RESTRICTED
WORLD TRADE S/NGMTS/4
9March 1995
ORGANIZATION(95-0535)
Original: English Negotiating Group onMaritime Transport Services
NOTE ONTHE MEETING OF9-10FEBRUARY 1995
TheNegotiatingGrouponMaritimeTransportServiceshelditsfourthmeetingon9-10February
1995. TheChairman saidthatsince thelastmeeting oftheGroup fivecountries hadannounced their
intention tobecome participants inthenegotiations -Cameroon, Chile, theDominican Republic, India
andSenegal -bringing thetotalnumber ofparticipants intheGroup tothirty-nine. Inaddition, twelve
other governments andthree organizations hadobserver status intheGroup.
Theagenda ofthemeeting wascontained inAirgram WTO/AIR/7 of24January 1995. The
Chairman saidthatheintended tofocus ontheexamination ofasmany replies tothequestionnaire
aspossible atthepresent meeting anddefer discussions ofother agenda items, suchasitemC-the
examination oftheDraft Schedule onMaritime Transport Services -untilthenextmeeting oftheGroup.
Thefirstitemoftheagenda wastheconsideration ofrequests forobserver status. TheGroup
decided togrant observer status totwogovernments: Slovenia, duetobecome afounding Member
oftheWTO onceitratified theUruguay Round Agreements; and,theRussian Federation, currently
intheprocess ofnegotiating itsaccession totheWTO. TheGroup decided nottogrant observer status
totwoprivate-sector organizations -theCouncil ofEuropean andJapanese National Shipowners '
Associations (CENSA) andtheAmerican Institute ofMerchant Shipping (AIMS) -onthebasis ofan
expressed preference onthepartofseveral delegations forlimiting observership tointer-governmental
organizations.
Thesecond itemoftheagenda wastheconsideration ofresponses tothequestionnaire on
maritime transport services. TheChairman saidthattheSecretariat hadsofarreceived anddistributed
fifteen setsofreplies, including afewwhich hadnotyetbeenprocessed formally given theirrecent
submission. Participants wereinvited togiveabriefintroduction oftheirsubmissions andthenrespond
toquestions from other delegations.
Thefirstsetofquestionnaire replies tobeexamined wasthatoftheUnited States
(S/NGMTS/W/2/Add.11). OnPartIofthequestionnaire, Market Structure, therepresentative ofthe
United States confirmed thatthedataprovided included thecabotage fleetwhere relevant. OnPartII,
Regulatory Structure, regarding thereply toQuestion 5,hesaidthatthere werenofederal subsidies
applying toports. Responding toarequest forclarification onthereply toquestion 8.(c), hesaidthat
there werespecial arrangements forvessels trading between Canada andtheUSontheGreat Lakes;
inaddition, hecitedtwoinstances which didnotfallunder government procurement: theCommodity
Credit Corporation andexport financing bytheExport-Import Bank. Onthereply toQuestion 12.(a),
hesaidthattheapproximate percentage share oftheprivately-owned fleetbenefitting fromOperating
Differential Subsidies (ODS) wasfactual anddidnotconstitute anythreshold orceiling. ODSaimed
atdecreasing operating costdifferentials between US-flag vessels andforeign competitors.
Onthereply toQuestion 12.(b), therepresentative oftheUnited States saidthatitwasdifficult
toascertain whether themaintenance of"Capital Construction Funds" or"Construction Reserve Funds"
wasaimed atbenefitting shipping orship-building. Onthereply toQuestion 17,hesaidthatUSlaw
permitted third-parties toseekaction bytheFederal Maritime Commission (FMC) toaddress restrictionsS/NGMTS/4
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onforeign-flag vessels ifsuchrestrictions were found tobeunfavourable toshipping inUSforeign
trades. Thecriteria toqualify forsuchanapplication were ofageneral nature. Onthereply to
Question 20,hesaidthattheUSagreement withtheRussian Federation didnotinvolve cargo-sharing
andthattheagreements withBrazil andArgentina involved equal access togovernment cargoes and
notcargo-sharing assuch. Onthereply toQuestion 25oncounter-measures affecting foreign-flag
vessels, hementioned thecaseofNedloyd, aforeign shipping company, thathadoncepetitioned the
FMC, inaccordance withSection 19oftheMerchant Marine Actof1920, foraction toaddress access
restrictions tothePeruvian market. Regarding points raised bydelegations onother replies, the
representative oftheUnited States saidthathewould come backtothem atthenextmeeting ofthe
Group, orinwriting beforehand.
Thesecond setofreplies tobeexamined wasthatoftheEuropean Communities
(S/NGMTS/W/2/Add.12). Onthereply toQuestion 8ofPartI,therepresentative oftheECsaidthat
itwasverydifficult toarrive ataprecise figure fortheshare ofconference shipping towhich the
United Nations Code ofConduct forLiner Conferences (henceforth, "Liner Code") applied, given
thatconferences wereprivate arrangements. Hesaidthatinpractice trades covered bytheLiner Code
werecommercially veryunattractive, accounting for3percentorlessofallECconference shipping.
TheECnever heldtheinterpretation thattheCode applied toallconference trades. Regarding the
replytoQuestion 9ofPartI,hesaidthatECCouncil Regulation 954/79 aimed toharmonize reservations
entered byEUMember States withrespect totheapplication ofArticle 2oftheLiner Code totrades
served byEUMember States. The"Brussels Package" hadbeenconcluded toensure thattheCode's
cargo-allocation provisions didnotapply totrades between Member States ortothose between them
andother OECD countries -thusavoiding aswellanyconflict withtheTreaty ofRome 'snon-
discrimination provisions. According tothe"Package" furthermore there would benogovernment
enforcement ofArticle 2oftheCode oncargo-allocation: allocation wasamatter forcompanies that
were members ofaparticular conference todecide.
Reacting toanother question onthereply toQuestion 9,hesaidthattheEUhaddifficulties
inreaching anunderstanding withWest andCentral African countries ontheapplication ofArticle 2
oftheCode oncargo-allocation -particularly inrespect towhether theArticle applied onlytoconference
trades ortoother trades aswell,including outsiders. Onthereply toQuestion 13ofPartI,heclarified
thatthecaseofSpain which didnotappear inthereply wasidentical tothatofBelgium. Reacting
toanother question onthesame reply, hesaidthatanationality requirement applied tothesupply of
customs clearance services inGreece butwasunsure oftheGreek regulatory situation applying tothe
supply ofmaritime agency services. Inaddition, hesaidthatnorestrictions applied inItalytoforeign
suppliers oftheservices listed inQuestion 13,though allsuppliers currently present intheItalian market
were ofnational origin. Onthereply toQuestion 14ofPartI,heconfirmed thatinland waterways
were notconsidered cabotage intheEUMember States andthatinvestment incompanies involved
ininland waterways services wasfeasible and,inmany instances, welcome. Regarding trucking, he
saidthatthenotion ofcabotage applied onlytotraffic within aMember State; traffic beyond theexternal
borders ofaMember Statewasinmany cases governed bybilateral regimes butthatwasadeclining
trend. Regarding theability toowntrucks andsupply trucking services between Member States, there
were norestrictions.
Onthereply toQuestion 3inPartII,therepresentative oftheECsaidthattheadditional
horizontal ECandnational legislation referred tointhereply didnotgobeyond thatwhich was
commonly understood incountry schedules as"horizontal measures" (e.g.investment). Onthereply
toQuestion 4inPartII,heconfirmed thatalicence wasneeded forsuppliers tobecome trucking
operators beyond theportandthattoobtain it,foreign operators hadtobeestablished within theEU.
OnQuestion 5,hesaidthatthere wasnothing specific toaddinaddition tothefirstparagraph ofthe
reply forMember States forwhich specific information hadnotbeenprovided. Hesaidthatpublicly
andnotprivately-managed ports (such astheonesintheUK)were subject totendering andotherS/NGMTS/4
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practices common topublic entities. Onthereply toQuestion 6,hesaidthatsome Member States
didnotapply thecabotage principle between itsownnational ports and/or offshore installations.
Onthereply toQuestion 12,sub-paragraph 3,hesaidthatpublic aidsgranted toshipping
companies established inEUMember States wereaimed atre-balancing manning andother operating
costs andweresimilar inthatrespect totheODSprogram applied bytheUnited States. Thisdidnot
relate toflagging andshould notbeseenasacentral point inthenegotiations since theGroup was
notnegotiating onsubsidies. Onthereply toQuestion 20,hebelieved thattheagreements listed
(i.e.agreements thatcontained cargo-sharing provisions) didnotcontain asunset clause. Hedidnot
know whether anagreement between theUKandtheRepublic ofKorea included provisions oninland
waterway transportation. OnthereplytoQuestion 25,hesaidthatdecisions onwhich counter-measures
totakewere reached onacase-by-case basis. OnQuestion 27,heclarified thattheEuropean
Communities andtheirMember States didnotapply theconcept ofgovernment cargoes andthathe
viewed theissue asanissue ofprocurement ofshipping services -assuch, anissue which would be
subject tofurther consideration under GATS 'Article XIII.
Thethirdsetofreplies tobeexamined wasthatofJapan (S/NGMTS/W/2/Add.3). Regarding
Question 1ofPartI,therepresentative ofJapan saidthatcontainer ships wereincluded under theitem
"Other DryCargo" onthefirstcolumn ofthetable. Onthereply toQuestion 4,hesaidthatthe
discrepancy between theestimated share forimports andexports wasexplained bythefactthatthe
imports figure included ironoreshipments. OnQuestion 6,heexplained thatlinershipping datawas
notavailable because customs clearance datadidnotdistinguish between linerandother drycargo.
Onthereply toQuestion 13,heemphasized thatthereference to50percentofequity interest did
notconstitute aregulatory ceiling butmerely adefinition ofwhatwasunderstood bytheterm"foreign
suppliers"; itwasgiven fortransparency purposes.
OnPartII,hestarted byclarifying thatinorder toqualify forapermit fromtheMinister of
Transport tosupply freight forwarding services asupplier needed toshow sufficient ability toengage
inthecarrier business. Onthereply toQuestion 5,hesaidthatJapan didnothaveanyprivate ports;
suppliers intending tocarry outporttransportation business needed toobtain apermission from the
Minister ofTransport based onaneconomic needs test; there werenoadditional conditions suchas
forfreight forwarding noranyquantity ceilings applied; thedetermination ofwhat constituted an
"oversupply"ofporttransportationserviceswasundertakenonacase-by-casebasis,thedemandgenerally
being short ofsupply inpractice. OnQuestion 8,heclarified thattheabsence ofanyreference to
seatransportation reflected theabsence ofanyrestriction inthatlegoftransportation. Onthereply
toQuestion 11,headded thatforeign nationals could notownJapanese-flag vessels. Onthereply
toQuestion 12,headded thatindeed there wereJapanese Development Bank low-rate loans, applied
onlytoJapanese-owned andflagged vessels, fortheconstruction ofvessels; there werealsospecial
depreciation provisions ontaxlevied onJapanese vessels.
Onthereply toQuestion 16,therepresentative ofJapan saidthatmost ofthemain ports in
Japan, numbering around onehundred, wereopentoforeign commerce. Foreign vessels could obtain
permission insome cases tocallatports nototherwise open toforeign commerce andnavigation.
Inthecontext ofthereply given toQuestion 19andreacting toaquestion ontherelationship ofnon-
government entities withgovernment bodies, hesaidthattheHarbour Management Fund wasnot
governed bygovernment measures andthuswasoutside thepurview oftheGATS. Regarding the
so-called RiceSub-Committee ofGrain Importation Council, hesaidthatthere were norestrictive
measuressuchascargo-sharingbeingappliedandthatallrelatedbusinesswasconductedonacommercial
basis. OnthereplytoQuestion 20,heconfirmed thatJapan didnothaveanygovernment-to-government
cargo-sharing agreements andcould notseetherelevance ofanynon-governmental measure applied
atthecompany level (e.g. within conferences). With theUnited States, forexample, Japan had
agreements suchasFriendship, Commerce andNavigation Treaties (FCN) which touched onsome
aspects ofshipping butnotcargo-sharing. Heagreed thatthereply given toQuestion 26onreciprocityS/NGMTS/4
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conditions infreight forwarding wasalsorelevant toQuestion 23.Onthereply toQuestion 30,he
saidthatconferences intrades between theUSandJapan wereopenwhile some others wereclosed.
Thenextsetofreplies tobeexamined wasthatofCanada (S/NGMTS/W/2/Add.5). OnPartI,
therepresentative ofCanada confirmed thatthedefinition ofwhat constituted aCanadian company
throughout thequestionnaire wasinconformity withGATS definitions asperArticle XXVIII, including
Canadian majority equity participation. Healsoconfirmed thatfirms established offshore butoperating
effectively inCanada through alocalbranch werealsoconsidered ofCanadian origin. Regarding the
reply toQuestion 11,headded thatexemptions formeasures dealing withCommonwealth countries
hadalready beensought byCanada andwould bemostprobably sought again attheendoftheGroup 's
work. Reacting toaquestion onthereply toQuestion 12(b), hesaidthatthestructure oftheCanadian
maritime industry (i.e.shipping companies established offshore) provided clear evidence thatthere
were notmany taxexemptions forCanadian nationals inCanada.
Thenextsetofreplies tobeexamined wasthatofSwitzerland (S/NGMTS/W/2/Add.1). On
PartI,therepresentative ofSwitzerland clarified withrespect tothereply toQuestions 13and14that
onlyhorizontal measures relating toestablishment andcommercial presence applied tomaritime agency
services. Onthereply toQuestion 1ofPartII,heclarified thattheSwiss Shipping Office wasthe
competent authority forshipping matters relating toSwiss, andnotforeign-flag, vessels. Reacting
toaquestion ontherecourse tocounter-measures, hecould notthink ofanyinstance where such
measures hadbeentaken; theirapplication wasjustified incases where thecommercial interests of
Switzerland were adversely affected.
Thenextsetofreplies tobeexamined wasthatofNewZealand (S/NGMTS/W/2/Add.2). There
wasonlyonequestion posed andthatrelated tothereply toQuestion 30.Therepresentative ofNew
Zealandsaidthatconferenceswereconsideredprivateorganizationsgovernedbycontractualarrangements
andthatthere werenogovernment measures applied atallinregard totheentry into,orwithdrawal
from, aconference.
Thenextsetofreplies tobeexamined wasthatofAustralia (S/NGMTS/W/2/Add.4). There
were noquestions onPartI.OnPartII,responding toaquestion onthereply toQuestion 12,the
representative ofAustralia saidthatthere wasindeed adifferential treatment granted tonational
companies butitwasnotnecessarily preferential innature. Onthereply toQuestion 27,shesaidthat
thelastsentence ofthereply wasincluded forthesakeofcompleteness andrelated tothefactthat
transhipments ofgoods andchattels forgovernment officers overseas hadinprinciple tobeundertaken
withnational lines. Thisregulation hadbecome virtually redundant given thatwiththecurrent very
limited network ofAustralian linesthese transhipments wereinmostcases undertaken byairandnot
sea.Responding toageneral question onmarket access, shesaidthattheAustralian National Line
Limited wasacompany 100percentwholly-owned bytheAustralian government. Consideration was
currently being given tothesale,andthemechanism forthesale,ofthecompany.
ThenextsetofrepliestobeexaminedwasthatoftheRepublicofKorea(S/NGMTS/W/2/Add.7).
OnPartI,responding toaquestion onthereply toQuestion 7,therepresentative ofKorea clarified
thattheitem"Shipping byConsortia" inthefirstcolumn ofthetableincluded conferences andthat
theshare ofthetotalwhich wasaccounted exclusively byconferences wasaround 14percentin1993.
Onthereply toQuestion 10,hesaidthatinKorea theterms "liner cargo" and"containerized cargo"
wereunderstood tomean thesame thing -thusthe100percentestimated share oflinercargo which
wascontainerized. InKorea, lineroperators mustowncontainer ships orcarferries; there wereno
Korean linerships operating onnon-containerized routes. Onthereply toQuestion 14,hebelieved
thatthere were twocompanies inKorea thatwere atleastpartially-owned byforeign persons.
OnPartII,addressing arequest forfurther information onQuestion 1,therepresentative of
Korea saidthatlawsoninvestment andantitrust constituted examples ofhorizontal measures whichS/NGMTS/4
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applied tothemaritime transport sector. Onthereply toQuestion 2,hesaidthatcharter operators
needed toqualify fortheKorean flag. Asof1January 1995linershipping hadbeenliberalized with
theexception ofonlyafewitems fordesignated cargoes. Theneedforawaiver totransport certain
cargoes wastherefore onlynecessary forbulkareas where reservation practices continued toapply.
Suchwaivers weregranted forsingle voyages (i.e.theywerenotgranted asblock exemptions) through
arelatively complex procedure. Heconfirmed thatwaivers could alsobeobtained through bilateral
agreements insome cases. Onthereply toQuestion 4,headded thatthere wasnospecific economic
needs testapplied inorder toobtain alicense tosupply freight forwarding services andthattwoforeign
companies were currently present inKorea.
Onthereply toQuestion 5,therepresentative ofKorea saidthatthecorporations responsible
forthemanagement andoperations ofKorea 'smajor container portswerepublicly-owned atthisstage
butthatforeign suppliers could apply forapermission tobuild theirownterminals. Hesaidthatthe
government owned andoperated mostoftheexisting portfacilities; private investors whobuilttheir
ownfacilities enjoyed exclusive usage rights butonlyforalimited period oftime(e.g.20years), after
which ownership would beautomatically transferred tothegovernment. Thisapplied toallports,
including thebiggest. Onthereply toQuestion 6,hesaidthatthere wasnoprecise definition of
"international maritime transport" butthatinter-port services between adomestic andaforeign port
orbetween foreign ports were understood tobecovered bythatnotion.
Onthereply toQuestion 8.(a)-(c), heexplained thatthelimitations indicated inthereply to
Question 4werenotrelevant hereastheydidnotrelate tomaritime transport assuchbuttorailand
roadtransport. Onthereply toQuestion 8.(a), heconfirmed, referring tothefourth point inthe
corrigendum circulated informally atthemeeting (later, document S/NGMTS/W/2/Add.7/Corr.1) that
there were nolimitations applied to"other forms ofcommercial presence" -asperparagraph 2of
thedefinitions attached tothedraft"model" schedule. Onthereply toQuestion 9.(a)(1), hesaidthat
theKorea Maritime andPortAdministration (KMPA) monitored foreign investment inshipping services
butdidnotapply strict criteria ingranting permission toestablish. On9.(a)(2), heconfirmed that
100percentforeign ownership waspossible inaKorean jointstock company (Chusik Hoesa). He
saidthatforeign-flag vessels accounted for77percentofshipping services supplied cross-border.
Onthereply toQuestion 12,hesaidthattherequirement thatshipping companies represent onlytheir
owncargoes hadbeeneliminated afewyears back. Onthereply toQuestions 20through 22,he
confirmed thatthere were nogovernment measures which applied cargo-sharing, whether based on
theLiner Code ornot.Thebehaviour ofconferences depended onmarket forces. Onthereply to
Question 29,hesaidthatthemaritime transport sector benefitted fromanexemption fromtheapplication
ofantitrust laws. OnQuestion 30,hesaidthatthegovernment encouraged conferences tobeopen;
there wasnothing intheKorean regulatory system which limited shipping linesfromparticipating or
withdrawing freely from particular conferences.
Thenextsetofreplies tobeexamined wasthatofCyprus (S/NGMTS/W/2/Add.8). OnPartI,
responding toaquery onthereply toQuestion 1,therepresentative ofCyprus saidthatthere were
some eighty foreign shipping companies established inCyprus, mostofwhich wereEuropean, and,
inparticular, German. Hedidnothaveanyfurther information onthebreak-down offoreign-flag
vessels butsaidthateighty percentofthem wereofEuropean origin. Onthereply toQuestion 13,
heclarified thattheso-called offshore sector covered activities undertaken from Cyprus andbeyond
andnottheprovision ofauxiliary services within thecountry. OnthereplytoQuestion 14,heconfirmed
thatwholly-owned foreign suppliers could notengage intrucking services within Cyprus; hesaidthat
multimodal transport ingeneral wasnotcommercially viable inCyprus.
Thenextsetofreplies tobeexamined wasthatofEgypt (S/NGMTS/W/2/Add.9). The
representative ofEgypt saidthatacomprehensive lawrelating tomaritime transport wascurrently
being examined inparliament which could affect several aspects ofthesector treated inEgypt 'srepliesS/NGMTS/4
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tothequestionnaire. Regarding points raised bydelegations andintheabsence ofexperts fromcapital,
hesaidthathewould come backtothem atthenextmeeting oftheGroup, orinwriting beforehand.
Thenextsetofreplies tobeexamined wasthatofPoland (S/NGMTS/W/2/Add.10). Inthe
absence ofexperts fromcapital, therepresentative ofPoland tooknoteofquestions posed onthereplies
submitted byPoland tothequestionnaire andsaidthathewould come backtothematthenextmeeting
oftheGroup, orinwriting beforehand.
Before concluding thediscussion onquestionnaire replies, theChairman saidthattheremaining
setsofreplies would bereviewed atthenextmeeting along withanyfurther setsreceived. Inaddition,
anopportunity would beprovided tothose participants whose replies hadalready beenexamined to
come backtooutstanding questions andtorespond toanyfurther questions thatmight ariseontheir
submissions. Anywritten clarifications onquestions asked atthepresent meeting received bythe
Secretariat would becirculated totheGroup. TheChairman saidthathehoped toconclude the
examination ofquestionnaire replies bythenextmeeting oftheGroup andmove from thefactual to
thenegotiating phase oftheGroup 'swork.
Regarding dates offuture meetings, theGroup agreed onhaving ameeting, primarily aimed
atfinishing theexamination ofquestionnaire replies, towards theendofMarch orbeginning ofApril.
There wasalsoageneral agreement thatbilateral negotiations should notbescheduled inparallel with
thenextmeeting oftheGroup butsome timelater, afterthecurrent phase oftheGroup 'swork had
beencompleted.