RESTRICTED
PREPARATORY COMMITTEE PC/IPL/M/7
FOR THE 10November 1994
WORLD TRADE ORGANIZATION
(94-2375)
SUB-COMMITTEE ONINSTITUTIONAL ,
PROCEDURAL AND LEGAL MATTERS
MINUTES OFTHE MEETING HELD ON21OCTOBER 1994
1. TheSub-Committee onInstitutional, Procedural andLegal Matters helditsseventh meeting
on21October 1994 under theChairmanship ofMr.K.Kesavapany (Singapore).
A. Paragraph 8(b)(ii) oftheDecision establishing thePreparatory Committee
(i) Terms ofreference forWTO bodies
2. TheChairman drew attention toproposed terms ofreference fortheWTO Committees on
Balance-of-Payments Restrictions andBudget, Finance andAdministration, circulated indocument
numbers 2460 and2461, respectively. Hethenmade thefollowing statement withregard tothe
Committee onBalance-of-Payments Restrictions: "Inrespect ofprocedures forperiodic balance-of-
payments consultations, Inotetheunderstanding ofdelegations thatthe'GATT 1994 procedures 'as
referred tobythefootnote toparagraph 5(b)ofArticle XIIoftheGeneral Agreement onTrade in
Services, ismeant toinclude paragraphs 5-13 oftheUnderstanding ontheBalance-of-Payments
Provisions oftheGeneral Agreement onTariffs andTrade 1994. Procedures andelements covered
byparagraphs5-13areactuallyscatteredintheDecisionsapprovedon28April1970(BISD18S/48-53),
19December 1972(BISD 20S/47-49) and28November 1979(BISD 26S/205-209), allofwhich have
been incorporated inthe1994 Understanding byreference. Inparagraphs 5-13 ofthe
1994 Understanding where these elements arecovered, thereferences toArticles XIIandXVIII of
GATT 1994 willhavetoreadsoastoinclude Article XIIoftheGATS forpurposes oflooking at
thesubstantive aspects oftheobligations under theGATS."
3. Therepresentative oftheUnited States saidthatinhisunderstanding theChairman 'sstatement
withregard totheCommittee onBalance-of-Payments Restrictions wasastatement reflecting the
understanding ofdelegations, which theUnited States fullyshared, rather thananinterpretation of
oneoftheUruguay Round Agreements. TheUnited States would notwishtoseeprecedents setwith
respect totheuseoftheSub-Committee orthePreparatory Committee fortheinterpretation of
Uruguay Round Agreements.
4. Therepresentative ofSwitzerland saidthatwhile hisdelegation didnothaveanyreservations
ontheterms ofreference oftheWTO Committee onBudget, Finance andAdministration, itwished
tonotethatthequestion ofparticipation ofgovernments thatwerenotWTO Members onthedateof
entry intoforce oftheWTO stillhadtobedealt with. Itwould beanomalous ifagovernment
contributed totheWTO budget butwasunable toparticipate inthedecision-making process. He
wondered ifthisissue would beaddressed under transitional arrangements.
5. TheChairman saidthattheconcern raised bySwitzerland wasonethatwasbeing addressed
inthediscussions ontransitional arrangements.PC/IPL/M/7
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6. TheSub-Committee tooknoteofthestatements, including theChairman 'sstatement withregard
totheWTO Committee onBalance-of-Payments Restrictions, andapproved theterms ofreference
fortheWTO Committees onBalance-of-Payment Restrictions andBudget, Finance andAdministration.
7. TheChairman saidthatproposed terms ofreference fortheWTO Committee onTrade and
Development were stilltobeagreed upon, andthatthismatter would beaddressed urgently witha
viewtoreaching asolution. TheSub-Committee would revert tothismatter atitsnextmeeting.
8. TheSub-Committee tooknoteofthestatement.
9. TheChairman, turning toterms ofreference fortheproposed WTO Committee onMarket
Access, drew attention totheCommunity 'sproposal circulated asPC/IPL/W/9.
10. Therepresentative ofSwitzerland saidthattheCommunity 'sproposal wasagood basis for
further work inthisarea. Hisdelegation hadcirculated itscomments ontheproposal toMembers
inthemeeting room, andsuggested thattheSecretariat invite delegations toaconsultation onhow
todealwiththismatter.
11. TherepresentativeofCanadasaidthathisdelegationhadonlyrecentlyreceivedthecontributions
fromtheCommunity andSwitzerland, andmight havesubstantive comments tomake. Hesuggested
inviting comments, perhaps inwriting, andthenholding ameeting ofinterested delegations.
12. Therepresentative ofAustralia saidthatitwould beimportant anduseful tobeabletohave
further discussions onaplurilateral basis onthismatter.
13. Therepresentatives ofNewZealand, Japan andBrunei Darussalam onbehalf oftheASEAN
countries, expressed theirGovernments 'interest inparticipating inconsultations regarding thismatter.
14. TheChairman saidthathehadnoted delegations 'desire forplurilateral consultations onthis
matter, andproposed thatinterested delegations beinvited tosubmit theircomments inwriting and
thatameeting, opentoallthatwished toparticipate, beheldthefollowing week.
15. TheSub-Committee tooknoteofthestatements andsoagreed.
16. TheChairman, turning tothequestion oftheContact Groups, saidthatsincethesummer break,
theContactGrouponAgriculturehadheldtwomeetingsconcerningtheWTOCommitteeonAgriculture
andanother concerning theWTO Committee onSanitary andPhytosanitary Measures. Atitsmeeting
on22September, theContact Group hadundertaken adetailed exchange ofviews onnotification
requirements andformats onthebasisofaninformal background noteprepared bytheSecretariat and
suggestions putforward inthecourse ofthediscussion. Afurther meeting onthissubject would be
heldon21October. TheContact Group hadalsometon6October toconsider terms ofreference
fortheWTO Committee onAgriculture which, herecalled, hadsubsequently beenapproved bythe
Sub-Committee atitsmeeting on7October, ontheunderstanding thatforthepurposes oftheterms
ofreference theMinisterial Decision onnetfood-importing developing countries wasanintegral part
oftheAgreement onAgriculture interms ofArticle 16thereof. Theapproved terms ofreference had
subsequently beencirculated asPC/IPL/1. Atitsmeeting on18-19 October, theContact Group had
consulted onthenotification requirements under theAgreement ontheApplication ofSanitary and
Phytosanitary Measures, andhadreached substantial agreement oncertain notification procedures and
onanumber ofrelated issues. Once thereport oftheContact Group wasavailable inthethreeworking
languages, itwould becirculated toMembers fortheirconsideration atthenextmeeting oftheSub-
Committee.PC/IPL/M/7
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17. Asregards theContact Group onAnti-dumping, Subsidies andSafeguards, therewerenonew
developments toreport. OntheContact Group onTRIPS, too,therewasnothing newtoreport, except
tonotethattheDirector-General ofWIPO hadreplied tohisearlier letter, indicating thattheWIPO
wasready foracooperative relationship withtheWTO.1Thethree Contact Groups would continue
theirwork withtheintention ofconcluding itandreporting totheSub-Committee byearlyNovember.
18. TheSub-Committee tooknoteofthestatements.
(ii) Rules ofprocedure forWTO bodies
19. TheChairman saidthatafterchecking withtherespective delegations withaviewtoresolving
possible conflicts inthevarious submissions onthissubject, theSecretariat hadcirculated revised draft
rulesofprocedure fortheMinisterial Conference indocuments 2028/Rev.1 and2028/Rev.1/Add.1,
andfortheGeneral Council indocuments 2029/Rev.1 and2029/Rev.1/Add.1. Intherevised Rules
fortheMinisterial Conference, adistinction hadnowbeenmade between regular andspecial sessions
inRules 1and2.Asregards Rule7,oncredentials, attention hadbeendrawn inaNotetoaparticular
concern onthepartofoneMember. Inthisconnection, heproposed removing anyreference toa
"Minister forForeign Affairs" inthesecond sentence, andmaking clear, perhaps inafootnote, that
communications concerning credentials would nothaveanyimplications astosovereignty. Finally,
theprovisions ondecision-making inRules 27and28hadbeenredrafted, andtherules onairmail
andtelegraphic ballots hadbeentransferred toRules ofProcedure fortheGeneral Council, forreasons
indicated intheNote following Rule38.
20. IntherevisedRulesfortheGeneralCouncil,Rule10regardingsubmissionofformalcredentials
formeetings oftheGeneral Council hadbeendeleted. Delegations would agree thatitwasunnecessary
tohaveformal credentials forevery meeting oftheGeneral Council. Rules 26and27hadbeen
compressed, andtheprovisions ondecision-making inRules 35and36hadbeenredrafted along the
same linesasthose fortheMinisterial Conference. While hebelieved thattherevised textshadtaken
account oftheconcerns ofthose thathadsubmitted comments, hewould givealldelegations afinal
opportunity tocomment onthetwopapers atthepresent meeting and,subject tothose comments, would
propose thattherules, withanyamendments beapproved atthenextmeeting.
21. Herecalled thattheGeneral Council would convene asappropriate astheTrade Policy Review
Body (TPRB) andtheDispute Settlement Body (DSB), andthatthese bodies could establish theirown
rulesofprocedure. Hesuggested thatdraftrulesforthesebodies alsobedrawn up,which would propose
thatthesebodies follow, totheextent necessary, theRules fortheGeneral Council, withsomeexceptions
thatwould bespelled out.Exceptions might beneeded, forexample, ontherulesfortheChairpersons
ofthese bodies. Inthisregard, itcould beproposed thattheChairperson orVice-Chairperson ofthe
General Council serve asChairperson, orthatthese bodies electtheirownChairpersons, either from
among therepresentatives orthenationals ofMembers. Another exception might beneeded ondecision-
making andonobservers inrespect oftheDSB. Afurther exception might beneeded inrespect of
theRuleonquorum when theTPRB conducted trade policy reviews, while maintaining thatRulefor
anydecisions thatmight betaken bytheTPRB. Heinvited suggestions onpossible variations ofthe
rules fortheGeneral Council forthese purposes.
22. Inconnection withtheRules regarding observers intheMinisterial Conference andtheGeneral
Council, twoother non-papers bytheSecretariat were before theSub-Committee. Thefirst
(document2035/Rev.1)wasarevisionoftheguidelinesforobserverstatusforinternationalorganizations,
1Thecommunication from theDirector-General oftheWIPO wassubsequently circulated as
PC/IPL/W/11.PC/IPL/M/7
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based oncomments bydelegations, bothoralandwritten. Therevised guidelines nowapplied to
"international inter-governmental organizations" asdefined infootnote 1ofthenon-paper. Ifthis
terminologyweretobeagreed,Rule9bisfortheMinisterialConferenceandRule12bisfortheGeneral
Council would beamended byremoving thesquare brackets around thewords "international" and"inter-
governmental" therein. Thesecond non-paper (document 2369), onguidelines forobserver status for
governments, wasnewandwasbased onguidelines adopted bytheGATT 1947 Council. Although
thiswasthefirsttimetheSub-Committee wasaddressing thismatter, hehoped thattheapproach would
beacceptable, andthatprogress could bemade onboththese setsofguidelines soon. Hesuggested
thatboththese issues beconsidered under thispartoftheSub-Committee 'smandate since guidelines
onobservers were intended tobeannexed totheRules ofProcedure.
23. Itwashisviewthat,onceallthework hasbeencompleted onrulesofprocedure, thevarious
rules could beputtogether asfollows: (1)Chapter ontheMinisterial Conference; (2)Chapter on
theGeneral Council; (3)Chapter onadditional rules fortheGeneral Council when convened asthe
DSB; (4)Chapter onadditional rulesfortheGeneral Council when convened astheTPRB; (5)Chapter
onrules forSubsidiary bodies -which hadbeenleftforconsideration untilaftertheentry intoforce
oftheWTO -andthethree annexes onobserver governments, onobserver organizations andon
derestriction procedures, respectively. Henoted thatagreement onderestriction procedures wasstill
pending intheGATT context, andthattheprocedures tobeagreed therein would form thebasis for
theproceduresforWTOdocuments.HesuggestedthatdelegationsindicatetheirviewstotheSecretariat,
either orally orinwriting, onallofthese non-papers, sothattheycould berevised before thenext
meeting withaviewtoadvancing theSub-Committee 'swork onthispartofitsmandate.
24. Therepresentative oftheUnited States saidthat,rather thanpresent rules fortheDSBand
theTPRB asadditional tothose fortheGeneral Council, itmight beclearer tohavespecific documents
onrulesforthose twobodies, which would make iteasier fortheSub-Committee toconsider andmake
progress thereon. Itwould behelpful iftheSecretariat could draw upsuchdocuments.
25. Therepresentative ofSwitzerland saidthathisdelegation wasparticularly interested inthe
provisions onobservers, given thatsome governments which might beunable toratify the
WTO Agreement bythetimeofitsentry intoforce might nevertheless wishtoparticipate inthework
oftheWTO. Itwashisunderstanding thatthismatter would alsobedealt withunder transitional
arrangements.
26. TheChairmansaidthatSwitzerland'sconcernscouldberesolvedthroughconsultationsregarding
transitional arrangements.
27. Therepresentative oftheEuropean Communities supported theUnited States 'suggestion that
theSecretariat drawupdraftrulesofprocedure fortheGeneral Council when itconvened astheDSB
ortheTPRB, which would assist delegations intheirconsideration ofthismatter. Withregard toRules
fortheGeneral Council, itwasnotclearfrom thelastsentence ofRule36astohowapostal ballot
would belaunched. Itappeared thatitcould onlybelaunched intheinterval between meetings of
theGeneral Council, while thisshould really beanalternative toaballot atthemeeting. TheCommunity
might wishtoamend thatsentence.
28. TheChairman saidthat,inresponse tothesuggestions made, hewould request theSecretariat
todraw updraftrules fortheGeneral Council when convened astheDSBorTPRB.
29. Therepresentative ofNewZealand supported thesuggestions bytheUnited States andthe
Community fortheSecretariat toprepare draftrules ofprocedure fortheDSBandtheTPRB. His
delegation believed itwould behelpful iftheSecretariat could alsoattempt afirstdraftofgeneric rules
forsubsidiary bodies sothatthese toocould beconsidered before theentry intoforce oftheWTO.PC/IPL/M/7
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Thiswasanecessary partoftheSub-Committee 'swork andwasreflected inthemandate given to
it.Itwould beunfortunate forthesubsidiary bodies oftheWTO tohavetospend alarge partoftheir
early meetings deciding onrules ofprocedure thatmight turnouttobeextremely divergent ifthey
weredoneonacase-by-case basis. Hisdelegation would bewilling tomake acontribution towards
thatwork.
30. TheChairman noted thathehadalready agreed torequest theSecretariat todraw upseparate
rules fortheDSBandtheTPRB. Asregards rules forsubsidiary bodies, hebelieved thatbecause
ofthelarge number ofsuchbodies, itwould notbepossible, within thelimited timeframe available
totheSub-Committee, toventure intothisexercise. However, ifNewZealand, which hadconsistently
raised thisissue, could prepare afirstdraft, theSub-Committee would beprepared toconsider it.
Accordingly, herequested thatNewZealand show leadership andproduce thefirstdraftofrulesfor
subsidiary bodies.
31. Therepresentative ofCanada saidthatherdelegation wished toreserve itsposition ontheRules
fortheMinisterialConferenceandtheGeneralCounciluntilongoingdiscussionswithregardtoobservers
andderestriction were concluded.
32. Therepresentative ofJamaica saidthatherdelegation hadnoted thetransfer oftherules for
airmail andtelegraphic ballots fromtheMinisterial Conference totheGeneral Council. Jamaica was
concerned that,asaresult, there would nowbenoprovision forMembers unable toattend sessions
oftheMinisterial Conference tovotebypostal ballot, thusdepriving them oftheopportunity to
participate inimportant decisions.
33. TheChairman invited Jamaica tosubmit itsconcerns inwriting soastoenable them tobe
addressed.
34. Therepresentative ofHong Kong saidthat,inviewoftheworkloadbefore theSub-Committee,
itshould dotheminimum necessary fortheeffective implementation oftheWTO, andshould notbe
tooambitious ordepart toomuch from thewritten provisions oftheWTO Agreement. Asregards
NewZealand 'ssuggestion concerning rulesforsubsidiary bodies, thisshould beapproached withsome
restraint bothforpractical reasons andbecause therelevant Agreements themselves called onthebodies
concerned toestablish theirownworking procedures. Itwould notbeinappropriate toallow some
timeforthese bodies tobenefit fromactual working experience, before considering rulesofprocedure
therefor.
35. Therepresentative ofChina saidthathisdelegation would submit anycomments itmight have
onrules ofprocedure totheSecretariat.
36. Therepresentative ofMorocco, addressing thequestion ofgovernment observers, saidthat
there would probably betwocategories ofsuchobservers. Thefirstwould consist ofsignatories to
theFinal Actthatcould notratify theWTO Agreement untilsome timeafteritsentry intoforce, and
thesecond those invited asobservers. Morocco believed thatconsideration should begiven toavoiding
aconfusion between these twocategories.
37. TheChairman saidthatitwould beuseful ifMorocco submitted itscomments inwriting.
While hedidnotwishtorushdelegations toadecision, theSub-Committee didnothavetheluxury
oftime. Accordingly, hewould urgedelegations tocome prepared totakedecisions onthevarious
aspects oftherules ofprocedure fortheMinisterial Conference andtheGeneral Council atthenext
meeting oftheSub-Committee.
38. TheSub-Committee tooknoteofthestatements.PC/IPL/M/7
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B. Transitional arrangements
39. TheChairman saidthattheissue oftransitional arrangements wasimportant foranumber of
Members. Hisdiscussions withvarious delegations hadindicated thatalmost 99percentofdelegations
wished toseeboththeGATT 1947 andtheWTO coexist foracertain period oftime. There was,
however, atleastonedelegation, andatmosttwo,thatbelieved thatonlyoneorganization should exist
asofthedateofentry intoforce oftheWTO. Inthisconnection, hewished torecall thetradition
intheGATT fortheminority tomove towards themajority view. Inthisparticular case, since there
wasalarge majority, theminority should tryandseehowitcould accommodate theinterests ofthe
majority. Theminority inthiscasemight havelegitimate concerns, andhewastrying toaddress these
inhisconsultations withthedelegations concerned. Heproposed tocontinue hisconsultations, and
tohavetheSub-Committee revert tothismatter atanappropriate time.
40. Therepresentative oftheUnited States saidthathisdelegation hadbeeninvolved ininformal
discussions overthepastseveral weeks onthesubject oftransitional arrangements, inparticular to
trytofindsolutions totheproblems thattheSecretariat andothers hadidentified withrespect tothe
coexistence oftheGATT 1947andtheTokyo Round Codes andtheWTO Agreement. Unfortunately,
anddespite itsbestefforts thusfar,nosuchsolutions hadbeenreached. Inparticular, solutions to
potential conflicts between obligations under theGATT 1947andtheTokyo Round Codes ontheone
hand andtheWTO Agreement ontheother, tothefree-rider problem andassociated disincentives
forrapid ratification, andtothedispute settlement issues, hadproven illusive. Asaresult, the
United States, atthisstage, planned toproceed withwithdrawal from theGATT 1947 andthe
Tokyo Round Codes effective upon entry intoforce oftheWTO Agreement, andhadstarted totake
thenecessary steps internally toprepare forthis. Henoted thattheUruguay Round implementing
legislation submitted toCongress on27September, andstillunder consideration, would enable the
United States toapply WTO benefits, onadefactobasis, toGATT 1947contracting parties thathad
notasyetratified theWTO Agreement prior toitsentry intoforce. TheUnited States expected to
continue toprovide suchbenefits during thetwo-year acceptance period provided forintheWTO
Agreement, consistent withitsobjective ofencouraging fullparticipation intheWTO byallGATT 1947
contracting parties asquickly aspossible. TheUnited States would alsocontinue towork toward a
smooth transition, andbelieved thatwithdrawal wasthesimplest andmosteffective approach tosuch
transition. Nevertheless, theUnited States recognized thatother governments preferred aperiod of
coexistence during which theywould remain intheGATT 1947andtheTokyo Round Codes aswell
asaccept theWTO Agreement. Notwithstanding itsplans, theUnited States would continue towork
withothergovernments intheprocess indicated bytheChairman inorder toaddress theentire spectrum
oftransition issues sothat,inaccordance withthediffering views ofvarious governments, both
withdrawal andcoexistence could betaken intoaccount inthedecisions ofthePreparatory Committee.
41. Therepresentative oftheEuropean Communities expressed thehopethattheUnited States '
statement wasanexpression ofintent rather thanafinaldecision, andthatconsultations untilthenext
meetingoftheSub-Committeewouldleadtoaresultsatisfactorytoallthosethatbelievedthatcoexistence
waspossible andthatitwasnotadvisable forgovernments suchastheUnited States, andpossibly
others, towithdraw fromGATT 1947uponentry intoforce oftheWTO. TheCommunity believed,
upon careful reflection, thatitwaslegally possible tofindanswers tothequestions raised bythe
United States. IftheUnited States wereindeed towithdraw from theGATT 1947 upon theWTO 's
entry intoforce, thiswould create asituation thatwould force thehandofthose thattoday believed
thatcoexistence waspossible, toreview theirapproach.
42. Therepresentative ofMalaysia, speaking onbehalf ofthedeveloping countries, saidthatthe
matter raised bytheUnited States wasofserious concern totheircountries, andexpressed thehope
thattherewasstillsome wayfortheUnited States toaccommodate theideaofcoexistence. AnumberPC/IPL/M/7
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ofdeveloping countries would findthemselves inaverydifficult situation iftheUnited States indeed
withdrew from theGATT 1947 upon entry intoforce oftheWTO. Hehoped thematter could still
beresolved, andurged theUnited States andothers tobeconsiderate onthisissue.
43. Therepresentative ofAustralia saidthattheUnited States 'statement wasofgreat concern.
Itwasinthecollective interest ofalltoensure thatthetransition from theGATT 1947 totheWTO
wasundertakenwithaminimumofconfusionandrecrimination.Ashisdelegationhadstatedonprevious
occasions,itbelievedthatthiscouldbestbedonebyallowingaperiodofcoexistenceofbothGATT1947
andtheWTO. IftheWTO weretocome intoexistence incircumstances inwhich countries weredenied
recourse tolegitimate dispute settlement procedures asaresult ofanyarrangements thatweremade
withregard tothetransition fromtheGATT 1947totheWTO, thatwould create anegative environment
fortheneworganization 'sentry intoforce. Itwasessential toprevent thisfrom happening.
44. Therepresentative ofJapan supported thestatements bytheCommunity andAustralia.
45. Therepresentative ofCanada supported theCommunity 'sstatement. Canada, likethe
Community, believed thatthere weresolutions totheproblems thattheUnited States wasconcerned
about. Also, likeAustralia, hewished toremind allthattheywerecommitted toasmooth transition,
towhich theUnited States 'announcement would notcontribute.
46. Therepresentative ofHong Kong expressed concern thatonehadyettowork outanagreeable
solution tothequestion oftransition. Hong Kong wasparticularly concerned about theareas ofanti-
dumping andsubsidies. Hong Kong, liketheCommunity, hoped thatasolution could beworked out
between thenandthenextmeeting.
47. Therepresentative ofSwitzerland saidthat,likeothers, Switzerland wished toseeasmooth
transition fromtheGATT 1947 totheWTO, andhoped thattheproblems thathadbeenraised could
besuccessfully resolved through consultations.
48. Therepresentative ofNorway, speaking onbehalf oftheNordic countries, expressed regret
attheUnited States 'statement. Their countries hoped, liketheCommunity, thatthiswasnotnecessarily
thefinalword onthesubject fromtheUnited States. Itwould bepossible tonotify withdrawal from
theGATT 1947 andstillcontinue toconsult inorder totryandreach asolution. Themain concern
oftheNordic countries wasintheareaofdispute settlement, anditwasimportant tobeabletowork
inaconstructive atmosphere inorder toreach asatisfactory solution inthatarea.
49. Therepresentative ofMorocco expressed hisdelegation 'sinterest inthisissueanditssupport
forthestatements bytheCommunity andbyMalaysia, onbehalf ofthedeveloping countries.
50. Therepresentative ofNewZealand agreed thattransition should notdeprive countries ofthe
opportunity ofrecourse toeffective dispute settlement procedures.
51. Therepresentative ofPoland expressed concern thattheUnited States 'statement might give
risetoasituation thatmight beprejudicial tothelegitimate interests ofmany ofthegovernments that
hadsigned theMarrakesh documents ingood faith. Hisdelegation wished tobeassociated withthe
process thatwould leadtofinding asolution tothisproblem.
52. Therepresentative ofBrunei Darussalam, speaking onbehalf oftheASEAN countries, said
thatthey,liketheCommunity, hoped thattheUnited States 'statement wasoneofintent, andthatfurther
consultations would becarried outtoresolve theproblems towards asmooth transition.PC/IPL/M/7
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53. Therepresentative ofUruguay expressed herdelegation 'sconcern attheUnited States '
announcement, andsupported theCommunity 'sstatement aswellasanyefforts aimed atpermitting
coexistence oftheGATT 1947 andtheWTO.
54. TherepresentativeofKoreaexpressedthehopethatthismattercouldberesolvedinasatisfactory
manner soastoenable asmooth transition totheWTO.
55. Therepresentative ofColombia joined others inexpressing concern attheUnited States '
statement.
56. Therepresentative ofArgentina joined intheconcerns expressed byprevious speakers, and
urged allparticipants intheconsultations toprovide foradequate arrangements fortransition tothe
WTO andensure therights ofallparties tohaverecourse todispute settlement.
57. Therepresentative ofTurkey saidthathisGovernment hadlegitimate interests inthismatter,
andbelieved thatasmooth transition andcoexistence were necessary.
58. Therepresentative ofBrazil associated hisdelegation withtheCommunity 'sstatement.
59. TheChairman saidthatthediscussion hadhelped tounderscore hisintroductory remark that
almost 99percentofalldelegations wasinfavour ofcoexistence oftheGATT 1947 andtheWTO.
Hereiterated thatitwasthetradition intheGATT fortheminority totrytomove towards themajority
view. Hehoped thataresolution could befound through further consultations.
C. Paragraph 8(b)(iii) oftheDecision establishing thePreparatory Committee
(i) Arrangements foreffective cooperation withother inter-governmental organizations
60. TheChairman recalled thatatthe7October meeting oftheSub-Committee, theSecretariat
hadbeenrequested toprepare apaper identifying thearrangements thatwould havetobeputinplace
by1January 1995 withtheIMFandtheWorld Bank. While thepaper wasready inEnglish, ithad
notyetbeentranslated intotheother twolanguages. Hesuggested therefore thattheSub-Committee
revert tothismatter atitsnextmeeting. Withregard tothequestion ofrelations withtheUN,herecalled
thattheSub-Committee hadagreed torevert tothismatter atafuture meeting. Heasked whether
delegations wished tocomment onthequestion oftheWTO 'srelations withtheUN,andwiththe
UNCTAD inparticular. However, iftheirpreference wasfortheSecretariat andhimself toputsome
thoughts onpaper before reverting tothismatter intheSub-Committee, thatapproach would alsobe
feasible. Indeed, work wasalready under wayonidentifying possible areas offuture collaboration
between theWTO andUNCTAD.
61. Therepresentative oftheEuropean Communities saidthatitwould beuseful foralltoreflect
onthequestion ofrelations withtheUnited Nations andforapaper tobeprepared forconsideration
bytheSub-Committee atasubsequent meeting.
62. Therepresentative ofEgypt saidthataclose working relationship withtheUNCTAD should
beinplace asofdayoneoftheentry intoforce oftheWTO, andthatthisshould notbelinked with
thegeneral relationship thatmight beenvisaged between theWTO andtheUN.
63. TheChairman saidthatdiscussions were taking place inother foraonthekindofrelations
theWTO should havewithUNbodies. Rather thanallowing others todecide thismatter fortheWTO,
thelatter should itself indicate whatkindofrelations itdesired withother organizations. With thisPC/IPL/M/7
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inmind, hehadrequested theSecretariat tobegin work onapaper thatwould address boththegeneral
aspect ofrelations withtheUNandthetechnical aspect ofrelations withtheUNCTAD, taking into
account thefactthattheITCwasajointsubsidiary organ ofthetwoorganizations.
64. TheSub-Committee tooknoteofthestatements.
(ii) Observer status forinternational organizations
65. Therepresentative ofIndia expressed concern thatwhile theSub-Committee wasdeliberating
ondraftcriteria forgranting observer status tointer-governmental organizations, andwhile itsdiscussion
wasnotyetconcluded, some bodies were going ahead withdecisions onobservers already. While
noonequestioned thatitwasultimately uptoanindividual body totakeadecision onacase-by-case
basis, suchdecisions haduntilnowbeen taken largely inconnection withIMF, World Bank and
UNCTAD. However, theNegotiating Group onMaritime Transport Services hadnowtaken adecision
toinvite theOECD asobserver toitsmeetings. Thiswasasubstantive decision thathadbeentaken
while discussion intheSub-Committee onguidelines wasstillongoing. India haddrawn attention
toitsconcern intheNegotiating Group but,being anobserver therein, hadbeenunable toinfluence
thedecision taken. Hisdelegation would therefore urgetheSub-Committee tomove ahead quickly
onthecriteria forgranting observer status tointer-governmental organizations before other bodies
alsobegan totaketheirowndecisions asregards observers.
66. Therepresentative ofAustralia agreed withIndia ontheimportance oftheSub-Committee
moving ahead quickly inworking outthearrangements forobserver status forotherinter-governmental
organizations inWTO bodies. Speaking inhiscapacity asChairman oftheNegotiating Group on
Maritime Transport Services, hesaidthatarrangements hadbeenworked outintheSub-Committee
onServices toprovide forindividual negotiating groups intheServices areatotakedecisions onobserver
status forother inter-governmental organizations onacase-by-case basis. TheNegotiating Group on
Maritime Transport Services hadreceived arequest fromtheOECD toobserve itswork andhadhad
apreliminary discussion thereon atitsmeeting inJuly. Afurther discussion hadbeenheldatthe
Negotiating Group 'smeeting on17October, atwhich adecision hadbeentaken byconsensus toinvite
theOECD tobeanobserver tothose negotiations.
67. TheChairman suggested thatheconsult onthismatter withtheChairmen oftheSub-Committee
onServices andtheNegotiating Group onMaritime Transport Services.
68. Therepresentative ofAustralia, speaking inhiscapacity asChairman oftheNegotiating Group
onMaritime Transport Services, saiditwashisunderstanding thattheSub-Committee wasengaged
indeveloping criteria forobserver status ofother inter-governmental organizations inWTO bodies,
andthatthiswasanissue forthefuture, following theimplementation oftheWTO. Theindividual
negotiating groups intheservices area,which weredoing theirworknowinadvance oftheWTO coming
intoeffect, hadbeenpermitted bytheSub-Committee onServices totakedecisions onacase-by-case
basistoallow other inter-governmental organizations toobserve thework ofthose groups now. There
wasaclearrationalefor,andalogicaldistinctionbetween,therespectivefunctionsoftheSub-Committee
onInstitutional, Procedural andLegal Matters andthose oftheservices negotiating groups withregard
tointer-governmental observers, which should notgiverisetoanyconfusion.
69. TheChairman saidthatthedecision bytheNegotiating Group onMaritime Transport Services
appeared tohavegiven risetoconcerns thatitshould notbeduplicated inother bodies andthatan
organization which hadnotbeenconsidered forobserver status thusfarintheWTO process should
notappear intothepicture. Onewastrying merely tosafeguard against suchasituation. Forthis
reason, hewished toholdadiscussion withtheChairman oftheSub-Committee onServices.PC/IPL/M/7
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70. Therepresentative ofIndia saidhisdelegation wasalsoconcerned thatanother Negotiating
Group, thatonBasic Telecommunications, had,atleastforthemoment, declined observer status to
theAsiaPacific Telecommunications Union which wasalsoanintergovernmental organization with
lessthanuniversal membership. While itwastruethatunder theproposed guidelines individual bodies
would decide onacase-by-case basis, hisdelegation believed thereshould besome consistency within
thenegotiatinggroupsintheservicesarea,andthattheirdecisionsshouldbebasedonestablishedcriteria.
Heemphasized thatIndiawasnotquestioning thedecision taken bytheNegotiating Group onMaritime
Transport Services.
71. Therepresentative oftheUnited States recalled thatatitsfirstmeeting, thePreparatory
Committee hadagreed thatitshould belefttotheSub-Committees todecide ontheirownrules on
observers andontheappropriate observers thatmight attend theirrespective meetings. Trying to
coordinatetheprocessbetweenthevariousSub-CommitteesshouldnotbethejobofthisSub-Committee,
particularly since ithadsomuch elsetodo.AsAustralia hadindicated, there wasanimportant
distinction between thework oftheSub-Committees ofthePreparatory Committee, where observer
status mayormaynotbegranted toaparticular group, andobserver status intheWTO bodies which
would besubject totherulesthatthisSub-Committee wastrying toestablish. Hehoped India would
haveconfidence thatthesituation afterthedateofentry intoforce oftheWTO would notbeprejudiced
bywhatwasdoneinthepastunder thenegotiating groups onservices ortheSub-Committees under
thePreparatory Committee.
72. TheChairman acknowledged thatthePreparatory Committee hadagreed atitsfirstmeeting
toleave ittoitsSub-Committees todecide ontheobservers tobeinvited totheirmeetings. While
hewould notwishinanywayto"coordinate" theworkoftheSub-Committees inthisregard, hebelieved
thatifanyconcerns arose thatcould beresolved through consultations, heshould seektoundertake
suchconsultations. Hehoped tosee,through adiscussion withtheServices Sub-Committee Chairman,
whether India'sconcern could beaddressed.
73. Therepresentative ofNorway, speaking onbehalf oftheNordic countries, supported the
statements byAustralia andtheUnited States. While theNordic countries would notobject to
consultations being held, theywould beconcerned iftheconsultations castanykindofdoubt onthe
decision taken bytheNegotiating Group onMaritime Transport Services. Thatdecision hadbeen
taken andthere wasnoreason toquestion itsappropriateness.
74. TheChairman saiditwasclearthatno-one wasquestioning thedecision taken bytheMaritime
Transport Services Negotiating Group. Atthesame time, ifthatdecision raised anyconcerns, he
believed thatthese should beresolved through consultations.
75. TherepresentativeofMalaysiasupportedtheChairman'seffortstotryandconsultontheconcern
raised byIndia. While no-one wanted tocastdoubt onthedecisions ofthenegotiating groups inthe
Services area, theimportance ofconsistency should bekeptinmind.
76. Therepresentative ofMorocco saiditwasimportant that, within theframework ofthe
Preparatory Committee 'swork andthatofitssub-bodies, thegranting ofobserver status toany
organization should notprejudge thewhole issue ofthegranting ofobserver status intheWTO. His
delegation believed thatobjective criteria should bedrawn uptoguide Members inthegranting of
observer status intheframework oftheWTO.
77. TherepresentativeofNewZealandsaidthatalthough,asIndiahadnoted,theNegotiatingGroup
onMaritime Transport Services hadgranted observer status toanorganization withlessthanuniversal
membership, theuniversality orotherwise ofthemembership ofanorganization wasnotnecessarilyPC/IPL/M/7
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arelevant criteria fordeciding, perse,whether itshould begranted observer status toWTO bodies
inthefuture.
78. Therepresentative ofAustralia, speaking inhiscapacity asChairman oftheNegotiating Group
onMaritime Transport Services, saidheobjected toanyimplication thatthedecision taken bythe
Negotiating Group onthisparticular issuewasinanywayimproper. Inthecontext oftheprocedures
thathadbeenworked outfortheinvolvement ofobservers inthework ofthenegotiating groups in
theservices area,animportant element wasthecomposition oftheindividual negotiating groups, which
consistedbothofparticipatingmembergovernmentsandobservers.Thediscussionatthepresentmeeting
seemed tohavepresented oneofthebestarguments forIndia tomove frombeing anobserver inthe
Maritime Transport Services negotiations tobecoming amember oftheNegotiating Group. HadIndia
beenamember atthetimetheNegotiating Group haddiscussed thisissue, itsvoice would havebeen
heard more fully.
79. TheChairman saidthat,ashehadstated earlier, thePreparatory Committee atitsfirstmeeting
hadclearly leftittotheSub-Committees todecide onobservers tobeinvited totheirmeetings, and
hedidnotbelieve thatanyone hadintended toquestion this.
80. Therepresentative ofIndia saidthathehadintended really toraiseaconcern regarding lack
ofconsistency inthedecisions taken bythevarious negotiating groups intheservices area, andwas
notquestioning thedecision bytheMaritime Transport Services Negotiating Group. Since the
Sub-Committee wasconsidering draftcriteria andconditions forobserver status forintergovernmental
organizations,hisdelegationhadconsideredthistobetheappropriateforuminwhichtoraiseitsconcern.
81. TheSub-Committee tooknoteofthestatements.
D. Paragraph 8(c)(iv) oftheDecision establishing thePreparatory Committee
(Composition oftheTextiles Monitoring Body)
82. The Chairman said that theChairman oftheContact Group onTextiles,
Mr.Abdel-Fattah (Egypt), wasconsulting onthecomposition oftheTextiles Monitoring Body (TMB).
Consultations ontheChairmanship oftheTMB, however, would havetobeundertaken bysomeone
elsesince Mr.Abdel-Fattah hadannounced hisowncandidacy forthatpost. Hewould consult with
delegations onthequestion ofdesignating someone forthistask.
83. TheSub-Committee tooknoteofthestatement.
E. Issues relating totheStanding Appellate Body
84. TheChairman saidthathewished tounderscore theimportance thatallshould attach tothe
Standing Appellate Body. Thecredibility ofthedispute settlement mechanism rested ontheprestige
thattheAppellate Body could attract toitselfandtherespect thatindividual members oftheBody could
command. Ifdecisions oftheAppellate Body were nottreated withtherespect theydeserved, the
WTO would beseriously injured.
85. Therepresentative oftheEuropean Communities saidthatthenewdispute settlement system
under theWTO would beanessential element ofthatorganization, andthattheAppellate Body would
clearly playaparamount roletherein. Itwastherefore important tohaveafirstexchange ofviews
ontheestablishment ofthisBody andtheselection ofitsmembers, andtheCommunity would shortly
bemaking awritten contribution withaview toassisting thefurther consideration ofthismatter.PC/IPL/M/7
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Although itwastruethatthefirstcases tobebrought before theAppellate Body would notnecessarily
come immediately aftertheWTO 'sentry intoforce, theBody should haveanopportunity tomeet,
toconsider itsrules ofprocedure andtostudy different aspects ofitsorganization. Consideration
therefore needed tobegiven totheestablishment oftheAppellate Body assoonaspossible. The
Community believed thatAppellate Body members should beofthehighest quality andthattheyshould
allbepermanently available. Furthermore, theAppellate Body should bepermitted towork as
independently aspossible, anditsmembership should reflect thatoftheWTO. Also, allmembers
oftheAppellate Body should beonanequal footing, anditshould operate inacollegiate manner.
Inthisconnection, theCommunity noted withsurprise thatintheDirector-General 'sbudget estimates
for1995(L/7550 andCorr.1) figures hadbeenprovided inrespect oftheAppellate Body, andbelieved
thatthesecould notbegiven much value atthisstage. Budgetary provisions could onlybemade when
itbecame clearwhatdelegations hadinmind orwhattheyrequired inregard totheAppellate Body.
TheDirector-General 'sestimates reflected acertain suggestion astowhattheAppellate Body might
looklike. Thiswasnot,however, thewayinwhich theCommunity sawtheAppellate Body, and
wished toheartheviews ofothers inthisregard. TheCommunity found regrettable thatinabudgetary
document apolitical issue hadbeenprejudged. Itreserved therighttomake awritten contribution
onthequestion oftheAppellate Body thenexttimeitwasdiscussed.
86. Therepresentative ofMalaysia saidthat,liketheCommunity, hisdelegation hadaconcern
withregard totheDirector-General 'sbudget estimates ontheAppellate Body, andrequested clarification
onthismatter.
87. Therepresentative ofAustralia saiditwasclearthatthekeyissuewithregard totheAppellate
Body wasitscredibility. Itwasalsoclearthatinthecontext ofthenewdispute settlement arrangements
tooperate under theWTO, theAppellate Body would haveanimportant function andaveryhighprofile,
andwould beinfluential indetermining thereputation ofthedispute settlement process oftheWTO
overtime. Itwastherefore important toreflect carefully onthecomposition, theformat, theworking
procedures andtheexpert staffthatallagreed should beprovided fortheAppellate Body. Inthatregard,
Australia shared thereservations expressed bytheCommunity andMalaysia about anyprejudgment,
intheDirector-General 'sbudget estimates, ofthese important political decisions thatwereyettobe
taken. TheDispute Settlement Understanding (DSU) made clearthatmembers oftheAppellate Body
should beseven people ofrecognized authority inbothinternational tradeandinlaw.Australia believed
itwould bemore practical tobeabletosecure theservices ofsuchpeople ofrecognized authority
iftheyweremade available tothedispute settlement process onan"asrequired" basisrather thanbeing
permanently appointed andresident inGeneva. Itwould notonlybeverydifficult toattract people
ofsufficient experience andrecognized authority toaccept permanent employment inGeneva, butwould
alsobeveryexpensive. Onewould alsoneedtothink ofhighly professional, small andseparate staff,
including atleastoneortwohighly qualified lawyers, whowould provide advice tothemembers of
theAppellate Body serving onanyparticular appeal sothatonewould, overtime, obtain acertain
legalconsistency inthejudgments. These issues needed tobediscussed more fullybefore anypolitical
decisions were made.
88. Therepresentative ofBrazil saidthatifAppellate Body members wererequired toberesident,
orvirtually resident, inGeneva, onewould substantially diminish theuniverse ofrecruitment and
therefore losesubstance andquality inthemembership oftheBody. Oneshould therefore beflexible
onthisissue. Asregards staff, oneshould beware ofcreating alarge bureaucracy. TheAppellate
Body would notreinvent thewheel inevery case. Theresearch oneachcaseshould basically bedone
withastrong reliance uponthelegaloffice andthepertinent divisions oftheWTO Secretariat, although,
clearly, staffthatwould work onwriting theopinions oftheAppellate Body should notbethesame
asthose serving onthepanel. Support staffshould besmall, andthepossibility ofbringing infurther
expertise should beprovided. Appellate Body members should beabletocallontheopinion ofexperts
foraspecific case,whoneednotenterintoprofessional contracts withtheorganization. Brazil believedPC/IPL/M/7
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thatoneshould becareful nottoburden theAppellate Body withfeatures andcharacteristics thatmight
impair itseffective functioning.
89. Therepresentative ofNorway, speaking onbehalf oftheNordic countries, agreed withthe
Community 'sstatement. TheAppellate Body wasanextremely important body which would bea
cornerstone institution intheWTO structure, anditscredibility should beassured from theoutset.
There weregoodreasons toassume thattheAppellate Body would beaverybusybody. TheNordic
countries didnotagree thatrequiring theavailability andpresence inGeneva ofAppellate Body members
contradicted theaimsofattracting highquality people tothatBody. Onthecontrary, afull-time Body
might bethebestwayofgiving ittheprestige thatwould attract therighttypeofperson. Asregards
Brazil 'scomment onallowing theAppellate Body tocallonexpertise, itwashisunderstanding that
theAppellate Body wastoruleonlegalmatters exclusively. While there wasprovision intheDSU
forcalling onexpertise atthepanel stage, itmight notbeappropriate totalkinterms oftheAppellate
Body calling onsuchexpertise. Asregards theprovisions intheDirector-General 'sbudget estimates,
where anassumption hadbeenmade, presumably forplanning purposes only, thattherewould bethree
permanent members andfouronaretainer basis, hewould underline whathadbeensaidorimplied
byothersthattheseshouldbedisregardedandnotseenasguidelinesfortheSub-Committee'sdiscussions
onthissubject.
90. Therepresentative ofHong Kong saidthatwhile itwasnotessential totieupalltheloose
endsatthisstage, oneneeded todevelop acoherent setofguidelines thatwere consistent withthe
outline setoutintheDSU. Hong Kong noted thatautomaticity wasoneofthekeyprinciples underlying
theDSU. From thisitfollowed thatthemethod ofrotation oftheseven members oftheAppellate
Body should bemechanical asfaraspossible. While dueallowance should bemade forconflicts of
interest andsoon,thesystem should besuchastoforestall anyattempt tomanipulate theroster for
tactical advantage. Norshould aselection system beintroduced totakeintoaccount differing levels
ofexpertise orexperience among themembers oftheBody. Anyattempt atmanagement along these
linescould turnouttobethestartofaslippery slope. Ifoneaccepted theprinciple ofstrict rotation,
oneimplicitly accepted theprinciple ofequality among theseven members, which argued infavour
ofallseven being retained onexactly thesame basis. Itwould clearly beveryexpensive toemploy
allseven members onafull-time basisandtheneedtodosointerms ofworkload wasfarfromproven.
AllAppellate Body members should beemployed onaretainer basisinorder toensure theiravailability,
andbeprovided additional remuneration asandwhen theirturncame upontheroster forcasework.
Thisapproach might notbeproblem free. Indeed, itmight notalways beeasytoobtain theservices
ofthepeople oftheveryhighcalibre thatonewanted onthebasis thathehadoutlined. Hong Kong
believed, however, thatitsapproach struck abalance between theidealandthepractical. Astothe
attributes oftheindividuals, onewasnotlooking forexperts because theAppellate Body would be
concerned withpoints oflaw.Ontheother hand, onedidnotwantaBody ofseven purejurists either.
Oneshould therefore belooking forpractically minded people withthequalifications setoutinthe
DSU. Representativeness oftheAppellate Body membership would have tobeapproached with
sensitivity. Interms ofinstitutional links, theAppellate Body wasclearly related totheDSB.
Administrative support would therefore havetocome fromtheSecretariat, although awaymight need
tobefound toprovide legaladvice thatwasindependent fromanyadvice thathadalready beengiven
inthecontext ofpanels. This, too,might havebudgetary implications.
91. Therepresentative oftheUnited States saidthathisdelegation would welcome theCommunity 's
written submission. While theUnited States agreed thatalltheissues neednotbetieddown before
thedateofentry intoforce oftheWTO, itmight bedifficult toleave theissue ofrepresentativeness
andthecomposition oftheAppellate Body openafterthatdatebecause onceadispute wasfiledittended
tofocus theminds ofparties ontheinterests involved. Onewould havethebestopportunity tobe
fairminded about composition before anydispute wasfiled, which could presumably bedonesoon
afterthedateofentry intoforce oftheWTO andhavethepotential ofcoming before theAppellatePC/IPL/M/7
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Body several months later. This wastherefore oneissue thatonecould trytohave some
recommendations onbefore thedateofentry intoforce. TheUnited States favoured independence
ofthestaffing butagreed thatoneshould notcreate ahugebureaucracy. Ontheissue ofexpertise,
Article 17:6oftheDSU made clear thatthejoboftheAppellate Body waslimited toissues oflaw
andlegalinterpretation,andexpertsonfactualissuesshouldnotthereforeberequired.Also,Article17:7
made clearthattheAppellate Body would beprovided withtheappropriate legalsupport, sothatthere
might notbeanoccasion forittoseekoutfurther expertise, particularly onfactual issues. Finally,
theUnited States agreed withothers thatthecredibility oftheAppellate Body wasakeyissue. In
thiscontext, herecalled thathisdelegation hadmentioned onanearlier occasion itsinterest inanethical
codeofconduct, particularly inthecontext oftheAppellate Body. Article 17:3oftheDSU stated,
forexample, thatAppellate Body members "shall notparticipate intheconsideration ofanydisputes
thatwould create adirect orindirect conflict ofinterest". TheUnited States hoped tosubmit shortly
awritten communication inthisregard, which could beconsidered inlightofthediscussion onthe
Appellate Body atthepresent meeting.
92. TheChairman saidthat,likeothers, hehadalsobeensurprised bytheimplications inthe
Director-General 'sbudget estimates astothepossible configuration oftheAppellate Body. Heassured
delegations thathehadnotparticipated inthepreparation ofthose proposals. However, hecould
understandthatforplanningpurposesitmighthavebeennecessarytoindicateapproximatecostestimates
fortheAppellate Body.
93. Therepresentative ofCanada saidthathisdelegation would either respond toapaper submitted
bytheCommunity orpresent asubmission ofitsown. Canada agreed thatthecredibility andthe
functioning ofthedispute settlement system intheWTO depended entirely onthefunctioning ofthe
Appellate Body, andonthehighquality andindependence ofthemembers thereof. Canada wasflexible
atthisstage astowhether suchmembers should beresident full-time oroncall.However, inarriving
atthatdecision, onewould havetokeepinmindtheanticipated caseloadandtheveryshorttime-frames
inwhich these persons would becalled upon torender adecision. Itwould therefore behelpful if,
atthenextdiscussion ofthisissue, theSecretariat could provide some ideas astowhatthecaseload
might be.Itwaslikely thatmost, ifnotall,cases, would beappealed. Clearly, aloser inapanel
proceeding would havegreat difficulty injustifying toitselectorate whyithadnotusedtheappeal
process. Appealing acasewould make iteasier fortheMember concerned toexplain thatithad
exhausted allpossible avenues. Canada favoured aseparate support system fortheAppellate Body
thatshould belodged intheSecretariat butbeindependent ofthelegaloffice because thatwould be
aninherent conflict ofinterest. With respect tothelatter question, Canada hadsupported the
United States fromtheoutset onthenecessity ofhaving acodeofconduct because thishadabearing
onthequestion ofcredibility. Astoworking methods oftheAppellate Body, theDSU made clear
thattheseweremattersfortheAppellateBodyitselftoconsider.HongKong'ssuggestionastoautomatic
rotation would, therefore, besomething fortheAppellate Body todecide on.
94. Speaking inhiscapacity asChairman oftheGATT 1947 Committee onBudget, Finance and
Administration, hewished torecall, indefence ofthefigures thatappeared intheDirector-General 's
budget estimates, thatanumber ofmembers ofthatCommittee hadsome timeearlier expressed the
needtohavefrom theSecretariat some ideaofthecosts oftheAppellate Body. Hebelieved thatthe
estimates produced bytheSecretariat wereanhonest attempt totryandgivearough estimate ofthe
costs, although hewould agree thattheyshould notinanywayprejudge thediscussion inthe
Sub-Committee ontheAppellate Body anditsnature andcomposition.
95. Mr.Lavorel, Deputy Director-General, saidthattheprovisions fortheAppellate Body inthe
Director-General 'sbudget estimates for1995weremerely indicative anddidnotreflect anypreference
oftheSecretariat ortheDirector-General astohowtheAppellate Body should besetup.Anumber
ofdelegations hadexpressed theneed, some weeks earlier, forsome indicative figure fortheAppellatePC/IPL/M/7
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Body. Atabout thesame time, anumber ofdelegations hadalsoindicated totheChairman ofthe
Sub-Committee theneedtohaveadiscussion onthepolicy aspects ofthisquestion. TheSecretariat
wasthenfaced withtheoptions ofdelaying circulation ofthebudget estimates untilaftertheSub-
Committee hadfullydiscussed thisissue, which might nothavebeentimely from thepoint ofview
ofthework oftheBudget Committee, orofcirculating thedocument withanindicative figure forthe
Appellate Body. Having decided onthelatter option, three costestimates were drawn uponthe
assumption thatfiveappeal cases would bebrought during thesix-month period under consideration,
i.e.JulytoDecember 1995. Tothese figures wasadded theestimated costofasmall staffconsisting
ofonesenior professional andtwosecretaries. Thefirstestimate provided fortheseven Appellate
Body members tobehired onaretainer basis andpaidconsultancy feeswhen theywere inGeneva
onacase,thesecond fortheAppellate Body members toreside permanently inGeneva andbefull-time
employees, andthethird fortheAppellate Body tobecomposed ofthree permanent members and
fourretainer members. Itwasdecided tousethefigures yielded bythethirdestimate inthebudget
document since theyfellinbetween those yielded bythefirstandsecond estimates. Asindicated in
L/7550,theoverallfigureforthisestimatewasSfr1,150,000.Figuresforthefirstandsecondestimates,
were,respectively,Sfr700,000andSfr1,700,000.Hereiteratedthatthefiguresinthebudgetdocument
were merely indicative andfortheuseoftheBudget Committee, andthattheywould obviously be
changed onthebasis ofanypolicy decision bytheSub-Committee.
96. TheChairman saidhedidnotbelieve thatanyone questioned thegoodfaithoftheSecretariat
inputting together thebudget estimates. Hesuggested thatonthequestion ofthenature andthe
composition oftheAppellate Body, oneproceed onthebasisofthediscussions intheSub-Committee,
andoverlook thebudget proposals onthismatter. Thevarious estimates justoutlined bytheDeputy
Director-General would beuseful interms ofestimating thefinalcostoftheAppellate Body.
97. TherepresentativeofNewZealandagreedthatitwasimportantthatallmembersoftheAppellate
Body hadequal status. LikeAustralia, hisdelegation believed thatitwasnotnecessary togobeyond
theconcept ofaretainer being paidtogether withconsultancy feesforthemembers oftheAppellate
Body, andinthiscontext theindicative figures given bytheDeputy Director-General hadbeenhelpful.
Following from this,itappeared thatAppellate Body members didnotnecessarily needtobebased
inGeneva. NewZealand envisaged asmall support office comprising limited legalandadministrative
staff. Itwasimportant thatthatoffice should beindependent, particularly interms oflegaladvice.
While thequality oftheAppellate Body members wasdefined toacertain extent inArticle 17ofthe
DSU, itsmembers should havesome familiarity withthebody ofGATT jurisprudence thathadbeen
developed overtheyears. While theorder ofrotation ofmembers wastobedetermined intheAppellate
Body'sworking procedures, NewZealand believed thatthisshould involve adegree ofautomaticity.
Astotiming, NewZealand believed thattheAppellate Body would needtobeinplace within about
sixmonths following theentry intoforce oftheWTO. Likeothers, NewZealand would submit more
detailed thoughts inwriting induecourse.
98. Therepresentative ofUruguay agreed withseveral previous speakers thattheAppellate Body
should meettherequirements ofthehighest quality andindependence inorder toensure thecredibility
oftheWTO 'sdispute settlement system. Herdelegation alsoagreed withothers thatthought should
begiven toselecting persons ofthehighest integrity withverybroad experience inallthematters that
fellwithin thecompetence oftheWTO. Astowhether Appellate Body members should serve full-time
orpart-time, herdelegation hadnoted thecomments made inthisregard andwould givethisfurther
consideration. With regard torotation, herdelegation believed thisshould beautomatic. Shehoped
thatafterthisfirstexchange ofviews further progress could bemade onthisissue, which wasof
fundamental importance.
99. Therepresentative ofIndia saidthattheworking procedures oftheAppellate Body could be
similar tothose fortheDSB, andthattheAppellate Body could establish these inconsultation withPC/IPL/M/7
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theChairman oftheDSB, among others. Astothenature ofthepersons tobeappointed totheAppellate
Body, theDSU indicated clearly thattheyshould have"demonstrated expertise inlaw,international
trade andthesubject matter ofthecovered agreements generally". Since itmight bedifficult tofind
persons withexpertise inallthree areas, there should besome balance intheAppellate Body among
persons withexpertise inlawandthose withexpertise inthecovered agreements. Thiswasimportant
fortheefficient functioning oftheAppellate Body. TheDSU provided alsothatAppellate Body
membership should be"broadly representative", anditmight beimportant toclarify atalaterstage
whetherthismeantgeographicallyrepresentativeorrepresentativeofdevelopedanddevelopingcountries,
although India didnothavestrong views onthissubject. Finally, inviewoftheprovision intheDSU
thatmembers ofAppellate Body "shall stayabreast ofdispute settlement activities andother relevant
activities oftheWTO", having asmall number ofitsmembers permanently resident inGeneva might
provide anelement ofconsistency andcontinuity forthefunctioning oftheBody.
100. TheChairman saidthatwhile taking intoaccount India'scomment thatthe"broadly
representative" nature ofthemembership might needclarification, theoverall objective should beto
obtain theseven bestpersons toserve ontheAppellate Body.
101. Therepresentative ofArgentina saidthatallappeared tobeinagreement astotheneedfor
thehighintegrity andindependence oftheAppellate Body, andtheimportance ofitscredibility. If
appropriatemechanismswereputinplace,itmightnotbenecessarytohaveapermanentbodyofeminent
persons inGeneva. Article 17:8oftheDSU referred to"theexpenses ofthepersons serving onthe
Appellate Body, including travel andsubsistence allowance", which indicated thatthedrafters ofthis
text,inprinciple, might havehadinmind thetypeofpossibility hehadjustoutlined. Theneedto
haveasmall group ofindependent legalrapporteurs should belooked atmore carefully. Suchsupport
staffshould beindependent oftheSecretariat, thusmaking aclear distinction between thedispute
settlement system itselfandtheAppellate Body. Thiswasclearly appropriate because afreshapproach
would berequired toassist andsupport theAppellate Body initswork, andbecause thepersons involved
intheprevious phase ofthedispute might haveprejudged theissues. Onrotation, automaticity was
offundamental importance, andaprocedure thatrequired anytypeofnegotiations astothemembers
thatshould hearaparticular appeal could notbeconsidered. Argentina agreed withtheUnited States
thatitwould beidealtodecide onthecomposition oftheAppellate Body before anappeal wasbrought
toit.
102. Therepresentative ofBrunei Darussalam, speaking onbehalf oftheASEAN countries, said
thatinreflecting onwhether Appellate Body members should serve part-time orfull-time, itwould
behelpful tohave acopy oftheoptions andthebudget estimates therefor thattheDeputy
Director-General hadreadoutearlier. Itwould alsobeuseful foralltoreflect onIndia'scomments
astothe"broadly representative" nature ofthemembership oftheAppellate Body.
103. Therepresentative ofNorway, speaking onbehalf oftheNordic countries, saidthattheywould
submit written proposals onthissubject totheChairman. TheNordic countries supported thesuggestion
thattheSecretariat provide anindication oftheworkload thatmight beexpected. Assuming thatten
disputes eachyearwenttothepanel stage, andthatsixofthose cases were appealed, theAppellate
Body would beemployed year-round, given thatithadsixtydaystocomplete itsproceedings onany
onecase. Asregards thecomments byothers ontheDirector-General 'sbudget estimates, hisdelegation
hadalready indicated thatitlooked onthese ashaving beendrawn upforplanning purposes only, and
underlined thattheSub-Committee 'sdiscussion should notbedependent onthose figures.
104. TheChairman saidthatthequestion ofthesetting upoftheAppellate Body should beaddressed
ascarefully aspossible soastoarrive atsome finalconclusions. Inorder tomove theprocess forward,
hesuggested thatheprepare aworking paper totryandhelpfocus ideas onthissubject, which would
include inputs fromtheSecretariat aswellasfromdelegations, asalsoresults ofbilateral andplurilateralPC/IPL/M/7
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consultations thatheplanned toholdshortly. Hewould trytohavethispaper available bythetime
ofthenextmeeting oftheSub-Committee. Heasked ifsuchanapproach would beacceptable.
105. Therepresentative ofCanada asked whether inthatprocess onecould begiven anindication
ofpossible caseloads andthebasis forthose estimates.
106. Mr.Lavorel, Deputy Director-General, saidthattheSecretariat would furnish suchinformation.
107. TheSub-Committee tooknoteofthestatements andagreed withtheapproach suggested by
theChairman.