RESTRICTED
WORLD TRADE G/STR/M/8
23September 1997
ORGANIZATION(97-3881)
Working Party onState Trading Enterprises
MINUTES OFTHE MEETING OFTHE
WORKING PARTY HELD ON
18JULY 1997
Chairman: Mr.Jacques Teyssier d'Orfeuil (France)
Page
A. Adoption oftheAgenda 1
B. Review ofnotifications submitted byMembers pursuant tothe 1
request fornotifications inG/STR/N/1, 2and3
C. Revision ofthe1960 questionnaire onstatetrading enterprises 6
- Progress report bytheChairman (G/STR/W/30/Rev.1)
D. Development ofanillustrative listshowing thekinds ofrelationships 7
between governments andenterprises andthekinds ofactivities engaged
inbythese enterprises (G/STR/W/31 and32)
- Progress report bytheChairman
E. Dateofnextmeeting 7
A. Adoption ofagenda
1. TheWorking Party adopted theagenda contained inWTO/AIR/629.
B. Review ofnotifications submitted byMembers pursuant totherequests fornotifications in
G/STR/N/1, 2and3
2. TheChairman recalled thataccording toparagraph 5oftheUnderstanding ontheInterpretation
ofArticle XVII ("the Understanding"), theWorking Party wastasked toreview thenotifications and
counter-notifications onstatetrading submitted byMembers, andinthelightofthisreview, theCouncil
forTrade inGoods maymake recommendations withregard totheadequacy ofnotifications andthe
needforfurther information.
3. Herecalled thattheCouncil forTrade inGoods, atitsmeeting on20February 1995, had
established adeadline of30June1995fornewandfullnotifications byMembers ontheirstatetrading
enterprises ("STEs"), andthatsubsequently theWorking Party hadagreed tomaintain 30Juneasthe
dateforfurther (updating) notifications. On10May1996arequest forupdating notifications -which
were tobebased onthefullnotifications duein1995 -wascirculated indocument G/STR/N/2. A
further request forupdating notifications covering themostrecent 12-month period wascirculated onG/STR/M/8
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17March 1997. These mostrecent updating notifications, required ofallWTO Members, weredue
by30June1997.
4. Hesaidthatasofthedateofcirculation oftheairgram convening thepresent meeting
(26June1997), atotalof67Members (counting eachoftheEUMember states individually) had
submitted a"new andfull"notification inresponse tothe1995 request. Intheareaofupdating
notifications, 32hadbeenreceived for1996 andonlysixfor1997. Henoted that11"new andfull"
notifications hadbeenconsidered alsoasupdating notifications duetothelateness oftheirsubmission,
andsaidthatwhile thenumber ofnewandfullnotifications hadincreased, thefailure ofanumber
ofMemberstomaketimelyupdatingnotificationswasdisappointing.WhiletheUnderstandingprovided
forthesubmission ofcounter-notifications where aMember feltthatanotification byanother Member
waseither incomplete orincorrect, thusfarnocounter-notifications hadbeenreceived.
5. Hereminded Members thattheinformation provided inthese notifications wasessential input
totheprocess ofrevising thequestionnaire anddeveloping anillustrative list,andasked thosedelegations
present which hadnotsubmitted anotification toprovide some oralexplanation forthis.
6. Therepresentative ofPerusaidthathiscountry hadjustsubmitted itsupdating notification
for1997.
7. Therepresentative ofRomania saidthatherdelegation hadmade anewandfullnotification
butnotanupdating notification, ontheunderstanding thatthelatter wasnotnecessary ifthere had
beennosignificant change inwhathadbeennotified.
8. Therepresentative oftheUnited States saidthatherdelegation hadthesame understanding
asRomania.
9. Ontherequest oftheChairman, theSecretary explained thatthenotification requirement with
respect toSTEs wasanannual one.Newandfullnotifications, i.e.fullresponses tothequestionnaire,
were dueinthefirstandthird years ofthenotification cycle, andupdating notifications ineachof
theintervening years, irrespective ofwhether thecountry maintained STEs andirrespective ofwhether
there hadbeenanychanges inwhathadalready beennotified.
(1) Newandfullnotifications under G/STR/N/1
10. TheChairman noted thattheairgram divided thereview exercise intotwosections: onedealing
withnewandfullnotifications made under G/STR/N/1, andtheother withupdating notifications made
under G/STR/N/2 and3.Hesuggested thattheWorking Party conduct thereview inthesamemanner
asattheprevious meeting, i.e.withafocus ontwomain elements: (1)whether thenotification
responded adequately totheinformation requested inthequestionnaire; and(2)whether more
information wasneeded inorder topermit -inthelanguage ofparagraph 2oftheUnderstanding -"a
clearappreciation ofthemanner ofoperation oftheenterprises notified andtheeffect oftheiroperations
oninternational trade".
(i) Bulgaria (G/STR/N/1/BGR)
11. Therepresentative oftheUnited States noted thatBulgaria 'snotification indicated thatitdid
notmaintain anySTEs pursuant toArticle XVII. Heasked Bulgaria toexplain whether theFund Zurno
continued itsoperations andwhatthefunctions oftheFund Agriculture were (G/STR/Q1/BGR/1).G/STR/M/8
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12. Therepresentative ofNewZealand saidthattherehadbeenanumber ofqueries onstatesector
enterprises inthecourse ofBulgaria 'saccession exercise, andthatBulgaria hadexplained thatthese
enterprises were intheprocess ofprivatization. Heasked forclarification ofthis.1
13. Therepresentative ofBulgaria saidthatthelawinstituting theFund Agriculture hadterminated
theFund Zurno, some ofwhose functions hadbeenovertaken bytheFund Agriculture. Thelatter
didnotperform foreign trade transactions, operated onlyonthedomestic market andenjoyed no
exclusive orspecial rights orprivileges regarding imports orexports. Hesaidthathisdetailed oral
answers tothequestions putbytheUSandNewZealand would besubmitted inwriting assoonas
possible.
(ii) Mexico (G/STR/N/1/MEX)
14. Therepresentative ofNewZealand noted thathisdelegation hadsubmitted awritten question
astowhyCONASUPO hadnotbeennotified andasked foranexplanation ofthis(G/STR/Q1/MEX/2).
15. Therepresentative oftheUnited States saidthathisdelegation understood thatCONASUPO
might fallwithin thedefinition ofanSTEandasked Mexico tosubmit arevised notification witha
more detailed explanation ofCONASUPO andofanyother STEifapplicable, suchasPEMEX
(G/STR/Q1/MEX/3).
16. Therepresentatives ofAustralia andCanada joined theUSandNew Zealand inseeking
clarification ofthestatus ofCONASUPO andthepossibility ofMexico making arevised notification
asappropriate.
17. Therepresentative ofMexico saidthatinhisdelegation 'sopinion, thenational company known
asCONASUPO didnotfallunder thepurview ofArticle XVII andrelated provisions because itdid
notenjoy any"exclusive orspecial rights orprivileges". Forexample, ithadnospecial righttoimport
milkpowder; anyone could import thisproduct intoMexico, paying therelevant customs duties when
suchimports were outside ofthequota. Thus, CONASUPO wasnottheonlychannel forimports
ofthisproduct. Regarding PEMEX, hisGovernment alsoconsidered thatthiswasnotanenterprise
which came under theprovisions ofArticle XVII asanSTE.
18. Therepresentative ofNewZealand asked Mexico whether anyone wasfreetoimport milk
powder within thetariff quota, provided therelevant customs duties were paid.
19. Therepresentative ofMexico saidthattheadministration oftariffratequotas andlicenses were
matters pertaining tootherforaandnottotheWorking Party onStateTrading Enterprises, andrepeated
thatCONASUPO wasnottheonlychannel forimports, thatitdidnotenjoy any"exclusive orspecial
rights orprivileges", andthatanyone could import thisproduct.
20. Therepresentative oftheUnited States saidthatMexico seemed tobesaying thatCONASUPO
andPEMEX hadnotbeennotified because theydidnotenjoy amonopoly import rights. Nowhere
inthedefinition ofSTEunder Article XVII diditsaythatonlymonopoly importers andexporters
hadtobenotified. TheUSnotification included anumber ofSTEs, suchastheStrategic Petroleum
Reserve, theUranium Enrichment Corporation andtheCommodity Credit Corporation, which did
nothavemonopoly import orexport rights. Sheencouraged Mexico tolookcarefully atthedefinition
ofSTEunder Article XVII.
1Thewritten questions were subsequently circulated indocument G/STR/Q1/BGR/2.G/STR/M/8
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21. Therepresentative ofNewZealand supported theUSstatement andsaidthatanumber of
countries hadnotified STEs thathadthesolerighttoimport under thetariff quotas butdidnothave
thesolerightoutside thatquota. ByMexico 'sdefinition ofSTE, noneofthose enterprises would have
tobenotified. None ofNewZealand 'sthreemarketing boards werethesoleexporters oftheproducts
inquestion. Monopoly import status wasnottheonlyconsideration under Article XVII.
22. Therepresentative ofMexico saidthathisauthorities hadexamined theenterprises inquestion
inthelightofalltherelevant provisions onSTEs.
23. Therepresentative ofMalaysia saidthatlikeMexico, hisdelegation hadsome difficulty in
determining whatcame under thejurisdiction ofArticle XVII. Hequoted from paragraph 1ofthe
Understanding onArticle XVII, andasked if"exclusive rights" hadanyother meaning thanmonopoly.
24. Therepresentative ofNew Zealand saidthatthedefinition justquoted included thewords
"exclusive orspecial"; thus, aspecial rightwasalsoacriterion. InNewZealand 'sview, thesole
righttoimport under atariff quota constituted aspecial rightorprivilege, andinsome cases thiswas
theonlymeans bywhich imports could beeffected.
25. Therepresentative oftheEuropean Communities shared NewZealand 'sview. Thelanguage
inArticle XVII wasclearandsetforthtwopossibilities -exclusive orspecial privileges. Oneshould
notmake atoonarrow interpretation ofthedefinition ofSTE, asboththese elements wereincluded
inArticle XVII.
26. Therepresentative ofMexico saidthathisdelegation didnotwanttoengage inanexhaustive
discussion ofArticle XVII oritsinterpretation. What wasatissuewasMexico 'snotification. Neither
CONASUPO norPEMEX hadtobenotified under theprovisions ofArticle XVII. Hesuggested that
thedetails oftheissueraised byNewZealand could bediscussed withtherepresentative ofthatcountry.
27. Therepresentative ofArgentina supported thestatements byNewZealand andtheECasto
whatwascovered bythedefinition ofSTEinArticle XVII andtheUnderstanding. Thepossibility
foronesoleoperator tobeabletoimport under atariffquota didconstitute aspecial rightorprivilege
under Article XVII. Thisdiscussion hadnothing todowiththeinterpretation ofArticle XVII, but
rather withthenotification byMexico. Hejoined intherequest thatMexico reconsider itsnotification.
28. Therepresentative oftheUnited States supported thestatements byNewZealand, theECand
Argentina concerning theinterpretation ofArticle XVII. Shesaidthatherunderstanding wasthatthe
MexicanConstitutionreservedexclusiverightsforPEMEXforoilextractionanddistributioninMexico,
andasked Mexico toclarify thefactual situation inthisregard.
29. Therepresentative ofMexico reserved hisdelegation 'srights inthismatter. There seemed
tobesomeconfusionregardingCONASUPO'sroleinimportsofaparticularproduct,andanaffirmation
wasbeing made which might beincorrect. Regarding theUSquestion onPEMEX, hewould need
toconsult hiscapital before answering. Hereiterated thatinhisdelegation 'sview, PEMEX didnot
havetobenotified asanSTEunder Article XVII anditsInterpretative Notes, especially theonerelated
toparagraph 1(a).
30. TheChairman saidthatitwasnottheWorking Party'smandate todiscuss theinterpretation
ofArticle XVII andhedidnotwishtoprolong thediscussion onthewayinwhich paragraph 1of
theUnderstanding should beread.
31. Therepresentative ofNewZealand saidthathewould behappy tocontinue thisdiscussion
withMexico bilaterally.G/STR/M/8
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32. Therepresentative ofMexico saidthathedidnotwanttoleavetheimpression thatCONASUPO
hadamonopoly toimport within quota. Anyone hadtherighttoimport intoMexico in-quota oroutside
quota byobtaining thenecessary licence forthein-quota imports andbypaying thecorresponding
tariffs fortheoutside quota imports.
33. TheChairman recalled thatallquestions andreplies regarding Mexico 'snotification wereto
besubmitted inwriting tothedelegation concerned, withacopytotheSecretariat.
34. Therepresentative ofMexico saidthathehadtaken duenoteofthecomments bytheUS,
NewZealand, Australia, Canada andArgentina about thetwoMexican companies towhich reference
hadbeenmade andthathewould convey those comments tohisGovernment.
(iii) Namibia (G/STR/N/1/NAM)
35. Therepresentative oftheUnited States saidthathisdelegation hadsubmitted awritten question
toNamibia ontheMeat Board (G/STR/Q1/NAM/1).
36. There were nocomments orquestions onthefollowing notifications:
- Botswana (G/STR/N/1/BWA)
- Venezuela (G/STR/N/1/VEN/Suppl.1)
(2) Updating notifications under G/STR/N/2 and3
(i) Philippines (G/STR/N/2/PHL)
37. Therepresentative ofthePhilippines made thefollowing correction tothestatistical information
inherdelegation 'snotification: production figures related to"palay" andimports figures related to
"rice", aspalay wasnotatradable product.
38. Therepresentative ofColombia saidthatherdelegation hadrecently submitted awritten reply
tothequestion from theUnited States.2
39. There were nocomments orquestions onthefollowing notifications:
- Hungary (G/STR/N/2/HUN)
- Korea (G/STR/N/2/KOR)
- Mauritius (G/STR/N/3/MUS)
- Pakistan (G/STR/N/3/PAK)
40. TheChairman invited delegations having raised questions atthepresent meeting tosubmit
theseinwriting directly totheMember concerned, withacopytotheSecretariat forcirculation. Written
answers tothose questions should besubmitted directly totheenquiring country, withacopytothe
Secretariat, assoonaspossible. Heemphasized theneedforMembers towhom written questions
hadbeenaddressed -insome cases several months earlier -torespond inwriting tothose questions
without delay.
2Thewritten reply wascirculated indocument G/STR/Q1/COL/4.G/STR/M/8
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41. Therepresentative oftheUnited States saidthathisdelegation hadrecently submitted anumber
ofquestions inwriting tovarious Members3andasked theseMembers torespond inwriting asquickly
aspossible.
42. Therepresentative ofIsrael gaveadetailed oralresponse tothequestion putbytheUSon
Israel'snotification, andsaidthatawritten response would besentinduecourse.
43. Therepresentative oftheCzech Republic asked forclarification astowhether questions similar
tothose raised withrespect toBulgaria 'sandMexico 'snotifications could beconsidered ascounter-
notifications.
44. TheChairman saidthataquestion onanotification wasnotacounter-notification andthat
thelatter wasawell-identified procedure.
45. TheWorking Party tooknoteofthestatements.
C. Revision ofthe1960 questionnaire onstatetrading enterprises
-Progress report bytheChairman (G/STR/W/30/Rev.1)
46. TheChairman recalled thatattheWorking Party'smeeting inFebruary 1997, theprevious
Chairman hadsaidinhisprogress report onthisissuethatwhile there werestillproblems toresolve,
itappeared thatthegroup wasclose toreaching aconsensus onadrafttextthatcould beputtothe
fullWorking Party andconsidered foradoption. Unfortunately, thatprognosis hadproved tobe
somewhat toohopeful.
47. Hereported thatthere hadbeentwoinformal meetings onthismatter since February. The
group hadmade goodprogress onsome partsofthetext,while other partswereproving more difficult
toreach consensus on.However, there appeared tobeacommitment byparticipants toresolve the
outstanding differences, which centred onthetypeofstatistical information thatshould berequested
inthequestionnaire. Heintended tocontinue these informal consultations inthecoming months, and
assoonasarevised drafttextwasready, itwould becirculated toallMembers anddiscussed inthe
Working Party.
48. Therepresentative ofBulgaria saidthathisdelegation would liketoparticipate intheinformal
consultations andreceive thetextsunder consideration.
49. TheChairman recalled thataccording toadecision bytheWorking Party inFebruary 1996
(G/STR/M/3, para. 76)participation intheinformal group wasopentoallinterested delegations.
50. Thedelegations ofMalaysia, Philippines, Thailand, Cuba, Egypt andNorway expressed their
interest inparticipating intheinformal consultations.
51. TheWorking Party tooknoteofthestatements.
3Thequestions werecirculated inthefollowing documents: G/STR/Q1/CAN/4, G/STR/Q1/CIV/2,
G/STR/Q1/ISR/9, G/STR/Q1/JAM/4, G/STR/Q1/MAR/3, G/STR/Q1/ZAF/2, G/STR/Q1/TUN/5.G/STR/M/8
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D. Development ofanillustrative listshowing thekinds ofrelationships between governments
andenterprises andthekinds ofactivities engaged inbythese enterprises
-Progress report bytheChairman
52. TheChairman recalled thatattheWorking Party'smeeting inSeptember 1996, thedelegations
oftheUnited States andNewZealand hadintroduced written proposals foradraftillustrative list(in
documents G/STR/W/31 andG/STR/W/32 respectively), andtheWorking Party hadhadauseful
exchange ofviews onthetexts. While work ontheillustrative listhadnotadvanced asmuch aswork
onthequestionnaire, there were twowritten submissions andafurther submission wasexpected in
September from theUnited States. Herecalled theneedforparallel work ontheillustrative listand
thequestionnaire, andasked participants todotheirutmost tocontribute tothedevelopment ofaworking
textofanillustrative listsoastoadvance thiswork.
53. TheWorking Party tooknoteofthestatement.
E. Dateofnextmeeting
54. TheChairman proposed thatthenextmeeting beheldduring thefirstpartofOctober. Adate
would befixed induecourse.