 
 RESTRICTED  WORLD TRADE  
ORGANIZATION  TCA/M/17 
30 January 2004 
 (04-0354) 
Committee on Trade in Civil Aircraft  
  
 
MINUTES OF THE MEETING  
HELD ON 12 NOVEMBER 2003 
 
Chairperson:  Mr. Didier Chambovey
 
 
 
1. The Committee on Trade in Civil Aircraft (the  "Committee") held a regular meeting on 
12 November 2003. 
2. The representative of the United States  informed the Committee that he would raise a 
question concerning Article 9 under "Other Business".  
3. The Committee adopted the following agenda: 
Page  
A. CONSIDERATION  OF THE  STATUS  OF THE  1979  AGREEMENT  ON TRADE  IN 
CIVIL  AIRCRAFT  UNDER  THE  WTO ....................................................................................1  
B. "END-USE"  CUSTOMS  ADMINISTRATION .........................................................................2  
1. Updating information regarding civil/military identification for customs 
purposes ....................................................................................................................... ..............2  
2. Military vs. Non-military Definition........................................................................................2  
C. MATTERS  CONCERNING  IMPROVED  OPERATION  OF ARTICLE  4 ...............................4  
D. OTHER  BUSINESS ...................................................................................................................6  
1. United States – EU enlargement and Article 9 of the Agreement ........................................6  
E. DATE  OF NEXT  REGULAR  MEETING ..................................................................................6  
F. ADOPTION  OF ANNUAL  REPORT ........................................................................................6  
 
 A. CONSIDERATION
 OF THE  STATUS  OF THE  1979  AGREEMENT  ON TRADE  IN CIVIL  
AIRCRAFT  UNDER  THE  WTO 
4. The Chairperson  recalled that in April 1999 he had sent to Signatories a draft protocol 
concerning technical rectifications needed to bring the Agreement on Trade in Civil Aircraft into the 
WTO framework.  Since then, certain Signatories had re mained unable to adopt this draft protocol but 
had indicated the utility of continuing to revert to this item in the Committee.  The Chairperson thus 
asked Signatories whether there had been any new developments. 
5. The representative of the United States  recalled that the matter of rectification and the Chair's 
proposal on this issue had been on the table for approxi mately four years.  This exercise was in line 
with the agreement in the Committe e to have a technical rectificat ion and updating of the Agreement TCA/M/17 
Page 2  
 
 without addressing any substantive changes.  As stat ed in the past, his delegation considered that the 
Chairperson's proposal was generally acceptable.  It wished to note a relatively small technical 
concern relating to the manner in which this rec tification might possibly change the relationships 
between various agreements of the WTO.  He sugg ested that this could be resolved with language 
similar to the language inserted in the Protocol updating the Product Coverage Annex some two years 
ago.   
6. He further renewed his request that whatever  proposals other Signatories could have with 
regard to changing the language, such proposals sh ould be put in writing or presented orally in the 
Committee in order for those concerns to be addressed and for the matter to be resolved.  He indicated 
that his delegation was of course available to discuss matters bilaterally as well. 
7. The delegate of the European Communities
 reiterated his delegation's interest in finding a 
solution and its willingness to discuss th e issue with the United States.   
8. The Chairperson  encouraged Signatories to talk to each other on this issue and to try to find a 
mutually agreeable solution.  He considered that  the main issues and the main problems had been 
identified and that it appeared that certain Signatories would at least try to find an appropriate date to 
get together to address the issue.  He reiterated hi s willingness to hold consultations if Signatories so 
desired. 
9. The Committee took note  of the statements made and agreed to revert to this matter at its next 
regular meeting.  
B. "END-USE"  CUSTOMS  ADMINISTRATION 
1. Updating information regarding civil/m ilitary identification for customs purposes 
10. The Chairperson  noted that no new information had been received from Signatories since the 
last regular meeting of the Committee.  
2. Military vs. Non-military Definition 
11. The Chairperson  recalled that Canada had made a proposal concerning the definition of civil 
aircraft for the purposes of the Agreement which w as circulated in document TCA/W/4.  He recalled 
that at the November 2002 meeting of the Committee,  Canada had circulated as a room document a 
revised wording of its proposal and that at th e spring meeting of the Committee, Signatories had 
agreed to revert to this item.  
12. The representative of Canada  stated that at the last meeting his delegation had received 
several questions concerning its idea to develop a bett er definition of civil aircraft for the Agreement, 
which would reflect the basic design and manufacture of the aircraft and would be independent of the 
user.  One question his delegation had received concerned planes that were originally certified as 
civilian but had later been adapted for military use.  His delegation agreed that it could occur that an 
aircraft originally certified as civilian was adap ted later on for military use and that Canada's 
suggested approach could initially include military ai rcraft that had been historically excluded from 
the Agreement.  He stated that this issue would n eed to be addressed with more precision in order to 
minimize unintended effects.  It had been suggest ed that this problem could be overcome through a 
certificate that would be issued by the importing country based on the final use of an aircraft without any reference to the initial manufacture of the aircra ft.  It seemed that a civilian plane converted to 
military use would therefore have no need for a certifi cate or would not be subject to the Agreement.    TCA/M/17 
 Page 3 
 
 
 13. His delegation was ready to look at such an idea more closely but had some concerns about 
this approach.  He considered that the problem w ith this arrangement was that when military entities 
purchase aircraft that are legitimately civil or ev en dual use, such as ex ecutive transport, water 
bombers, helicopters, cargo planes etc. Signatories would still not benefit from the provisions of the 
Agreement that would require the purchase of airc raft to be on a competitive price, quality and 
delivery basis.   
14. He considered that the central problem with th e current Agreement was that the benefits of 
the Agreement were not applied to purchases of all ci vil aircraft, and therefore, in his view, any new 
method for classifying an aircraft as "civil" should ensure  that this happened.  He was of the view that, 
rather than excluding certain aircraft upfront, becau se of the absence of a certificate, it would be 
preferable from a trade perspective to exclude military aircraft through other methods, such as a 
national security exception, if necessary.  Canada w ould continue to think about this issue and he 
hoped that the Committee could revert to this issue again at the next meeting.   
15. The representative of th e European Communities  considered that it would be useful if the 
delegate of Canada coul d provide the explanation in writing since that would be helpful in addressing 
the issue.  In his view, the Canadian explanation contributed to answering part of the first question 
that his delegation had raised at the last meeting,  i.e., how the Canadian proposal would address the 
question of military use or adaptation.  Another question his delegation woul d like to see addressed by 
the delegation of Canada was the question of how this new proposal would be integrated in the 
Agreement, and how it would interplay with the Ag reement on Government Pr ocurement and with the 
basic GATT rules. 
16. The delegate of the United States  recalled that his delegation was generally supportive of this 
initiative and agreed with the approach of havi ng things categorized as civil aircraft through 
certification by authorities, pretty much the way this was being done in the United States at present.  However, his delegation also noted, as did other dele gations, that there were certain problems in terms 
of circularity of the definition.  He recalled that cu rrently the definition provided that things that were 
not purchased by military entities which had been no tified were considered civilian.  This would 
imply that things that were certified by civilian au thorities were civilian.  He wondered however what 
that central characteristic was and how this would wo rk operationally.  He further recalled that since 
this would be a substantive change, some textua l change to the Agreement itself was required to 
accomplish this.  He considered that without a r ectified agreement or the prospect of such a 
rectification in the near future, it would be difficult to carry this out.  Nevertheless, he considered it 
useful to continue discussing the matter in the Co mmittee and to try to move this along as was done 
with ground maintenance simulators in respect of which Signatories informally agreed to accord to 
their best ability duty-free treatment, even though it was not formally part of the Agreement. 
17. He then referred to Canada's specific answer  at the meeting concerning excluding essentially 
civilian aircraft used for military purposes through some national security exception.  His delegation 
had some problems with this idea, as it considered th at the matter should be handled in a definitional 
sense rather than on an ad hoc basis.  
18. The representative of Japan
 considered that the explanations provided by the Canadian 
delegation gave some food for thought about the circumstances in which the certificates would be 
given to civilian aircraft and the relationship between  this process and the definition of civil aircraft or 
what should be regarded as military use.  In his de legation's view, this was a very substantive issue on 
which it needed to reflect further.  He agreed with  the delegate of the Eur opean Communities that it 
would be appreciated if the Canadian delegation c ould provide a written version of the explanations 
given at the meeting.  TCA/M/17 
Page 4  
 
 19. The delegate of Canada
 promised to provide a written vers ion of his delegation's intervention 
to those Signatories interested.  He agreed with the United States that there was a link between the 
matter raised by Canada concerning the definition of civil aircraft and the technical rectification exercise and that it would be helpful if there c ould be some progress on the latter issue so that 
Signatories would be able to address the matter rai sed by Canada and the concerns expressed by other 
delegations on this question as part of that process.  
20. The Committee took note
 of the statements made and agreed  to revert to the matter at its next 
regular meeting.  
C. MATTERS  CONCERNING  IMPROVED  OPERATION  OF ARTICLE  4 
21. The delegate of the United States  informed the Committee that  the United States government 
continued to be concerned about  the allegations of inducements  and other activities covered by 
Article 4 of the Agreement concerning the sale of civil aircraft.  He recalled that he made such concerns known to Signatories at the last meeting of  the Committee and that at that time he had also 
suggested discussing at this meeting ways to avoi d the appearance of actions inconsistent with 
Article 4 and how best to quickly resolve allega tions that were false.  Upon good recommendation of 
the Committee Chairperson, his delegation had drafted a short outline of some of the relevant issues in 
order to help structure the discussion.  This documen t was available in the back of the room.  It only 
intended to facilitate discussion in the Comm ittee and among Signatories as well as within 
Signatories, including the United States.  He stated  that because of the importance attached by the 
United States to full compliance with all the provi sions of this Agreement, and in particular 
compliance with the Agreement's prohibitions on i nducements, his delegation welcomed any further 
discussion on this issue.   
22. The representative of the United States affirm ed that the United States did not exert 
unreasonable pressure on foreign governments or air lines concerning civil aircraft purchases and did 
not engage in inducements, or made positive or  negative linkages to other government actions, 
consistent with its obligations.  He expressed th e hope that all Signatories would adopt a similar 
attitude and that the governments of the purchaser s of civil aircraft would also resist any 
representations inconsistent with Article 4 of the Agreement.   
23. The delegate of the United States then summarized  the United States paper.  He noted that the 
first section of the United States paper described the objective of the paper which he just reviewed 
verbally with the Committee.  The second section of the paper reviewed the Article 4 provisions of 
the Agreement and sought to provide some of the hi storical objectives of including this language in 
the Agreement.  This section also identified some  of the consequences of inducements for both the 
buyers and the sellers involved in the transaction.  It noted that inducements were disfavoured under 
the Agreement because they skewed  purchasing decisions to reflect considerations other than the 
commercial and technological factors.  Inducements  could have negative consequences because they 
gave a higher priority to potential positive or ne gative government activities outside the sale than to 
the pure commercial interests of the buyer and the se ller within the sale.  The paper further recalled 
that both the buyers and the sellers of aircraft coul d be harmed by activities that could be inconsistent 
with Article 4.  Such behaviour could also lead to  recriminations by the parties not selected in the 
competition and to a possible deterioration of pol itical or economic relati onships among interested 
parties.   
24. The representative of the Unite d States then explained that "inducements" was not a fully 
defined term under the Agreement.  Over the years th e lack of a detailed definition had proven to be a 
source of difficulty in the implementation of th e Agreement.  The United States and the European 
Communities had in the past attempted to clarify the concept of inducements, and more broadly the  TCA/M/17 
 Page 5 
 
 
 provisions of Article 4, but such proposals had not been adopted by all Signatories.  Appendix A of 
the United States' document provided furthe r information on this bilateral effort. 
25. The delegate of the United States recalled that a number of discussions had taken place in the 
past in the Committee regarding actions that may ha ve been inconsistent with Article 4, including 
inducements, but efforts to resolve those concerns through these discussions had not been effective.  
Therefore, the United States was proposing that th e Committee would seek to identify which factors 
could facilitate the effectiveness of Article 4 and to discuss specific suggestions for improving its 
operation.  In order to facilitate discussion in th e Committee, the United States had offered one way 
the Committee might do this.  While recognizing that  the Agreement did have  consultation provisions, 
he stated that perhaps one way to improve the operation of the Agreement could be to improve 
communication between the parties by creating more effective mechanisms for exchanging 
information and addressing concerns.  Instead of making accusations in the press, or in other fora, 
Signatories could agree to provide timely and factual clarifications about their actions when questions 
arose.  He added that this information excha nge could take place directly between Signatories, 
perhaps via designated contact points for each Signato ry.  Another option would be for the exchange 
to take place indirectly, perhaps through a neutra l third party such as the Chairperson of the 
Committee who would facilitate the information exchange .  He considered that this could assist the 
transparency and the effectiveness of  the exchange of information as  well as to provide the Committee 
itself with further information on the operati on of the Agreement's Article 4 provisions.  
Representatives of procuring entities, particularly if  they were Signatories to the Agreement, should 
perhaps also be co-participants in  this communication since these matters would affect them as well as 
the competing sellers.  Finally, he stated th at Signatories might consider developing common 
principles or factors that may assist in evaluating the information exchanged.   
26. The delegate of the European Communities  noted that at this stage his delegation could only 
make some general comments.  The European Comm unities shared the United States' concerns about 
incidents of inducement, and was therefore in prin cipal not opposed to setting up some kind of early 
warning system which would allow Signatories to express concerns in cases of suspected inducement. 
While open to the idea in principle, the Europe an Communities was of the view that such a 
mechanism would have to provide added value to ex isting possibilities to address such issues inside or 
outside the Agreement.  The delegate of the Eur opean Communities stated that his delegation still had 
to assess whether the United States' paper provided an  answer to these concerns and, in that regard, 
his delegation was wondering whether such a mech anism would have been able to avoid such 
situations such as the very recent engine procurem ent involving China Airlines.  The representative of 
the European Communities reiterated his delegation' s astonishment and concern about a decision by 
China Airlines regarding engine equipment for its re cently acquired Airbus aircraft, a decision which 
risked being taken on grounds other than relevant  commercial and technological ones.  The European 
Communities reminded the competent authorities of Ch inese Taipei of their obligation to refrain from 
any interference with commercial decisions which w ould be incompatible with Article 4.4, i.e., 
prohibition of inducement and Article 4.1, i.e., that purchasers of civil aircraft should be free to select suppliers on the basis of commercial and technological factors.  
27. The representative of Chinese Taipei
 stated that he was somewhat  surprised to hear from the 
delegate of the European Communities for the fi rst time about the allegations regarding China 
Airlines' recent engine procurement.  His delegati on considered that the allegations were completely 
groundless, while welcoming the opportunity to give his delegation's preliminary response and 
reiterating the assurance of its full and faithful co mpliance with the Agreement.  The delegate of 
Chinese Taipei further recalled that while the i ssue revolved around what was by nature a purely 
private commercial decision of the specific airline in question, the authorities of Chinese Taipei had 
nevertheless engaged over the last few months in a number of bilateral discussions with the European 
Communities in order to clear up any lingering d oubts the European Communities may have had. TCA/M/17 
Page 6  
 
 28. The Committee took note
 of the statements made and agreed  to revert to this issue at the next 
regular meeting.  
D. OTHER  BUSINESS 
1. United States – EU enlargement and Article 9 of the Agreement 
29. The delegate of the United States  recalled that there would be ten new members of the 
European Communities on 1 May 2004 and that am ongst those members were certain governments 
which were already Signatories to the Agreement, others which in their accession process to the WTO 
had indicated that they would become Signatories and others which had not  expressed any views on 
this matter.  He further noted that the represen tatives of the European Communities had on other 
occasions indicated that parties that are beco ming members of the European Communities would 
undertake the same level of obligations as the curre nt members of the Eur opean Communities.  His 
delegation was wondering if the representative of  the European Communiti es could comment on the 
expectations with regard to all ten new member s of the European Communities becoming Signatories 
to the Agreement on Trade in Civil Aircraft. 
30. The delegate of the European Communities  explained that he was not in a position at this 
stage to provide specific answers to the question pos ed by the United States, but promised he would 
refer the question to his capital and provi de some answers as soon as possible.  
31. The Committee took note  of the statements made and agreed  to revert to this matter at the 
next meeting.  
E. DATE  OF NEXT  REGULAR  MEETING 
32. The Chairperson  proposed that the date of the next regular meeting was Wednesday, 
2 June 2004.  
33. The Committee so agreed.  
F. ADOPTION  OF ANNUAL  REPORT 
34. The Chairperson  recalled that under Article 8.2 of the Agreement on Trade in Civil Aircraft 
and Article IV.8 of the Marrakesh Agreement est ablishing the WTO, the Committee reported annually 
to the General Council, and that this year, because  the General Council had met before the regular fall 
meeting of the Committee, the Chairperson had subm itted a brief report to the General Council on his 
own responsibility.  He further noted that that brie f report, which had been sent to Signatories by fax 
on 9 July 2003, contained information concerning the activities of the Comm ittee since the adoption 
of its 2002 Annual Report, but that, of course, th e brief report did not replace the Annual Report of 
the Committee. 
35. The Committee adopted  the annual report1, as amended. 
36. The meeting was adjourned . 
__________ 
                                                      
1 Circulated as document WT/L/544. 