RESTRICTED
PREPARATORY COMMITTEE PC/M/7
FOR THE 30November 1994
WORLD TRADE ORGANIZATION
(94-2608)
PREPARATORY COMMITTEE FOR THE
WORLD TRADE ORGANIZATION
MINUTES OFMEETING
Held on23November 1994
1. ThePreparatory Committee fortheWorld Trade Organization (WTO) helditsseventh meeting
under theChairmanship ofMr.Peter D.Sutherland.
2. TheChairman saidthatthemain purpose ofthepresent meeting wastooversee progress of
workpertaining tothepreparation oftheCommittee 'sreport totheWTO. Before turning tothismatter,
hewished torecall theCommittee 'sdecision atitsmeeting on25October toholdtheImplementation
Conference on8December andtosetoutitsprovisional agenda. Theconvening notice forthe
Conference hadbeencirculated on11November (PC/AIR/40, GATT/AIR/3652) and,asdelegations
would havenoted, theagenda wasspecific andaction-orientated anddidnotcallforgeneral statements
orspeeches. Thecentral taskoftheImplementation Conference wastoconfirm 1January 1995 as
thedateofentry intoforce oftheWTO. Thisconfirmation bythePreparatory Committee, acting
aspartoftheImplementation Conference, would bebased ontheCommittee 'sunderstanding that
members werecommitted tobringing theWTO intoforce on1January 1995 andwould bemaking
every effort toconclude theirdomestic ratification processes tothisend. Heknew fullwellthatthat
was,indeed, thecase. Asmembers wereaware, paragraph 7oftheMinisterial Decision Establishing
thePreparatory Committee kepttheCommittee inplace untiltheentry intoforce oftheWTO. He
could already seetheneedforatleastonemore meeting oftheCommittee aftertheImplementation
Conference tofinalize andadopt thereport totheWTO taking intoaccount thework doneinDecember.
Itwentwithout saying thatatsuchameeting, theCommittee would alsobefreetoreview, ifnecessary,
thesituation regarding theconclusions reached on8December.
3. TheCommittee tooknoteofthestatement.
Report ofthePreparatory Committee totheWTO
4. TheChairman recalled thattheMinisterial Decision Establishing thePreparatory Committee,
under itsparagraph 8(b)(iv), required thattheCommittee prepare andsubmit areport onitsactivities
totheWTO. Inorganizing thework ofthePreparatory Committee earlier intheyear, thetaskof
drafting areport fortheCommittee 'sconsideration andeventual adoption hadbeenallocated tothe
Sub-Committee onInstitutional, Procedural andLegal Matters. Afirstpreliminary draftreport was
before theCommittee indocument PC/R/W/1. Hehoped delegations would understand theunavoidable
reasons which hadledtothisdocument being made available onlyafewdaysbefore thepresent meeting,
themostimportant ofwhich hadbeentheaimofproviding anup-to-date andaccurate picture ofthe
situation without prejudging ongoing work anddiscussions under wayinthevarious bodies.
5. Thedraftreport wasa"skeleton" which needed tobefleshed outandfine-tuned, which the
Committee would bedoing inthecoming weeks leading uptotheImplementation Conference on
8December. Thedraftrepresented amajor stepforward inbringing theactivities ofthePreparatoryPC/M/7
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Committee toameaningful conclusion prior totheWTO 'sentry intoforce. Astothedetails, two
comments would beworthwhile atthisstage. First, thestructure andformat ofthereport flowed
naturally fromthemandate oftheCommittee anditstasksassetoutunder paragraph 8oftheMinisterial
Decision establishing theCommittee. Second, thework accomplished inrespect ofindividual tasks
were bestdealt withasafactual description together withpoints forthePreparatory Committee 's
information ordecision orboth. Asstated bytheChairman oftheSub-Committee onInstitutional,
Procedural andLegal Matters inhispresentation ofthereport totheSub-Committee on18November,
thereport should neither duplicate, norbeasubstitute for,thedetailed minutes ofvarious meetings,
therecords ofwhich would remain aftertheentry intoforce oftheWTO. Heasked iftheChairmen
ofthefourSub-Committees wished toelaborate further onanypoints covered bythedraftreport and
tooutline theoutstanding issues andtheprocess thatwasunder waytodealwiththem. Listing such
issues would beparticularly useful totheCommittee inpreparing itsfinalreport totheWTO inatimely
andsmooth manner.
6. Mr.Kesavapany (Singapore), Chairman oftheSub-Committee onInstitutional, Procedural
andLegal Matters, referring tothedraftreport inPC/R/W/1, expressed gratitude totheChairmen
oftheother threeSub-Committees fortheirrespective contributions tothetaskofpreparing thedraft.
AstheChairmanhadsaid,thedraftreportwouldundergoconsiderableeditingasoneprogressedthrough
theoutstanding issues. Astotheactivities oftheSub-Committee, withtheapproval oftheterms of
reference fortheWTO Committees onBudget, Finance andAdministration, Balance-of-Payments
Restrictions, Trade andDevelopment, Market Access andAgriculture, theSub-Committee 'swork on
thispartofitsmandate hadbeencompleted.
7. OnrulesofprocedureforWTOBodies,asetofrulesfortheMinisterialConference,theGeneral
Council, theTrade Policy Review Body andtheDispute Settlement Body hadbeenapproved. Draft
guidelines forobserver status forinternational intergovernmental organizations hadyettobefinalized.
TheAnnex totherulescontaining these guidelines hadbeenwithdrawn fromthepackage pending the
resolution oftheissue ofobserver status forintergovernmental organizations intheDSB. Finally,
ithadbeenagreed thatobserver status forsignatories oftheFinal Actwhich hadnotyetbecome WTO
members atthetimeofentry intoforce would bedealtwiththrough specific transitional arrangements
onthenature oftheparticipation ofthesegovernments intheWTO, instead ofintherulesofprocedure.
TheSub-Committee hadtherefore completed itswork onthispartofitsmandate also,interms ofwhat
ithadagreed toaddress inthetimeavailable toit.Anyfurther work orcontribution onrules of
procedure bydelegations, suchasonrulesforsubsidiary bodies, would beadditional tothatmandate.
Work hadbeeninitiated recently onaproposal bytheUnited States regarding rulesofethical conduct
inthesettlement ofdisputes. Mr.Armstrong (New Zealand) wasundertaking consultations onthis
matter.
8. Work waswelladvanced inthethree Contact Groups. IntheContact Group onAgriculture,
workonSanitaryandPhytosanitaryMeasureshadbeencompletedandworkonnotificationrequirements
andformats fortheWTO Committee onAgriculture should becompleted bytheSub-Committee 's
nextmeeting. TheContact Group onAnti-Dumping, Subsidies andSafeguards should alsobereporting
inthepresent week. With regard totheContact Group onTRIPS, work onTRIPS aspects hadbeen
completed, while work onTRIMs wasalsovirtually completed.
9. OntheWTO 'srelations withother intergovernmental organizations, several useful exchanges
ofviews, bothformal andinformal, hadtaken place since theprevious meeting ofthePreparatory
Committee. Ithadbeenagreed thatwhile work, which wasatdifferent stages ofadvancement, could
proceed normally onaspects oftheWTO 'srelations withtheinternational organizations which the
Sub-Committee hadidentified aspriority ones, namely theIMF, World Bank, WIPO, CCC, ISOand
three agriculture-related organizations, onlyoneaspect really needed tobedealtwithbefore theentry
intoforce oftheWTO, which related toarrangements withtheIMFwithregard tothebalance-of-PC/M/7
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payments provisions intheWTO Agreement. Hehadrequested, therefore, pending theconclusion
ofamore definitive arrangement withtheIMF, thattheChairman oftheGATT 1947BOPCommittee
seektheagreement oftheIMFinrespect ofthecontinuation intothefollowing yearofthearrangements
currently inplace withrespect toGATT 1947 andtheIMF, andthenecessary extension thereof to
balance-of-payments matters intheareaofservices. Separately, theSub-Committee hadfound no
grounds forinstitutional linksbetween theWTO andtheUnited Nations. However, theneedforthe
establishment ofcooperative tiesbetween thetwoorganizations hadbeenunderscored, which could
betaken upbytheWTO 'sGeneral Council. AsforUNCTAD, theneedfortheWTO toestablish
arrangements foreffective cooperation atanearly stage hadbeenrecognized. Onthequestion ofthe
interest ofthenon-governmental organizations infollowing thework oftheWTO inspecific areas,
thiswould beaddressed assoon astheongoing discussion intheSub-Committee onTrade and
Environment hadbeenconcluded.
10. Ontransitional arrangements, several useful exchanges ofviews, mostly inaninformal setting,
hadbeentaking place. TheSub-Committee would present proposals forconsideration bythePreparatory
Committee atanappropriate timesufficiently inadvance oftheImplementation Conference.
11. Onissues relating totheStanding Appellate Body, agreat dealofprogress hadbeenmade
andtheSub-Committee should beinaposition topropose detailed recommendations forconsideration
bythePreparatory Committee soon. There wasnearunanimity ofviews onthesetting upofthisvery
important body. Together withtherulesofethical conduct thatwerebeing drafted, thePreparatory
Committee hadmade avitalcontribution inensuring thattheWTO would betreated withtherespect
andcredibility thatitwould require tocarry outitsfunctions. AsfortheTextiles Monitoring Body,
theContact Group established toexamine thecomposition oftheTMB should bereporting tothe
Sub-Committee thefollowing week.
12. Finally,heaskediftheChairmancouldgivesomeconsiderationtoanissuethathadbeenbrought
tohisattention bybothdelegations andtheSecretariat, namely thatofthederestriction ofthePreparatory
Committee 'sdocumentation. After theself-extinction oftheCommittee upon entry intoforce ofthe
WTO, there would benoformal body lefttodecide onthisissue, which, moreover, didnotappear
tobewithin themandate oftheSub-Committee onInstitutional, Procedural andLegal Matters. He
suggested thatthePreparatory Committee takeadecision, asaroutine matter, prior tooratitslast
meeting, onthederestriction ofitsdocuments, similar tothedecision taken bytheUruguay Round
Trade Negotiations Committee, without discussion, before theMarrakesh Ministerial Meeting
(MTN.TNC/W/138). While thatdecision hadnotyetbeenacted uponforlackoftime, thelegalbasis
existed forimplementing it.Thesameapproach forthePreparatory Committee 'sdocumentation could
beenvisaged.
13. TheChairman saidthathewould propose adraftdecision atthenextPreparatory Committee
meeting, based, mutatis mutandis ,ontheTNC decision inMTN.TNC/42.
14. Mr.Szepesi(Hungary),ChairmanoftheSub-CommitteeonBudget,FinanceandAdministration,
saidthattheSub-Committee hadmettwice sincehislastreport totheCommittee. Inaddition, anumber
offormal meetings andinformal consultations hadtaken place, inparticular inaworking group the
composition ofwhich corresponded broadly tothatoftheGATT 1947Committee onBudget, Finance
andAdministration andwhich wasoperating under theChairmanship ofMr.Gosselin (Canada). With
regard totheManagement Review, theSub-Committee had,asagreed, received regular oralprogress
reports fromtheconsultants. Atthemeeting oftheSub-Committee heldthedaybefore, theconsultants
hadmade adetailed oralpresentation onwhattheysawastheirmajor conclusions andmostimportant
draftrecommendations. Itwashisunderstanding thattheconsultants, while stillworking onsome
oftheanalysis andsupportive argumentation withaviewtofinalizing theirreport, would beavailable
tomeetwithinterested Members oftheSub-Committee andtolisten tothespecific points MembersPC/M/7
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might wishtoraisewithrespect todifferent elements oftheconclusions andrecommendations ofthe
draftreport. Thenext, and,atthesame time, thefinalstepinthisprocess would bethesubmission
ofthefinalreport, scheduled for15December.
15. With regard tothenegotiations ofaHeadquarters Agreement withtheSwiss authorities, the
teamnegotiating onbehalf ofthePreparatory Committee hadmade detailed progress reports tothe
Sub-Committee. These reports hadcovered allmainaspects oftheongoing negotiations, namely the
building andotherphysical facilities tobeprovided totheWTO, theaccommodation forleast-developed
country Members, aswellasthebroad chapter ofimmunities andprivileges. Itwasageneral perception
thatwhile discussions onthedifferent aspects ofthephysical facilities wereprogressing quite well,
alotofwork remained tobedoneinthefieldofprivileges andimmunities tobeafforded toPermanent
Missions, totheWTO itselfandtotheirrespective staff. Inthiscontext, direct andindirect taxation,
work permits andresidence permits were issues onwhich progress, ifany,seemed tobeextremely
slow. Itwascleartobothsidesthatnothing would beagreed unless amutually satisfactory agreement
could bereached onalltheissues concerned. Although bothsides would dowhatever theycould to
achieve substantial progress, hedidnotexclude thepossibility, asmatters nowstood, thatitmight
benecessary toenvisage thecontinuation ofthenegotiations intotheearly partof1995 before a
satisfactory overall package could befinalized.
16. With regard tothe1995 budget, arecommendation from theworking group hehadreferred
tohadbeenaddressed totheSub-Committee andwould beconsidered thefollowing week before asking
fortheendorsement ofthePreparatory Committee. Thesame recommendation would hopefully be
approved bytheforthcoming annual Session oftheCONTRACTING PARTIES totheGATT 1947
aswell.
17. Withregard totheotherissues intheSub-Committee 'smandate, afirstexamination hadalready
taken place intheworking group. Regarding thetransfer ofassets andliabilities fromICITO/GATT
totheWTO, further toanexchange ofviews intheworking group, theSecretariat hadprepared a
document thatwould beexamined bytheSub-Committee earlythefollowing week. Thesame applied
totherelationship between theITCandtheWTO aswellastothefuture financial regulations ofthe
WTO. With regard toguidelines forbudget contributions byMembers oftheWTO, herecalled that
thePreparatory Committee hadalready agreed that,inprinciple, theassessment should reflect shares
ininternational trade ingoods, services andintellectual property, butthat,pending further study, the
calculation ofassessments forthe1995budget oftheWTO should follow existing practices under the
GATT 1947. Changes toreflect thedecision ofthePreparatory Committee would beintroduced no
laterthanoneyearafterthecreation oftheWTO. Ontheissues ofcontract ofemployment policy
andsalaries andpensions, itseemed thatthese matters would havetobediscussed further atalater
stage, asapackage, taking alsointoaccount theconclusions oftheManagement Review. Ifthisapproach
were tobeadopted, some transitional arrangements might become necessary regarding thecontract
policy, anditwashisexpectation thattheSub-Committee would alsoaddress thisissue atitsnext
meeting. Asthisbriefoverview indicated, while anumber ofissues werestillwaiting forfinalization
andaction intheSub-Committee, thebulkofthework could hopefully beaccomplished prior tothe
nextmeeting ofthePreparatory Committee.
18. Mr.Manhusen (Sweden), Chairman oftheSub-Committee onServices, saidthatsincehislast
report tothePreparatory Committee, theSub-Committee hadhelditsfourth meeting atwhich ithad
reviewedprogressinon-goingnegotiationsonBasicTelecommunications,MaritimeTransport,Movement
ofNatural Persons andFinancial Services. Ithadalsodiscussed outstanding issues relating tothescope
oftheGATS andarevised version ofthedraftGuidelines forNotifications. Atthatmeeting, hehad
alsomade astatement concerning theverification ofservices schedules drawing theattention ofMembers
oftheSub-Committee tothethree schedules submitted tothePreparatory Committee bySt.Kittsand
Nevis, theUnited Arab Emirates andMali. While theapproval ofsuchschedules wasamatter forPC/M/7
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thePreparatory Committee, theverification oftheirtechnical accuracy andlegalconsistency hadto
bedonebytheSub-Committee. TheNegotiating Group onMovement ofNatural Persons hadheld
itsthird meeting on4November, themain purpose ofwhich hadbeentoprovide transparency on
progress made inbilateral negotiations. Atthisstage, theoutstanding work before theSub-Committee
could besummarized asfollows: (a)thedraftGuidelines forNotifications, which hadbeenrevised
onthebasisofdiscussions intheSub-Committee, wereexpected tobefinalized attheSub-Committee 's
nextmeeting on29November andsubsequently issued asaformal document oftheSub-Committee;
(b)theverification ofthethreeschedules hehadreferred to,aswellasofothers thatmight besubmitted
before theendoftheyear. Toexpedite thatprocess, theSecretariat hadcirculated anoteinviting
delegations tocommunicate toitanytechnical questions theywished toraiseinrelation tothose three
schedules. Atitsmeeting on29November, theSub-Committee would takeupthisquestion, including
theorganizational arrangements fortheremainder oftheverification process; and(c)issues relating
tothescope oftheGATS. Herecalled thatthedeadline setintheUruguay Round Group ofNegotiations
onServices fortheprocess ofconsultations onthisissue was15December 1994. Since divergences
stillexistedbetweenMembersoncertainpoints,itwasexpectedthatconsultationswouldhavetocontinue
beyond theSub-Committee meeting on29November. Therefore, there would probably beaneed
toconvene another meeting oftheSub-Committee before 15December toconsider afinalreport to
theCouncil forTrade inServices.
19. Mr.Lampreia (Brazil), Chairman oftheSub-Committee onTrade andEnvironment, saidthat
delegations hadrecognized early intheSub-Committee 'swork thattheMinisterial work programme
ontradeandenvironment wasacontinuum which would extend wellbeyond thelifeofthePreparatory
Committee andwould betaken upshortly bytheWTO Committee onTrade andEnvironment. At
itsmeeting tobeheldthatafternoon andthefollowing day,theSub-Committee would takeup,for
thefirsttime, thethirdofthethree items ofitswork programme thathadbeenagreed uponforinitial
focus,namely,theeffectofenvironmentalmeasuresonmarketaccess,especiallyinrelationtodeveloping
countries, inparticular totheleastdeveloped among them, andenvironmental benefits ofremoving
trade restrictions anddistortions. Theother twoitems ofitswork programme hadalready beenthe
subject ofdiscussions atearlier meetings oftheSub-Committee, andhehadprovided briefreports
tothePreparatory Committee onthose discussions. Work onallthree items ofthework programme
would needtocontinue in1995, under theauthority oftheWTO Committee onTrade andEnvironment,
since there hadonlybeenapreliminary analysis ofthese items thusfar.Inaddition, members ofthe
Sub-Committee hadagreed ontheneedtotakeupearlyinthenewyearwork onafourth item, namely,
theissueofexportsofdomesticallyprohibitedgoods.Finally,hehadbeenholdinginformalconsultations
onthebasis oftheinvitation from Ministers inMarrakesh totheSub-Committee toprovide input to
therelevant bodies inrespect ofappropriate arrangements forrelations withinter-governmental and
non-governmental organizations referred toinArticle VoftheWTO Agreement. Hisconsultations
hadnotyetbeenfinalized. However, hebelieved thatprogress wasbeing made, andattheappropriate
timehewould consult withtheSub-Committee onTrade andEnvironment formally onthisissueand
subsequently bring thematter backfortheattention ofthePreparatory Committee.
20. TheChairman saidthattheCommittee nowhadbefore itboth itsdraft report anda
comprehensive listing oftheoutstanding issues under itsmandate. Since discussion orcomments would
bepremature atthisstage, heproposed thattheCommittee takenoteofthedraftreport andofthe
outstanding issues asdescribed bytheChairmen ofthefourSub-Committees. Healsoproposed that
theCommittee agree thatitwould continue tooversee theevolution ofthedraftreport inthelight
offurther work andaimathaving before itamore comprehensive draftforconsideration atitsmeeting
scheduled for5December. Before thatdate, however, itmight benecessary fortheCommittee to
takestock ofresults achieved oncertain issues, particularly those intheSub-Committees onBudget,
Finance andAdministration andonInstitutional, Procedural andLegal Matters. Asfurther timewas
needed bytheChairmen toconduct work inthese areas, heproposed thatthePreparatory Committee
meetalsoon30November.PC/M/7
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21. TheCommittee tooknoteofthestatements andagreed withtheapproach proposed bythe
Chairman.
Paragraph 8(b)(i) oftheDecision establishing thePreparatory Committee
22. TheChairman saidthatsince the25October meeting oftheCommittee, fourschedules on
goods –namely those ofBurkina Faso, Mali, Tanzania andUganda –hadbeendeemed tohavebeen
verified under theprocess agreed bytheCommittee inMay. Accordingly, heproposed thatthe
Committee approve theschedules ongoods oftheabove mentioned participants.
23. TheCommittee soagreed.
24. TheChairman saidthatwithregard tothefewoutstanding schedules ongoods andservices,
hecould onlyurgetheparticipants concerned toactquickly. Itwasparticularly worrying thatthere
werestillgovernments thathadnotsubmitted schedules. With respect totheothers thatwereinthe
middle ofnegotiations, hewould askthattheirtrading partners extend allpossible cooperation in
concluding theprocess inatimely manner. TheSecretariat continued todoallitcould inthisarea.
Work wasalsocontinuing inanumber ofWorking Parties onAccession totheGATT 1947 or,as
inthecaseofSlovenia, totheWTO. Hewould beinaposition toreport more atalaterstage on
progress being made intheseWorking Parties when thepicture wasclearer. Inthiscontext, herecalled
thatattheCommittee 'smeeting on27June, hehadinformed Members thatconsultations werebeing
conductedbytheChairmanoftheGATT1947Councilregardingthegeneralquestionofthemanagement
ofaccess negotiations thathadbeenraised bytheNordic countries. Heinformed theCommittee that,
onthebasis ofconsultations, theChairman oftheGATT 1947 Council hadmade astatement tothe
Council on10November which hadbeentaken noteof.Asdesired bytheCouncil, thetextofthe
statement hadbeencirculated toMembers oftheCommittee fortheirinformation (PC/2). Heproposed
thatthePreparatory Committee takenoteoftheinformation indocument PC/2.
25. TheCommittee tooknoteofthestatement andsoagreed.