RESTRICTED
WORLD TRADE G/C/M/9
10April 1996
ORGANIZATION(96-1260)
COUNCIL FOR TRADE INGOODS
19March 1996
MINUTES OFMEETING
Held inCentre William Rappard
on19March 1996
Chairman: Mr.S.Narayanan (India)
Theproposed agenda, contained indocument G/C/W/38 wasadopted without anyamendments.
Page
Thefollowing items were discussed:
1. Agreement between theSwiss Government, oftheonepart,andthe 2
Government ofDenmark andtheHome Government oftheFaroe Islands,
oftheother part,onfreetrade between theFaroe Islands andSwitzerland
- Notification from theparties totheAgreement (WT/REG24/N/1
andWT/REG24/1)
2. Agreement between theGovernment ofNorway, oftheonepart, 3
andtheGovernment ofDenmark andtheHome Government of
theFaroe Islands, oftheother part,onfreetrade between the
Faroe Islands andNorway
- Notification from theparties totheAgreement (WT/REG25/N/1
andWT/REG25/1)
Thefollowing items were discussed under "Other Business"
3. US-"Cuban Liberty andDemocratic Solidarity Actof1996" 3
4. Brazilian Measure concerning theautomotive sector 7
5. Agreements between theCzech Republic andBulgaria, and 8
theSlovak Republic andBulgaria
6. Preferential tariff treatment forthecountries offormer Yugoslavia 8
7. Banonexports ofwild-harvested shrimps totheUS 9
8. USNarcotics Control Trade Act 11
9. Working Group onNotification Obligations andProcedures 12
10. Dateforthenextmeeting oftheCouncil 13G/C/M/9
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TheChairman welcomed delegations tothemeeting oftheCouncil forTrade inGoods which
wasconvened byWTO/AIR/290. 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. Agreement between theSwiss Government, oftheonepart, andtheGovernment of
Denmark andtheHome Government oftheFaroe Islands, oftheother part, onfreetrade
between theFaroe Islands andSwitzerland
- Notification from the parties tothe Agreement (WT/REG24/N/1 and
WT/REG24/1)
1.1 TheChairman drewtheCouncil 'sattention tothenotification fromtheparties totheAgreement
contained indocument WT/REG24/N/1, which indicated theentry intoforce on1March 1995 of
theFreeTrade Agreement between theSwiss Government ontheonepartandtheGovernment of
Denmark andtheHome Government oftheFaroe Islands ontheother part. ThetextoftheAgreement
wascirculated asdocument WT/REG24/1.
1.2 Therepresentative ofDenmark, speaking onbehalf oftheHome Government oftheFaroe
Islands andtheGovernment ofSwitzerland, stated thatthisAgreement hadentered intoforce on1
March 1995 anditsprovisions were infullconformity withWTO provisions. Theparties tothe
Agreement were ready toprovide further information, ifrequested, andwould cooperate fullywith
theCommitteeonRegionalTradeAgreementsatthetimeofexaminationofthisAgreement.Sherecalled
thatasimilar Agreement between theHome Government oftheFaroe Islands andIceland hadbeen
notified andaworking party established bythisCouncil atitsmeeting of29January 1996.
1.3 TheChairman recalled thatatthemeeting oftheGeneral Council on6February 1996, adecision
hadbeentaken toestablish aCommittee onRegional Trade Agreements (WT/L/127) which would
carry outtheexamination ofsuchagreements inaccordance withtheprocedures andterms ofreference
adopted bytheCouncil forTrade inGoods andwhich would thereafter present itsreport totheCouncil
forTrade inGoods forappropriate action.
1.4 TheChairman proposed thattheCouncil forTrade inGoods adopt thefollowing terms of
reference under which theCommittee onRegional Trade Agreements should examine thisAgreement:
Terms ofreference:
"toexamine, inlightoftherelevant provisions oftheGATT 1994, theAgreement
between theGovernment ofDenmark andtheHome Government oftheFaroe Islands,
ontheonepart,andtheGovernment ofSwitzerland, ontheother part,andtosubmit
areport totheCouncil forTrade inGoods."
1.5 Headded thatthestatement concerning theunderstanding made bytheChairman oftheCouncil
forTrade inGoods under item 7oftheagenda ofthemeeting oftheCouncil forTrade inGoods on
20February 1995, ascontained indocument WT/REG3/1, would apply mutatis mutandis tothisG/C/M/9
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examination. Itwasalsounderstood that,during theexamination, dueaccount would betaken ofthe
intrinsic differences between customs unions andfree-trade areas.
1.6 TheCouncil forTrade inGoods tooknoteofthestatements, andagreed totheChairman 's
proposal.
2. Agreement between theGovernment ofNorway, oftheonepart, andtheGovernment
ofDenmark andtheHome Government oftheFaroe Islands, oftheother part, onfree
trade between theFaroe Islands andNorway
- Notification from the parties tothe Agreement (WT/REG25/N/1 and
WT/REG25/1)
2.1 TheChairman drewtheCouncil 'sattention tothenotification fromtheparties totheAgreement
contained indocument WT/REG25/N/1, which indicated theentry intoforce on1July1993 ofthe
FreeTrade Agreement between theGovernment ofNorway ontheonepartandtheGovernment of
Denmark andtheHome Government oftheFaroe Islands ontheother part. ThetextoftheAgreement
wascirculated asdocument WT/REG25/1.
2.2 Therepresentative fromDenmark, speaking onbehalf oftheHome Government oftheFaroe
Islands andtheGovernment ofNorway, stated thatthisAgreement hadentered intoforce on1July
1993, anditsprovisions wereinfullconformity withWTO provisions. Theparties totheAgreement
wereready toprovide further information, ifrequested, andwould cooperate fullywiththeCommittee
onRegional Trade Agreements atthetimeofexamination ofthisAgreement.
2.3 TheChairman,recallingthedecisiontakenbytheCouncilunderthepreviousitemontheagenda,
proposed thatthisAgreement alsobereferred totheCommittee onRegional Trade Agreements for
examination inaccordance withthefollowing terms ofreference:
Terms ofreference:
"toexamine, inlightoftherelevant provisions oftheGATT 1994, theAgreement
between theGovernment ofDenmark andtheHome Government oftheFaroe Islands,
ontheonepart,andtheGovernment ofNorway, ontheother part,andtosubmit a
report totheCouncil forTrade inGoods."
2.4 Headded thatalsointhecaseofthisAgreement thestatement concerning theunderstanding
made bytheChairman oftheCouncil forTrade inGoods under item 7oftheagenda ofthemeeting
oftheCouncil forTrade inGoods on20February 1995, ascontained indocument WT/REG3/1, would
apply mutatis mutandis totheexamination. Itwasalsounderstood that,during theexamination, due
account would betaken oftheintrinsic differences between customs unions andfree-trade areas.
2.5 TheCouncil forTrade inGoods tooknoteofthestatements andagreed totheChairman 's
proposal.
3. US-"Cuban Liberty andDemocratic Solidarity Actof1996"
3.1 Therepresentative ofCuba, speaking under "Other Business, stated thaton12March 1996,
thePresident oftheUnited States hadsigned intolawtheHelms-Burton Act,which wasprimarily
aimed atextending tothird countries theapplication oftheeconomic, trade andfinancial blockade
thattheUnited States hadunilaterally imposed onCuba over35years ago.G/C/M/9
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3.2 Likethe"Democracy inCuba Act"adopted in1992, thisActsought toimpede Cuba'strade
relations withother WTO Members, anditsprovisions wereincompatible withtheprinciples andrules
governing international trade andalsowiththecommitments entered intobytheUnited States inthis
forum.
3.3 Thus, itshould berecalled thatoneoftheobjectives oftheWTO wastoraisestandards of
living, realincome, effective demand, production andtrade ingoods andservices, assetoutinthe
firstpreambular paragraph oftheAgreement Establishing theWTO.
3.4 Thefundamental principle oftheWTO wasthatofMost-Favoured-Nation (MFN) treatment,
under which there should notbetrade discrimination among Members. Thisprinciple wasblatantly
violated inboth letter andspirit bytheabove-mentioned Act, which unilaterally established a
differentiation intrade treatment withrespect toCuba, based onconsiderations ofapolitical nature.
AtthesametimetheActsought tomake otherWTO Members comply withitsprovisions, andprovided
forsanctions forthosewhodidnotsubmit toUnited States jurisdiction. Cuba wasalsoafforded different
anddiscriminatory treatment from thatafforded toother Members, asaresult ofpressures exerted
byanother Member.
3.5 GATT Article XIprovided forthegeneral elimination ofquantitative restrictions onimports
while allowing certain exceptions thatrelated tosituations ofshortage offoodstuffs essential tothe
country applying therestriction, those necessary totheapplication ofquality standards forcommodities
destined forinternational trade, andimport restrictions onanyagricultural orfisheries product necessary
fortheenforcement ofspecific governmental measures.
3.6 Section 110oftheHelms-Burton Actbanned theimport intotheUnited States ofsugar, syrups
andmolasses where thePresident oftheUnited States determined thatthese products wereimported
fromCuba, which constituted aquantitative restriction onimports thatGATT Article XIonlyallowed
asanexception inveryspecific cases.
3.7 TheActdisregarded theprinciples andobjectives setoutintheGATT rules ontrade and
development (Part IV),which urged developed countries toadopt measures aimed attheraising of
standards ofliving andthedevelopment oftheeconomies ofless-developed countries, andrecognized
thatinternational trade should begoverned byrules andprocedures thatwere consistent withthe
above-mentioned principles andobjectives. ItwasinthislightthatthisAct,which sought tocurb
thetrade relations ofthirdcountries withCuba andhence limititssalesinthose markets, might be
judged.
3.8 Cuba wasacountry whose economy depended heavily onforeign trade. Itcould therefore
besaidthatthesigning intolawoftheHelms-Burton Actwasnotconsistent withthecommitment to
"refrain fromintroducing, orincreasing theincidence of,customs duties ornon-tariff import barriers
onproducts currently orpotentially ofparticular export interest toless-developed contracting parties."
3.9 Itviolated theprinciples oftheAgreement onTrade-Related Investment Measures, which were
aimedatpromotingandfacilitatinginvestmentacrossinternationalfrontierssoastoincreasetheeconomic
growth ofalltrading partners, particularly developing-country Members.
3.10 Intheareaofservices, theActalsodisregarded commitments entered intobytheUnited States
intheWTO, bylimiting thefreedom ofaccess thatshould existintradeinservices, particularly financial
services, andtheprogressive liberalization pursued bythenegotiations inthissector, byprohibiting
financing foranyone fortransactions involving property subject toclaims under theterms oftheAct.G/C/M/9
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3.11 ItshouldberecalledthattheUnitedNationsGeneralAssemblyhadonfourconsecutiveoccasions
rejected theblockade imposed bytheUnited States onCuba asviolating international lawandtheUnited
Nations Charter.
3.12 Insummary, theHelms-Burton Actblatantly violated therules, principles andobjectives
governing international trade. Itsextraterritorial andcoercive reach harmed thetrade interests of
third-countryWTOMembersmaintaininglinkswithCuba:thiswasnotonlyaviolationoftheprinciples
ofsovereigntyrecognizedbyinternationallaw,byextraterritoriallyprojectingtheUnitedStateslegislative
provisions toother States, butalsohadtheeffect ofcreating aclimate ofuncertainty thatundermined
thegoals ofexpanding anddiversifying international trade relations.
3.13 CubareserveditsrightsunderGATT1994andtheWTOAgreementstotakeactioninaccordance
withtheestablished procedures.
3.14 Therepresentative ofMexico stated thathisdelegation shared theconcerns expressed regarding
thisAct. TheHelms-Burton Actwasextremely complicated andgiven itscomplexity, ithadnotyet
beenpossible todetermine theextent oftheadverse effects which itmight haveonallWTO Members,
including Mexico, aswellasonmultilateral trading relations generally. Mexico, along withother
countries, including themembers oftheRioGroup, i.e.Argentina, Brazil, Chile, Colombia, Ecuador,
Mexico, Panama, Peru, Paraguay, Uruguay andVenezuela whoon8March 1996 hadsigned the
declaration onthismatter wereconcerned bythewayinwhich thisActwasnotinkeeping witheither
thespirit ortheprinciples ofinternational law,theUNCharter, theCharter oftheOrganization of
American States, andinparticular theWTO andfree-trade agreements which hadbeensigned with
theUS.Heinformed theCouncil thatgiven suchconcerns, hisauthorities, along withtheCanadian
authorities, hadasked thatconsultations beheldunder theNAFTA withtheUSGovernment inorder
todealwiththose issues; allofthiswithout prejudice tothose rights which Mexico enjoyed under the
WTO.
3.15 Therepresentative ofCanada stated thathisGovernment, forsome time, hadbeenpromoting
democratic reform andrespect forhuman rights inCuba. Canada hadcondemned theshooting down
ofthecivilian aircrafts bytheCuban authorities, however, theHelms-Burton legislation wasnotan
appropriate response tothissituation, norauseful toolforachieving theaforementioned objectives,
andhisGovernment hadworked hardtopersuade theUSauthorities nottoenact thislegislation. The
legislation wasintended tohaveextra-territorial effects, andwasdesigned tochillinvestment inCuba.
Canada could notaccept thattheUSCongress could dictate toCanadians whotheycould dobusiness
with, orwhere theycould invest. While theActwasdirected primarily atinvestment, andongoing
business relationships inCuba, there would beinevitable effects ontrade ingoods aswell. Canada
wasconsidering itsoptions carefully, andwould beexamining closely theUSapproach to
implementation.AsindicatedbytherepresentativeofMexico,CanadatogetherwithMexicohadalready
requested consultations withtheUSauthorities under theNAFTA. Hisauthorities called ontheUS
tofullyrespect itsobligations under international agreements, including itsobligations under theWTO
Agreement.
3.16 Therepresentative ofChile stated thatmember states ofthePermanent Mechanism forPolitical
Consultation andConcerted Action, known astheRioGroup, ofwhich Chile wasamember had,on
8March 1996, expressed theirfirmrejection oftheadoption ofthislegislation referred toastheHelms-
Burton Actwhich violated theprinciples andrules ofinternational lawaswellastheUNCharter,
theCharter oftheOrganization ofAmerican States, andtheWTO. ThisActwasalsoinconsistent
withthespirit offriendship andcooperation which should bethemark ofinter-state relations. The
RioGroup members werealsoconcerned asthescope ofthisActdisregarded theprinciple ofnational
sovereignty, since itsimplementation meant theextraterritorial application ofinternational lawin
opposition topublic international law.Accordingly, Chile wasconcerned thatfreedom oftradewouldG/C/M/9
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berestricted bythistypeofmeasure. Such freedom should notbeimpeded byeconomic sanctions
applied bycertain countries, because theywere inbreach ofinternational legislation.
3.17 Therepresentative oftheEuropean Communities agreed withthecomments made byprevious
speakers onthisissue atthismeeting, andparticularly withtheobservations made bytheCanadian
representative. Before theBillhadbeenenacted, theCommunity hadhadtheopportunity toconvey
totheUSGovernment itsconcerns withrespect tothelegislation, andnowthattheBillhadbeenenacted,
hisauthorities stillfeltconcerned, andparticularly withoneaspect ofthislegislation thathadtodo
withitsextra-territorial implications. Heendorsed, atthisstage, theobservations made bythe
representative ofCanada totheeffect thatitwasparticularly unacceptable tohaveathird country
dictating orimposing restrictions oneither investments ortrade ofother countries withdifferent parts
oftheworld. Hisdelegation would bemonitoring thesituation carefully, toseehowtheprovisions
ofthislegislation would beapplied.
3.18 Therepresentative ofNicaragua shared theconcern expressed atthismeeting concerning the
Helms-Burton Act. Thelegislation wentagainst themultilateral trading system which Members had
worked veryhardtoestablish. Hisdelegation considered thatdifferences between states should be
settled withallduerespect tointernational law,andhisdelegation rejected theuseofextra-territorial
measures.
3.19 Therepresentative ofIndia stated thathisdelegation shared theconcerns expressed byother
delegations regarding theHelms-Burton Act.India hadconsistently opposed alltypes ofunilateralism
intrade matters, andfeltthattheUSaction would adversely affect therights ofother WTO Members
under various WTO Agreements. Hisdelegation urged theUStoreconsider itsstand andwithdraw
theproposed action.
3.20 Therepresentative oftheUnited States stated thatinsigning thislegislation, thePresident had
clearly recognised theneedtotakestrong measures aftertherecent downing ofunarmed UScivilian
aircraft bytheCuban Government. Inhisdelegation 'sview, persons whoknowingly andintentionally
didbusiness inCuba using confiscated property werefurthering wrongs committed against theformer
owners ofthisproperty, andwereundermining theinterests oftheUSAanditscitizens. Hisauthorities
were stillworking onguidelines andmechanisms forimplementing keyprovisions oftheActsohis
delegationcouldnotyetprovidedefinitiveinformationonnewprocedures.Notwithstandingthestatement
made bytherepresentative ofCuba, onepoint hefeltnecessary tomake onthisoccasion wasthata
careful reading ofthislegislation revealed thatthelawintroduced nomeasures ontrade ingoods of
atypewhich could beappropriately taken upinthisCouncil. Inthisconnection, hebelieved thatthe
representatives ofCuba, Mexico andChile hadbeenreferring toanearlier version ofthelegislation.
3.21 Therepresentative ofCuba expressed gratitude tothose Members whohadtaken thefloorin
order toexpress theirconcerns relating totheenactment ofthislaw. With respect tothestatement
made bytherepresentative oftheUS,hisdelegation would notwishtoenterintodetailed consideration
ofmatters which were currently under examination inother fora, asindeed wastheshooting down
ofthepirate aircraft inviolation ofCuban airspace. TheInternational Civil Aviation Organization
wascurrentlyinvestigatingallaspectsconcerningtheincidentanditsbackground.Hisdelegationwished
toemphasize, however, thatthere wasnojustification whatsoever fortheenactment oftheActin
contravention oftheUNCharter andinviolation ofinternational law.Currently, hisgovernment was
carefullyconsideringtheimplicationsoftheapplicationofthislawandacertainnumberofconsiderations
were tobemade.
3.22 TheCouncil forTrade inGoods tooknoteofthestatements.G/C/M/9
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4. Brazilian Measure concerning theautomotive sector
4.1 TherepresentativeofBrazil,speakingunder"OtherBusiness",statedthatduringthelastmeeting
ofthisCouncil, hehadindicated theintention ofBrazil torequest awaiver fromcertain WTO obligations
asaconsequence oftheadoption ofanautomotive regime. Nowhewished toinform WTO Members
thaton15March 1996, Brazil hadsubmitted therequest forawaiver pursuant toArticle IXofthe
Marrakesh Agreement establishing theWTO. Hewished tostress twopoints regarding therequest
forawaiver andaskMembers totakethem intoaccount when considering thisissue.
4.2 Thefirstpoint hadtodowiththeexceptional circumstances thathadledBrazil torequest the
waiver, which derived fromthefactthatboththeWTO andMERCOSUR, asaCustoms Union, had
entered intoforce ontheverysame day,i.e.1January 1995. Brazil hadthenbeenconfronted with
asituation inwhich twoofitsMERCOSUR partners maintained TRIMs andcould notify themunder
theTRIMs Agreement 'sprovisions, astheyeventually did. HadBrazil notadopted legislation
comparable tothatexisting inother MERCOSUR countries, theconditions ofcompetition within the
common market would certainly havebeendistorted.
4.3 Thesecond point hewished tostress related totheterms andconditions ofthewaiver: its
duration would belimited tothesame transition period granted under theTRIMs Agreement toother
developing countries thatnotified similar measures, i.e.until31December 1999. Furthermore, the
waiver would onlyapply tospecific products listed intherequest. Inshort, thewaiver request concerned
measures ofatemporary nature, which werelimited tocertain defined products andwhich hadbeen
taken duetoexceptional circumstances. They didnotrepresent adeparture byBrazil from itstrade
liberalization process norfrom anyofitsWTO commitments.
4.4 TherepresentativeoftheEuropeanCommunitiesstatedthathisdelegationwouldhavetoexamine
indetail thisrequest aswellasthebackground information substantiating thatrequest which hadbeen
submitted byBrazil. AttheHeads ofDelegation meeting of18March 1996, Members hadspoken
oftheimportance ofensuring thatcommitments made byMembers becarried outscrupulously. The
request forawaiver from Brazil would beexamined withthisinmind andinlightofthecomments
made bytheBrazilian representative.
4.5 Therepresentative ofJapan expressed concern about theBrazilian measures fortheautomobile
industry introduced inDecember 1995 bythepromulgation oftheProvisional Presidential Measure
1235andtheGovernment Ordinance 1761, containing trade-balancing requirements andlocalcontent
requirements which weretobethepreconditions fortheimportation ofautomobile partsandfinished
vehicles atreduced import dutyrates. Theintroduction ofsuchmeasures constituted aviolation of
theWTO Agreements, inparticular theTRIMs Agreement. Theargument advanced bytheBrazilian
delegation namely thatthesemeasures wereintended toequalize competitive conditions forinvestment
within MERCOSUR werenotjustifiable. InMarch 1995 Brazil hadraised itstariffs drastically with
aview tosetting abasis fortheabove-mentioned measures. InMay1995, Brazil hadsubmitted a
document, which wascirculated asaWTO official document (WT/L/66) toexplain thatthisincrease
wasatemporary measure which would bereduced within themaximum period ofoneyear. Upuntil
now, however, theincreased tariff ratehadbeenmaintained, andJapan wished toknow whythiswas
thecase. Inconclusion, sincethesemeasures hadbeentaken byamajor WTO Member, hisdelegation
hadtobeexplicit inexpressing itsserious concern. Japan therefore reserved allitsrights under the
WTO Agreement.
4.6 Therepresentative ofCanada stated thathisdelegation would carefully consider Brazil 'srequest
forawaiver ofitsWTO obligations under Article IX:3oftheMarrakesh Agreement establishing the
WTO.G/C/M/9
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4.7 Therepresentative oftheUnited States stated thathisdelegation looked forward toexamining
theBrazilian waiver request, andwould giveitcareful consideration.
4.8 Therepresentative ofKorea stated thateversinceBrazil hadintroduced theauto-sector measure
atthebeginning of1996, Korea 'sexport ofautos toBrazil hadvirtually stopped. Under these
circumstances, Korea hadaserious concern overBrazil 'smeasure. Hisauthorities understood that
Brazil hadinfactacknowledged through itsmove toseekawaiver thatitsmeasures wereinconsistent
withBrazil 'sobligations under theWTO Agreement. Hewould alsonotethatBrazil hadintroduced
thisWTO-inconsistent measure before ithadreferred thematter totheWTO. Inshort, theBrazilian
measure presupposed thegranting ofawaiver. Therefore, thedamage hadalready beendone. Itwas
hisdelegation 'sconcern thatsuchanexpostrequest forawaiver constituted anundesirable precedent
forthefuture ofthisinstitution andcould prove tobedetrimental tomaintaining themultilateral trading
system. Given theseconcerns, hisdelegation hoped thatBrazil would withdraw itsauto-sector measures,
thereby helping toavoid anyawkward situation withitstrading partners. IfBrazil persisted inpursuing
awaiver, itshould firstrescind themeasure, waitfortheoutcome oftheeventual voting, asprovided
forinArticle IX.3oftheMarrakesh Agreement establishing theWTO andthenonlytakeactions as
appropriate. Hisdelegation reserved allitsrights under theWTO Agreement.
4.9 TheCouncil forTrade inGoods tooknoteofthestatements.
5. AgreementsbetweentheCzechRepublicandBulgariaandtheSlovakRepublicandBulgaria
5.1 Therepresentative oftheCzech Republic, speaking under "Other Business", alsoonbehalf
oftheSlovakRepublicandtheRepublicofBulgaria,informedMembersofthesigninginDecember1995
offreetrade agreements between theCzech Republic andBulgaria, andbetween theSlovak Republic
andBulgaria.
5.2 Thefreetradeagreements, covering products falling within HSChapters 1to97andproviding
fortheestablishment offreetrade areas within thetransitional period ending on1January 1998, had
beenapplied onaprovisional basis since 1January 1996. TheAgreements would benotified tothe
WTO when theratification processes ineachofthesignatory states hadbeencompleted.
5.3 TheCouncil forTrade inGoods tooknoteofthestatements.
6. Preferential tariff treatment forthecountries offormer Yugoslavia
6.1 Therepresentative oftheEuropean Communities, speaking under "Other Business", stated
thatsince theDayton Agreements hadbeensigned there wasmuch concern regarding thesituation
ofthedifferent republics offormer Yugoslavia devastated bywar,andwhere averyfragile form of
peace wasslowly evolving. Some Members contributed tothisprocess inasubstantive manner, which
wasthecaseoftheCommunities, totheefforts atreconstruction andinhelping torelocate refugees
totheirformer villages andtowns. Ithadbeenfeltthatonefurther element inthisprocess ofassistance
could beintheformofgranting these republics thepossibility ofexporting totheCommunity market,
which wastheclosest market forthese countries, freeofobstacles andatzeropercentdutyrate. As
aresult, hisdelegation intended torequest awaiver fromitsobligations under Article IofGATT 1994
inorder togrant thispreferential access totheCommunity market foralimited period oftime. It
wasintended thatsuchameasure should assist inthereconstruction andtherecovery oftheeconomies
ofthese republics. Affected bythismeasure would betheRepublics ofCroatia, Bosnia-Herzegovina,
Serbia-Montenegro, theformer Yugoslav Republic ofMacedonia, andprobably Albania.
6.2 Therepresentative oftheUnited States stated thathisdelegation would support theaimofsuch
awaiver which fitted wellwiththetraditional useofthewaiver intheGATT andnowtheWTO system.G/C/M/9
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Thissupport would besubject toanacceptable waiver text,tobearrived atthrough consultations,
bytheCommunity.
6.3 TheCouncil forTrade inGoods tooknoteofthestatements.
7. Banonexports ofwild-harvested shrimps totheUS
7.1 Therepresentative ofthePhilippines, speaking under "Other Business", alsoonbehalf ofthe
ASEAN countries, wished tobring totheattention oftheCouncil forTrade inGoods thatfollowing
thedecision oftheUSCourt ofInternational Trade on29December 1995, exports ofwild-harvested
shrimps totheUSafter1May1996would beembargoed fromexporting countries thatdidnotadopt
seaturtle conservation programmes comparable totheexisting USprogramme. Section 609ofPublic
LawNo.101-162,onwhichtheCourtbaseditsorder,requirednationsexportingwild-harvestedshrimps
totheUStohaveaseaturtle conservation programme comparable totheUSprogramme. TheUS
programme included mandatory useofseaturtle excluder devices (TEDs) onallcommercial shrimp
trawl vessels andeffective enforcement ofthisrequirement. Following thisdecision, theUSauthorities
hadimposed therequirement thatallwild-harvested shrimp exporters should provide thenecessary
information foracertification by1April 1996.
7.2 While thisembargo wasrestricted toexports ofwild-harvested shrimps anddidnotcover
aquaculture shrimps, eachshipment ofaquaculture shrimps totheUShadtobeaccompanied bya
declaration andgovernment certification. Asmajor exporters ofbothwild-harvested andaquaculture
shrimps, ASEAN countries wished toexpress serious concern overthisUSaction, which wasconsidered
tobeinconsistent withUSobligations intheWTO. TheUSaction could cause trade disruption as
aresult oftheconditions imposed onwildshrimp exporters. TheASEAN countries, justliketheUS,
werealsocognisant oftheneedtoprotect seaturtles astheywerenotonlyanatural heritage butalso
ofeconomic importance andinfacttheASEAN countries hadtheirownconservation programmes.
Toimpose thataprogramme comparable tothatoftheUSprogramme beusedbyshrimp exporters
raised thequestion ofextra-territorial jurisdiction. Members were familiar withtheoutcome ofthe
tuna-dolphin casewhich dealtwithasimilar action. TheASEAN countries reserved theirrights to
haverecourse totheappropriate course ofaction intheWTO.
7.3 Therepresentative ofIndia wished toassociate hisdelegation withthestatement made bythe
ASEAN countries onthesubject oftheproposed embargo bytheUnited States authorities onimports
ofwild-harvested shrimps fromexporting countries, including India, totheUnited States. Asamajor
exporter ofbothwild-harvested andaquaculture shrimps, India wished toexpress itsserious concern
regarding thisunilateral action bytheUnited States, which India considered tobeinconsistent with
theobligations oftheUnited States under theWTO Agreement. Suchanaction would haveanadverse
impact onIndia'sexports, which inturnwould result inlossofemployment forthose engaged inthis
sector inIndia. India wasdeeply committed totheneedtoprotect sea-turtles, aspecies protected in
Indiaunder theEndangered Species Act.Hisauthorities were, however, notconvinced thattheadoption
ofsuchatrademeasure would benecessary oreffective inachieving thestated environmental objectives.
Hisdelegation wished toreserve itsrights under theWTO Agreement tohavefuture recourse toan
appropriate course ofaction.
7.4 Therepresentative ofHong Kong stated thattheUSseaturtle protection lawhadbeenin
existence forsome time. Hisdelegation hadnowlearnt thatbyarecent ruling oftheUSCourt of
International Trade, andwitheffect fromthebeginning ofMay1996, itsapplication would beextended
fromtheAtlantic andCaribbean toother waters oftheworld where shrimp washarvested. Thiswas
onecaseofMFN application which Hong Kong could notwelcome, because inHong Kong'sview
themeasure should nothavebeenapplied inthefirstplace. Substantially thesameWTO considerations
regarding therights andobligations oftheWTO Members involved hadbeenexamined intheWTOG/C/M/9
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before, inthecontext ofthepanel caseontunaanddolphin. Hewasnotsuggesting thatthetwocases
were identical. However, there were close similarities. Information tohand indicated thatWTO
provisions, including Articles XXandXIofGATT 1994, should findapplication totheprospective
embargo onshrimps, astheydidinthetunacase. InHong Kong'sview alsorelevant totheturtle
lawwere thefundamental principles inArticle IofGATT 1994, andtherequirement under the
Agreement onTechnical Barriers toTrade nottocreate unnecessary trade obstacles when adopting
technical regulations. Available information showed thatupto49exporters ofshrimps would be
affected, including Hong Kong. Hong Kong regretted thatitslegitimate trade interest wasbeing
threatened andwasalsoveryconcerned thatimportant WTO rules were being challenged.
7.5 Hong Kong hadnoted thaton27February 1996 anotice ofappeal wasfiledbytheUS
administration against theUSCourt ofInternational Trade 'sruling. Hong Kong welcomed this
development andhoped thattheappeal would putthematter backontherighttrack. However, there
wasamajor omission, inthatinitsappeal, theadministration hadsofarashisdelegation wasaware
neglected toaskforastay,towithhold implementation oftheembargo order untiltheappeal hadbeen
heard andaruling made. InHong Kong'sview, immediate steps should betaken bytheUS
administration toredress thisomission, toavoid disruption totrade. Pending thefinaloutcome of
thiscase, Hong Kong reserved itsrights totakethematter further intheWTO. Notrade embargo
wouldhelpinternationaltradeintheviewofHongKong,norwouldthisparticularembargohelpanybody
intheongoing negotiations intheWTO onthesubject oftrade andtheenvironment.
7.6 Therepresentative ofMexico endorsed thepoints made bythePhilippines onbehalf ofthe
ASEAN countries andbyother speakers. Hisauthorities wereconcerned about thetraderepercussions
andtheconsequences onthemultilateral trade system ofthepossible implementation onthepartof
theUnited States ofanembargo onshrimp imports asaresult oftheruling oftheInternational Trade
Court ontheadoption oftheseaturtle conservation programme. Sucharuling would notonlyviolate
theverybasic rules oftheWTO, butwould goagainst theefforts thatwere being made atpresent
toprotect seaturtles. Hisdelegation trusted thattheefforts made bytheUSadministration in
reconsidering theapplication ofthismeasure would giveapositive result, andherehewished toendorse,
inparticular, thepoints made bytherepresentative from Hong Kong asregarded theappeal andthe
different elements ofthatappeal. Mexico hoped thatitwould bepossible toavoid theimposition of
protectionist measures disguised asenvironmental measures which affected theverycredibility ofthe
WTO andthecredibility ofthose groups thatwerelegitimately aiming toprotect bothfloraandfauna.
7.7 Therepresentative ofAustralia stated thathisdelegation shared theconcerns onthisissue
expressed bytheASEAN countries andbyothers. Theunilateral imposition ofanimport banbythe
United States would haveadetrimental effect onAustralia 'sexports ofshrimps bothtotheUSmarket
andtoother markets andalsoraised theimportant tradepolicy considerations including theconsistency
ofthemeasure withWTO obligations. Against thebackground oftheseconcerns, hisdelegation would
urgetheUnited States nottoproceed withthismeasure andinstead toseektoresolve anygenuine
concerns withrelation toenvironmental issues through cooperative workinanappropriate international
forum. Work inthiscontext wasunderway inarange ofinternational foratoensure thattrade and
environment policies were mutually supportive, ascalled forbytheUnited Nations Conference on
Environment andDevelopment. Aunilateral banbytheUnited States would beacounterproductive
signal tothiswork, including thatoftheWTO Committee onTrade andEnvironment andanegative
signal intheleaduptotheSingapore Ministerial Meeting.
7.8 Therepresentative ofVenezuela stated thathisdelegation shared theconcerns voiced bythe
Philippines onbehalf oftheASEAN countries andbyother countries. Hisgovernment alsowished
tovoice itsdeep-rooted concern attheunilateral nature ofthismeasure, andthefactthatitcould affect
theverycredibility ofthemultilateral system. Inthelightoftheforegoing Venezuela wished toreserve
itsrights under theWTO.G/C/M/9
Page11
7.9 Therepresentative ofPakistan stated thathisdelegation shared theconcerns expressed bythe
ASEAN countries andothers onthesubject oftheproposed embargo onimports ofwild-harvested
shrimps. Pakistan, being oneoftheexporters ofwildshrimps, wished toputitsconcern onrecord
regarding theUSproposed action which contravened USobligations under theWTO Agreement.
7.10 Therepresentative ofKorea wished tojointhePhilippines andother delegations inregistering
itsconcern overtherestrictions proposed bytheUSonimports ofwild-harvested shrimps caught without
aseaturtle conservation programme. Inparticular, hisdelegation questioned theintention expressed
bytheUSGovernment toexpand unilaterally beyond itsterritory thejurisdiction ofdomestic legislation,
without recourse toanyinternational agreements. Korea wasoftheviewthatthedecision oftheUS
Court ofInternational Trade wasnotjustified under anyinternational agreements. Itwasnotcovered
byArticle XXsub-paragraph (b)or(g)ofGATT 1994. Norwasitcompatible withArticle III,since
theUSaction wasnotbased upon product-related Processes andProduction Methods (PPMs). Even
theConvention onInternational Trade inEndangered Species (CITES) Agreement, which classified
seaturtles asanendangered species, didnotregulate theby-catch orincidental catch ofseaturtles.
Therequirement forcertification ofthisnature wasunprecedented inanyoftheagreements governing
international commerce andenvironment. Asamatter offact,mostoftheKorean shrimp vessels were
equipped withtheturtle excluder devices (TED). However, apartfromKorea 'scommercial interests,
Korea hadanimportant systemic interest inprecluding theuseofunilateral trade measures purported
toregulate environmental problems beyond thenational jurisdiction.
7.11 Therepresentative oftheUnited States stated thatitwasimportant tonotethatthefinaloutcome
ofthiscasehadnotyetbeensettled. TheUSadministration wascontinuing toconsider itslegaloptions.
On18March 1996, theDepartment ofJustice hadfiledamotion seeking tomodify theCourt 'sorder
byextendingtheCourt-imposeddeadlinefortheimpositionofmeasuresbyoneyear.Theadministration
hadalsofiledanotice ofappeal topreserve itsoption tochallenge theCourt 'sruling. Hisdelegation
understood thattradeinshrimp andshrimp products wasoftremendous importance tomany countries,
andconsultations wereincourse internally onhowtominimize thedisruption totradethatcould result
fromimplementation oftheCourt 'sorder. However, itwasimportant tonotethatthelawwhich the
Court wasinterpreting wasintended toprotect endangered species ofseaturtles, anobjective which
wasshared byparties totheConvention onInternational Trade inEndangered Species. Most ofthe
Members represented intheCouncil wereparties tothatConvention. Hisdelegation urged countries
nottolosesight ofthefactthatprotection ofendangered seaturtles wasaserious concern thatwas
shared bymany countries. TheUnited States wascontinuing towork onmultilateral solutions tothis
problem, inparticular onanagreement among countries intheWestern hemisphere onprotection of
seaturtles.
7.12 TheCouncil forTrade inGoods tooknoteofthestatements.
8. US:"Narcotics Control Trade Act"
8.1 TherepresentativeofMexico,speakingunder"OtherBusiness",statedthathisdelegationwished
todraw theattention oftheCouncil toabillintheUSA which wascurrently attheveryearly stages
oflegislative process. However, itcould become law,andifso,itwould becalled "The Narcotics
Control Trade Act". Should thisbillbecome law,itwould cause serious problems toAmerican trading
partners andposeproblems tothemultilateral trading system asawhole. Thebillinquestion would
oblige theexecutive branch oftheUSGovernment toimpose tradesanctions onthose countries which
either itorCongress felt,according totheirowncriteria, werenotdoing enough against theproduction
ortraffic ofillegal narcotics. Thiswould include sanctions going asfarasthewithdrawal ofmfnstatus,
thewithdrawal ofpreferences under systems suchastheGSP, Caribbean Basin andAndean Pact
arrangements, aswellastheimposition ofadditional tariffs ofupto50percent. There would also
beanendtoagreements intheareaofairtransport, thewithdrawal ofbenefits enjoyed under freeG/C/M/9
Page12
trade agreements, andsoon.Aware oftheimplications thatthislawcould haveonthefulfilment
oftheUSobligations under theWTO orNAFTA, those promoting thebillalsoincluded aclause
according towhich incaseatrading partner should refertotheWTO orNAFTA arrangements inorder
toensure theirrights, theUSgovernment would beobliged toinvoke exceptions inarticles relating
tonational security andtheprotection ofthehealth andlivesofpeople andanimals.
8.2 TheCouncil forTrade inGoods tooknoteofthestatement.
9. Working Group onNotification Obligations andProcedures
9.1 TheChairman oftheWorking Group onNotification Obligations andProcedures, MrShoyer,
speaking under "Other Business", reported onthestatus ofthework inthatGroup. Herecalled that
theWorking Group wasnotastanding body under anyparticular agreement inAnnex 1Aofthe
WTO Agreement. Rather, ithadbeenestablished pursuant toaspecific decision byMinisters at
Marrakesh. Thatdecision required theGroup toundertake athorough review ofallexisting notification
obligations andprocedures inthegoods areawithaviewtosimplifying andstandardizing themwhile
alsoseeking toimprove compliance andtransparency. TheGroup hadalsobeendirected specifically
tobearinmind possible needs ofsome developing countries forassistance inmeeting theirnotification
obligations. When theGroup hadreported tothisCouncil in1995, ithadnoted thatitwould be
undertaking itsexamination withthewidest possible scope, within theterms ofreference given toit
bytheMinisterial Decision. Thiswork hadbeencomplicated bythefactthattheWTO notifications
obligationshadbegunjustlastyearandthereforetheexperienceofMemberswiththesystemwaslimited.
Some hadsuggested thattheywould prefer tohaveafullcycle ofnotifications before conducting such
areview. Nevertheless, intheGroup 'sfirstyear, Members wereabletoidentify fourgeneral subjects
forexamination leading, hopefully, torecommendations onways toimprove thenotification system
andthereby lighten theburden onallMembers. These fourtopics were: (i)duplication/overlapping
ofnotification obligations inAnnex 1AAgreements; (ii)simplification ofdatarequirements and
standardization offormats; (iii)improvement inthetiming ofthereporting process; and(iv)assistance
tosome developing countries inmeeting theirnotification obligations.
9.2 TheGroup wasnowwellintothesecond phase ofitswork, thatwas,thedetailed examination
ofeachofthese subject areas. Under thetopic ofduplication ofnotification obligations, theGroup
hadexamined fourpairsofagreements andinthecaseofthreeofthem, i.e.TRIMS/Import Licensing,
Agriculture/Import Licensing, andtheAgreements onSPS/TBT initial discussions intheGroup had
indicated thatlittleornoduplication existed orthatadjustments didnotappear tobewarranted. In
thecaseoftheAgriculture andSubsidies Agreements, discussions were continuing toseeifthe
duplication thatdidexistwarranted adjustments tothecurrent notification procedures.
9.3 Onthetopicofsimplification ofdatarequirements andthestandardization offormats, theGroup
hadconsidered three points: were there anyquestionnaires thatsought information going beyond
thatrequired bythevarious agreements; werethere anyadditional agreements forwhich formats or
questionnairescouldbedeveloped;andwerethereanyareaswherethequestionnairesfortwoagreements
could becombined?
9.4 Onthethirdquestion, ofimprovements inthetiming ofthereporting process, theWorking
Group hadbeendiscussing whether, inthecaseofregular notification requirements withdifferent
deadlines, harmonization ofthesedeadlines would befeasible anddesirable. Atthisstage, itappeared
tobebroadly accepted thatanychanges made elsewhere inthenotification system would incorporate
thetiming aspects and,therefore, there wasnoneedtotakethisissue upseparately.
9.5 Astothefourth point, thepossible assistance tosome developing countries inmeeting their
notification obligations, theGroup hadheard positive comments onthework oftheWTO technicalG/C/M/9
Page13
assistance programmes asanimportant vehicle tohelpMembers. TheGroup hadhadsome discussion
ofthescope forproviding simplified formats orforextending deadlines forLDCs although theseideas
didnotappear tohavegenerated great interest. TheGroup wasalsolooking atsuggestions onother
forms oftechnical assistance suchasthepreparation ofamanual orhandbook andthepossible exchange
oftechnical experts between developing anddeveloped countries fortraining onnotification procedures.
9.6 TheGroup hadalsosought tomeasure compliance withthenotification obligations inAnnex 1A
agreements butthisdiscussion wasstillinitsearly stages. While much discussion wasgoing onin
theGroup, thequestions atthispoint intimehadtobe:whatwasbeing achieved andwould theGroup
beinaposition tomake comprehensive recommendations tothisCouncil? Ithadbeenaccepted early
onthattheresponsibility ofmaking notifications laywitheachMember directly, thatitwasnotan
areawhere theSecretariat orindividual committees could besaidtohavethegreatest insight, and
therefore, thatthisGroup could onlywork onthebasis ofspecific proposals byMembers. Several
verbal suggestions hadbeenmade, butsofartheGroup hadhadonlytwowritten proposals bothon
thespecific subject ofduplication between theAgriculture andSubsidies Agreements. Nowritten
proposals onsimplification ofdatarequirements hadbeensubmitted; noneonstandardization offormats
andnoneonpossible assistance todeveloping countries. Inthese circumstances, hecould onlysuggest
thattheprogress achieved sofarhadbeenverylimited indeed.
9.7 Astotheremaining months, theGroup would certainly continue itswork ofexamining the
subjects ontheagenda withaviewtohaving itsreport andrecommendations ready forthisCouncil
inOctober. Hestressed, however, thattheextent oftheGroup 'ssuccess would depend directly on
theparticipation ofallMembers andparticularly ontheir written proposals. Hehadstressed the
importance ofwritten proposals because ofthehighly technical nature ofnotification requirements
andtheneedtofacilitate consideration ofproposals byMembers, bothhereinGeneva andincapitals.
Thetimeremaining wasverylimited -theGroup 'ssubstantive workhadtobecompleted bythesummer
break withthefinalreport andrecommendations being prepared inSeptember/October. Hewould
appeal toallMembers togiveserious consideration tothistopicandifMembers hadexperienced any
difficulties inanyofthenotification obligations, nowwasthetimetobring these problems forward
withproposals onhowtodealwiththem. Hewould invite alldeveloping countries toinform theGroup
ofwhere theirdifficulties layandhowthenotification burden might belightened forthem.
9.8 TheChairman, thanking theChairman oftheWorking Group onNotification Obligations and
Procedures forhisupdating ofthesituation concerning thework oftheGroup, saidthatthere was
nodoubt thatthiswasadifficult andcomplex taskanditwasencouraging thatsome progress hadbeen
achieved. Hewould notewithsome concern, however, thattheGroup 'swork appeared tobe
handicapped bythelackofspecific proposals onways tostreamline thenotification process andon
howtoextend some particular assistance todeveloping countries inthisregard. Hefound thispuzzling
inlightoftheconsiderable attention thatmany Members haddrawn tothesubject ofnotifications in
various WTO bodies. HewassurethatallMembers would agree thatevery possible effort should
bemade toreach thegoalsetbytheMinisters atMarrakesh forthisWorking Group. He,therefore,
urged allMembers totakeaserious lookatthissubject andmake surethattheirviews onallofthe
topics before theWorking Group weremade available toitassoonaspossible, andpreferably inthe
form ofwritten submissions.
9.13 TheCouncil forTrade inGoods tooknoteofthestatements.
10. Date forthenextmeeting oftheCouncil
10.1 TheChairman proposed thatthenextmeeting oftheCouncil beheldon22May1996.
10.2 TheCouncil forTrade inGoods soagreed.