RESTRICTEDWORLD TRADE
ORGANIZATIONG/C/M/59
22 April 2002
(02-2275)
Council for Trade in Goods
MINUTES OF MEETING
Held in the Centre William Rappard on 22 and 27 March 2002
Chairperson:  Ambassador Mi lan Hovorka (Czech Republic)
I. IMPLEMENTATION-RELATED ISSUES ARISING FROM PARAGRAPH 12
OF THE DOHA MINISTERIAL DE CLARATION (WT/MI N(01)DEC/1) ........................2
II. NOTIFICATION BY BANGLADESH UNDER SECTION C OF ARTICLE
XVIII OF THE GE NERAL AGREEMENT ON TARIFFS AND TRADE 1994
AND THE DECISION OF 28 NOVEMBER 1979 ON SAFEGUARD ACTIONFOR DEVELOPMENT PURPOSES (G/C/7, G/C/8 AND G/C/ 9) .......................................4
III. REQUEST BY SLOVENIA – CONSIDERATION OF CROATIAN BAN ON
ROAD TRANSIT OF CRUDE OIL AND OIL PRODUCTS (G/C/W/346 AND
ADD.1) ......................................................................................................................... ..............4
IV. REVIEW OF THE OPERATION OF THE TRIMS AGREEMENT UNDER
ARTICLE 9 (G/C/W /307 AND ADD .1) ..................................................................................9
V. TRADE FACILITATION  WORK PROGRAMME ...........................................................12
VI. REGIONAL TRADE  AGREEM ENTS ................................................................................12
VII. REQUEST BY COSTA RICA;  INDIA;  INDONESIA;  PAKISTAN;  PERU
AND HONG KONG, CHINA:  CTG'S OVERSIGHT FUNCTION PURSUANT
TO ARTICLE IV OF THE AGREEMENT ESTABLISHING THE WTO –
TRANSPARENCY REGARDING NEW RESTRICTIONS ON TEXTILE ANDCLOTHING PRODUCTS COMMENTED ON BY THE TEXTILES
MONITORING BODY (G/C/W/260/REV.1).......................................................................13
VIII. MAJOR REVIEW OF THE IMPLEMENTATION OF THE AGREEMENT ON
TEXTILES AND CLOTHING DURING THE SECOND STAGE OF THE
INTEGRATION PROCESS PURSUANT TO  ARTICLE 8.11 OF  THE ATC ................14
IX. APPOINTMENT OF OFFICERS FOR SUBSIDIARY BODIES OF THE
COUNCI L........................................................................................................................ ........17
X. ELECTION OF THE CHAIRPERSON OF THE COUNCIL FOR TRADE IN
GOODS.......................................................................................................................... ..........18
XI. OTHER BUSINESS.............................................................................................................. ..18
The meeting of the Council for Trade in Goods (CTG) was convened by Airgram
WTO/AIR/1745.  Discussion on items 9 and 10 was suspended and resumed on March 27.
Regarding the proposed agenda contained in G/C/W/361, in accordance with Rule 7 of the
Rules of Procedure, the Chairman proposed adding the following item: "Implementation-related IssuesG/C/M/59
Page 2
arising from Paragraph 12 of the Doha Ministerial Declaration (WT/MIN(01)DEC/1)" on the
understanding that discussion be limited to the statement made by the Chairman and that Members
would have the opportunity to introduce their im plementation-related proposals and/or comment on
what other issues should be addressed in the CT G.  Also, he had been informed by the Grenada
authorities that they were unable to be present to be present for the discussion of item 1 "Request from
Grenada for authorization to renegotiate under Article XXVIII.4".  Grenada was, therefore, requestingthat this item be withdrawn from the agenda.  The Chairman proposed that, in accordance with Rule 7,
the Grenada item be withdrawn a nd that the meeting begin with th e implementation item.  The Council
adopted the agenda as amended.
I. IMPLEMENTATION-RELATED ISSUES ARISING FROM PARAGRAPH 12 OF
THE DOHA MINISTERIAL DECLARATION (WT/MIN(01)DEC/1)
1.1 As announced in the Chairman's fax communications of 19 and 21 March 2002, the Chairman
made a statement on the following implementation issues:  The first related to the specific mandate
given by Ministers to the Council for Trade in Goods to examine two proposals concerning the
Agreement on Textiles and Clothing (paragraphs 4.4 and 4.5 of the Decision of 14 November 2001 on
Implementation-Related Issues and Concerns (in document WT/MIN(01)/17).  Under this mandate,
the Council for Trade in Goods would make r ecommendations on the proposals to the General
Council by 31 July 2002 for appropriate action.  To this end the Chairman proposed that this item be
put on the agenda of the next CTG meeting to be held on 2 and 3 May 2002 as well as subsequent
meetings, as required.  The incoming Chairman would conduct consultations on this issue in order to
prepare for the next meeting.  Secondly, with respect to tiret 99, contained in the Compilation of
Outstanding Implementation Issues Raised by Me mbers (Document Job)(01)/152/Rev.1), he proposed
that this tiret fell in the area of competence of the Market Access Committee which would take up the
issue and report to the Trade Negotiations Committee by the end of 2002.  He proposed that this issue
be put on the agenda of the next meeting of the Market Access Committee so that it could be
addressed in accordance with paragraph 12(b) of the Ministerial Declaration.  Thirdly, he suggested
that his successor in the Chair conduct consultations on how to handle any other implementationissues that Members might deem relevant to be addressed in the CTG.
1.2 The representative of India said it was no secret that India attached the greatest importance to
the expeditious resolution of the concerns of developing countries that underpinned these
implementation-related issues.  Ministers at Doha have had specifically stated that they attached theutmost importance to implementation-related issues and concerns raised by Members and were
determined to find appropriate solutions to them.  He noted and accepted a proposal for the
substantive consideration of the implementation-related issues arising from paragraph 12 of the DMD
at the next meeting of the CTG on 2-3 May 2002 and at each subsequent meeting.  He agreed that the
Chairman of the CTG should hold informal consulta tions in the immediate future to develop various
elements of the work ahead on implementation-related issues consistent with the mandate of the
Ministers and looked forward to participating in these consultations in a constructive spirit. Withrespect to the Agreement on Textiles and Clothing , the Ministerial conference at Doha and paragraphs
4.4 and 4.5 of its decision on implementation-related issues and concerns, requested the Council for
Trade in Goods to examine two proposals and to make recommendations to the General Council by
31 July 2002 for appropriate action.  These proposals emanated from a long process of consideration
of implementation-related issues and concerns.  It was therefore essential that for any worthwhileexamination of these proposals, this background be kept in view.   The implementation of the ATC
has given rise to many concerns because of the great importance of trade and textiles and clothing for
developing countries, both for export earnings and employment.   The sector accounted for about 20%
of exports of manufactured products and for some developing countries, especially the least
developed amongst them, its share in their export earnings was even larger.  He hoped thatmeaningful discussions would take place on these two tirets relating to the agreement on textiles and
clothing and that by the scheduled date of 31 Ju ly the CTG would have some definite and positiveG/C/M/59
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contribution to make to the ongoing process taken up under the Doha Ministerial Declaration.  He was
of the view that any delay in making applicab le the proposed growth-on-growth measure would
reduce the usefulness of the proposed increases in access arising out of integration.  The proposal with
respect to small suppliers and least developed country Members was in line with the letter and spirit
as well as purpose of the relevant provisions of the ATC.  He looked forward to constructive
cooperation from all Members to ensure that the two tirets were fruitfully addressed.
1.3 The representative of Brazil underlined that the implementation-related issues and concerns,
deriving both from the Decision adopted on 14 November 2001 (WT/MIN(01)17) and from the list of
outstanding implementation issues (JOB(01)/152/Rev.1)  were an integral part of the work programme
agreed to in Doha.  Indeed, the establishment of specific and more ambitious deadlines – which in no
way extended beyond the end of the current year – alongside the specific instructions given by
Ministers in paragraph 12 of the Doha Declaration, mandate the CTG to attribute particular priority tothese issues.  He recalled the instructions imparted by Ministers, and subsequently ratified by the TNC
that "outstanding implementation issues.....be addressed.....by the relevant WTO bodies".  It was for
the Membership of this Organization to decide what the relevant bodies referred to by Ministers were.
In the interests of transparency and clarity, he conveyed initial views on the outstanding
implementation issues related to the TRIMs Agreement (tirets 37 through 40 of JOB(01)/152/Rev.1).He believed these items should be taken up in this Council in the course of this year.  Article 9 of the
TRIMs Agreement mandated the CTG to "review the operation of this Agreement and, as appropriate,
propose to the Ministerial Conference amendments to its text".  This exercise, although behind
schedule, was still underway in the Council.  It would seem unnecessarily burdensome to undertake
two sets of negotiations where both were directed to the same goal.  Brazil understood that tirets 37through 40 should be dealt with directly by the CTG under the parameters set out in paragraph 12 of
the Ministerial Declaration which requested the relevant WTO bodies to report to the TNC by the end
of 2002 for appropriate action.
1.4 The representative of Bangladesh highlighted the proposals contained in the relevant
paragraphs 4.4 and 4.5 of the Doha document on implementation related issues and concerns as vital
for the least developed countries.  It was very important that, given the deadline, this issue be taken up
in earnest immediately.
1.5 The representative of Pakistan agreed with the statements made by India and Bangladesh.
Considering the fact that the implementation issues had been on the agenda of various WTO bodies
for quite some time, and delegations were fully aware of the concerns of a large number of developing
countries, he expected meaningful discussions in future meetings for positive results on these issues.
Considering the importance of the implementation issues for a large number of delegations, his
delegation requested that a mechanism be established to take up these issues in the spirit of priority
assigned to them by the Ministers.
1.6 The representative of the United States said that the US would be fully prepared to engage in
a substantive discussion on these issues and believed it would be helpful to have the Secretariat
provide data to inform future discussions.  It woul d be helpful if, for example, statistics on the overall
change in world trade in textiles and apparel since 1995 could be provided as well as statistics on
changes in the absolute volume and value of exports by Members of textiles and apparel since 1995.She would provide the CTG with a short list of data which could be easily pulled together so that
Members could undertake these discussions with sufficient information to engage.  In order to
undertake this exercise, she encouraged Members that had not done so already, to provide their import
and tariff data to the Secretariat as required by the IDB.  Her delegation would work constructively in
the spirit of the Ministerial Decisions.  On TRIMS issues, she maintained that the relevant Body totake up those items was the TRIMS Committee, and if there was consultations on how to deal with
this issue, the US would like to participate in those consultations, as well as those on the textile items.G/C/M/59
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1.7 The representative of Colombia said Colombia  concurred with Brazil in that implementation
was an important element of a review of the TRIMS agreement.  It was important to determine
whether or not the relevant Body for this was the TRIMS Committee.  Consultations would also give
the possibility of weighing the work load of the Council.
1.8. The representative of Guatemala accepted the Chair's proposal regarding implementation
items 4.4 and 4.5 and considered it a good structure to initiate work.  As India had indicated, these
matters were the result of a lengthy process and work done by Members over several months, and he
felt that there was ample documentation that would permit the CTG to work satisfactorily.
1.9 The representative of India noted the US request for data to be collected by the Secretariat;
he was sure that other delegations would also like data to be collected by the Secretariat so that the
full picture was available to everybody to make meaningful discussions possible.  I hope that in thefuture informal consultations, which the Chairman of the CTG was going to carry out, this request
would be taken into consideration.
1.10 The representative of Canada agreed with the Chair's proposals with regards to the
implementation issues emanating out of paragraph 12.  In the case of the proposal regarding tiret 99,
he looked forward to discussing that issue in the Market Access Committee at its next meeting.  As
regards the textile implementation proposals, he looked towards engaging on that matter at the next
CTG meeting on 2-3 May.  As regards the TRIMS issue, it was his view that the relevant body was
the TRIMS Committee.
1.11 The representative of the United States welc omed India's suggestion that there may be other
data that should be considered for collection in the course of discussions.  However, she felt that the
data which she had identified would be necessary to begin discussions in the CTG.
1.12. The Council took note of the statements and agreed  to proceed in the way the Chairman had
outlined.
II. NOTIFICATION BY BANGLADESH UNDE R SECTION C OF ARTICLE XVIII OF
THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994 AND THE
DECISION OF 28 NOVEMBER 1979 ON SAFEGUARD ACTION FORDEVELOPMENT PURPOSES (G/C/7, G/C/8 AND G/C/9)
2.1 The Chairman noted that this item concerned a notification by Bangladesh under paragraph
14 of Article XVIII.C of GATT 1994 contained in document G/C/7.  It concerned certain measures
which Bangladesh proposed to take under Article XVIII.C as interpreted by paragraph 1 of the
Decision on Safeguard Action for Development Purposes for the four products listed.  Subsequently,
the United States and the EC sent requests for consultations pursuant to paragraph 15 of Article XVIII
contained in documents G/C/8 and G/C/9 respectively.   He proposed that his successor in the Chair
organize informal consultations in preparation for discussion at a future meeting on this matter.
2.2 It was so agreed.
III. REQUEST BY SLOVENIA – CONSIDERATION OF CROATIAN BAN ON ROAD
TRANSIT OF CRUDE OIL AND OIL PRODUCTS (G/C/W/346 AND ADD.1)
3.1 The Chairman noted that  the request by Slovenia concerning a ban on road transit of crude oil
and oil products by Croatia.  Slovenia had circul ated two communications in  documents G/C/W/346 and
Addendum.1.G/C/M/59
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3.2 The representative of Slovenia pointed out that the documents should be read and examined
jointly in order to obtain a clearer understanding of the context in which measures by Croatia were
imposed. Why did Slovenia bring this matter to th e attention of the Council for Trade in Goods?  At
issue was the freedom of transit (of goods), a pillar of the multilateral trading system, based on
Article V of the GATT 1994.  Also at issue was the respect of other Articles of the GATT 1994 and
newly introduced border measures and procedures which were not consistent with the GATT 1994and which put limitations on the freedom of transit.  The measures imposed by Croatia affected
established logistics in a geographically sensitive area, which emerged from armed conflict and was
still not yet fully stabilised.  Because it was a sensitive region, Croatian measures had detrimental
regional implications.  They were specifically target ing vital supplies of energy in the region:  oil and
oil products including and in particular diesel fuel, heating oil and liquid petroleum gas and other vital
raw materials.  Slovenia was bringing this to the Council for Trade in Goods and through it to the
Members of the World Trade Organisation, because of the extent and manner in which the measureswere applied, implicating a landlocked country, implicating regional trade in vital goods, with
economic consequences.  This posed a serious systemic question and should be of interest to the
Members from the point of view whether a coun try could interfere in trade between two other
countries by imposing obstacles which in fact were designed  to reduce competition in the region.
Could a country, by whatever justifiable or unjus tified means disrupt normal trade by imposing trade
related measures, affecting the transit or delivery of goods, if it was by fact of geography a territory of
international transit, and particularly in what way might it affect, cut off, or effectively impose
conditions of supply of vital goods to a land-locked territory, again, which was in a position to do so
by the mere fact of geography?
3.3 Croatia, without prior announcement, or coordination with the authorities of countries at its
border, at first , had imposed a complete ban on road transit of crude oil and oil products , and, as a
result, the international road traffic was, for a ti me, completely blocked.  This was not a temporary
measure.  In the relevant government documents there was no reference to that effect.  The measure
caused immediate disarray and logistical confusion, and naturally, protests.  Under immediate protest
from the most affected governments, i.e. of Slov enia and Bosnia and Herzegovina, and diplomatic
pressure, Croatia, having realised the political implications of such a drastic measure, through a set of
government decisions imposed a number of replacement administrative measures and conditions and
border measures, fees, to cover the cost of the m easures. These, again, were brought without prior
announcement. Croatia immediately began to apply th ese measures in the strictest manner, without
proper technical preparations and co-ordination with authorities of bordering countries.  The coverage
of goods  was extended from crude oil and oil products to a wide range of goods classified as
"hazardous" by definition of the Europe Agreement on the carriage of Hazardous Goods, or the so-
called "ADR Agreement".  The customary border procedures were changed overnight and new
documentary requirements introduced, thus imposing unnecessary administrative and technical
barriers.  Slovenia maintained that the measures imposed by Croatia were contrary to Articles V,
paragraphs 2,3, and 6; Article III, paragraphs 1 and 2; Article VIII, paragraphs 1(a), (b), (c); ArticleX, Article XX, Article XXI of the GATT 1994.  Furthermore, the measures constitute newly imposed
technical barriers to trade and were trade distorti ve in terms of the TBT Agreement.  Croatia imposed
fines, fees, taxes and charges, documentary require ments, procedural requirements, which were not
customary in the transit or international carriage of goods.  Slovenia protested the measures and
informed the government of Croatia of its objections .  There were two bilateral meetings at an expert
level and objections were repeated.  Slovenia conducted a survey of companies affected (about 50)
and of the economic damage and consequences for the normal conduct of business.  Companies had
incurred disproportionate new costs of transit and transport of certain types of goods, which were
directly attributable to the imposed measures.  Some companies had reduced their operations in order
to cut their losses.  There were longer term costs, the so-called opportunity costs, which could not yetbe fully determined.  There was a loss of confidence and increased risks due to the arbitrarily imposed
measures.  The measures caused unnecessary hardship to transporters; instructions required customs
officials to impose "high" fines for administrative infringements.  The way that measures wereG/C/M/59
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executed (e.g. the signature of a protocol of inspection by at least three customs officials) indicated
the fact that Croatia desired to eradicate an internal problem of corruption.  The most obvious measure
was the strictly applied and controlled corridors (through the territory of Croatia) which were not co-
ordinated with neighbouring countries’ relevant border crossings.  Some crossings were in fact
unilaterally closed for shipments, which were now routinely rejected and re-routed.  Claims by
Croatia that the "measures improved the system" and that the corridors were "the most convenientroutes", that "transit was not subject to any unnecessary delays", that the time for crossing the border
had not changed, were misleading.
3.4 One example illustrated the actual situation:  The nearest border crossing to a refinery in
Croatia which supplied about 70 per cent of Sloven ia's consumption of liquid petroleum gas (l.p.g.)
was about 15-20 kilometres away.  Because this border crossing was unilaterally closed, tankers
needed to travel a route which was ten times  the necessary distance in order to reach their destination
in Slovenia, over mountainous terrain.  The shorte st and most direct route between Slovenia and
Bosnia and Herzegovina was 50 kilometres and did not go through any national park or other
protected area.  The alternative corridor was more than three times that distance.  The corridors in fact
meant that Slovenia could not use the most conven ient and economical routes for the supply of goods
to a third country.  As a matter of fact, the direct link between Slovenia and Montenegro, and Serbia,had been cut off.  The cost of transport had accordingly increased.  When Croatia presented its
environmental argument (s the justification for its measures, it should find a way to explain how the
environment was better protected by longer transit routes, both in terms of time and distance, and in
terms of greater risks of accidents.  It also claimed that concentrated traffic was a better way to protect
the environment and minimise risk.  Of the 14 accidents in 2001, that Croatia mentioned in itsdocument, almost all of them were caused by Croatian transporters.  The problems that Croatia
wished to address by imposing trade-related measures – better protection of the environment, illegal
trade, corruption, road safety – were not unique.  They were never put forward and discussed with its
neighbours.  They should be discussed, but in a regional context.  With a truly systematic approach
they could be resolved in a manner consistent with WTO obligations.  It was wrong to say that"carriers would get used to the measures".   Did that mean, therefore, that any country could
arbitrarily impose counter-measures, at any time that it saw fit?  This was not a systemic approach,
nor was it WTO consistent.  Considering the specific region, trade was the bloodline of development
and stability.
3.5 Taking an example of processing at the border, he said that because of inadequate technical
preparations, and because every vehicle was required to be weighed even if it was in transit and
empty, the border on the Croatian side of a principal crossing was not equipped with a scale.  A tanker
truck had to necessarily cross from Croatia into Slovenia to be weighed, return across the border to
Croatia to be further processed (after waiting to cross back) and then finally cross into Slovenia after a
complicated and time-consuming procedure of inspection and document preparation and after paying
parking and other fees.  In other words a shipment , according to the instructions by the Croatian
government, had to cross the border with Slovenia three times.  The processing included mandatory
vehicle and cargo inspection regardless of transit, testing of the goods, sampling and laboratory
analysis, waiting for results, payment of the cost.  Referring to Article XX of the GATT 1994, there
were a number of landmark "environmental" cases.  Panel reports provided valuable insight and
guidance and relevance to the standards that needed to  be met in order to invoke this article. In its
document of 18 March, Croatia found a basis for its measures in this Article.  Reading the Article and
in particular in connection with its paragraph (b), it was easy to see the conditions that needed to be
met to base any measure on this article.  In particular, an inconsistent measure must be necessary and
least trade distortive, and can be imposes if no other means are available.  Measures imposed by
Croatia were simply not logical unless they intended to limit competition in an area of trade whichwas lucrative, nor were they necessary or appropriate for the purposes declared.  Croatia had a clear
international obligation to take all necessary steps to facilitate the transit of energy materials, in
particular, and not to impose restrictions on transit or international carriage of goods.  The transportersG/C/M/59
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and exporters and importers of goods were now facing an economic reality.  It could not be
overlooked nor exaggerated because of the regional context.  Operators were faced with the task of
difficult and costly logistical readjustment and financially burdensome obstacles, contrary in all
respects to WTO rules.  Croatia was interfering with trade in the region. Slovenia's access to certain
destinations was either limited or prevented.  Slovenia requested that Croatia should notify and justify
the measures properly and in accordance with the TBT Agreement and the GATT 1994, so that otherMembers might be informed and allow them to examine the nature of the measures and their
necessity.
3.6 The representative of Croatia said that in document G/C/W/360 entitled "Road transit of
hazardous materials in Croatia", submitted on March 15 2002, the Republic of Croatia explained the
reasons for the adoption of a regulation introducing road corridors for transit of hazardous materials
and designating specific border crossings for the clearance of these goods.  In order to provideadequate information to the members of the Council for Trade in Goods, he restated the policy
objectives and content of these measures as well as their nature under the provisions of the GATT
1994 and other WTO Agreements.  The significant increase of road traffic, accidents of vehicles
transporting hazardous materials, as well as deceptive practices related to illegal trade, especially
frequently occurring with transportation of oil derivatives, necessitated the introduction of thesemeasures.  After the withdrawal of the restrictive measures on road transit of crude oil and oil
products, which had been in place only for few days, on 24 January 2002, Croatia amended the
legislation related to road transport of hazardous materials with the objective of establishing an
adequate regulatory framework to deal with serious problems that it faced. These measures were at no
time intended or implemented in such a manner as to reduce road transit or prevent and disrupt tradethrough or within the territory of Croatia.  Croatia had informed Slovenia on the nature and the text of
the draft measures before their adoption. This was done with the intention to provide an opportunity to
receive Slovenia’s comments on draft regulations. Therefore, the assertion that Croatia’s measures
were introduced as a fait accompli  was not based on actual facts.
3.7 The regulation of 24 January 2002 introduced corridors for transit of hazardous materials and
designated specific border crossings for customs clearance.  The most convenient routes for
international road transit in the sense of Article V: 2 of the GATT were designated as corridors, as
they were the best quality roads with proper infrastructure which was necessary for the protection of
environment and road transport safety.  Due to the overall conditions of Croatian roads, designatedroutes contributed to the safety and efficiency of transport, thus minimizing the risk of accidents.
Excepted from these corridors were the roads and routes passing through national parks and tourist
centers along the Adriatic coast. The necessity to divert the transport of hazardous materials from
these areas was derived from the legitimate policy objective of protecting the environment and
ensuring road safety and was not, in any way, creating unnecessary obstacles to international trade
The designation of specific border crossings (11 in total; 3 to Slovenia, 5 to B-H; 2 to Hungary; 1 to
FRY) that had all necessary facilities and equipment to ensure a normal flow of trade was arequirement in the sense of Article V: 3 whereby Croatia required that the traffic in transit through its
territory be entered at the proper customs house.  The corridors which were used for transit, import
and export were also maintained for transport of hazardous materials within Croatia, except in case of
local deliveries for production facilities, petrol stations and consumers. In case the goods were
imported for the Croatian market, after the custom clearance procedure had been completed and dutiespaid, the vehicle, irrespective of the nationality of its carrier and the origin of goods transported, could
deliver these same goods by road. Such a procedure was in accordance with Article III of the GATT
1994, thus fully complying with national treatment. Therefore, Croatia could not accept the assertion
that it precluded access to customers or product ion facilities and access to sources of supply.
3.8 The statement that there was an obligation of escort through transit corridors by a domestic,
and more particularly a private company upon payment of a high flat fee, was inaccurate as well as
the claim that strict time schedules with fines for tardiness were maintained. Transit through corridorsG/C/M/59
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did not require any kind of escort. There was only one exception, where the escort (by local police
cars and not a private company) was required and that was the short route to one of the border
crossings with Bosnia and Herzegovina, which passed within the boundaries of the National Park
Plitvička Jezera. Any accident with hazardous materials in that region would have detrimental
consequences for the environment.  In order to underline the fact that the measures introduced by the
Croatian government had not caused any unjustified barrier to international trade, he stated that nonew border procedures, which would increase the costs of transit were introduced. Sampling or
laboratory analyses of goods in transit was not required. With regard to the weighing of vehicles, this
procedure lasted less than a minute.  The costs for administrative expenses had not changed since the
introduction of the new measures and amounted to a total of about 40 EURO, which reflected the
costs for the services rendered.  This data illustrated the fact that transit was not subject to
unnecessary delays or restrictions as the time spent at the border crossings had not substantially
changed from the time the measures had been adopted.  The growing figures on the number ofvehicles transporting hazardous materials and oil products, which were transiting to neighbouring
countries illustrate the fact that Croatia had not limited or banned transit through its territory. This
traffic had increased in February 2002 by more than 50% in comparison to traffic in February 2001,
and it was becoming even denser every day in the direction of neighbouring countries.
3.9 With regard to the systemic concern raised with respect to the alleged prejudice caused to
WTO and non-WTO countries in the region, since the introduction of the amended regulation of the
24 January 2002 and subsequent bilateral talks held, Croatia had not received additional complaints.
Slovenia was among a number of countries that were not allowing the usage of all roads for transport
of hazardous materials.  In conclusion, he believed that the information provided earlier and todayproved that Croatia complied with the relevant prov isions of the WTO Agreements, in particular with
Article III: 4 and V of the GATT 1994, as well as with Articles 2 and 5 of the Agreement on
Technical Barriers to Trade.  Furthermore, Croatia was fully honouring its commitment related to free
transit of goods and normal flow of trade and had not violated its terms of accession to the WTO nor
acted in the sense that Slovenia’s benefits under the GATT 1994 could be nullified or impaired in themeaning of Article XXIII of the GATT 1994.  Finally, in order to solve these problems, two meetings
were held with the Slovenian representatives, both in Slovenia.  The Croatian government was ready
to continue with these efforts. In  line with such an approach we would also like to inform the WTO
membership that the Government has passed an amended decree whose provisions would clarify,
along the lines explained in this statement, all re maining misunderstandings regarding this issue. That
decree introduced an additional corridor and border crossing to Slovenia.
3.10 The representative of Slovenia said that since Croatia was invoking the TBT Agreement, it
would be good if they notified their TBT measures so that other Members might be able to examine
them and their justification.
3.11 The representative of Hungary said it was somewh at regretful that this issue was on the agenda
due to the fact that Hungary had friendly and tight  relationships and trade links with both countries.
When the original measures were introduced by Cr oatia, it was clear that they directly affected
Hungary's trade interests.  Hungar y entered into immediate consultations with Croatia to understand the
new measures and in order to ensure that the orde rly continuation of regional trade was not inhibited.
As a result of consultations, it was possible to fi nd a solution to the problems of transit affecting
Hungary.  The original measure, which was really a ban, was modified in such a way which allowed
orderly continuation of trade.  In the first few da ys after the introduction of the new measure there were
bottlenecks and delays in transit, but as a result of expert consultations these problems were resolved. He
encouraged both countries to continue their bi lateral dialogue and was hopeful that a mutually
acceptable solution could be found without re liance on dispute settlement procedures.
3.12 The representative of Malaysia also urged both parties to consult and that this matter be
resolved amicably and expeditiously.G/C/M/59
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3.13 The representative of Bosnia and Herzegovina said that the Government of Bosnia and
Herzegovina was convinced that this the Croatian measure represented a direct violation of the
following agreements to which Croatia was a party: first, Article V of the General Agreement on Tariffs
and Trade 1994, obliging the Members of the WTO to enable free transit trough its territory using
shortest, the most convenient and direct routes fo r international transit and with treatment not less
favourable than that provided for transport of domestic products;  second, Article VI of the Energy
Charter Treaty obliging contractual parties to prov ide the treatment for energy materials and products in
transit not less favourable than for those of domestic  origin or imported onto their territories;  third,
Articles 18, 27 and 31 of the bilateral Free Trade Agreement between Bosnia and Herzegovina and
Republic of Croatia, prohibiting the Parties to impose and use any restrictions on transit as a means of
discrimination, obliging the Parties on prior consulta tions and respect for the procedures stipulated.
Bosnia and Herzegovina considered that the above said Croatian administrative ban on road transit of
crude oil and oil products led to discrimination and a disguised restriction of international trade since it
related to transit of these products trough Croatia only, and not on transport of the same products
produced in Croatia.  Several attempts of the Gove rnment of Bosnia and Herzegovina to resolve the
issue bilaterally, bringing it into compliance w ith mentioned unequivocal commitments of Croatia,
regrettably had only symbolic results.  Having in mi nd the fact that this unilateral administrative act is
contrary to the international agreements to which Croatia was a party, as well as principles of good
neighbourly, particularly economic, relations between the two countries, Bosnia and Herzegovina still
expected that the measures be withdrawn allowi ng for free transit and usual conduct of trade
contributing further stability to the region.
3.14 The representative of Croatia was surprised with the statement as Croatia was obviously
misled by the conclusions of the agreement reached and signed on this issue in bilateral talks.  He
believed that Croatian measures were in full compliance with relevant WTO provisions.  Although he
understood the economic and political challenges and problems faced by some countries in the region,
he failed to understand that this forum was being used in an attempt to make Croatia change its
regulatory policy measures which did not contribute to the problems faced by others and which were
in compliance with WTO rules and principles.
3.11 The Council took note of the statements made.
IV. REVIEW OF THE OPERATION OF THE TRIMS AGREEMENT UNDER ARTICLE
9 (G/C/W/307 AND ADD.1)
4.1 The Chairman recalled that the Council initia ted the review under Article 9 of the TRIMs
Agreement in October 1999.  Since then there had b een an invitation outstanding to delegations to
present written submissions on this issue;  none had been received to date.  Last Spring it was agreed
that the WTO and UNCTAD Secretar iats would be invited to prepare a joint background Study on the
basis of agreed terms of reference to assist the C ouncil with its deliberations on this issue.  This study
had now been circulated and is entitled Trade Related Investment Measures and Other Performance
Requirements.   Part I on Scope and Definition – Provisions in International Agreements was contained
in document G/C/W/307 and Part II on Evidence on the Use, the Policy Objectives, and the Impact of
Trade-related Investment Measures and Other Perform ance Requirements  was contained in document
G/C/W/307/Addendum.1.
4.2 The representative of the Secretariat expre ssed appreciation to the UNCTAD secretariat for
their close cooperation in the preparation of this study.  Their experience and their expertise on this
subject proved invaluable in the preparation of such  a comprehensive review.  Pursuant to the terms of
reference, WTO-UNCTAD had tried to remain factual and objective in the study and had not attempted
to draw conclusions which was for delegations and this Council to do.G/C/M/59
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4.3 The representative of Colombia said she was st ruck by statements to the effect that TRIMS
themselves did not significantly influence trade and affected investments only marginally.  In specific
cases applying a levy to intermediate products woul d be more prejudicial than the application of a
national content standard.  As regards her understanding as to the manner of pursuing the examination,
the joint study was an element in the process mandated under Article 9 of the TRIMs Agreement. which
would permit Colombia to define the scope and modalities of the examination.  As regards the time-limitfor carrying out the examination, the CTG should concl ude the exercise prior to the Mexico Ministerial
in order to submit the results at th at time.  For this reason, she appealed to Members to define a calendar
of work.  The preamble of the TRIMs Agreement struck a balance between the objectives of avoiding
trade distortions and the promotion of investment with the clear recognition of the specific trade and
development and financial requirements of developing  countries.  It was indispensable to determine
whether or not the TRIMs Agreement was a tool whic h was efficient in avoiding trade distortions, or
whether its effectiveness depended on other components in the fields of investment and competition and,
if so, what these might be.
4.4 The representative of the United States stated that this report was just one input in the Article 9
review.  It must be remembered that the TRIMs Agreement was an agreement that highlighted certain
elements in light of already existing provisions in the GATT that prohibit ed certain trade related
investment measures.  The review was designed to examine ways to further clarify the elements that
prevented the use of TRIMS already found in GA TT.  Part 1 of the report which undertook the
substantial task of outlining how performance require ments were defined in trade policy literature and
investment agreements provided good backgr ound for understanding part 2 of the report which
contained observations of the study.  However, the empirical evidence collected and currently available,
did not answer the question regarding what impact TRIMS had on employment and wages or
competition  Additionally, according to the statistics cited in the report, the impact on investment and
trade flows appeared to be limited in certain cases.   A key issue for development outlined in the report
was the relationship between TRIMS and resource allo cation.  There, most of the empirical evidence
illustrated that TRIMS led to inefficient production that mis-allocated scarce resources.  Given this
background, the question was whether the adoption of TR IMS could be justified as a necessary tool for
economic growth.  Finally, she noted that when  Members had engaged on the issue of TRIMS
extensions, it was agreed that the conduct of the Ar ticle 9 review would not impinge on those extensions
and her delegation expected that Members who had b een a part of those decisions could now abide by
them.
4.5 The representative of Argentina said the study was a good compilation of relevant agreements
and definitions.  Regarding incentives and disincen tives to investment, the first section permitted
Members to be aware of the fact that what was at present embodied in the TRIMS agreement was a
small aspect of the issue of investment incentives  in a broad sense.  Regarding Part 2, preceeding
speakers had stressed the limited impact of existing TRIMS measures on trade flows.  Why then were
those countries which had TRIMS in place the object of such strict monitoring when they asked to
extend those measures?  The report seemed to indi cate that the main problem was how resources were
distributed or, indeed,  misallocated..  This was a point which might be interesting to discuss  but it was
up to national governments to determine the manner in which a country decided to use its resources.
If Members were to analyse the efficiency of the way in which a government decided to allocate its
resources, he suggested that the agricultural sector would make a good starting point.
4.6 The representative of Egypt noted that the studi es seemed to indicate that TRIMS had been used
by all countries, both developed a nd developing, hence nobody was really immune to their use.  Second,
TRIMS did not seem to substantially distort trade flow s, but seemed to be useful in achieving specific
developmental needs of both developed as well as de veloping countries.  He highlighted the need to
establish a work programme to continue the review process of the TRIMS Agreement.G/C/M/59
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4.7 The representative of Canada had preliminary comments at this stage which pointed to the fact
that TRIMS and performance requirements were not the best means of attracting high quality FDI.
Rather, the balance of evidence would indicate that  such measures had resulted in misallocation of
scarce resources, the perpetuation of inefficiencies a nd lack of competitiveness.  As indicated in the
study, where positive results were observed, it was unclear whether these were a function of
performance requirements.
4.8 The representative of Malaysia said that Malaysia stood steadfastly by its commitment on the
elimination of all TRIMS in Malaysia by the 31 December 2003 deadline.  Regarding the study, he
highlighted two points:  TRIMS had had some positive effects on trade and that a large number of
developed country partners had been using them until the recent past.  Finally, he asked the secretariats
as to whether the measures covered by some national governments, or governments below the federal
government, particularly in the developed c ountries, were also the subject of this study
4.9 The representative of India said that a quick glan ce of the study would seem to indicate that to a
great extent the conclusions were drawn on the basis of a theoretical construct which seemed to assume
certain conditions in the market-place which did not  always correspond to reality.  Certain TRIMS had
been used by many developed countries in their early stages of growth as tools of growth and
development. From a global point of view there c ould be a certain impact on resource allocation and
growth.  From the micro level, it was necessary to see what impact TRIMS had in respect of particular
countries, particularly those which were under-priv ileged with a lower level of technology and certain
disadvantages relating to scale of production, but at the same time had advantages in terms of lower
factor costs in certain areas.
4.10 The representative of China referring to part 2, paragraph 33 of the study, said first, the laws and
regulations of China concerning investment as referred in this paragraph was mostly outdated or
obsolete; the information about China's legislation needed to be updated.  Secondly, because the study
used this kind of data, the information on China's investment policies and its impact on trade was notsufficiently objective or accurate.
4.11 The representative of Pakistan said Pakistan was one of the delegations which had requested
this study be undertaken jointly by UNCTAD and the WTO.  He supported most of the statements made
by Colombia and especially the point made by Argentina regarding the allocation of resources.
4.12 The representative of Korea said some sections related to Korean matters was also based on out
of date information.  His delegation was ready to c ooperate with the secretariat to update information
and materials as required.
4.13 The representative of the European Communities said his delegation would comment on the
study at a late stage  Members might also want to  consider the way in which the CTG should organise
the substantive review of the TRIMS agreement.
4.14 The representative of the Secretariat said the response to the question raised by the delegation of
Malaysia was that the study did not cover all sub-national level government measures.  In response to
the delegations of China and Korea, he regretted any misrepresentation of the situation in their
countries with regard to TRIMs.  As was stated in paragraph 3 of Part II of the Study, the study aimed
to illustrate the use that had been made of TRI Ms, without claiming to be a fully up-to-date and
accurate representation of the current legal and policy stance of each of the countries mentioned.  To
do anything on that scale for all WTO Members would be an enormous task and would involve
Members themselves checking whatever was written.  If the delegations of China and Korea, or anyothers, felt that they would like a correction issued, this would be done.G/C/M/59
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4.15 The Chairman noted that it had been a useful  discussion on Parts I and II of the Study and he
proposed that the CTG take note of the statements ma de and revert to this matter at the next meeting.
Before closing this item, he gave the floor to the UNCTAD Secretariat to make a statement about a
recent UNCTAD publication on Host Country Operational Measures , copies of which were made
available to Members.
V. TRADE FACILITATION WORK PROGRAMME
5.1 The Chairman reported to on the informal consultations he had held with Members on how to
structure the work programme on trade facilitation for the year 2002.  To carry out the mandate given to
the CTG at Doha, he proposed, and discussed at length with Members, the following structure of trade
facilitation work for 2002:  First, four formal meetings in the framework of regular sessions of the
CTG of two days duration, with trade facilitation being the first agenda item of the whole first day andthe morning of the second day.  To ensure predictability, adequate time for Members to prepare and toallow for capital based experts and representatives to attend, the proposal was based on the
understanding that the scheduled meetings would take place irrespective of the number of other items
on the CTG agenda.  The second half of the second day would be devoted to other items on the CTG's
agenda, including implementation-related issues of paragraph 12 of the Doha Ministerial Declaration.
Second, concerning the scheduling of meetings, four se ts of dates have been proposed as follows:  23
– 24 May 2002;  22 – 23 July 2002;   3 – 4 October 2002;  4 – 5 December 2002.  In the light of the
July meeting, Members would decide if additional tim e was needed to be devoted to the issue of trade
facilitation to ensure fulfilment of the mandate given to the CTG in paragraph 27 of the Doha
Ministerial Declaration.  Third, the core agenda would have the following elements:   The May, July
and October meetings would focus on GATT Arti cles X , VIII a nd V respectively.  Although each
meeting would focus on one GATT Article, delegations would be free to address questions related to
all three Articles in all meetings.  Trade facilitation needs and priorities of Members, particularly of
developing and least developed countries would be a standing item in all meetings as would technical
assistance and capacity building.  The fourth meeting in December would be a forum for an overall
discussion and also serve to discuss the organisation of future work.
5.2 The Council agreed to adopt this work programme.
VI. REGIONAL TRADE AGREEMENTS
6.1 The Chairman drew attention to the five Agreements listed under this item that had been
notified under GATT Article XXIV.  The texts of the Agreements and their notifications had been
circulated in the documents listed;
(A):  Free Trade Agreement Between Slovenia And Bosnia And Herzegovina - Notification From The
Republic Of Slovenia (WT/REG131/N/1, WT/REG 131/1);  (B):  Free Trade Area Between The
EFTA States And Croatia - Notification From Th e Parties To The Agreement  (WT/REG132/N/1,
WT/REG132/1);  (C):  Free Trade Area Between The EFTA States And Jordan - Notification FromThe Parties To The Agreement  (WT/REG133/N/1 , WT/REG133/1);  (D):  Free Trade Agreement
Between Turkey And Slovenia - Notification From  The Parties To The Agreement (WT/REG135/N/1,
WT/REG135/1);  (E):  Free Trade Area Between The United States And Jordan - Notification From
The Parties To The Agreement (WT/ REG134/N/1 And Corr.1, WT/REG134/1).
6.2 There were no comments and the Chairman proposed that the Committee on Regional Trade
Agreements carry out the examination of the above-quoted Agreements in accordance with the
following terms of reference:  "to examine, in lig ht of the relevant provisions of the GATT 1994, the
free trade agreements just referred to and to submit a report to the Council for Trade in Goods.  It is
understood that the understanding read out by the Ch airman of the Council for Trade in Goods under
Item 7 of the agenda of the meeting of the Council for Trade in Goods on 20 February 1995, asG/C/M/59
Page 13
contained in document WT/REG3/1, will apply mutatis mutandis  to the examination of the
agreements.  It is also understood that, during the examination, due account will be taken of the
intrinsic differences between customs unions and free trade areas."
6.3 The Council so agreed.
VII. REQUEST BY COSTA RICA;  INDIA;  INDONESIA;  PAKISTAN;  PERU AND
HONG KONG, CHINA:  CTG'S OVERSIGHT FUNCTION PURSUANT TO
ARTICLE IV OF THE AGREEMENT ESTABLISHING THE WTO –
TRANSPARENCY REGARDING NEW RESTRICTIONS ON TEXTILE AND
CLOTHING PRODUCTS COMMENTED ON BY THE TEXTILES MONITORING
BODY (G/C/W/260/REV.1)
7.1 The Chairman said that this item had been retained on the agenda at the request of Hong
Kong, China also on behalf of Costa Rica, India, Indonesia, Pakistan and Peru.  It concerned the
CTG's oversight function in relation to the Agreement on Textiles and Clothing and, in particular, to a
restraint agreement between the US and Turkey on one clothing category.  He noted that this matter
was discussed in the Council's major review of the implementation of the ATC held last year and was
one of the matters under discussion in the informal consultations which were being held in efforts toreach an agreed report on the major review.
7.2 The representative of Hong Kong, China, also  speaking on behalf of India, said the matter
was first raised formally by his delegation at the CTG meeting on 14 March 2001.  To recapitulate:
Article 2:4 of the Agreement on Te xtiles and Clothing (ATC) provided that no new restrictions should
be introduced on textile and clothing products unless justified under its provisions.  The ATC also
provided for the TMB to examine all measures taken under the Agreement and to determine their
conformity with its provisions.  Finally, Article IV:5 of the WTO Agreement assigned the CTG the
responsibility of overseeing the functioning of all agreements in the area of goods, including the ATC.
There could be little doubt that all these provisions were designed to ensure that the provisions of theATC were fully respected, and that there was multilateral supervision and oversight to avoid any
deviation so that the integrity of the Agreement and the WTO system could be preserved.
Unfortunately, there had been instances in which new restrictions had been imposed by certain
restraining Members, even when not justified by the ATC.  One such instance was the introduction of
a new restriction by the United States on imports of a textile and clothing product from Turkey.Despite repeated requests, including by the Textiles Monitoring Body, the US had failed to notify this
restriction to the TMB for it to examine its conformity.  Later, it had claimed that the restriction in
question was justified by a provision of the ATC, without however specifying the relevant provision.
Given the systemic significance of the issue, both  for the integrity of the ATC and for enabling the
TMB to carry out its mandate, through a joint subm ission in G/C/W/260/Rev.1, his delegation urged
the CTG (i) to request Members to provide full deta ils of any new restrictions to the TMB, (ii) to
invite them to clarify and rectify any measures that might already have been the subject of TMB
review or comments, and (iii) to re-emphasize the need to ensure conformity of all measures with
their obligations.  At the CTG meeting of 14 March 2001, the US had contended that it believed the
measure to be consistent with the ATC, and that there were grounds under the Agreement for such a
measure.  The US however, did not specify the rele vant provision.  In subsequent CTG meetings, the
US had argued that the matter belonged to the CTG in the context of the major review of ATCimplementation and that it would indicate the relevant provision during such consideration.
Subsequently, during the CTG meeting held on 17 October 2001 in connection with the major review
of ATC implementation, the US representative had stated that it was his Government's view that this
restriction was consistent with Article 4 of the ATC.  In the view of Hong Kong, China, it should be
possible for the CTG to conclude that the justification given only during the course of the majorreview could also be provided by the US to the TMB.  Secondly, it could recall that the TMB had
already stated that there was no provision in the ATC, including in its Article 4, justifying such newG/C/M/59
Page 14
restrictions.  Reference in this regard was invited to the relevant TMB reports, as also recapitulated in
its comprehensive report to the CTG in G/L/459, paragraphs 488 to 503.  Thirdly, there should now
be little difficulty for the CTG to invite the Members concerned (the US and Turkey) to rectify the
measure and emphasize the need to ensure the conformity of all measures with their obligations under
the Agreement.  The CTG had a self-standing function for overseeing the agreements in the area of
trade in goods.  The issue under reference was important and belonged to such a function of the CTG.He, therefore, looked forward to an early decision by the Council on the matter.
7.3 The representative of the United States considered that the matter should continue to be
handled in the ATC major review process.  The representative of Turkey shared the views of the
representative of the United States that this issue should be handled by the major review of the ATC.7.4 The representative of India said the interplay between the major review and the consideration
of this matter by the CTG under its regular business, had been played out for some time.  Through the
process of the major review, the United States had indicated that it had taken this measure under the
ATC's Article 4.  However, when one looked at the TMB's own report on the matter, it clearly set out
that this restriction or restraint had not been justified under Article 4 of the ATC.  The matter before
the CTG was simply that the CTG has oversight of all of the implementation of the ATC.  It was notpurely a matter for the major review to consider implementation of the ATC.  He urged the CTG to
recommend, as already proposed, that the Members concerned should be asked to rectify the measure
which is in violation of another Member's obligations under the ATC or any WTO agreement.
7.5 The representative of Japan supported the proposal put forward by Hong Kong, China and
noted that these proposals would contribute to the transparency vis-à-vis the restricted measures that
were now being discussed.
7.6 The representative of Hong Kong, China re quested the Chairman to hold further informal
consultation on the substantive issues raised by his delegation and on how to proceed further on this
matter.
7.7 The Council took note of the statements made and agreed  that the Chairman would hold
informal consultations.
VIII.  MAJOR REVIEW OF THE IMPLEMENTATION OF THE AGREEMENT ON
TEXTILES AND CLOTHING DURING THE SECOND STAGE OF THE
INTEGRATION PROCESS PURSUANT TO ARTICLE 8.11 OF THE ATC
8.1 The Chairman last reported on the developments in the major review of the implementation of
the ATC at the meeting of the General Council held on 19 and 20 December 2001.  At that time, he
had noted that the CTG had held a series of formal meetings in September and October to conduct the
major review, as required by Article 8.11 of the ATC.  The minutes of these meetings were set out  indocuments G/C/M/51, 52 and 56.  Thereafter, the previous Chairman, Ambassador Major, had
arranged a series of informal consultations with a view to preparing a report for consideration by the
CTG.  In these consultations, however, there were important differences on a number of  matters and
the report on the review could not be finalized at that time.  He informed  the General Council on 20
December that the consultation process would continue and be intensified in 2002, with a view tosubmitting a report to the Council at the earliest possible date.  The consultations were resumed in
2002 and have been held on a regular basis up to the present time.  Discussions had been intensive,
focussing mainly on the subject areas where it might have been  possible to reach  certain conclusions.
All participants had been constructive and many approaches to finding solutions to the remaining
differences had been examined.  In spite of a great deal of effort on all sides, however, he reportedthat it had not been possible to bridge the gaps on some of the key issues.  Nevertheless, the dialogue
remained positive and on the basis of the willingness expressed by Members, it was hisG/C/M/59
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recommendation that consultations should continue und er the chairmanship of his successor to arrive
at a consensus report for the Council to consider.  This item would be retained on the agenda for the
next meeting.
8.2 The representative of Hong Kong, China, as  Chairman of the International Textiles and
Clothing Bureau (ITCB), also speaking on beha lf of its 24 members which were Members or
Observers of the WTO, expressed regret and disappointment about the state of affairs.  Textiles and
clothing was an extremely important sector of trade for developing countries, both for export earnings
and employment generation.  Progressive implementation of the ATC was, therefore, eagerly
anticipated as perhaps the main area in which developing economies could hope to benefit from the
Uruguay Round.  Regrettably, the actual experience of implementation had failed to live up to
expectations.  His concerns derived from some incontrovertible facts.  Despite the passage of over
seven years of what was supposed to be a progressive transitional period, only a few quota restrictionshad been phased out.  Meanwhile, the attainment of the objectives of the Agreement had been
impeded by new restrictions in violation of the provisions of the ATC, unjustified anti-dumping
actions on products already under quota restriction, and other customs and administrative formalities
including changes in rules of origin.  The provisions of the Agreement in favour of small suppliers,
least-developed country Members and cotton-producing exporting Members had either beenimplemented inconsistently with the object and purpose of those provisions, or in some cases not at
all.  In the CTG meetings devoted to the major review last September and October, the ITCB's
detailed submissions established that the balance of rights embodied in the ATC had been seriously
impaired, to the disadvantage of developing exporting countries.  It also submitted concrete proposals
for adoption by the CTG pursuant to its mandate under which the Council "shall take [such] decisionsas it deems appropriate to ensure that the balance of rights and obligations embodied in this
Agreement is not being impaired".  Unfortunately, ther e appeared to be little willingness so far on the
part of the restraining Members to agree to any such decisions.  Indeed, some had even sought in the
course of the review to dilute some of the decisi ons already adopted by Ministers in Doha.  The CTG
had, thus, been prevented from fulfilling its mandate.  Given that the major review was a mandatoryrequirement under the Agreement and that the CTG had been entrusted with ensuring not only the
conduct of the review but also with taking decisions to ensure that the balance of rights under the
Agreement was not being impaired, it was essential that further efforts now be made.  He trusted that
the incoming Chairman would follow the current ch air's example and strive to bring this important
unfinished business to agreed conclusions and decisions.
8.3 The representative of India fully supported the statement made by the representative of Hong
Kong, China.  The second major review exercise was yet to be concluded, which was a matter of
disappointment for his delegation.  The second major review of ATC implementation was important
as it came at a critical time;  the ATC and all restrictions thereunder was to be terminated on 1
January 2005.  If the objective of the ATC was actually to liberalize trade in textiles and clothing
through progressive implementation of the ATC, then it was difficult to see how this objective wasbeing achieved.  Unless major improvements were made, the bulk of quotas would remain in effect
until the end of the transitional period.  The process of integration so far had not been commercially
meaningful to developing purpose of the ATC.  In this context, it was important that CTG complete
the review exercise at the earliest possible time and take appropriate decisions as mandated under
Article 8:11 and 8:12 of the ATC so as to restore the balance of rights accruing to the restrainedMembers under the ATC.  He trusted that the incoming Chairman of the CTG would hold
consultations with an objective of early conclusion of the second major review with an acceptable set
of conclusions and decisions.
8.4 The representative of Egypt highlighted his delegation's association with the statement made
by the delegation of Hong Kong, China.G/C/M/59
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8.5 The representative of China supported the statement of Hong Kong, China.  China did not
become a Member of the WTO until the end of 2001 and did not have the experience of the first
major review of the implementation of the ATC.  After becoming a Member, it started to be involved
in the second review.  Three months had elapsed on top of the two months before the Doha
Ministerial Conference since the major review was put into operation.  Regardless of the efforts made
by the former CTG Chairman, and the interim Chairman, as well as those by the ITCB members, henoted the little progress so far in the review.  In the face of meagre results towards the attainment of
the central objective of phasing-out of GATT-inconsistent quota restrictions, some of the developed
partners insisted that everything was on the right track.  Without showing due respect to basic facts,
and without demonstrating the minimum political will, it would be impossible for them to move away
from the rigid positions they had held.  For the benefit of the developing textile and clothing
exporters, and to further improve and strengthen the multilateral trading system, China appealed to the
relevant developed partners to take a positive attitude towards the major review so that it could sooncome to a successful conclusion.
8.6 The representative of Brazil echoed the statement by Hong Kong, China as well as the
concerns of other exporting Members as regards the lack of an outcome to the second major review,
and the lack of flexibility as regards some positions of importing countries.  The several examples ofmeasures that were mentioned showed how diffic ult it was for developing countries to try to
overcome the obstacles that prevail in this sector which was of paramount importance to many
exporters.  In this context, the second review was instrumental to correct imbalances in rights and
obligations embodied in the ATC.  He hoped that the incoming Chairman would continue to exert
efforts to bring this exercise to a conclusions as soon as possible.
8.7 The representative of Bangladesh, speaking on behalf of least-developed Members of the
WTO, supported the statement by the representative of Hong Kong, China.  It was a matter of serious
concern that the mandated major review of the implementation of the single most important sector of
trade to the economies of developing countries, including Bangladesh, had yet to be concluded andthe Council for trade in Goods had been prevented from taking the necessary decisions.  As a least-
developed country, Bangladesh had repeatedly urged that special and differential provisions in favour
of least-developed countries be implemented fully and faithfully.  In this connection, it had
specifically drawn attention to relevant provisions in the ATC as well as to the Ministerial Decision
on Measures in Favour of  Least-Developed Countries adopted at the conclusion of the UruguayRound. Regrettably, however, these provisions had been ignored by Members maintaining quota
restrictions on their exports.  This was not only contrary to the principle of "effective treaty
interpretation", but also detrimental to the integrit y of the Agreement itself.  Continued delay in the
conclusion of the major review of ATC implementation and the adoption of appropriate decisions was
unhelpful in creating an atmosphere of trust and confidence among WTO Members.  For small
delegations, like Bangladesh, preoccupation with important implementation concerns also distracted
attention, and was not conducive to effective participation in other WTO activities.  He encouragedthe incoming CTG Chairman to re-double efforts to bring the major review to effective conclusion, as
soon as possible.
8.8 The representative of the United States   believed that the review conducted last year and the
report drafting process had revealed a deep difference of opinion about the operation of the ATC in
the second stage.  Despite this fact, substantial progress had been made in identifying issues of
common concern to be reflected in the conclusion section of the report.  It was her understanding that
the group of developing textile exporting countries had just this week indicated that they had serious
difficulties with the draft conclusion section of the report.  This was disappointing as both developed
and developing Members had worked hard to find a degree of consensus in a series of meetings overthe last two months.  New proposals at this stage were not likely to advance this process.  Her
delegation would review any new proposals made and continue consultations with a view to reaching
a consensus on the text of the report.G/C/M/59
Page 17
8.9 The representative of Guatemala supported what had been said by the delegation of Hong
Kong, China.  The members of the ITCB had participated objectively in this process in order to try
and establish a constructive dialogue that would guarantee the integrity of the outcome.  He
considered that the CTG should take appropriate meas ures to conclude the final report in keeping with
the mandate.
8.10 The representative of Canada said that the ATC was important for all Members as was the
review of its implementation.  The review by all Members of the second stage had to be based on the
actual provisions relating to the ten-year adjustment period as set out in the ATC.  This was the
yardstick by which conclusions could be drawn.  His delegation would continue all efforts to
complete this review and was prepared to re-engage in consultations.  However, like the United
States, he was of the view that Members taking part in the Chairman's consultations were makingprogress;  he did not share the assessment or the conclusions suggested by Hong Kong, China.
Instead, he came to a different conclusion which was evident from what Canada had said in earlier
meetings, but his delegation was prepared to look at new ideas to move forward.
8.11 The representative of Hong Kong, China said that the ITCB members had not put a new
proposal on the table as had been mentioned by some  other speakers.  Rather, they had put forward
their quite detailed arguments when the CTG met in special sessions last year.  The incoming
Chairman would, no doubt, clarify this point when  he commenced further informal consultations.
Commenting on the remark made by a delegation, he said that it was unfortunate that, so far, the
restraining developed country members were taking a rather restrictive and narrow interpretation ofthe ATC provisions.
8.12 The Council agreed to the Chairman's propos al that the incoming Chairman would hold
further consultations.
IX. APPOINTMENT OF OFFICERS FOR SUBSIDIARY BODIES OF THE COUNCIL
9.1 At the reconvened meeting on 27 March, the Chairman noted that the guidelines for the
appointment of officers to WTO bodies contained in document WT/L/31, and approved by the
General Council on 31 January 1995, provide that th e Chairperson of the Council for Trade in Goods
conduct consultations on the appointment of the Chairpersons of the subsidiary bodies of the Council
for Trade in Goods.  He had carried out consultations and was in a position to propose to this Council
an agreed slate of names for the Chairs of the subsidiary bodies and the ITA Committee as follows:
Committee on Agriculture Dr Magdi Farahat (Egypt)1
Committee on Anti-Dumping Mr. Cristian Espinosa Canizares
(Ecuador)
Committee on Customs Valuation Mr. Raimundas Karoblis (Lithuania)
Committee on Import Licensing Mr. Hiromichi Matsushima (Japan)
Committee on Market Access Mr. Joshua Phoho Setipa (Lesotho)
Committee on Rules of Origin Mr. Stefan Moser (Switzerland)
                                                     
1 Appointed prior to Chairman Hovorka's consultations.G/C/M/59
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Committee on Safeguards Mr. Gustavo Nerio Lunazzi
(Argentina)
Committee on Sanitary and Phytosanitary Measures Mrs. Maria Fe M. Alberto-Chau Huu
(Philippines)
Committee on Subsidies and Countervailing Measures H.E. Mr. Milan Hovorka (Czech
Republic)
Committee on Technical Barriers to Trade Ms. Emily Earl (New Zealand)
Committee on Trade-Related Investment Measures Mr. Vasilli Notis (Greece)Working Party on State Trading Enterprises Mr. Aliyu Muhammed Abubakar
(Nigeria)
ITA Mr. Preben Gregersen (Denmark)
He said that while all the other subsidiary bodies of the Council have provisions in their
respective Agreement or rules of procedure requiring them to elect Chairpersons, Working Parties did
not have any procedural rules on electing Chairpersons.  As a result, in the case of the Working Partyon State Trading Enterprises, he proposed that the Council appoint the nominated Chairperson.  In the
case of all the other subsidiary bodies, I proposed that the Council take note of his proposals.
9.2 It was so agreed.
X. ELECTION OF THE CHAIRPERSON OF THE COUNCIL FOR TRADE IN GOODS
10.1 At the reconvened meeting, the Chairman said  that the Chairman of the General Council had
carried out consultations on a slate of names for Chairpersons to the different WTO standing bodies in
accordance with the established guidelines for appointment of officers.  These proposed nominations
were approved by the General Council at its meeting on 15 February 2002.  He therefore proposedthat the Council for Trade in Goods elect H.E. Ambassador Supperamaniam of Malaysia as
Chairperson of this body by acclamation.
10.2 It was so agreed.
XI. OTHER BUSINESS
11.1 The representative of Romania on behalf of his delegation, and the delegation of Lithuania,
informed the Council that a free trade agreem ent between the two countries was signed on 26
November 2001 and would be officially notified to the WTO after the ratification procedures were
terminated.  He also informed the Council that a free trade agreement between Romania and Israel
came into effect on 1 July 2001 and its notification to the Council was under preparation.
11.2 The representative of Chile, speaking on behalf of Costa Rica and Chile, informed the
Council on the establishment of a free trade agreem ent between the two countries.  On 18 October
1999 the Presidents of Chile and Costa Rica and El Salvador, Honduras, Guatemala and Nicaragua
signed a free trade agreement for goods, services and investment facilitation between the parties.  The
establishment of this Treaty was being pursued in different phases.  The first one concluded with thesigning of the Treaty, including disciplines ruling our trade relations.  The second phase concludes
with the signing of bilateral protocols between Ch ile and each of the other signing parties.  This
Treaty established rights and obligations between Chile and each of the other countries and sets a
gradual mechanism for entering into force with the purpose of not having to wait until the six signing
parties conclude the bilateral protocols. Therefore, the FTA enters into force as the pending bilateralnegotiations are concluded. Bilateral negotiations on Market Access on Tariffs and Services betweenG/C/M/59
Page 19
Chile and Costa Rica had concluded and had been ratified by their appropriate national parliaments
and has entered into force on 15 February  2002.  This Treaty would be notified as soon as possible to
this council in accordance with Article XXIV of GATT 94, so that the corresponding mandate can be
granted by this council to the Regional Trade Agreement Committee.  Further information and the
text of the Treaty can be found in the Web page of the General Directorate of International Economic
Affairs of Chile (www.direcon.cl) and in the Web page the Foreign Trade Ministry of Costa Rica
(www.comex.go.cr). He added, on behalf of Chile, that the applying tariff in his country from 1
January 2002 corresponded to 7% ad valorem  for all tariff lines.   This lies within an open policy
framework agreed by the National Congress in 1999 when they approved a law establishing a gradual
tariff reduction of 5 points on the 11% that was applied by that time and that will end next year with a
of  ad valorem 6% flat tariff.
11.3 The representative of Bulgaria said  the delegations of Bulgaria and Croatia would like to
inform the Council for Trade in G oods that a Free Trade Agreement was signed by the two countries
on 4 December 2001.  The aim of the agreement was to establish a free-trade area, within the meaning
and in accordance with Article XXIV of the GATT 1994, during a short transitional period.  Duties
and other restrictive regulations of commerce shall be eliminated on substantially all the trade
between the constituent territories in products orig inating in them.  Apart from provisions on the
liberalization of trade in agriculture and industrial products, the agreement contained provisions on
dumping, state monopolies, state aid, trade remedies, balance of payment difficulties, rules of
competition concerning undertakings, payments, public procurement, protection of intellectual
property, etc.  An evolutionary clause allowed for the inclusion of new provisions and the extension
of cooperation to areas not previously covered.  Pending its entry into force, the parties agreed toapply the agreement provisionally from 1 January 2002.  The text, annexes and protocols to that
agreement would be made available and a notification provided as soon as the internal legal
procedures for its entry into force have been fulfilled by both parties.
11.4 He further said that the delegations of Bulgaria and Estonia would like to inform the Council
for Trade in Goods that a Free Trade Agreement was signed by the two countries on 11 December
2001.  The aim of the agreement was to establish a free-trade area, within the meaning and in
accordance with Article XXIV of the GATT 1994.  Duties and other restrictive regulations of
commerce were eliminated on substantially all the trade between the constituent territories in products
originating in them.  Apart from provisions on the liberalization of trade in agricultural and industrialproducts, the agreement contained provisions on dum ping, state monopolies, state aid, trade remedies,
balance of payment difficulties, rules of competition concerning undertakings, payments, public
procurement, protection of intellectual property, etc.  An evolutionary clause allowed for the inclusion
of new provisions and the extension of cooperation to areas not previously covered.  Pending its entry
into force, the parties agreed to apply the ag reement provisionally from 1 January 2002.  The text,
annexes and protocols to that agreement would be made available and a notification provided as soon
as the internal legal procedures for its entry into force had been fulfilled by both parties.
Date of next meeting
11.5 The next meeting of the Council was scheduled to take place on 2 and 3 May 2002.  The
Agenda would close on Friday, 19 April 2002.
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