the Ministerial Conference to review the exemption provided under paragraph 3(a) of the
GATT 1994 not later than five years after the entry into force of the WTO.  Because Article IV:2 of
the WTO Agreement provided that the General Council should conduct the functions of the
Ministerial Conference between meetings of the Ministers, and because this issue was not of acharacter meriting the involvement of Ministers, her delegation had thought it appropriate to review
the exemption in the General Council.  Since some delegations were not familiar with the background
to the exemption or with the annual statistical reports submitted by the United States in connection
with it, her delegation had recently provided addi tional background information in order to facilitate
the General Council's discussion.  The exemption provided under paragraph 3 of the GATT 1994 wasnot a waiver but an integral part of the GATT 1994 that had its origin in paragraph 1(b) of the
Protocol of Provisional Application of the GATT 1947.  That paragraph provided that Part II of the
GATT 1947 applied to contracting parties "to the fullest extent not inconsistent with existing
legislation".  Since the WTO was not applied by its Members provisionally, and since the GATT 1994
had no counterpart to the GATT 1947's Protocol of Provisional Application, the exemption providedunder paragraph 3 of the GATT 1994 was necessary to deal with non-conforming provisions of
domestic legislation of a non-discretionary character in the specific area addressed by the exemption.
On 20 December 1994, the United States had invoked the provisions of paragraph 3(a) with respect to
specific legislation that met the requirements of that paragraph.  The United States' invocation of this
exemption had been acknowledged by the then Director-General the same day.  The invocation of the
exemption carried with it an obligation to provide WTO Members with annual statistical reports
pursuant to the requirements of paragraph 3(c) of the GATT 1994.  The United States had abided fullywith this reporting requirement, and had submitted reports for 1995 in WT/L/112, for 1996 in
WT/L/201, for 1997 in WT/L/257 and for 1998 in WT/L/293.  The sole purpose of the review
provided for in paragraph 3(b) was to "examine whether the conditions which created the need for the
exemption still prevail" – in other words, whether the legislation continued in force and had not been
amended in a way that would disqualify it from coverage under the exemption.  The conditions thathad created the need for the use of this exemption by the United States still existed.  Since the United
States had invoked this exemption in 1994, there had been no amendments, legislative changes, or
measures adopted by the United States that would alter the US position in conforming to coverage by
the exemption.  In fulfilling the terms of the exemption, the United States had provided detailed
annual reporting of vessel orders and deliveries from US shipyards.  The General Council, acting forthe Ministerial Conference, should conclude its examination by noting that the conditions that created
the need for this exemption still existed.
Many Members expressed appreciation for the additional information provided by the United
States on this matter.
The representative of the European Communities said that his delegation had noted the United
States' argument that the conditions that had created the need for the exemption still existedWT/GC/M/45
Page 19
essentially on the grounds that the legislation had not been amended.  The Community regretted this
situation and invited the United States to consider amendment, if not repeal, of the protectionist
provisions of the Jones Act.  The forthcoming negotiations aimed at multilateral trade liberalization
would provide both the opportunity and the encouragement to do so.
The representative of Myanmar, on behalf of the ASEAN Members , noted that according to
the United States, the existence of relevant legislation was, by itself, the then-prevailing condition that
had created the need for the exemption, and that since such legislation still existed, the condition still
prevailed.  According to this argument, discrimination was authorized simply because it existed, and
should continue to be authorized simply because it continued to exist.  One had to distinguish between
the underlying rationale for an act, and the act itself.  In the context of the present review, Members
were to examine "whether the conditions which created the need for the exemption still prevail", i.e.whether the rationale for the Act still prevailed.  This exemption was a serious deviation from a basic
principle of the WTO.  Worse, there was a real possibility that the exemption would remain
perpetually, and that Members would engage in the mandated reviews in, at best, a routine manner.
Paragraph 3 of GATT 1994 was a product of negotiations in the Uruguay Round, and only future
negotiations could allow Members to remove such exemptions.  Pending that, paragraph 3 of GATT1994 would remain an aberration that Members had to live with.
The representative of Japan said that his delegation attached great important to this review
process, because the provision in question allowed a serious deviation from fundamental GATT
disciplines.  The purpose of the review was to examine "whether the conditions which created theneed for the exemption still prevail".  Members of the WTO should fulfil their duties, with the aim of
minimising deviation from – and thereby maintaining the integrity of – WTO rules.  In the course of
this review, each Member should ask itself whether it was convinced of the necessity for the
continuation of the exemption.  The General Council should continue its review in order to reach a
conclusion as to whether the conditions that created the need for the exemption actually did stillprevail.  The core issue of the present exemption, which was the Merchant Maritime Act of 1920 –
the so-called "Jones Act" – required that ships for domestic shipping services be built in the United
States.  His Government had repeatedly raised this issue in bilateral meetings, and had requested that
such restrictions be removed.  It was disadvantageous to foreign shipbuilders that the US Government
prohibited carriers from making use of ships built in foreign countries, and to clients having cargo
transported – such as in the case of long distance "domestic" maritime transportation from the
mainland of the United States to the Hawaiian islands – due to the increased cost for maritimetransport through the use of the comparatively more expensive US-made fleet.  Given the
unreasonable nature of this legislation, the necessity of the exemption had to be re-examined in a
serious manner.  The information that there had been no legislative changes with respect to the
exempted measures did not help Japan to understand the necessity for the exemption, or for the WTO
to allow the exemption to continue.  The last paragraph of the US communication in WT/GC/W/228
did provide information on the general thinking of  the United States regarding "national defense
purposes", but was far from a sufficient or persuasive explanation.  Japan had difficulties
understanding the linkage between the acquisition and maintenance needs of the US Navy, and the
need to keep the US internal shipping market co mpletely closed.  According to the acknowledgement
letter in 1994 from the then Director-General, there were five elements of the legislation;  therefore,this issue was not limited to the Jones Act.  A more detailed explanation was required of the need for
the exemption for each element of the legislation, and the US paper failed to meet such requirements.
The representative of Hong Kong, China said that his delegation urged the United States to
reform the Jones Act, which was outdated legislation that was inconsistent with the fundamental
principles of the GATT/WTO and did not meet the modern business needs of US industries.  As
indicated in a US International Trade Commission study, it reduced the competitiveness of US
industries and increased the cost of transportation of raw materials and products.  The United States
had a liberal services régime and a vigorous and competitive economy, and the Jones Act did not fitWT/GC/M/45
Page 20
well in this scenario.  Reform of the Jones Act would be instrumental to the success of the
negotiations on maritime transport services to be resumed in 2000.
The representative of Australia said that the exemption under paragraph 3 of GATT 1994 had
been fashioned for the United States alone in the closing stages of the Uruguay Round.  The US had
not been prepared to seek congressional approval at that time to bring the relevant legislation into
consistency with GATT 1994, and thus had been given this special temporary provision to enable the
Uruguay Round to be finalized.  All other Members had been obliged to bring their previously grand-
fathered legislation into conformity, e.g. in Austra lia's case, the discriminatory sales tax on fruit juice.
The review provisions of paragraph 3(b) were in the expectation that at some stage after five years,
the waiver would be terminated, i.e. it was in essence a transition provision.  The phrase in
paragraph 3(b) to "examine whether the conditions which created the need for the exemption stillprevail" did not mean what the United States had claimed, i.e. to examine "whether the legislation
continues in force and has not been amended in a way which would disqualify it from coverage under
the exemption".  The latter would be a meaningless examination by the Ministerial Conference, as it
would not take a decision by that body to ascertain whether the legislation was no longer in force or
had been amended.  Moreover, if this was the exte nt of the review, why would subsequent reviews be
required every two years?  The reference to the phrase "the conditions which created the need for the
exemption still prevail" meant that the Ministerial Conference had to decide whether the exemption
was still justified.  Following an examination, the Ministerial Conference might decide that the
exemption was justified, or that the exemption should be modified or removed, or that a normal
waiver would be preferable.  Paragraph 3 was an exemption granted to the United States for Part II ofGATT 1994, but was not necessarily an integral part of GATT 1994, as claimed by the United States.
It was a waiver, but not one falling under WTO paragraphs 3 and 4 of Article IX and the
Understanding in respect of waivers of obligations under GATT 1994.
The representative of Norway said that his delegation shared the hope expressed by the
European Communities that the United States would be willing to look at this legislation in
connection with the upcoming negotiations on maritime transport services.
The representative of Panama asked whether the General Council was, at the present meeting,
conducting a review of the exemption under paragraph 3(b) of the GATT 1994.
The Chairman confirmed that the General Council was conducting a review of the exemption.
The representative of Panama  said that it was not clear from the documentation related to this
item whether the review was to be conducted at present or in the future, and asked the United States
for clarification on this point.
The representative of the United States said that the General Council was conducting a review
of the exemption at the present meeting.  In response to Australia's comment, she said that
paragraph 3(a) of GATT 1994 was not a waiver a nd was not a temporary provision, but was the
present day's counterpart to the GATT Protocol for Provisional Application, and defined the United
States' legal relationship with the WTO in the area covered.  In response to Japan's concern that theadditional information circulated was not sufficient, she noted that the terms of the exemption did not
require the United States to justify the invocation of its coverage.  However, her delegation would
provide additional information on the context for the legislation at issue.  The core shipbuilding
industrial base in the United States, upon which the US Navy depended to meet its acquisition needs,
had historically been sustained by a combination of commercial shipbuilding for the domestic tradeand military orders.  With defense orders declining in a tight budget environment, it was critical for
US shipbuilders to build commercial ships for this trade in order to ensure a viable industrial base to
meet future US Navy requirements.  Moreover, the US Navy relied on shipyards that performed
commercial work for the Jones Act trades, for day-to-day maintenance of naval and surge fleetWT/GC/M/45
Page 21
vessels, such as the Ready Reserve Fleet.  Vessels in that Fleet were maintained in a state of readiness
by the US Government and were capable of providing strategic sealift resources to meet national
defense and other national security requirements.  She hoped that this information would answer the
questions posed on this legislation.
The representative of Jamaica said that beyond the particular issue at hand, there were
important implications to be taken into account as Members considered flushing out the rights and
obligations of the WTO.  First, his delegation was struck by the infant industry argument used by
some Members to maintain protection for certain industries needed for national economic security.
Second, paragraph 3(b) of GATT 1994 did not provide that the legislation covered by the exemption
was open-ended and could continue ad infinitum.  That paragraph spoke of a review for as long as the
exemption was in force.  Therefore, the question was at what point conditions would change in orderfor Members to contemplate that the exemption should  disappear.  If there was no clear answer to that
question, this part of the GATT 1994 meant that the situation was open-ended and there was no
obligation by the United States to remove the legislation under the exemption.  Thus, the question was
whether there was a sunset clause to the exemption from the general rules and principles of the WTO.
This exemption could not be considered a waiver because it was contained in Annex 1A of the WTOAgreement and thus was an integral part of that Agreement.  However, if there was no way in which
to review the exemption in order to bring it to cl osure, except at the discretionary authority of the
Member invoking the exemption, it was just as bad as legislation that had discretionary elements.
While the present review was perfunctory, his delegation supported Australia's suggestion for
examining this issue in a working party, so that the range of issues identified by Members could be
explored.
The representative of Brazil said that his delegation did not see anything in document
WT/GC/W/228 that invited the General Council to engage in a review of the exemption.  Thus, his
delegation had taken this communication merely as information, and had no instructions for engagingin a review at the present meeting.  Brazil would like to have further clarification on the other four
legislations cited in the communication to the United States from the then Director-General dated
20 December 1994, contained in WT/GC/W/228.
The representative of the United States said that her delegation had not obtained this
exemption in the Uruguay Round for free.  As Myanmar had noted, the exemption had resulted from a
negotiation that had materially affected the way other elements of the WTO Agreement had beenfinalized.  Regarding Jamaica's statement, the exemption would vanish when the United States
changed the legislation or decided to end the exemption through negotiation.
The representative of Panama said that the title of this item on the General Council's agenda
did not give any indication of the real nature of the subject.  Thus, his delegation had not obtained
instructions on this matter, and was not in a position to agree that the review of the exemption had
been concluded.  Panama agreed in principle with Australia's suggestion that this matter might be
considered in more detail in a working party.
The representative of Mexico referred to the supplemental background information provided
by the United States on this matter, and noted that the United States had claimed that the purpose of
the review was to examine whether the legislation continued in force and had not been amended in a
way that would disqualify it from coverage under the exemption.  Mexico did not agree with that
interpretation of paragraph 3(b).  The conditions that had created the need for this exemption were not
the legislation itself or whether the legislation had been amended.
The representative of the Philippines noted that the review was supposed to take place not
later than five years after the entry into force of the WTO Agreement.  There was some significance in
this, because in the review, Members were supposed to examine whether the conditions that hadWT/GC/M/45
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created the need for the exemption still prevailed.  He asked whether, in the case where there was no
consensus that the conditions still prevailed, the exemption would lapse automatically.
The Chairman proposed that delegations reflect further on this question, and that the General
Council take note of the statements and revert to this matter at its next regular meeting.
The General Council so agreed.
10. Participation of acceding countries as obse rvers in the preparatory work for the 1999
Ministerial Conference  (WT/GC/W/212)
The Chairman recalled that the question of accession to the WTO had been most recently
discussed at the 15 June 1999 meeting of the General Council, at which time a submission by the
European Communities (WT/GC/W/153) and a Technical Note by the Secretariat (WT/ACC/7 and
Corr.1) had been considered.  Members had also heard an oral report prepared by Mr. Ruggiero,
former Director-General, and read out by the Chairman, which had subsequently been circulated in
WT/GC/W/212.  Delegations had been invited at that meeting to reflect on the question of therelationship between the accession process and the new round of multilateral trade negotiations, and
on whether to enable the acceding governments to participate, as observers, in the General Council's
informal preparatory meetings for the 1999 Ministerial Conference.  On the basis of informal
discussions with delegations, it appeared that the id ea of inviting acceding governments to participate
as observers in the informal General Council preparatory process would be acceptable to Members.He therefore proposed that the General Council agree that acceding governments be exceptionally
invited to attend, as observers, the General C ouncil's informal preparatory meetings for the
1999 Ministerial Conference.
The representative of Egypt suggested that  the term "acceding governments" in the
Chairman's proposal be replaced by the term "observer governments", as the latter term had a wider
scope.
The representative of Myanmar, on behalf of the ASEAN Members , said that it was important
that acceding government be given as much opportunity as possible to gain first-hand experience of
the WTO's objectives, functions and structure.  Thus, ASEAN acknowledged the need for a clear
understanding on the participation of acceding countries in the preparatory process for the 1999Ministerial Conference, as such participation would be very useful for acceding governments in their
preparation for WTO membership.  Acceding governments should be allowed to participate, as
observers, in the General Council's informal preparatory process for the next Ministerial Conference.
The representative of Panama asked whether, according the Chairman's proposal, acceding
governments would be able to participate only in the informal, and not the formal, meetings of the
General Council  preparatory to the 1999 Ministerial Conference.
The Secretary of the General Council confirmed that acceding governments were already
observers in the formal meetings of the General Council, which included the special meetings in
preparation for the Ministerial Conference.  The question was whether these governments should be
exceptionally invited to attend, as observers, the informal preparatory meetings of the General
Council, which normally no observers attended.
The representative of Egypt said that some governments that had the intention to accede to the
WTO had not yet submitted a formal request for accession.  Governments such as those, which
already had observer status, should not be excluded from the preparatory meetings.WT/GC/M/45
Page 23
The Chairman said that if there was no objection, it could be agreed that observer
governments would be allowed to participate in the informal preparatory meetings of the General
Council, unless any delegation had a different view.
The representative of Brazil said that his delegation could agree with Egypt's proposal, and
asked whether all acceding governments already had observer status in the General Council.
The Chairman confirmed that this was the case.
The representative of Japan said that his delegation hoped that acceding governments could
join the organization as soon as possible.  Those who would not have completed their accession
procedures before the launch of the next round of negotiations should be able to participate in thosenegotiations, following the example of the Uruguay Round.  Thus, his delegation was in favour of
exceptionally inviting acceding governments to attend the informal General Council meetings held in
preparation for the 1999 Ministerial Conference.
The representative of Mexico said that his delegation had understood, according to the agenda
of the present meeting, that the General Council would decide whether those governments already
formally in the process of negotiating their accession to the WTO could participate as observers in the
General Council's informal preparatory meetings for the Ministerial Conference.  On that point
Mexico was in agreement.  Regarding Egypt's suggestion to expand this group to those governments
that had not yet submitted a formal request for accession, his delegation would first like to have a listof the governments in question.  The General Council could decide at the present meeting to grant
observer status in the meetings in question to governments which had formally requested accession to
the WTO, and decide later on those which had not yet formally initiated their accession process.
Mexico was ready to accept Egypt's proposal, once it knew what governments were involved.
The General Council took note of the statements and agreed
 to the Chairman's proposal as
amended by Egypt.
11. United States restrictions on imports of lamb from Australia
The representative of Australia, speaking under "Other Business", said that on 7 July 1999 the
United States had announced import restrictions on imports of lamb meat as a measure under the
WTO Agreement on Safeguards.  His delegation was raising this matter in the General Council
because it had systemic implications.  The US lamb industry was small and in secular decline for
reasons that had nothing to do with imports.  The US International Trade Commission ("USITC") had
found only a threat of serious injury, but had nevertheless made a recommendation for a tariff quota.
The USITC finding had been made in early February 1999, and the measures announced on 7 Julyhad been more punitive than those recommended by the USITC.  The United States Government had
chosen to use the safeguard instrument in the most dubious circumstances, on the basis of only a
threat of serious injury, and had made it clear that it would take similar action in the future.
The representative of New Zealand said that his delegation shared the concerns expressed by
Australia on the imposition by the United States of safeguard measures on lamb from Australia and
New Zealand.  His delegation considered this action unjustified, and had made its views known at the
recent US Trade Policy Review meetings, as well as in consultations with the United States under
Article 12:3 of the Agreement on Safeguards.  Ne w Zealand was reviewing its further WTO options
in relation to the US action.
The General Council took note of the statements.WT/GC/M/45
Page 24
12. Change in United States trade relations with Mongolia
The representative of the United States, speaking under "Other Business", recalled that in July
1996, the United States had notified the Chairman of the General Council that it did not consent to the
application, as between it and Mongolia, of the WTO Agreement and the Multilateral TradeAgreements in Annexes 1 and 2 thereto.  On 7 July 1999, the United States had notified the Chairman
that it had rescinded this invocation of Article XIII of the WTO Agreement, and therefore consented
to the application, as between it and Mongolia, of the WTO Agreement and the Multilateral Trade
Agreements in Annexes 1 and 2 thereto.
The General Council took note of the statements.
13. Review of procedures for the circulation and derestriction of WTO documents
The Chairman, speaking under "Other Business", said that enhancing transparency in the
work of the WTO was a major political concern to many Members.  An important aspect of this
question was the revision of current procedures for circulation and derestriction of WTO documents.He recalled that he had requested Mr. Hoda, fo rmer Deputy Director-General, to conduct informal
consultations on this matter, based on the draft proposals submitted by the Chairman of the General
Council on the revision of current procedures for derestriction of WTO documents (Job No. 929 of
18 February 1999).  Mr. Hoda had conducted further consultations with interested delegations, but
these had not been concluded by the time he had left office.  As it was necessary to pursue theseinformal consultations further, he proposed that once the new senior management was in place, one of
the Deputy Directors-General be asked to continue these consultations and to report to the General
Council.
The General Council took note of the statement and so agreed
.
14. Submission of end-of-year reports by WTO bodies
The Chairman, speaking under "Other Business", said that the last meeting of the General
Council before the 1999 Ministerial Conference was scheduled to be held on 4 and 5 November 1999,
at which time the General Council would not only consider and adopt its own annual report for 1999,
but would also receive and take appropriate action on annual reports from the various subsidiarybodies of the WTO.  These reports would then be forwarded as part of the report of the General
Council to the 1999 Ministerial Conference.  As a result, all the subsidiary bodies reporting to the
General Council would need to have their respective annual reports in circulation by 22 October.
The General Council took note of the statement.
15. Attendance of international intergovernmental  organizations as observers at the 1999
Ministerial Conference
The Chairman, speaking under "Other Business", recalled that at its meeting on 15 June 1999,
the General Council had agreed that consultations would be held on requests for observer status to the
1999 Ministerial Conference from international intergovernmental organizations that were not
observers to the WTO.  To date, the Secretariat had received such requests from the Economic
Cooperation Organization (ECO) and the Energy Charter Conference.  Members wishing to consult
the communications from these organizations were invited to contact the Council Division or theWT/GC/M/45
Page 25
External Relations Division.  The Economic Cooperation Organization had ad hoc observer status in
the Committee on Trade and Development and had a pending request for observer status in the
Committee on Regional Trade Agreements.  The Energy Charter Conference had a pending request
for observer status in the  Working Group on the Relationship between Trade and Investment.  He
proposed that unless any objection was received by the Secretariat from any Member by 29 July, theseorganizations be granted observer status to the 1999 Ministerial Conference.
The General Council  took note of the statement and so agreed
.
16. Establishment of the Global Trust Fund for WTO Technical Cooperation
The Chairman, speaking under "Other Business ", said that considering the permanent
character and the growing financial requirements  of WTO technical cooperation activities, and
bearing in mind the long-term objective of financing technical cooperation through the WTO regular
budget, a number of WTO Members had decided, as an interim solution to the financial requirements
of these activities, to establish a Global Trust Fund for WTO Technical Cooperation (GTF).  He had
been requested by the delegations of Denmark, Finland, the Netherlands, Norway, Sweden,Switzerland, the United Kingdom, the European Communities, and Hong Kong, China to inform the
General Council on this initiative.  The text of the Global Trust Fund had been circulated to Members
with a cover note in document Job No. 3788/Rev. 1.  The objectives of the GTF were based on the
Guidelines and Implementation Modalities adopted by the Committee on Trade and Development,
and were oriented to improving the management and implementation of WTO technical cooperation,to supporting and complementing the WTO regular budget, to enhancing technical assistance and to
enabling the Secretariat to deliver technical cooperation in a flexible, timely and pertinent manner.  At
the same time, it was intended to minimize the administrative costs and procedures that derived from
having a multiplicity of trust funds on a national basis. In this sense, the GTF was designed to reflect
the multilateral nature of the WTO.  All WTO Members could participate in the GTF, which had beenopen to receive voluntary financial contributions since 1 July 1999.
The General Council took note of the statement.
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