WORLD TRADE G/L/128
28October 1996
ORGANIZATION(96-4496)
REPORT (1996) OFTHE WORKING PARTY ON
STATE TRADING ENTERPRISES
I. Organization ofthework oftheWorking Party
1. TheWorking Party onState Trading Enterprises wasestablished bytheCouncil forTrade
inGoods atitsmeeting on20February 1995 pursuant toparagraph 5oftheUnderstanding onthe
Interpretation ofArticle XVII oftheGeneral Agreement onTariffs andTrade 1994 (hereinafter "the
Understanding"). Membership oftheWorking Party isopen toallMembers indicating their wish to
serve onit.Observer governments intheGeneral Council oftheWTO have observer status inthe
Working Party. During theperiod under review, Mr.Peter May (Australia) served asChairman of
theWorking Party.
2. Themandate oftheWorking Party, assetoutinparagraph 5oftheUnderstanding, is:(1)to
review notifications andcounter-notifications onstate trading; (2)toreview, inthelight ofthe
notifications received, theadequacy ofthequestionnaire onstate trading (BISD 9S/184-185) andthe
coverage ofstate trading enterprises notified under paragraph 1oftheUnderstanding; and(3)todevelop
anillustrative listshowing thekinds ofrelationships between governments andenterprises, andthe
kinds ofactivities, engaged inbythese enterprises, which may berelevant forthepurposes of
Article XVII.
3. This report issubmitted under paragraph 5oftheUnderstanding. Itsetsouttheactivities
oftheWorking Party during theperiod under review (December 1995 -October 1996).
4. Participants intheWorking Party 'smeetings todateare: Argentina, Australia, Bangladesh,
Brazil, Brunei Darussalam, Canada, Chile, Colombia, Costa Rica, Cuba, Cyprus, Czech Republic,
Egypt, ElSalvador, European Communities andtheir member States, Hong Kong, Honduras, Hungary,
India, Indonesia, Israel, Japan, Korea, Malaysia, Malta, Mauritius, Mexico, Morocco, New Zealand,
Norway, Pakistan, Peru, Philippines, Poland, Romania, Singapore, Slovak Republic, South Africa,
Switzerland,Thailand,Turkey,UnitedStates,Uruguay,VenezuelaandZambia.China,ChineseTaipei,
Russian Federation andVietnam participated asobservers.
5. The Working Party held four formal meetings during theperiod under review: on
20February1996,27June1996,26September1996and24October1996.TheMinutesoftheWorking
Party 'smeetings arecontained indocuments G/STR/M/3 to6.Inaddition, theChairman convened
four informal meetings with theobjective ofadvancing work onthetasks mandated totheWorking
Party intheUnderstanding, andoneinformal meeting regarding theWorking Party 'sreport tothe
Council forTrade inGoods.
6. Themeeting oftheWorking Party held on24October 1996 wasforthepurpose ofadopting
itsreport totheCouncil forTrade inGoods.G/L/128
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II. Notification andreview ofMembers 'state trading activities
7. AllMembers arerequired under Article XVII ofGATT 1994 and paragraph 1ofthe
Understanding tosubmit annually notifications oftheir state trading activities. Inthefirstandfourth
years, "new andfull" notifications arerequired, while intheintervening years anupdating notification
istobemade indicating anychanges since thefullnotification. Ateach ofthefirst three meetings,
theChairman made astatement concerning theunsatisfactory record ofcompliance withthenotification
requirements intheareaofstate trading, andtheneed forgreater transparency inthetrade conducted
bystate trading enterprises.
8. Since thefirstrequest for"new andfull" notifications ofstate trading enterprises wascirculated
(inMarch 1995), such notifications have been received from 45Members, counting theEuropean
Communities andtheir member States asone. Updating notifications for1996 have been received
from 16Members. (seetheAnnex tothisreport)
9. Atitsmeeting on20February 1996, theWorking Party conducted areview ofnewandfull
notifications from thefollowing Members: Chile, Colombia, European Communities, India, Norway,
Switzerland, Hungary, Guinea andHonduras. Italsoreverted toseveral earlier notifications. Acentral
issue thatemerged inthecourse ofthereviews waswhether entities thatdidnotengage intrade but
whose activities might have animpact ontrade should benotified. Many ofthequestions raised on
specific notifications indicated varying interpretations ofwhat constituted notifiable state trading, and
inturn emphasized theneed toaccelerate work onrevision ofthequestionnaire anddevelopment of
anillustrative list. Theneed formore complete andprecise responses tothequestionnaire wasstressed
asafundamental aspect ofthenotification obligation.
10. Atitsmeeting on27June 1996, theWorking Party conducted areview ofnew andfull
notifications from Morocco andPakistan, andreverted tonumerous earlier notifications. Many
delegations raised further questions onnotifications previously reviewed atearlier meetings, with a
continuing emphasis onboth thespecifics ofthenotifications andontheunderlying interpretations
ofwhat wasrequired tobenotified.
11. Atitsmeeting on26September 1996, theWorking Party conducted areview ofnew andfull
notifications from Barbados, Brazil andMalta, andreviewed updating notifications from thefollowing
Members: Australia, Canada, Chile, European Communities, Hong Kong, New Zealand, Norway,
Singapore, Switzerland andtheUnited States.
III. Mandated work programme oftheWorking Party
12. Regarding itsmandated work programme, theWorking Party decided atitsmeeting on
20February thatsubstantive work ontherevision ofthe1960 questionnaire onstate trading andthe
development ofanillustrative listwould betaken upininformal consultations open toanyMember
wishing toparticipate.
13. Atthemeeting on27June, theChairman reported totheWorking Party onthefourinformal
consultations hehadheld onthetwoissues. TheWorking Party considered adraft textofarevised
questionnaire (G/STR/W/30) -which inpartreflected discussions intheinformal consultations and
which hadbeen circulated asaChairman 'stext-andagreed topursue discussion ofthisdraft text
andtocontinue work onanillustrative list,ininformal consultations. TheChairman encouraged
Members, inthelight ofthetimeliness andimportance ofthese twotasks, toredouble their efforts
forprogress inthese areas. Views were expressed concerning theneed tomove rapidly andintandem
onthetwoissues, aseach wasinextricably linked totheother andboth were fundamental toimproving
transparency intheareaofstate trading. Theneed tocraft aquestionnaire thatwould elicit therelevantG/L/128
Page 3
information while avoiding duplication andunnecessary information wasstressed. Oneproblem facing
theWorking Party infinalizing thequestionnaire wasthedivergent views expressed ontheprovision
ofcommercially sensitive information.
14. Atitsmeeting of26September, theWorking Party discussed written proposals submitted by
New Zealand (G/STR/W/31) andtheUnited States (G/STR/W/32) regarding theillustrative listof
relationships andactivities ofstate trading enterprises. The submissions were deemed apositive
contribution towork onthisissue andagood basis forfurther progress. Preliminary views were
expressed thataclearer understanding ofwhat should benotified would assist Members incomplying
with their obligations andwould stimulate anincrease intransparency. Itwassuggested thatwork
should beaccelerated ontherevised questionnaire andtheillustrative list. Thelinkbetween these
twotasks, andtheneed forthem toprogress rapidly andinparallel, wasagain stressed. Itwasagreed
thatwork onthequestionnaire would continue onthebasis ofthetextinG/STR/W/30.
IV. Other Matters
15. Atthemeeting of26September, theEuropean Communities submitted apaper (G/STR/W/33)
outlining suggestions forfuture work tobeundertaken bytheWorking Party, including anexamination
ofwhether Article XVII andtheUnderstanding needed further strengthening. Itwasexplained that
theintentofthepaperwasnottorenegotiateArticleXVII,butsimplytostartadiscussionintheWorking
Party ontheadequacy ofthecurrent WTO disciplines onstate trading. This delegation suggested that
inthissense, while theWorking Party continued topursue thework mandated intheUnderstanding,
theCouncil forTrade inGoods could assign thistask totheWorking Party. While anumber of
delegations supported theproposal invarying degrees, several other delegations were oftheview that
what wassuggested inthepaper went beyond themandate oftheWorking Party, andthatgiven the
current state ofwork intheWorking Party, was forthetime being pre-mature. The European
Communities indicated itsintention toraise thismatter atthenext meeting oftheCouncil forTrade
inGoods.
V. Recommendations
16. Inlight ofitsdesire tocomplete expeditiously thereview ofthequestionnaire andthe
development ofanillustrative list,theWorking Party recommends totheCouncil forTrade inGoods
thattheCouncil urge allMembers tofulfil their notification obligations under Article XVII andthe
Understanding without delay.G/L/128
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ANNEX
NOTIFICATIONS SUBMITTED BYWTO MEMBERS UNDER
ARTICLE XVII:4(a) OFGATT 1994 AND PARAGRAPH 1OFTHE
WTO UNDERSTANDING ONTHE INTERPRETATION OFARTICLE XVII
Status asof17October 1996
Member New and Full Notification Updating Notification
Antigua andBarbuda
Argentina X
Australia X X
Bahrain
Bangladesh
Barbados X
Belize
Benin
Bolivia
Botswana
Brazil X
Brunei Darussalam
Burkina Faso
Burundi
Cameroon
Canada X X
Central African Republic
Chile X X
Colombia X X
Costa Rica X
Côte d'Ivoire X
Cuba
Cyprus X
Czech Republic X
Djibouti
Dominica
Dominican Republic
European Communities X X
Ecuador
EgyptG/L/128
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Member New and Full Notification Updating Notification
ElSalvador
Fiji
Gabon
Ghana
Grenada
Guatemala
Guinea Bissau
Guinea, Rep. of X
Guyana
Haiti
Honduras X
Hong Kong X X
Hungary X
Iceland
India X
Indonesia X X
Israel X
Jamaica X
Japan X X
Kenya
Korea X
Kuwait
Lesotho
Liechtenstein
Macau X
Madagascar
Malawi
Malaysia X
Maldives
Mali
Malta X
Mauritania
Mauritius X
Mexico
Morocco X
MozambiqueG/L/128
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Member New and Full Notification Updating Notification
Myanmar
Namibia
New Zealand X X
Nicaragua
Nigeria
Norway X X
Pakistan X
Pap. New Guinea
Paraguay
Peru X
Philippines X
Poland X
Qatar
Romania X
Rwanda
Saint Kitts &Nevis
Saint Lucia
Saint Vincent &Grenadines
Senegal
Sierra Leone
Singapore X X
Slovak Republic X X
Slovenia X
Solomon Islands
South Africa X X
SriLanka
Suriname
Swaziland
Switzerland X X
Tanzania
Thailand X X
Togo
Trinidad &Tobago
Tunisia
Turkey X
UgandaG/L/128
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Member New and Full Notification Updating Notification
United Arab Emirates X
United States X X
Uruguay X
Venezuela X
Zambia
Zimbabwe
Total*45/108 16/108
X=notification submitted
*The denominator used here (108) reflects thefactthatforeach obligation, theECsubmits asingle notification thatcovers all
15memberStates. Theofficial total membership oftheWTO (123) includes theECplusthe15individual memberStates.