RESTRICTED
WORLD TRADE G/C/M/10
29May1996
ORGANIZATION(96-2267)
COUNCIL FOR TRADE INGOODS
22May1996
MINUTES OFMEETING
Held inCentre William Rappard
on22May1996
Chairman: Mr.S.Narayanan (India)
Theproposed agenda contained indocument G/C/W/39, wasadopted without anyamendments.
Page
1. Approval oftheRules ofProcedure ofthe: 2
(i)Committee onAgriculture (G/AG/W/22);
(ii)Committee onAnti-dumping Practices (G/ADP/W/135/Rev.1);
(iii)Committee onSafeguards (G/SG/W/59/Rev.1);
(iv)Committee onSubsidies andCountervailing Measures
(G/SCM/W/143/Rev.1)
2. Agreement onPreshipment Inspection 2
- Commencement ofOperations oftheIndependent Review
Entity (G/PSI/IE/2)
3. Impairment bytheEuropean Community ofTariff Treatment ofHigh 3
Technology Products
- Communication from theUnited States (G/L/73)
4. Report bytheCouncil forTrade inGoods totheMinisterial Conference 4
- Statement bytheChairman
Thefollowing items were discussed under "Other Business"
5. State ofplayconcerning subsidy notifications -lackofcompliance 5
withsubsidy notification requirements under Article 25.2ofthe
Agreement onSubsidies andCountervailing Measures
6. EFTA-Estonia, EFTA-Latvia, EFTA-Lithuania FreeTrade Agreements 6
7. Banonexports ofwild-harvested shrimps totheUS 7
8. Brazilian Measure concerning theautomotive sector 8
9. Enlargement oftheCentral European FreeTrade Agreement (CEFTA) 9G/C/M/10
Page2
10. Europe Agreements between theEuropean Communities andthe 10
Czech Republic, andtheEuropean Communities andtheSlovak Republic
11. Letter from theChairman oftheCommittee onTrade andDevelopment 10
12. Datefornextmeeting oftheCouncil 11
_________________
TheChairman welcomed delegations tothemeeting oftheCouncil forTrade inGoods which
wasconvened byWTO/AIR/338. Henoted thatinaccordance withtheagreement reached atthelast
meeting oftheCouncil, thefollowing Organizations hadbeeninvited tothismeeting oftheCouncil
namely:FAO,IMF,ITCB,OECD,UN,UNCTAD,WorldBankandtheWorldCustomsOrganization.
Heproposed thatpending theadoption ofcriteria andconditions forobserver status forInternational
Intergovernmental Organizations intheWTO andunless adelegation raised anobjection, those
Organizations invited tothismeeting oftheCouncil forTrade inGoods beinvited alsotothenext
meeting.
TheCouncil forTrade inGoods soagreed.
1. Approval oftheRules ofProcedure ofthe:(i)Committee onAgriculture (G/AG/W/22);
(ii)Committee onAnti-dumping Practices (G/ADP/W/135/Rev.1); (iii)Committee on
Safeguards(G/SG/W/59/Rev.1);(iv)CommitteeonSubsidiesandCountervailingMeasures
(G/SCM/W/143/Rev.1)
1.1 TheCouncil forTrade inGoods, pursuant toparagraph 6ofArticle IVoftheWTO Agreement
approved theRules ofProcedure submitted bytheCommittees onAgriculture, Anti-dumping Practices,
Safeguards, andSubsidies andCountervailing Measures, contained indocuments G/AG/W/22,
G/ADP/W/135/Rev.1, G/SG/W/59/Rev.1, andG/SCM/W/143/Rev.1, respectively.
2. Agreement onPreshipment Inspection
- Commencement ofOperations oftheIndependent Review Entity (G/PSI/IE/2)
2.1 TheChairman drew theattention oftheCouncil todocument G/PSI/IE/2 which informed
Members ofthecommencement ofoperations oftheIndependent Review Entity under theAgreement
onPreshipment Inspection (PSIAgreement). Herecalled thatatitsmeeting of13December 1995,
theGeneral Council hadadopted a"Decision ontheOperation oftheIndependent Entity established
under Article 4oftheAgreement onPreshipment Inspection" (WT/L/125/Rev.1). Ithadalsobeen
agreedthatinordertoallowtheOrganisationsinvolved,namelytheInternationalChamberofCommerce
(ICC) andtheInternational Federation ofInspection Agencies (IFIA) tocomplete theadministrative
andprocedural requirements tocommence operations oftheIndependent Review Entity, atemporary
moratorium would benecessary regarding thereceipt ofapplications requesting independent reviews.
TheICCandtheIFIAhadnowrecently confirmed thatthose requirements hadbeenputinplace, and
asaresult theIndependent Review Entity wasinaposition, asof1Mayto1996, toreceive applications
requesting independent reviews under Article 4ofthePSIAgreement.
2.2 Therepresentative oftheUnited States stated thatinviewofthedifficulties encountered by
USexportersconcerningvariouspreshipmentinspectionregimes,hisdelegationwelcomedtheavailability
ofthismechanism toensure thatpreshipment inspection activities werebeing performed inaccordanceG/C/M/10
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withtheobligations ofthePSIAgreement which aimed toensure transparency anduniformity inthe
areaofpreshipment inspection.
2.3 TheCouncil forTrade inGoods tooknoteoftheinformation provided indocument G/PSI/IE/2,
andofthestatement made.
3. ImpairmentbytheEuropeanCommunityofTariffTreatmentofHighTechnologyProducts
- Communication from theUnited States (G/L/73)
3.1 TheChairman drew theattention oftheCouncil toacommunication fromtheUnited States,
circulated indocument G/L/73, which hadrequested theinclusion ofthisitemontheagenda.
3.2 TherepresentativeoftheUnitedStatesstatedthaton2May1996,theUnitedStateshadrequested
consultations withtheCommunity concerning thetarifftreatment currently being applied toLocal Area
Network (LAN) equipment andpersonal computers withtelevision capability.
3.3 Since latelastyear, customs authorities incertain member states oftheCommunity hadstarted
reclassifying imports ofLAN equipment intothetariff category applicable totelecommunications
apparatus. These actions reversed theprevious practice ofthese member states ofclassifying such
products ascomputer products. Asaresult, thedutyratenowapplicable toLAN equipment hadmore
thandoubled. More recently, exporters ofpersonal computers intocertain member states ofthe
Community hadbeeninformed thattheircomputers mustbeclassified as"televisions" ifthecomputer
hadtelevision capability -acommon feature thatwasaccomplished through themere presence ofa
printed board circuit assembly inthecomputer. Asaresult ofthechange inclassification, theduty
rateapplicable was14percent, rather thanthe3.5percentwhich wastheratecontained inthe
Community 'sUruguay Round tariffschedule forpersonal computers. Trade intheseproducts amounted
tohundreds ofmillions ofdollars annually andwasgrowing eachyear.
3.4 Article II:1oftheGeneral Agreement provided anabsolute obligation toaccord treatment no
lessfavourable thanthatlaiddown inaMember 'sschedule. Intheview ofhisdelegation, such
reclassification bymember states oftheCommunity wasnotconsistent withtheobligations ofthe
Community ascontained initsUruguay Round tariffschedule andshould becorrected inorder touphold
theCommunity 'sobligations under theWTO Agreement; nofurther reclassification should takeplace.
3.5 Therepresentative oftheEuropean Communities stated thathisdelegation wassurprised that
thisitemhadbeenincluded attherequest oftheUnited States ontheagenda ofthismeeting. Before
theUScommunication,containedindocumentG/L/73,wascirculated,hisdelegationhadalreadyagreed
totheUSrequest fortechnical consultations. Ithadbeenhoped thatduring these consultations the
United States would bemore specific withregard totheproducts andthetariff headings concerned.
Itwasnotthepractice oftheCommunity oritsmember states toarbitrarily reclassify products inorder
toobtain higher ratesofdutyorforprotectionist purposes. Moreover, since theintroduction ofthe
Harmonized System (HS), theCommunity hadbeenconsistent andcoherent intheinterpretation that
ithadgiven toWorld Customs Organization (WCO) rules. Inhisdelegation 'sviewnoUSrights had
beenimpaired.
3.6 Therepresentative ofJapan recalled thatitwasnotthefirsttimethatacaseofreclassification
bytheCommunity hadbeenraised inthisCouncil. Quite recently theCommunity hadraised tariff
ratesonCD-Rom drives through aprocess ofreclassification. Inthiscase, theHarmonized System
(HS) Committee oftheWCO hadmade adecision which supported theJapanese view thatthe
Community 'sreclassification ofCD-Rom drives wasinappropriate. Japan would beseriously concerned
ifsome member states oftheCommunity hadraised tariff rates onLAN equipment andpersonalG/C/M/10
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computers withtelevision capabilities through reclassification oftheseproducts. Suchmeasures would
notonlybeproblematic interms oftheHSConvention butalsointerms oftheWTO Agreement.
Hisdelegation waslooking forward toseeing thisissuepromptly resolved inamanner consistent with
theWTO Agreement.
3.7 Therepresentative ofKorea stated thathisdelegation hadalsoengaged inconsultations with
theCommunity onthereclassification oftariffs onCD-Rom drives. Asamatter ofprinciple, his
delegation shared theconcerns expressed bytheUnited States regarding therecent developments in
theCommunity 'stariff treatment ofhightechnology imports. Korea wasexamining thissituation in
order toshedlightontheimplications ofthese developments forit'sexports.
3.8 Akeyobligation ofanyWTO Member wastomaintain thetariffbindings offered initsschedule
ofconcessions. Unilateral reclassification ofhightechnology products bysome members ofthe
Community would nullify andinvalidate thetariffconcessions contained intheCommunity 'sschedule
which weretheoutcome ofcomprehensive negotiations among WTO Members. Anyreclassification
should therefore becorrected, andproper measures taken toprevent suchreclassification inthefuture.
Hisdelegation alsofeared thatthistypeofaction taken byanyWTO Member which affected bound
tariffs might constitute adangerous precedent, andhisGovernment reserved itsrights under theWTO
Agreement.
3.9 Therepresentative ofSwitzerland stated thathisdelegation hadsubstantive interests inthis
matter andhadconcerns onthereclassification undertaken bysome member states oftheCommunity.
Hisauthorities would follow thismatter withgreat attention.
3.10 TheCouncil forTrade inGoods tooknoteofthestatements.
4. Report bytheCouncil forTrade inGoods totheMinisterial Conference
- Statement bytheChairman
4.1 TheChairman stated thatinthe"Procedures foranAnnual Overview ofWTO Activities and
forReporting under theWTO" which wasadopted bytheGeneral Council on15November 1995
(WT/L/105), ithadbeenagreed that"The respective sectoral Councils should report inNovember
eachyeartotheGeneral Council ontheactivities intheCouncil aswellasinthesubsidiary bodies"
andthatthereports ofthesectoral Councils should be"factual innature, containing anindication of
actions anddecisions taken, withcross references toreports ofsubordinate bodies andcould follow
themodel oftheGATT 1947 Council reports totheCONTRACTING PARTIES."
4.2 Inthestatement made bytheChairman oftheGeneral Council atthemeeting of
16April1996(WT/L/145),concerning"ReportingProceduresfortheSingaporeMinisterialConference",
theChairman hadindicated thatsubsidiary bodies oftheGeneral Council wereinvited toprepare their
reports onthebasisofthe"Procedures foranAnnual Overview oftheWTO activities andforReporting
under theWTO" laiddown bytheGeneral Council on15November 1995. Inhisstatement, hehad
alsosaidthat,given thedifferent mandates ofStanding Bodies oftheWTO, itwasdifficult toestablish
acommon format forreports ofthose Bodies. Consequently, eachBody mustultimately decide on
theformat ofthereport which itdeemed mostappropriate forconsideration ofrelevant issues bythe
superior Body. Thesuggestion hadalsobeenmade thatthereports include atleastthefollowing
elements: (a)asection onimplementation oftherelevant Agreements; (b)progress concerning work
under theBuilt-in Agenda; (c)anindication asappropriate ofissues andproblems which havebeen
identified, andrecommendations ifany.G/C/M/10
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4.3 Hehadwished toraisethispoint atthisstage inorder toprovide Members anopportunity
togivesome thought tothequestion concerning thereport thatthisCouncil would havetomake to
theMinisterial Conference. Heproposed holding informal consultations atalaterstageonthismatter.
4.4 TheCouncil forTrade inGoods soagreed.
5. State ofplayconcerning subsidy notifications -lackofcompliance withsubsidy notification
requirements under Article 25.2 oftheAgreement onSubsidies andCountervailing
Measures
5.1 Therepresentative oftheEuropean Communities, speaking under "Other Business", conveyed
hisdelegation 'sconcern regarding thelowlevelofcompliance byMembers withtheirobligations under
Article 25.2oftheAgreement onSubsidies andCountervailing Measures (SCM Agreement) tonotify
thespecific subsidies maintained orgranted within theirterritories. Those notifications hadbeendue
by30June1995. However, asof22May1996, only51Members outofatotalof121Members
hadmade thenotification. Even worse, alarge number oftheMembers whohadnotified haddone
soonlyinthelasttwoorthreemonths. Additionally, hisdelegation wished toexpress itsdisappointment
anddissatisfaction regarding thecontent ofthenotifications thathadbeenreceived. Some Members
haddecided thatagricultural subsidies didnotfallwithin thedisciplines oftheSCM Agreement and
hadtherefore unilaterally decided tonotnotify themtotheCommittee onSubsidies andCountervailing
Measures (SCM Committee). Inasimilar way, other Members seemed toconsider thatonlythose
subsidies thatwere granted byNational orFederal government authorities were tobenotified. So
allsubsidies granted bylayers ofgovernment other thanthose ontheNational orFederal levelhad
beenexcluded fromthenotification. Athirdissue ofconcern totheCommunity wasthatArticle 26
oftheSCMAgreementprovidedthattheSCMCommitteeshouldrevieweverythirdyearthenotification
ofsubsidies made byMembers, andevery yearthenotification updates submitted intheintervening
years. Thelowlevelaswellasthelatearrival ofnotifications didnotallow hisdelegation toconsider
thatthere wassufficient critical mass toinitiate thereview inquestion. Even inthose circumstances
some Members continued toseektoapply preconditions andrequirements tothereview ofthe
notifications. Despite theveryconsiderable efforts made bytheChairman oftheSCM Committee
tofindvolunteers forthefirstreview meeting ithadonlybeenpossible tofindaverysmall number
ofcountries whowereprepared toactasvolunteers inthatfirstsession. Hisdelegation found itvery
difficult toaccept thissituation. Theupdates onthenotifications required bytheSCM Agreement
tobemade every yearweredueby30June; bythatdate,theSCM Committee would notbeinaposition
ofevenstarting areview ofthenotifications oftheprevious year.
5.2 TheCommunity hadtolerated thisrather unsatisfactory situation inorder nottoprolong
difficulties anddelay theprocess. Buthisdelegation hadtomake achoice between whatitconsidered
tobeanunjustified faitaccompli orseeing thesystem grind toahalt. When theWTO wasestablished,
Members reinforced anorganization which wasessentially rules-based. Thegood operation of
notifications andahighlevelofcompliance withobligations were pre-requisites forthesmooth and
goodoperation oftheWTO system initsentirety. Transparency inthefieldofsubsidies wasacondition
forthepromotion offairtrading conditions among WTO Members andalackofobservance orrespect
forthetransparency andnotification obligations thatwere setoutinthevarious Agreements atthis
veryearly stage inthelifeoftheWTO wasdangerous andwasthewrong precedent forallfields of
activity which thisOrganization covered. Therefore, hisdelegation made anappeal toMembers to
takethismatter seriously andtotakethenecessary stepssothattheseearlydeficiencies intheoperation
ofthesystem werecorrected intheinterest ofamore credible operation which functioned according
totheprinciples oftheOrganization.G/C/M/10
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5.3 Therepresentative ofNewZealand thanked therepresentative oftheCommunity forhaving
drawn thisissuetotheattention ofMembers, andstated thathisdelegation shared many oftheconcerns
thathadbeenexpressed. However, hewished tofurther underline thefailure bysome delegations
tonotify agricultural subsidies totheSCM Committee. Reading ofbothAgreements clearly showed
thatagricultural subsidies werecovered bytheSCM Agreement, andthattherewasaclearnotification
obligation forthose subsidies totheSCM Committee. Therefore hisdelegation urged those Members
which hadnotnotified suchsubsidies totheSCM Committee toreassess theirposition andtomake
theappropriate notifications.
5.4 Therepresentative ofNorway shared theconcerns expressed concerning thelowlevel of
compliance withnotifications requirements bothunder Art.25.2oftheSCM Agreement andinother
contexts.
5.5 Therepresentative ofArgentina stated thathisdelegation supported virtually allthepoints
raised bytheCommunity onthisissue. Reference wasmade, inparticular tothefreeinterpretation
given bysomeMembers towhatshould orshould notbenotified, especially onthesubject ofagriculture.
Inhisdelegation 'sviewthiswasoneofthecentral elements thathadhampered thereview exercise
provided forintheSCM Agreement. Hisdelegation hoped thatthissituation would beremedied in
theveryshort termsothatthere would betransparency intheareaofsubsidies.
5.6 Therepresentative oftheCzech Republic alsoshared theconcerns expressed regarding the
lackofcompliancebyMemberswithnotificationrequirementsundertheSCMAgreement.Notifications
andthereview exercise would lendtransparency totheareaofsubsidies, andheappealed toMembers,
nothaving doneso,tomake theappropriate notification.
5.7 TheCouncil forTrade inGoods tooknoteofthestatements.
6. EFTA-Estonia, EFTA-Latvia, EFTA-Lithuania FreeTrade Agreements
6.1 Therepresentative ofIceland, speaking under "Other Business" andonbehalf oftheEFTA
countries andofEstonia, Latvia andLithuania, informed theCouncil thattheEFTA countries and
Estonia, Latvia andLithuania, respectively, hadconcluded FreeTrade Agreements onDecember 1995.
TheAgreements were expected toenter intoforce ortobeapplied onaprovisional basis asof
1June1996.
6.2 Thecontent andstructure oftheAgreements weresimilar toFreeTrade Agreements which
hadbeenconcluded between theEFTA countries andtheCentral andEastern European Countries,
withcertain adjustments reflecting themore recent developments. They would replace thebilateral
FreeTrade Agreements which wereinforce between Norway andSwitzerland, ontheonehand, and
Estonia, Latvia andLithuania, respectively, ontheother hand. TheAgreements would benotified
under GATT Article XXIV:7(a) intheverynearfuture.
6.3 TheCouncil forTrade inGoods tooknoteofthestatement.G/C/M/10
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7. Banonexports ofwild-harvested shrimps totheUS
7.1 Therepresentative ofHong Kong, speaking under "Other Business", stated thatHong Kong
wasoneofanumber ofdelegations which hadexpressed serious concern attheCouncil 'smeeting
of19March 1996 about thepotential embargo bytheUnited States against wild-harvested shrimps.
Atthatmeeting theUSrepresentative had,inhisresponse, referred tolegaloptions, domestic appeal
procedure andminimization oftrade disruptions. Hisdelegation remained veryconcerned about this
issue, andrequested further information onthefollowing: firstly, whether theUSadministration had
finished consideration ofitslegal options; secondly, whether there wasanyprogress ontheUS
administration 'sappeal tochallenge therelevant court ruling; andthirdly, whatmeasures theUShad
taken orwould taketominimize thedisruption totrade thatcould result fromimplementing thecourt
ruling?
7.2 Therepresentative ofthePhilippines, speaking onbehalf ofASEAN countries affected by
theUSSeaTurtleConservationProgramme(namelyIndonesia,Malaysia,thePhilippinesandThailand),
stated thatattheCouncil meeting of19March 1996, ASEAN hadregistered itsserious concern with
theDecision oftheUSCourt ofInternational Trade on29December 1995thatexports ofwild-harvested
shrimps totheUnited States after1May1996would beembargoed ifexporting countries didnotadopt
seaturtle conservation programmes thatwerecompatible withtheUSprogramme. Atthatmeeting
theUSdelegation hadinformed Members thatthefinaloutcome ofthiscasewasnotyetsettled, that
theadministration wascontinuing toconsider itslegaloptions, andthattheDepartment ofJustice had
filedamotion seeking tomodify thecourt order byextending theCourt-imposed deadline forthe
imposition oftheembargo byoneyear.
7.3 Unfortunately on10April 1996, theUSCourt ofInternational Trade rejected therequest of
theUSadministration 'smotion todelay theimplementation oftheshrimp embargo foroneyear.
Following thisdecision, after1May1996, exports ofwild-harvested shrimps would bepermitted only
from countries which provided adeclaration andgovernment certification ofcompliance withthe
requirements oftheUnited States. Asmajor exporters ofbothwild-harvested andaquaculture shrimps,
ASEAN countries wished toexpress serious concern overthisUSaction which wasconsidered tobe
against theprinciples oftheWTO andwhich could cause serious trade disruption. TheASEAN
countries, liketheUnited States, attached greatimportance totheirsea-turtle conservation. AllASEAN
countries hadalready inplace extensive seaturtle conservation programmes. Legislations hadbeen
enacted formore thanhalfacentury fortheprotection ofseaturtles. Moreover, allASEAN countries
were signatories totheConvention onInternational Trade inEndangered Species (CITES) which
contained provisions fortheprotection ofseaturtles initsAppendix I.ASEAN countries, therefore,
strongly urged theUSgovernment tonotsubject ASEAN countries totheimpending shrimp embargo.
Atthisjuncture, ASEAN countries wished tohaveresponses from theUSgovernment onwhether
theUSdecision wasfinalandwhether theUSgovernment hadanyintention oftaking action inorder
tominimize thedisruptive effects totradethatcould result fromimplementation oftheCourt 'sorder.
Inthemeantime, ASEAN countries reserved their rights under GATT 1994, therelevant WTO
Agreements andtheDispute Settlement Understanding.
7.4 Therepresentative ofAustralia stated thathisdelegation alsohadatradeinterest inthisissue,
andhadexpressed concerns ontheimpending USembargo attheCouncil meeting of
19March 1996. Hisdelegation alsowished tohaveadditional information fromtheUSonthisissue.
7.5 Therepresentative ofIndia wished toassociate hisdelegation withthestatements made by
previous speakers onthissubject. India alsohadasubstantive interest inthismatter being amajor
exporter ofwild-harvested andaquaculture shrimps .Hisdelegation wished tohavefurther information
from theUnited States onwhathadbeendonebytheUSadministration onthismatter.G/C/M/10
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7.6 Therepresentative ofKorea, referring tothestatement made byhisdelegation attheCouncil
meeting of19March 1996, aswellastherepresentatives oftheEuropean Communities andMexico
shared theconcerns expressed byprevious speakers onthismatter.
7.7 TherepresentativeofVenezuela,referringtothestatementmadebyhisdelegationattheCouncil
meeting of19March 1996, saidthatVenezuela hadtrade interests inthematter andwasconcerned
bytherepercussions thatunilateral action inthisareamayhaveontheWTO system. Hisdelegation
supported thecomments made byprevious speakers onthismatter, andhoped thattheUSwould provide
responses tothequestions puttoit.
7.8 Therepresentative ofElSalvador thanked Hong Kong forhaving brought thismatter tothe
attention oftheCouncil andhoped thattheUSwould beabletoprovide more information.
7.9 Therepresentative ofPakistan stated thatPakistan being oneoftheexporters ofshrimps to
theUShadexpressed itsconcern atthelastmeeting oftheCouncil when theissue hadbeenraised.
Hisdelegation would appreciate receiving theinformation asrequested bythedelegation ofHong Kong.
7.10 Therepresentative oftheUnited States stated thathehadtaken noteofthecomments made
andwould report backtohisauthorities.
7.11 TheCouncil forTrade inGoods tooknoteofthestatements.
8. Brazilian Measure concerning theautomotive sector
8.1 TherepresentativeofBrazil,speakingunder"OtherBusiness",recalledthatBrazilhadpresented
on15March 1996 arequest forawaiver under Article IXoftheMarrakesh Agreement establishing
theWorld Trade Organization regarding theBrazilian automotive regime (G/L/68). On9May1996,
afterinformal consultations withinterested WTO Members, Brazil hadwithdrawn therequest (G/L/75).
While informing WTO Members ofsuchawithdrawal, hewished tostress Brazil 'sfirmcommitment
totheWTO rules. Brazil wasverymuch aware ofMember 'srights andobligations under theWTO,
andhewould transmit tohisauthorities inBrasilia anyconcerns expressed andstatements made by
delegations onthisissue.
8.2 Therepresentative ofKorea stated thathisdelegation regarded theBrazilian government 's
decision towithdraw itsrequest forawaiver concerning itsauto-sector measures asanencouraging
move. AnyWTO Member hadaright toinvoke anyprovision oftheWTO Agreement, including
Article IX.3 oftheMarrakesh Agreement establishing theWorld Trade Organization onwaivers.
However, asalready mentioned attheprevious Council meeting of19March 1996, Brazil should have
firstrescinded theWTO-inconsistent measures before requesting awaiver. Asthepossible number
onevictim, Korea remained seriously concerned with theBrazilian measures, because oftheir
inconsistency withWTO rules andbecause oftheprobability thattheymight constitute adangerous
precedent thatmight damage theworld trading system. Korea, therefore, urged Brazil torescind,
without further delay, itsauto-sector measures thatwerenotconsistent withWTO rules. Korea reserved
allitsrights under theWTO Agreement inthismatter.
8.3 Therepresentative ofJapan stated thathisdelegation hadexpressed concern attheprevious
meeting ofthisCouncil withregard toBrazil 'sautopolicies. Japan believed thatthese measure were
clearlyinconsistentwiththeWTOAgreement,inparticulartheTRIMsAgreement,sincetheyconstituted
alocal-contentrequirementandatrade-balancingrequirementprohibitedbythatAgreement.Inaddition,
averyhightariff rateof70percentwasstillbeing maintained contrary towhat hadbeennotified
toMembers indocument WT/L/66. Thishightariff rate,since itwasreduced forcompanies whichG/C/M/10
Page9
metthelocalcontent requirement andtrade-balancing requirements, effectively constituted anincentive
tocomply withtheTRIMs measures inquestion.
8.4 Recently, hisauthorities hadlearnt thatBrazil hadwithdrawn itsrequest forawaiver. However,
there werenosigns thatthemeasures inquestion, which wereclearly inconsistent withWTO rules,
would bechanged soastobring them intoconformity withWTO rules. Brazil citedparagraph 5of
Article 5oftheTRIMs Agreement asthebasisforjustifying these measures, butthisargument could
hardly besustained. Japan wished tobelieve thatthere wasabsolutely nointention onthepartofthe
Brazilian Government toreinforce thefaitaccompli ortobuytimebytherecent move. Japan had
beenseeking thewithdrawal ofthemeasures which were inconsistent withtheWTO Agreement, as
wellasthewithdrawal oftherequest forthewaiver.
8.5 Japan verymuch deplored thefactthatanimportant member oftheWTO likeBrazil should
continue totakeWTO-inconsistent measures, aswellastoclaim onshaky grounds thatthemeasure
wasconsistent withWTO Agreements. Thecredibility ofBrazil andtheWTO Agreement wasatstake
andJapan feared thatsuchbehaviour could setabadexample forother countries. HisGovernment
requested Brazil toretract immediately allauto-sector measures which wereinconsistent withWTO
Agreements andreserved itsrights under theWTO Agreements.
8.6 Therepresentative oftheUnited States welcomed Brazil 'swithdrawal ofitswaiver request
foritsautomotive regime andtheindications received fromBrazil thatitintended torevise itsregime
andeliminate anyaspects thatdidnotcomply withBrazil 'sWTO obligations. Hisgovernment wished
toconfirm itsexpectations thataWTO consistent regime would beintroduced shortly.
8.7 TherepresentativeoftheEuropeanCommunitiesstatedthat,likeotherdelegations,hisdelegation
shared concerns about anysituation where measures adopted byaWTO Member wereincompatible
withtheobligations ofthatMember. Hisdelegation wasparticularly concerned about thewider
implications sincetherewasaserious danger ofproliferation ofmeasures ofasimilar kindwhich were
incompatible withtheobligations of,inparticular, theTRIMs Agreement. Hisdelegation appealed
toallMembers totakethecurrent situation veryseriously, andtodotheirbesttoensure astrict
application oftheTRIMs Agreement andmore specifically Articles IIIandXIoftheGATT which
underlie thatAgreement.
8.8 TheCouncil forTrade inGoods tooknoteofthestatements.
9. Enlargement oftheCentral European FreeTrade Agreement (CEFTA)
9.1 Therepresentative oftheSlovak Republic, speaking under "Other Business", andonbehalf
oftheCzech Republic, Hungary, Poland (parties totheCentral European FreeTrade Agreement
(CEFTA)) andSlovenia informed theCouncil thatpursuant toArticle XXIV:7(a) oftheGeneral
Agreement onTariffs andTrade 1994 thetextoftheCEFTA hadbeencomplemented byprovisions
(Article 39(a)) which allowed foraccession totheCEFTA byothercountries. OnthatbasistheRepublic
ofSlovenia hadsigned theAgreement onAccession withthefourparties tothatAgreement, on
25November 1995.
9.2 Asof1January 1996, FreeTrade Agreements, which hadbeenconcluded onabilateral basis
between Slovenia andtheCzech Republic, Slovakia andHungary ceased toapply, andwerereplaced
bytheAgreement ofAccession ofSlovenia totheCEFTA. TheFreeTrade Agreement between Poland
andSlovenia concluded in1995, wasalsosuperseded bytheAgreement onAccession ofSlovenia.
ThisAgreement wasapplied onaprovisional basis, andwould enter intoforce aftertheratification
procedures inthecountries whowere parties tothisAgreement, hadbeencompleted.G/C/M/10
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9.3 Theoriginal textofCEFTA, withAnnexes andProtocols hadbeencirculated on30June1994
indocuments L/7495 andL/7495/Add.1 respectively. TheAccession Agreement would benotified
totheWTO oncetheratification procedures inthecountries, parties totheAgreement, werecompleted.
9.4 TheCouncil forTrade inGoods tooknoteofthestatement.
10. Europe Agreements between theEuropean Communities andtheCzech Republic, and
theEuropean Communities andtheSlovak Republic
10.1 TheChairman, speaking under "Other Business", stated thatin1992, theGATT wasnotified
ofthesignature oftheEurope Agreement between theEuropean Communities andtheCzech andSlovak
Federal Republic. Atthattime, thetextoftheinterim agreement -which contained thetradeprovisions
oftheEurope Agreement -wasdistributed tocontracting parties (L/6992/Add.1), andtheprocedures
forreviewing Article XXIV agreements were initiated.
10.2 Thedelegations oftheEC,oftheCzech Republic andoftheSlovak Republic hadrecently
notified theWTO that,following thedissolution oftheCzech andSlovak Federal Republic, theEurope
Agreement between theEuropean Communities andtheCzech andSlovak Federal Republic hadbeen
replaced byAgreements witheachofthesuccessor states. Thenotifications andthetextsofthenew
agreements werecirculated under thesymbols WT/REG18/N/1, WT/REG18/N/2, WT/REG18/6 and
WT/REG18/7.
10.3 Theexamination ofthese agreements would takeplace intheCommittee onRegional Trade
Agreements inaccordance withtheterms ofreference adopted bytheGeneral Council atitsmeeting
on11July1995, which were contained indocument WT/REG18/1.
10.4 TheCouncil forTrade inGoods tooknoteofthestatement.
11. Letter from theChairman oftheCommittee onTrade andDevelopment
11.1 TheChairman, speaking under "Other Business", informed theCouncil thathehadreceived
aletter from theChairman oftheCommittee onTrade andDevelopment requesting information on
theimplementation ofdevelopment-related provisions inthose Uruguay Round instruments dealtwith
bytheCouncil forTrade inGoods.
11.2 Thisinformation wasnecessary inorder fortheCommittee onTrade andDevelopment tocarry
outthetasksetoutinitsterms ofreference which was"toreview periodically, inconsultation, as
appropriate, withtherelevant bodies oftheWTO, theapplication ofspecial provisions intheMultilateral
Trade Agreements andrelated Ministerial Decisions infavour ofdeveloping country Members, and
inparticularleast-developedcountryMembers,andreporttotheGeneralCouncilforappropriateaction."
Suchareview wasalsoprovided forintheCommittee 'sprogramme ofwork for1996, andrepresented
apriority fortheCommittee 'sfuture work.
11.3 HehadsentalettertothechairpersonsofthevarioussubsidiarybodiesofthisCouncilrequesting
themtogivehiminformation onthework doneinthisarea. After receipt ofthisinformation, further
action asappropriate would betaken toenable theCommittee onTrade andDevelopment toconduct
thereview.
11.4 TheCouncil forTrade inGoods tooknoteofthestatement.G/C/M/10
Page11
12. Date fornextmeeting oftheCouncil
12.1 TheChairman, speaking under "Other Business", proposed thatthenextmeeting oftheCouncil
beheldon5July1996.
12.2 TheCouncil forTrade inGoods soagreed.