WORLD TRADE ORGANIZATION

General Council 22 October 1997

RESTRICTED WT/GC/M/23 28 November 1997

(97-5234)

MINUTES OF MEETING Held in the Centre William Rappard on 22 October 1997 Chairman: Mr. C. Lafer (Brazil) Subjects discussed: 1. 2. 3. 4. 5. Conditions of service of WTO staff ..................................................................... Accession of Andorra .......................................................................................... Communication from Andorra ................................................................ Ethiopia - Request for observer status .................................................................. Accreditation of Permanent Representatives to the WTO ..................................... Committee on Balance-of-Payments Restrictions ................................................ (a) Consultation with Pakistan ...................................................................... (b) Simplified consultation with Bangladesh ................................................. (c) Consultation with India ........................................................................... (d) Consultation with Tunisia ....................................................................... (e) Consultation with the Czech Republic ..................................................... (f) Consultation with Bulgaria ...................................................................... (g) Consultation with Nigeria ....................................................................... (h) Notes on the meetings of 21-22 April, 2 May and 10-11 June 1997 ......... Committee on Budget, Finance and Administration ............................................. Report of the Committee ......................................................................... Waivers under Article IX of the WTO Agreement ............................................... (a) Hungary - Agricultural export subsidies .................................................. Request for a waiver ................................................................... (b) Harmonized System - Requests for extensions of waivers ....................... (i) Bangladesh ................................................................................. (ii) Nicaragua ................................................................................... (iii) Sri Lanka .................................................................................... (c) Zambia - Renegotiation of Schedule LXXVIII ........................................ Request for extension of waiver .................................................. Page 2 4 4 6 8 8 8 9 9 13 13 14 14 15 15 15 17 17 17 18 18 18 18 18 18

6. 7.

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(d)

(e)

Decision on the introduction of Harmonized System changes into WTO schedules of tariff concessions on 1 January 1996 ................................... Extension of time-limit ............................................................... Review of waivers pursuant to Article IX:4 of the WTO Agreement ....... (i) Canada CARIBCAN ................................................................ (ii) Cuba - Article XV:6 ................................................................... (iii) EC - The fourth ACP-EC Convention of Lom ........................... (iv) United States - Andean Trade Preference Act .............................. (v) United States - Caribbean Basin Economic Recovery Act ........... (vi) United States - Former Trust Territory of the Pacific Islands .......

19 19 19 19 19 19 19 19 19 20 20 20 20 21 23 24 24 24 24 24 25 25

8.

Arrangements for effective cooperation with other intergovernmental organizations ....................................................................................................... Draft Agreement between the World Trade Organization and the Office International des Epizooties .......................................................... Preparations for the 1998 Ministerial Conference and the commemoration of the 50th anniversary of the multilateral trading system .............................................. Statement by the Chairman ..................................................................... Frequency of meetings of WTO bodies ................................................................ Observer status for international intergovernmental organizations ....................... United States - Recent action with regard to Korea under Section 301 of the Omnibus Trade and Competitiveness Act of 1988 ............................................... Accession of Seychelles ...................................................................................... Chairmanship of the Working Party ........................................................ Accession of Azerbaijan ...................................................................................... Chairmanship of the Working Party ........................................................ Institutional reform and restructuring of the Secretariat ....................................... Implementation of the Agreements between the WTO and the IMF and the World Bank ......................................................................................................... Conditions of service of WTO staff

9.

10. 11. 12. 13. 14. 15. 16.

1.

The Chairman recalled that the General Council had decided on 1 July 1997 to request the Director-General to complete, by 31 August, detailed consultations with the United Nations Joint Staff Pension Fund concerning the determination of the amount of assets that the WTO could expect to withdraw from the Fund in the event of termination of its membership (WT/L/223). The General Council had also decided that a second opinion on the calculations of the WTO consulting actuary should be prepared by an actuary to be designated by its Chairman in consultation with the Chairman of the Working Group on Conditions of Service, and submitted by 31 August 1997. He recalled that the United Kingdom Government Actuary had subsequently been designated for that purpose. Finally, also at the General Council meeting on 1 July, the Director-General had been requested to contact the International Civil Service Commission as soon as possible to explore the possibilities for implementing reforms in WTO conditions of service, taking into account the different options raised

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by Members. The General Council had agreed that it would consider the matter of conditions of service further not later than October 1997 and decide upon the appropriate action to be taken. The General Council had thus been awaiting information on three items before resuming its consideration of the conditions of service applicable to WTO staff. Replies had since been received on all three items, namely from the United Nations Joint Staff Pension Fund, the United Kingdom Government Actuary and the International Civil Service Commission, and had been circulated to Members. Members had also received a copy of the letter addressed by the Director-General on 23 July 1997 to the Chairman of the ICSC. He believed that the three texts provided all the necessary information and answers requested by Members, while demonstrating the technical feasibility of the proposed reforms. It appeared that a large number of delegations supported the proposals on the table for the reform of the WTO Secretariat and agreed that they constituted the best possible solution to the needs of the WTO under the present circumstances. Such a solution would be the logical consequence of the decision taken at Marrakesh to establish the WTO as a sui generis institution with a distinct legal personality and not part of the UN family. It also represented a much-deserved and long overdue fulfilment of a commitment taken towards the Secretariat of the WTO. He understood, however, that certain governments were still considering the matter and were not yet in a position to join in a consensus. He therefore proposed that, notwithstanding the deadline of October 1997 set by the General Council for a decision, the General Council defer further consideration of this matter until a future meeting to be convened by the second week of November at the latest. The General Council took note of the statement and so agreed. The Chairperson of the WTO Staff Council said that Members had been supposed to take a decision at the present meeting on the establishment of an independent WTO Secretariat as required in Article VI of the WTO Agreement. However, the decision had once again been postponed. Members would soon be celebrating fifty years of the GATT/WTO trading system, but the staff, the backbone of this Organization, remained employed by the Interim Commission of an organization that never existed. The GATT as an institution had come and gone, and had never had its own secretariat. She wondered if that would be the fate also of the WTO. Fifty years earlier, Members' predecessors had decided, as a matter of convenience, to apply the UN Common System on a de facto basis to the interim Secretariat. That was still the situation at present. Perhaps the decision had been a good one fifty years earlier, but for more than 15 years this decision of "convenience" had caused considerable inefficiencies for Members, and inequities for staff. Over the years, numerous working groups had examined the matter and had concluded that the best interests of both Members and staff would be served by a Secretariat whose structure was tailored to the needs of this organization. Proposals had been made, and deadlines for decisions come and gone. The background technical work had been completed, and re-examined. Expert opinions had all confirmed the advantages to Members as well as to staff, of an independent Secretariat. Almost one year earlier, Members had formally set themselves a deadline of 30 June 1997 for this decision (WT/L/197). Yet, they were today missing yet another deadline. The basic principles of the GATT and the WTO were equitable, nondiscriminatory treatment and transparency. Staff were asking the same for the Secretariat. The proposal before Members would establish a single, equitable system of salaries, benefits and pensions for all staff. It would end the discriminatory treatment between professional and general service staff, make the Secretariat accountable only to WTO Members, and do this with no change in cost for Members. Some governments had taken the position that they wished to see the proposed system implemented at the level of the United Nations. However, the WTO was not and had never been part of the United Nations. It was obvious that to change the structure of a 500-person, Geneva-based organization was quite different from what would be required to change a world-wide organization of more than 60,000 staff members. The United Nations itself had described the WTO staff as a drop of water in the ocean of the UN. What was required of Members was a straightforward, simple decision.

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The staff urged Members to take that decision without further delay. Over the years, staff had become increasingly frustrated and demoralized. Until now, they had resorted only to the more diplomatic actions to express their dismay. However, staff had earlier voted in favour of "work to rule", should such action be necessary to secure a decision by Members. The effects of such action on the work of committees, on technical assistance, on dispute settlement, and on the preparations for the next Ministerial Conference could be significant. This was not what Members or the staff wanted. The staff wanted a decision by Members before the end of October to establish an independent Secretariat. Most Members had already recognized the benefits that such a decision would have for Members as well as for staff. Most had also been prepared to support a positive decision at the present meeting. The staff appreciated this support, and urged Members to no longer accept the delaying tactics of the few that had not yet joined in the consensus. The staff asked Members to put this issue to a vote, as provided in Article IX of the WTO Agreement, and to finally fulfil their responsibilities and create an independent, equitable Secretariat for the Organization. The Director-General said he was proud of the responsible way in which staff had expressed their point of view, and wished to confirm his full support to the commitment already taken by Members to create an independent and equitable Secretariat. The General Council took note of the statements. 2. Accession of Andorra Communication from Andorra (WT/ACC/AND/1)

The Chairman drew attention to the communication from Andorra (WT/ACC/AND/1) concerning its interest in acceding to the WTO Agreement pursuant to Article XII. The representative of Andorra, speaking as an observer, said that although Andorra's foreign trade at the beginning of the century had been concentrated in exchanges with France and Spain, its immediate neighbours, trade with the rest of Europe had intensified by the second half of the century. The reach of Andorra's economy now extended beyond the European Community and, as a result of a dynamic and entrepreneurial commercial sector, Andorra's interaction with the rest of the world had increased. Andorra believed it was time to join the WTO so that its exchanges with all countries would be based on the WTO framework. Andorra strongly believed in, and applied, the principles of an open economy. Since the 1930s, Andorra had progressively become a centre for trade, demonstrating by its example the possibilities of economic development resulting from loyal and open exchanges between sovereign States. Andorra shared the WTO's goals of trade liberalization, and wished to start the process to join the WTO in the near future. The Uruguay Round had considerably modified the nature of liberalization undertaken by the GATT since its creation. Not only had the traditional area of trade seen its scope extended to agriculture, textiles and clothing and trade-related investment measures, but new areas had come to the forefront, including services, intellectual property and dispute settlement rules and procedures. Andorra would refer essentially to three major steps forward in the Uruguay Round to justify its accession request. First, the traditional system of economic development of Andorra based on commercial tourism encountered limits. The path of industrialization should be considered, but it would seem that this would have to be circumscribed to the processing and assembly of products that had a high value-added and were non-polluting. The tertiary area other than tourism, as well as international trade, therefore seemed to Andorra to be particularly interesting. He noted that the General Agreement on Trade in Services concluded in the Uruguay Round covered all the forms that trade in services might take. Second, Andorra had demonstrated the interest it attached to intellectual property in becoming a member of the World Intellectual property Organization. However, all

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seemed to be agreed that the TRIPS Agreement of the WTO represented considerable progress over existing international standards. Third, Andorra attached considerable importance to dispute settlement as well. The Dispute Settlement Understanding of the WTO represented a considerable improvement over the status quo, and the first years of implementation of these provisions seemed to reaffirm this view, which Andorra welcomed. All these reasons, as well as Andorra's attachment to the guiding principles of the WTO, had led his Government to formally request accession to the WTO Agreement at the present meeting. Andorra wished to become a WTO Member and to contribute, within its limits, to the new world economic order established by the WTO. The representative of the European Communities welcomed Andorra's application. Andorra had close relations with the Community's member States across the whole field of government activity, and had specific relations in the trade field. It was clear from its statement that Andorra had well understood what was happening in the WTO and the trends represented by the Uruguay Round. He hoped that the General Council could establish a working party at the present meeting to examine Andorra's application, and perhaps then consider procedures to enable Andorra to move rapidly towards membership. The representative of Argentina welcomed and supported Andorra's request. The representative of the United States said that his Government was gratified to see Andorra's interest in joining the WTO. However, the United States was not in favour of following normal practice and deciding already at the present meeting to establish a working party with standard terms of reference. The United States questioned the desirability and appropriateness of Members entering into full-scale Article XII negotiations with countries whose relative participation in trade was of the order of Andorra's. The United States believed that further consultations on this question were warranted. The representative of Brunei, speaking on behalf of the ASEAN Members, expressed support for Andorra's request. Andorra's participation in the WTO, along with that of others who had also applied for membership, would benefit the WTO and give a further push to global trade. The representative of Mexico welcomed Andorra's initiative and supported holding negotiations on its accession as rapidly as possible. Mexico would follow the process closely. The representative of Paraguay expressed support for Andorra's request. The participation and cooperation of all was needed to create a global trading system under the WTO, and Paraguay supported Andorra's accession to the WTO as soon as possible. The representative of Venezuela expressed support for Andorra's request, and hoped that its accession process would be completed expeditiously. The representative of Tunisia expressed his Government's full support for Andorra's request. Andorra's application, as that of any other country -- large or small -- which was ready to accept the principles of free trade, as well as the question of the establishment of a working party or other mechanism to examine the application, should be treated with the seriousness that was due. Andorra's accession would reinforce the universality of the WTO. The representative of Chile supported Andorra's accession request, as also the establishment of a working party to examine the request. The representative of the Czech Republic expressed support for Andorra's accession at the earliest possible opportunity.

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The representative of the Slovak Republic supported Andorra's request, and said that his delegation would act constructively with the aim of contributing to a smooth and quick accession process. The representative of Japan said he wished to raise a point of order. It appeared that many delegations, including his own, had instructions to support Andorra's application. However, for each delegation to repeat this at the meeting would take up too much of the General Council's time. He suggested that the Chairman instead ask the delegations in support of Andorra's application to raise their nameplates for the record, so that this item could be disposed of quickly. The Chairman said that as he had only a few more speakers on his list, he would offer them the floor in the interests of non-discrimination. The representative of Romania expressed support for the point of order raised by Japan. His delegation's intervention was also simply to join others in welcoming and supporting Andorra's request. The representative of Mauritius expressed support for the point of order raised by Japan, as also his Government's support for Andorra's application. The representative of Canada joined others in welcoming Andorra's application. Having listened to the discussion thus far, his delegation believed that this application should not present particular difficulties, and that it could be dealt with expeditiously. There appeared to be agreement among delegations that Andorra's request was a welcome development, and that a way should be found to allow it to be dealt with speedily. The representative of Argentina associated his delegation with Japan's statement on the point of order the latter had raised. Argentina believed that in order to expedite the conduct of business in such situations the General Council could more frequently apply Rule 24 of its Rules of Procedure (WT/L/161). The representative of Cuba wished to be placed on record as welcoming and supporting Andorra's request. The Chairman proposed that the General Council agree to establish a working party to examine Andorra's application, and authorize its Chairman to hold consultations on the procedures and terms of reference of the Working Party. He further proposed that the General Council agree to revert to this matter after the consultations were concluded. The General Council took note of the statements and of the expression of support, and so agreed . The Chairman then invited Andorra, on behalf of the General Council, to attend meetings of the General Council and, as appropriate, meetings of other WTO bodies as an observer during the period when the Working Party was carrying out its work. 3. Ethiopia - Request for observer status (WT/L/229)

The Chairman drew attention to the communication from Ethiopia requesting observer status in the General Council and its subsidiary bodies (WT/L/229). In the same communication, Ethiopia had also indicated its intention to apply for accession to the WTO Agreement and had provided a description of its economy and foreign trade regime, in accordance with the guidelines for observer status for governments in the WTO (WT/L/161, Annex 2). He proposed that Ethiopia's request be granted.

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The General Council so agreed. The representative of Ethiopia, speaking as an observer, said that Ethiopia was currently undertaking a structural adjustment programme and had put in place macro-economic policies, and sectoral strategies and programmes aimed at addressing the issue of poverty. Given its limited resources, Ethiopia believed that it had gone a long way in the past six years towards meeting its objectives. It fully recognized the importance of the Uruguay Round Agreements in fostering international trade, and was aware of the WTO's role in implementing the Uruguay Round, and in assisting the developing countries in general, and the least-developed countries such as Ethiopia in particular, to be fully integrated into the international market. Ethiopia had been closely monitoring the implementation of the Uruguay Round and its impact on developed and developing countries, and had noted, for example the problem faced by some developing countries with regard to notification requirements. Ethiopia's observer status would enable it to study in detail the implications of the WTO Agreement and the workings of the WTO, and help it to submit its application for membership in due course. The representatives of Morocco on behalf of the African Group, Egypt, Kenya, India, Brunei on behalf of the ASEAN Members, and Bangladesh welcomed the granting of observer status to Ethiopia. The representatives of Morocco on behalf of the African Group , Egypt, Kenya, and India also welcomed Ethiopia's intention to become a Member of the WTO. The representatives of Egypt, India and Bangladesh underlined the importance of their respective historical and economic links with Ethiopia. The representative of Morocco, speaking on behalf of the African Group, said that Ethiopia's accession would strengthen Africa's voice in the Organization. He assured Ethiopia that African Members would give any assistance necessary to facilitate its accession to the WTO. The representative of Egypt expressed appreciation for the statement by Ethiopia and for the documentation which would facilitate Ethiopia's future accession procedure. The representative of Kenya said that the presence of Ethiopia's Minister of Trade and Industry at the meeting demonstrated that country's willingness and seriousness in participating in the WTO. As a neighbour, Ethiopia would contribute immensely in its sub-region and also, as a member of Common Market for Eastern and Southern Africa (COMESA), would bring numerous valuable ideas to the WTO. The representative of India said that over centuries Ethiopia and India had worked together in the field of economic cooperation and development especially with a view to enhancing capacitybuilding in Ethiopia. His Government was ready to participate constructively in Ethiopia's accession process. The representative of Bangladesh said that Ethiopia and Bangladesh, as least-developed countries, had interests in common, and that his delegation looked forward to working closely with Ethiopia in the General Council and its subsidiary bodies. The General Council took note of the statements. 4. Accreditation of Permanent Representatives to the WTO (WT/GC/W/61/Rev.2)

The Chairman recalled that following consultations on the basis of an initial paper prepared by the Secretariat at his request, the General Council had considered this matter on 16 July, and had

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agreed to revert to it at the present meeting. In the light of the views expressed since the 16 July meeting, a revised text (WT/GC/W/61/Rev.2) had subsequently been considered at an informal meeting on 2 October. Following the comments made at that meeting, he had undertaken to circulate a further revised text with a view to seeking agreement on accreditation procedures at the present meeting. Regrettably, however, it had not proved possible to reach a consensus on the text, and he proposed therefore to pursue consultations with interested delegations on this matter before submitting a further revised proposal. He had, in the meantime, requested the WTO Secretariat to circulate a note on the existing accreditation practices with regard to international intergovernmental organizations. He reiterated the importance of having a clear accreditation procedure for Permanent Representatives to the WTO, since the WTO had been established by the Marrakesh Agreement as an independent Organization that was not part of the UN system, and which therefore had an independent Headquarters Agreement with the host country, Switzerland, according to which Members had certain rights and obligations. A standard procedure for accreditation would also eliminate the haphazard practice currently followed in this regard, which was not in keeping with the present status of the Organization. The purpose was to have a simple but clear, standard procedure for accreditation which ensured transparency and clarity, and respected the legal nature of the Organization as an independent entity in international relations. The General Council took note of the statement and agreed to revert to this matter at a future meeting. 5. Committee on Balance-of-Payments Restrictions (a) Consultation with Pakistan (WT/BOP/R/27) (b) Simplified consultation with Bangladesh (WT/BOP/R/28) (c) Consultation with India (WT/BOP/R/32) (d) Consultation with Tunisia (WT/BOP/R/31) (e) Consultation with the Czech Republic (WT/BOP/R/33) (f) Consultation with Bulgaria (WT/BOP/R/34) (g) Consultation with Nigeria (WT/BOP/R/35) (h) Notes on the meetings of 21-22 April, 2 May and 10-11 June 1997 (WT/BOP/R/26, WT/BOP/R/29 and WT/BOP/R/30) (a) Consultation with Pakistan (WT/BOP/R/27)

Mr. Jenkins (United Kingdom), Chairman of the Committee on Balance-of-Payments Restrictions, said that at the consultation with Pakistan on 21-22 April, Members had recognized that Pakistan was facing a serious balance-of-payments (BOP) problem and had agreed that it was justified in resorting to measures in accordance with Article XVIII:B of GATT 1994. While Members had appreciated the reduction of items on the Negative List from 214 to 68 since 1989, some had pointed out that many of the items should more appropriately be justified under other WTO provisions, e.g. on grounds of health, safety, public morals or security. The Committee would meet again on 10 November 1997, with a view to concluding on the basis of (i) a clarification of Pakistan's notification of items restricted on BOP grounds, as well as an explanation as to why quantitative restrictions were preferred to price-based measures, and (ii) a short paper addressing the procedural requirements in paragraph 1 of the Understanding on the BOP Provisions of GATT 1994. The General Council took note of the statement and adopted the report in WT/BOP/R/27. (b) Simplified consultation with Bangladesh (WT/BOP/R/28)

Mr. Jenkins (United Kingdom), Chairman of the Committee on Balance-of-Payments Restrictions, said that at the simplified consultation with Bangladesh on 2 May, Members had

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recognized that, since the previous consultations, the balance-of-payments (BOP) situation had deteriorated and remained precarious. Noting a reduction in the number of quantitative restrictions in recent years, some Members had commended Bangladesh for not intensifying restrictions but continuing with its programme of trade liberalization. Members had called for further information and clarification, in accordance with paragraph 11 of the Understanding on the BOP Provisions of GATT 1994, regarding the legal basis, system and effects of restrictions, and had observed that, under paragraph 1 of the Understanding, Members were committed to announcing time schedules for the removal of restrictions taken for BOP purposes. Noting that full consultations had never been held with Bangladesh, the Committee had determined that full consultations would be desirable, as a means of clarifying the BOP situation and promoting greater transparency. The Committee had invited Bangladesh to consider holding such full consultations in the autumn of 1998 or, in any case, before May 1999. The representative of Bangladesh thanked the Committee for the understanding it had shown towards Bangladesh's situation, and assured Members that his Government continued to keep the situation under observation and would take all necessary measures to improve its BOP situation on a long-term basis. The General Council took note of the statements, and that it would be desirable to hold a full consultation with Bangladesh in the autumn of 1998 or in any case before May 1999, and adopted the report in WT/BOP/R/28. (c) Consultation with India (WT/BOP/R/32)

Mr. Jenkins (United Kingdom), Chairman of the Committee on Balance-of-Payments Restrictions, said that at the consultations with India on 10-11 June and 30 June-1 July, the Committee had been unable to arrive at agreed conclusions. Therefore, as required by the Understanding on the Balance-of-Payments (BOP) Provisions of GATT 1994, a record of the different views expressed had been produced and circulated to Members (WT/BOP/R/32). The representative of the European Communities regretted that the consultations had not resulted in a consensus on the phasing out of India's import restrictions under Article XVIII:B of GATT 1994. India's BOP situation was no longer such as to meet the conditions of Article XVIII:9, and it was therefore obliged to eliminate the restrictions pursuant to Article XVIII:11. While the WTO's BOP rules did not envisage a period of phasing out once the conditions of Article XVIII were no longer met, the Community understood that India might require time for the gradual elimination of restrictions. India's import restrictions had been in force for a very long time and covered almost all sectors of the economy. A reasonable time for the phasing out of the restrictions might therefore be needed to allow for the necessary restructuring of the economy and specific sectors of industry. That being said, it was essential that protection did not continue beyond what was strictly necessary. Since the consultations in the Committee had ended, the Community had held formal consultations with India under Article XXII of GATT 1994 with a view to finding a mutually-satisfactory solution. The Community was continuing these consultations and was hopeful that a satisfactory and legally sound agreement could be found in the near future. The representative of the United States associated his delegation with the Community's statement. The United States expected India in its consultations with its trading partners to try to reach a settlement that reflected certainty, predictability and transparency in market access in the Indian market. The Untied States was also continuing consultations with India to this effect. The representative of India regretted that the Committee had been unable to arrive at conclusions incorporating proposals for recommendations by the General Council, and that it had therefore submitted a report recording the different views expressed. India believed this outcome was

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not in the interest of the multilateral trading system. However, this situation had arisen in spite of India's efforts to show flexibility and take into account comments by Committee Members. India had consulted regularly with the Committee, as required under Article XVIII:B of GATT 1994, ever since the introduction of the measures justified under these provisions. Although the measures had been in existence for many years, the Committee had not once come to the conclusion that they were not justified under Article XVIII:B. It was only in January 1997 that the Committee had for the first time invited India to present a phase-out plan. He noted that the measures in question were justified under GATT provisions entitled "Governmental Assistance to Economic Development". Article XVIII:B had been drafted solely to enable developing countries to embark on their respective roads to economic development under the aegis of the multilateral trading system. Article XVIII:B was a distinct provision with a distinct objective, although there was already a provision in Article XII relating to the more limited issue of import restrictions introduced for BOP purposes. Obviously, the distinct objective of Article XVIII:B was to support the aspirations of developing countries for economic development. It was clear that the primary beneficiary of such economic development was the developing country concerned. Nevertheless, it was also an acknowledged fact that the benefit of economic development also flowed to the developing country's trading partners and, in this sense, the provisions of Article XVIII:B had been of value to India's trading partners as well. Article XVIII:B had several parameters, which were clearly spelt out in its provisions. It was India's conviction that in resorting to these provisions to justify its import restrictions, it had conformed in letter and spirit with these parameters. This had been acknowledged by the fact that until the current consultations, the BOP Committee had always found India's measures to be justified by these provisions. India found it difficult to agree with the Community that under Article XVIII:B or its related Understanding, there was no scope for a phase-out plan. This matter had been discussed in the Committee, and India would not revisit the arguments at this stage. While the report before the General Council in WT/BOP/R/32 understandably indicated the divergence of opinion in the Committee, there was no explicit or implicit finding by that Committee that India was in violation of any of its obligations. Outlining India's efforts to enable the Committee to arrive at proposals for recommendations by the General Council, he recalled that India had been a party to the Committee's decision in January to invite India to present a plan to eliminate the Article XVIII:B measures. At the resumed consultations on 10-11 June, the Committee had expressed its appreciation for India's timely and comprehensive notification of this proposed phase-out schedule, and had recognized the considerable effort involved in its preparation. In submitting this plan, India had not only responded positively and responsibly to the Committee's invitation, but had also acted consistently with the provisions of Article XVIII:B and the related Understanding. India's original phase-out plan had been for a period of nine years with three phases of three years each. After taking into consideration the comments by Committee Members at the meeting held on 10-11 June, India had offered to reduce the phase-out period to seven years at the meeting itself. At the Committee's meeting on 30 June-1 July, India had shown further flexibility in offering to reduce the period to six years with two phases of three years each. Following a suggestion by a major trading partner, India had then agreed, at the meeting, to split the six-year period into three phases of three, two and one years instead of two phases of three years each. India had also expressed readiness to explore with its trading partners further adjustments with regard to the products in each of the three phases, to the extent feasible, in a last-minute effort to ensure that the Committee was in a position to make an appropriate proposal for recommendation to the General Council. While the enormous sacrifice by India to arrive at a consensus in the Committee had been recognized by many Members, some had expressed their inability to accept even its vastly improved proposals. The basic point of difference, when the Committee had had to face the situation of no consensus, had been that India was agreeable to a six-year phase-out period while some of its trading partners were insisting on limiting the phase-out period to five years. India did not believe that this difference was so great as to result in a situation of no proposals for recommendations being submitted to the General Council. However, to arrive at a successful conclusion to the consultations

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in the Committee, flexibility had to be shown not only by India, which it believed it had done in ample measure, but also by some of its trading partners. He did not believe it necessary at this stage to go into various fundamental issues arising out of the report on the consultations with India. However, he wished to reiterate that countries like India believed in the multilateral trading system and were committed to following its rules. It was necessary for the WTO to ensure that the rules and the system provided a supportive environment to countries embarking on a path of trade liberalization in spite of the challenges they faced on the domestic front, both social and economic. India had fulfilled its obligations by presenting a phase-out plan to the BOP Committee as directed by the Committee, and by showing responsibility in modifying its phase-out plan to the extent possible taking into consideration the views expressed by its trading partners. It was well known that six of India's trading partners had initiated Article XXII consultations after the BOP Committee had concluded its consultations, and that one other trading partner had joined in these consultations. India was using the opportunity provided by these consultations to arrive at a satisfactory solution. In India's assessment, it was close to an understanding with the majority of the Members it was consulting with, and consultations with the remaining Members appeared promising. If India were able to arrive at an understanding with all these trading partners, it intended to submit a revised six-year phase-out plan for multilateral endorsement which would provide, inter alia, the same degree and quality of legal certainty to India as well as its trading partners. India regretted that in spite of the special efforts by the BOP Committee Chairman, it had not been possible to arrive at a consensus decision in the Committee. It was India's expectation and desire to find a solution acceptable to the collective membership of the WTO. The representative of Egypt said his delegation had noted the Committee's report as well as India's statement, and regretted the Committee's inability to reach a consensus on recommendations. Egypt sympathized with the efforts made and the flexibility shown by India during the consultations. The phase-out plan as reflected in the report and in India's statement would help India, within the framework of Article XVIII:B, to embark on its path toward economic development under the multilateral trading system. He believed that further consultations would soon lead to a consensus on this matter. The representative of Pakistan associated his delegation with India's statement, and agreed that the development dimensions of the issue should be given due weight in the BOP Committee's deliberations. The representative of Bangladesh said that India's statement had raised issues which transcended India's particular situation in this matter, and related also to the predicament of other countries at the lower end of the development scale. He urged Members to give serious consideration to India's statement with a view to arriving at a successful conclusion to the consultations. The representative of the United States said it was worth placing on record that the discussion in the BOP Committee context with respect to India was over and was no longer an issue for consideration. In that context, India was in clear contravention of its WTO obligations. It was for this reason that the United States and others had engaged the dispute settlement procedures with respect to India. The United States had tried to negotiate a solution to India's lack of compliance with its WTO obligations. However, his delegation's understanding of where things stood in those discussions was considerably different from the picture painted by India. As he had stated earlier, any settlement would need to be one that reflected certainty, predictability and transparency in respect of market access. None of those conditions had thus far been met in the United States' consultations with India.

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The representative of Cuba expressed solidarity with India's statement. Like Egypt and Pakistan, his delegation regretted that the concept of development had not been kept in mind in India's case, and that despite India's considerable efforts an agreement had not been obtained in the BOP Committee. He hoped that Article XVIII:B would be better complied with in future cases. The representative of Sri Lanka said that his delegation had noted India's statement and welcomed its desire to enter into further constructive engagement with the concerned trading partners to resolve their outstanding differences and to arrive at a consensus soon on this matter. The representative of Colombia said that India's statement was positive and showed a political will to find a solution to this matter. Although it was unfortunate that the Committee had been unable to reach a solution, his delegation believed that effort and goodwill on all sides should make it possible to reach a satisfactory solution. The representative of Brazil also expressed regret that the BOP Committee had been unable to reach an understanding on the conclusions of its report on the consultation with India. Brazil had been very active in the Committee's consultations and, in regard to the consultations with India, had addressed the question of disinvokation of Article XVIII. In Brazil's view, a phase-out plan was a recognition that a Member faced a serious BOP situation and underlined that it could not immediately do away with all restrictions without serious implications for its BOP situation. In its statement at the present meeting, India had indicated its political decision to seriously present a phase-out plan which would not create difficulties for its BOP situation. His delegation wished to stress its understanding and support for India's statement. The representative of Canada said he hoped that the General Council would not take over the work of the BOP Committee. The records of the Committee's various activities, including the report on its consultations with India, spoke for themselves. His delegation associated itself with the Community's statement. Canada was one of the countries that had held consultations with India under Article XXII, and was now engaged in trying to develop a mutually-agreed solution. He was hopeful that such a solution would be possible. The representative of Japan said that his Government's position on the BOP consultations with India had been stated on previous occasions. Japan had been engaged in bilateral consultations with India over the past several weeks in which some progress had been made, and he hoped that a mutually-satisfactory solution would be reached as soon as possible. The representative of Australia said that his delegation had hoped not to have had this discussion in the General Council, because the discussion thus far seemed to indicate a confusion as to whether India had a BOP problem. In that context, Australia wished to associate itself with the remarks by others and to note simply that the BOP Committee had been unable to agree that India in fact did have a BOP problem. The consultations that were now taking place, and in which Australia was involved, were designed to produce agreement on a satisfactory phase-out plan for India's existing quantitative restrictions. Australia, for its part, was satisfied with the progress of the consultations. He wished to place on record that Australia fully recognized that India was entitled to generous arrangements for the phase out of its restrictions. The representative of Switzerland associated his delegation with Canada's statement. Switzerland had similar concerns, and was engaged in consultations with India under Article XXII. The consultations had been progressing satisfactorily, and Switzerland was hopeful of reaching an agreement as soon as possible.

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The representative of Argentina said that a key point stressed by several delegations in this discussion was the spirit of Article 3:7 of the Dispute Settlement Understanding, which stipulated that before bringing a case to the dispute settlement system, one should try to exhaust all constructive solutions. Argentina believed that India was opening the door to such a possibility, and that this should be taken into account to try to resolve this matter in a constructive way. The representative of New Zealand said that his Government had initiated Article XXII consultations with India, and associated his delegation with the comments by Canada, Switzerland, Australia and others in expressing the hope that the consultations would result in a mutually-satisfactory solution. The General Council took note of the statements and adopted the report in WT/BOP/R/32. (d) Consultation with Tunisia (WT/BOP/R/31)

Mr. Jenkins (United Kingdom), Chairman of the Committee on Balance-of-Payments Restrictions, said that at the resumed consultation with Tunisia on 23-24 June, the Committee had commended the Tunisian authorities for their sound macro-economic policies which had led to an improvement in the external situation. Although the balance-of-payments (BOP) position had strengthened and there appeared to be no threat of a serious decline in the level of reserves, opinions had differed as to whether the situation was stable or remained fragile. According to the IMF, the outlook was encouraging. While acknowledging the residual nature of the remaining restrictions, some Members had emphasized that sectoral measures were neither in accordance with the provisions of the Understanding on the BOP Provisions of GATT 1994 nor an appropriate way of addressing a BOP problem. Tunisia had undertaken to phase out the remaining restrictions in four steps from 1 July 1997, ending 1 July 2000. The Committee had invited Tunisia to accelerate implementation of this phase-out plan should circumstances permit. On that basis, there had been a consensus to conclude the consultations. The Committee had recommended to the General Council that, in adhering to its phase-out plan, Tunisia be deemed to be in compliance with its GATT 1994 obligations. In the event of a future threat to the balance-of-payments during this period, Tunisia could seek recourse anew to Article XVIII:B. The representative of the European Communities noted that, as set out in the Committee's report, Tunisia's BOP situation had improved. However, the BOP situation was not solid, and a phasing out period of reasonable duration, taking into account all the circumstances, seemed justified. The Community welcomed the efforts being made by Tunisia and encouraged it to continue in that direction. The General Council took note of the statements, agreed that, in adhering to its phase-out plan, Tunisia be deemed to be in compliance with its GATT 1994 obligations, and adopted the report in WT/BOP/R/31. (e) Consultation with the Czech Republic (WT/BOP/R/33)

Mr. Jenkins (United Kingdom), Chairman of the Committee on Balance-of-Payments Restrictions, said that at the consultation with the Czech Republic on 14-15 July, the Committee had considered a six-month, non interest bearing import deposit scheme introduced on 21 April 1997. The Committee had welcomed the macroeconomic reforms introduced by the Czech authorities since 1990 and had applauded the progress made towards an open, market-based economy. The Committee had expressed appreciation for the timely notification of the measure under consideration, while regretting the absence of any time-schedule for its elimination. Some Committee Members had taken the view that the Czech Republic's balance-of-payments (BOP) circumstances did not justify recourse to Article XII of the GATT 1994. The Czech delegation had reaffirmed its confidence that the measure was a necessary response to circumstances corresponding to those set out in Article XII. A majority

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of Members had argued that the measure was inappropriate, particularly in that its coverage of imports was selective, and ill-designed to redress macroeconomic imbalances. They had urged the Czech authorities to eliminate it during or before a forthcoming review of the measure, or to present to the Committee, before any resumption of the consultations, a time-schedule for its elimination within 1997. The Czech delegation had maintained that the measure was in full conformity with Czech obligations under Article XII and the Understanding on the BOP Provisions of GATT 1994, and had stressed that it was without protectionist intent. Noting that the Czech authorities were planning to carry out their review before mid-September, the Committee had agreed to suspend the consultations and to resume in the week of 22 September. The Committee had welcomed the Czech authorities' readiness to take into account, during the review, the opinions expressed during the meeting. Subsequently, on 29 August, the Czech Republic had notified the WTO that it had abolished the scheme on 21 August and was no longer applying Article XII. The General Council took note of the statement and adopted the report in WT/BOP/R/33. (f) Consultation with Bulgaria (WT/BOP/R/34)

Mr. Jenkins (United Kingdom), Chairman of the Committee on Balance-of-Payments Restrictions, said that at the consultation with Bulgaria on 21-22 July, the Committee had considered a 5 per cent import surcharge introduced to safeguard the balance-of-payments (BOP) on 4 June 1996, which Bulgaria intended to reduce annually until elimination on 1 July 2000. The Committee had commended Bulgaria for having maintained, during its recent difficulties, its commitment to reform and liberalization. It had recognized that, although Bulgaria's reserve position had improved recently, its BOP situation was still delicate, and had noted, inter alia, both the continuing importance of market-oriented policies and Bulgaria's continuing reliance on the timely disbursement of official external assistance. The Committee had found that recourse to Article XII of GATT 1994 was justified. The Committee had welcomed the fact that the import surcharge was transparent, nondiscriminatory and, as a price-based measure, least disruptive to trade; it had appreciated the timely notification of the measure to the Committee along with the announcement of a time schedule in accordance with paragraph 1 of the Understanding on the BOP Provisions of GATT 1994. Some Committee members had urged Bulgaria to accelerate the elimination of this measure, as recommended by the IMF in its statement, and had expressed their hope to see progress in this regard by the next consultation. Bulgaria had affirmed that it would keep under continuous review the compatibility of this measure with its obligations under Article XII:2(b). The Committee had decided to recommend to the General Council that Bulgaria be deemed to be in compliance with its WTO obligations. The General Council took note of the statement, agreed that Bulgaria be deemed to be in compliance with its WTO obligations, and adopted the report in WT/BOP/R/34. (g) Consultation with Nigeria (WT/BOP/R/35)

Mr. Jenkins (United Kingdom), Chairman of the Committee on Balance-of-Payments Restrictions, said that at the Committee's resumed consultation with Nigeria on 30-31 July, the Members had welcomed the submission of a time schedule for the phasing out of Nigeria's remaining import prohibitions. Although at least one Member had considered Nigeria's proposal acceptable, most Members, recalling that the Committee had already concluded that these measures could no longer be justified under Article XVIII:B and the Understanding on the BOP Provisions of the GATT 1994, had called for their elimination immediately or over a much shorter time-frame than that proposed by Nigeria. The Nigerian delegation had not been in a position to propose a shorter time schedule at this meeting and had agreed to communicate the views expressed by Members to the appropriate and competent authorities for their consideration, and to consult with interested Members in November. On that basis, the Committee had decided to suspend the consultations and resume,

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with a view to concluding, in early February 1998. As they had done during a previous phase of the consultations in March, Members had reserved their rights under GATT 1994. The General Council took note of the statement and adopted the report in WT/BOP/R/35. (h) Notes on the meetings of 21-22 April, 2 May and 10-11 June 1997 (WT/BOP/R/26, WT/BOP/R/29 and WT/BOP/R/30).

Mr. Jenkins (United Kingdom), Chairman of the Committee on Balance-of-Payments Restrictions, drew attention to the Committee's discussion of its ongoing business at its meetings in April, May and June (WT/BOP/R/26, WT/BOP/R/29-30). At the meeting on 10-11 June, under "Other Business", the Committee had noted that Turkey had disinvoked Article XVIII as of 1 January 1997, and that Nigeria had removed two product groups -- textiles and furniture -- from its import prohibition list. The General Council took note of the statement and of the information in WT/BOP/R/26 and WT/BOP/R/29-30. 6. Committee on Budget, Finance and Administration Report of the Committee (WT/BFA/32)

Mr. Morjane (Tunisia), Chairman of the Committee on Budget, Finance and Administration, introducing the Committee's report on its meetings of 23 and 29 September and 7 October 1997 (WT/BFA/32), said that the Committee had, inter alia, examined the Director-General's financial report on the 1996 accounts of the GATT/WTO and the report of the External Auditor, and had recommended that the General Council approve the recommendation contained in paragraph 4 of its report. Given that the term of office of the Austrian Court of Audit with the WTO ended with the audit of the 1996 accounts, the Committee had also recommended that the General Council request the Director-General to communicate to the President of the Austrian Court of Audit Members' gratitude for the valuable contribution since 1986 (paragraph 5 of the report). The Committee had also examined a report on the Performance Against Budget as at 31 August 1997, in which an overall saving of approximately Sw F 490,000 by the end of the year had been projected. With regard to the 1998 budget estimates, after a detailed examination and in-depth discussions, the Committee, with the exception of one Member that had reserved its position, had agreed to recommend a proposed 1998 budget for the WTO Secretariat of Sw F 114,399,250 -- which included a contribution of Sw F 13,696,400 for the ITC -- and a budget for the permanent costs for the Appellate Body and its Secretariat amounting to Sw F 1,579,600. The Committee had recommended approval of the draft resolution on the expenditure of the WTO and the ways and means to meet that expenditure, referred to in paragraph 19 of its report. The Committee had also examined the ITC's report on Performance Against Budget as at 31 August 1997, in which an overall saving of approximately Sw F 1.2 million by the end of the year had been projected. The Committee had been informed that since the WTO and the UN had not been able to agree on a single budgetary format, the ITC had been obliged to present its 1998 budget in formats that would satisfy both the WTO and the UN budgetary requirements. This was a dual accounting exercise that would inevitably lead to additional costs. The Committee was concerned by this matter, and believed that this was a question of coordination and cooperation between international organizations. It also believed that WTO Members should inform their delegates at the UN in New York of this problem so that they could intervene in the competent bodies in order to identify a solution to the problem. The Budget Committee Chairman, together with the WTO Secretariat, should also engage a negotiation process with the Secretariat and the competent bodies of the UN to find a solution.

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Among other matters, the Committee had also discussed the utilization of the 1996 surplus, and had recommended contributions to the 1997 budget and advances to the Working Capital fund to be assessed on Mongolia and Panama upon their accession (paragraphs 32 and 33 of the report). The Committee had also recommended that, given that the High-Level Meeting for Least-Developed Countries scheduled for 27-28 October was a Decision of the Ministerial Conference in Singapore, the requirement for a 13 per cent overhead on the Trust Fund which would finance the meeting be waived (paragraph 38 of the report). He added that the participation of least-developed countries in WTO activities consisted of many facets, and should be approached with a global focus and a long-term perspective. He had taken the initiative to identify, with the Secretariat, measures to help these countries be removed from Category IV of the administrative measures. This required further consultations and would be discussed at the next meeting of the Committee. The Committee, at this stage, had considered the question of the access of least-developed countries in Category IV to technical assistance, including training courses. Most Members had considered that least-developed countries which were WTO Members should be exempted from the application of the administrative measure whereby Inactive Members were denied access to training or technical assistance. The Committee had been unable to make a formal recommendation on this subject since two delegations had had to refer the matter to their capitals. Following the meeting, however, he had received approval from the two Members concerned, and the Committee therefore submitted the contents of paragraph 41 of its report as a recommendation for approval. The representative of Morocco expressed satisfaction at the Committee's recommendation that the General Council approve the contents of paragraph 41. By taking this measure, least-developed countries Members of the WTO would not be discriminated against by virtue of WTO provisions. Such a discrimination would in fact constitute a contradiction with the Integrated Framework for Trade-Related Technical Assistance to be endorsed by the High-Level Meeting. It was only right therefore that the General Council act rapidly in order to do away with this risk of discrimination against WTO Members. He believed that the WTO was heading in the right direction in trying to solve the problem of arrears of the least-developed countries and wished to make an appeal to all to continue to work in a constructive manner in finding a solution to this very important problem, in order to avoid the marginalization of these countries. The representative of the United States said it was his delegation that was referred to in paragraph 20 of the Committee's report and had reserved its position on the recommended 1998 budget for the WTO. Having reached the conclusion that the proposed new third trade-policy training course could not be funded by additional savings in other parts of the WTO budget, the United States agreed that the otherwise zero growth budget for the WTO in 1998 should be increased by the amount necessary to fund this course, and therefore lifted its reservation on the budget for the WTO as recommended in WT/BFA/32. The General Council took note of the statements, approved the Committee's specific recommendations in paragraphs 4, 5, 19, 32, 33 and 38 of its report in WT/BFA/32, as well as the contents of paragraph 41, and further approved the draft Resolution referred to in paragraph 19. The General Council then adopted the Committee's report in WT/BFA/32, including the recommendations contained therein and the Resolution on the revised expenditure of the WTO in 1998 and the ways and means to meet that expenditure.

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7.

Waivers under Article IX of the WTO Agreement (a) Hungary - Agricultural export subsidies Request for a waiver (G/L/183, G/C/W/86) (b) Harmonized system - Requests for extensions of waivers (i) Bangladesh (G/L/186, G/C/W/89) (ii) Nicaragua (G/L/187, G/C/W/87) (iii) Sri Lanka (G/L/188, G/C/W/90) (c) Zambia - Renegotiation of Schedule LXXVIII Request for extension of waiver (G/L/189, G/C/W/91) (d) Decision on the introduction of Harmonized System changes into WTO schedules of tariff concessions on 1 January 1996 Extension of time-limit (G/C/W/93/Rev.1) (e) Review of waivers pursuant to Article IX:4 of the WTO Agreement (i) Canada - CARIBCAN (WT/L/185, WT/L/236) (ii) Cuba - Article XV:6 (WT/L/182, WT/L/231) (iii) EC - The fourth ACP-EC Convention of Lom (WT/L/186, WT/L/235) (iv) United States - Andean Trade Preference Act (WT/L/184, WT/L/232) (v) United States - Caribbean Basin Economic Recovery Act (WT/L/104, WT/L/233) (vi) United States - Former Trust Territory of the Pacific Islands (WT/L/183, WT/L/234)

Mr. Johannessen (Norway), Chairman of the Council for Trade in Goods, addressing the general question of requests for waivers submitted for initial consideration to the Goods Council, said that he was pleased with the speed and efficiency with which the Council had handled these requests. However, he would have been more pleased if the Council had not been obliged to recommend the granting of so many waivers. As he had stated on previous occasions, waivers were by definition exceptions to the rule, and the collective aim should therefore be to reduce considerably the number of these exceptions. The General Council took note of the statement. (a) Hungary - Agricultural export subsidies Request for a waiver (G/L/183, G/C/W86)

The Chairman drew attention to the request by Hungary (G/L/183) for a waiver from its obligations under paragraph 3 of Article 3, Article 8, and paragraph 2 of Article 9 of the Agreement on Agriculture, and to the related draft decision (G/C/W/86). Mr. Johannessen (Norway), Chairman of the Council for Trade in Goods, reporting on the Council's consideration of this request, said that the Council had agreed to forward the draft decision in G/C/W/86 to the General Council for adoption. The representative of Mexico said that at the Goods Council meeting on 6 October, Hungary had clarified some of Mexico's doubts with regard to certain terms in Annex D of the draft decision. Hungary's statement would be reflected in the record of the Goods Council meeting, and Mexico wished to see that statement reflected also in the record of the present meeting, at which the draft decision was going to be adopted. The Chairman said that a reference to the statement made by Hungary at the 6 October meeting of the Goods Council would be included in the record of the present meeting.

WT/GC/M/23 Page 18 The General Council took note of the statements1 and, in accordance with the DecisonMaking Procedures under Articles IX and XII of the WTO Agreement (WT/L/93), adopted the draft decision (WT/L/238). (b) Harmonized System - Requests for extensions of waivers (i) (ii) (iii) Bangladesh (G/L/186, G/C/W/89) Nicaragua (G/L/187, G/C/W/87) Sri Lanka (G/L/188, G/C/W/90)

The Chairman drew attention to the requests by Bangladesh (G/L/186), Nicaragua (G/L/187) and Sri Lanka (G/L/188) for extensions of waivers previously granted in connection with their implementation of the Harmonized System, and to the related draft decisions (Bangladesh G/C/W/89, Nicaragua - G/C/W/87 and Sri Lanka - G/C/W/90). Mr. Johannessen (Norway), Chairman of the Council for Trade in Goods, reporting on the Council's consideration of these requests, said that the Council had agreed to forward the draft decisions to the General Council for adoption. The representative of Bangladesh, referring to the Goods Council Chairman's remarks reflected at the beginning of this item, said that his Government recognized the extraordinary nature of waivers and did not wish to continue requesting an extension for its HS-related waiver longer than was necessary. Negotiations remained pending only with Australia at this stage, and Bangladesh hoped to conclude these soon. The General Council took note of the statements and, in accordance with the DecisionMaking Procedures under Articles IX and XII of the WTO Agreement (WT/L/93), adopted the draft decisions (Bangladesh WT/L/239; Nicaragua - WT/L/240; and Sri Lanka - WT/L/241). (c) Zambia - Renegotiation of Schedule LXXVIII Request for extension of waiver (G/L/189, G/C/W/91)

The Chairman drew attention to the request by Zambia (G/L/189) for an extension of the waiver previously granted in connection with its renegotiation of its schedule, and to the related draft decision (G/C/W/91). Mr. Johannessen (Norway), Chairman of the Council for Trade in Goods, reporting on the Council's consideration of this request, said that the Council had agreed to forward the draft decision in G/C/W/91 to the General Council for adoption. The General Council took note of the report and, in accordance with the Decision-Making Procedures Under Articles IX and XII of the WTO Agreement (WT/L/93), adopted the draft decision (WT/L/242). (d) Decision on the introduction of Harmonized System changes into WTO schedules of tariff concessions on 1 January 1996 Extension of time-limit (G/C/W/93/Rev.1)

The Chairman drew attention to the draft decision regarding the introduction of Harmonized System changes into WTO schedules on 1 January 1996 in G/C/W/93/Rev.1.

Including the statement by Hungary on this matter at the meeting of the Council for Trade in Goods on 6 October 1997 (G/C/M/23, item 4).

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Mr. Johannessen (Norway), Chairman of the Council for Trade in Goods, reporting on the Council's consideration of this matter, said that the Council had agreed to forward the draft decision in G/C/W/93/Rev.1 to the General Council for adoption. In this connection, he wished to note that Cuba had requested to be withdrawn from the list of Members annexed to the draft decision since it had subsequently concluded its negotiations. The General Council took note of the report and that Cuba had requested to be withdrawn from the list of Members annexed to G/C/W/93/Rev.1 and, in accordance with the Decision-Making Procedures Under Articles IX and XII of the WTO Agreement (WT/L/93), adopted the draft decision as amended (WT/L/243). The representative of Switzerland recalled his delegation's concerns regarding the implementation of procedures for the verification and certification of schedules that were being transposed. Switzerland appreciated the consultations being held on this matter by the Goods Council Chairman, and wished to inform Members that it had recently submitted for circulation a new communication with a view to contributing to the discussions under way.2 The General Council took note of the statement. (e) Review of waivers pursuant to Article IX:4 of the WTO Agreement (i) Canada - CARIBCAN (WT/L/185, WT/L/236) (ii) Cuba - Article XV:6 (WT/L/182, WT/L/231) (iii) EC - The fourth ACP-EC Convention of Lom (WT/L/186, WT/L/235) (iv) United States - Andean Trade Preference Act (WT/L/184, WT/L/232) (v) United States - Caribbean Basin Economic Recovery Act (WT/L/104, WT/L/233) (vi) United States - Former Trust Territory of the Pacific Islands (WT/L/183, WT/L/234)

The Chairman recalled that this item was on the Agenda pursuant to the provisions of Article IX:4 of the WTO Agreement. Under these provisions, "Any waiver granted for a period of more than one year shall be reviewed by the Ministerial Conference not later than one year after it is granted, and thereafter annually until the waiver terminates." The Article further provided that "In each review, the Ministerial Conference shall examine whether the exceptional circumstances justifying the waiver still exist and whether the terms and conditions attached to the waiver have been met. The Ministerial Conference, on the basis of the annual review, may extend, modify or terminate the waiver". In accordance with these provisions, the waivers listed under this Agenda item were before the General Council for review. Each of these waiver decisions called upon the government or entity granted the waiver to submit an annual report to the General Council on the operation or implementation of the waiver or the measures thereunder, with a view to facilitating the annual review provided for in Article IX:4. In connection with the General Council's consideration of this item, he drew attention to reports on the implementation of the waivers that had been received from the following: Canada (WT/L/236), Cuba (WT/L/231), the European Communities (WT/L/235), and the United States (WT/L/232, 233 and 234). The General Council took note of the reports submitted under the waivers under consideration.

G/C/W/97.

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8.

Arrangements for effective cooperation with other intergovernmental organizations Draft Agreement between the World Trade Organization and the Office International des Epizooties (G/SPS/W/61)

The Chairman drew attention to document G/SPS/W/61 and to the draft exchange of letters proposed therein as the basis for establishing relations between the WTO and the Office International des Epizooties (OIE). As Members were aware, the text of the Agreement on Sanitary and Phytosanitary Measures made explicit reference to the OIE, and it had been felt that a close working relationship between the two organizations would enhance implementation of the SPS Agreement. In May 1997, the General Session of the OIE, for its part, had approved the draft texts of the letters. These texts had also subsequently been approved by the WTO Committee on Sanitary and Phytosanitary Measures and the Council for Trade in Goods in July. It now remained for the General Council to also approve these texts in order to permit the formal exchange of letters which would form the basis for the collaboration between the two organizations. The General Council approved the draft texts of the exchange of letters. 9. Preparations for the 1998 Ministerial Conference and the commemoration of the 50th anniversary of the multilateral trading system Statement by the Chairman

The Chairman recalled that he had been holding informal consultations recently on the question of the preparations for the Ministerial Conference and the commemoration of the 50th anniversary of the multilateral trading system. His intention had been to begin the process of reflection among Members on the different issues which should be settled in due time to allow for the necessary preparation for the two events. At informal consultations held on 9 October, there had been a broad measure of agreement that the Ministerial Conference should be held on 18-19 May, followed by the commemoration of the 50th anniversary on 20 May, and that the General Council should take a decision to this effect at the present meeting. There had also been broad agreement among delegations that the Director-General should be requested to prepare a paper on the organization of the commemoration of the 50th anniversary. At the consultations, delegations had also been invited to reflect on what the outcome of the Ministerial Conference should be in order to establish the format and begin preparatory work. Differing views had been expressed as to whether the outcome should be in the form of a Ministerial Declaration or a summing-up by the Chairman of the Ministerial Conference. Delegations had appeared to be agreed, however, that any declaration should be kept short, and also that it would be premature to begin intensive preparatory work now for the Ministerial Conference. He would continue consultations on these matters as appropriate. He noted that, among other things, the Ministerial Conference would have to review the implementation of the WTO Agreements. As Members were aware, at its meeting in December 1997, the General Council would carry out its annual overview of WTO activities on the basis of reports from WTO bodies in accordance with the procedures agreed in November 1995 (WT/L/105). At its December meeting, the General Council would also have to consider how it would report to the 1998 Ministerial Conference. He then proposed that the General Council agree that the Ministerial Conference be held on 18-19 May, followed on 20 May by the commemoration of the 50th anniversary of the multilateral trading system, and that it invite the Director-General to prepare a paper on the organization of the commemoration of the 50th anniversary. The General Council took note of the statement and so agreed.

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10.

Frequency of meetings of WTO bodies The Chairman said that this item was on the Agenda at Egypt's request.

The representative of Egypt said his delegation wished collective consideration to be given to how delegations could cope with the frequency of meetings of WTO bodies. The increasing number of both formal and informal meetings was putting delegations, particularly those with limited human resources, under considerable strain, requiring them to be selective in participating in the various meetings. This was not a new issue. In November 1995, the General Council had adopted guidelines on the arrangements for scheduling of meetings (WT/L/106), and the Singapore Ministerial Declaration (WT/MIN(96)/DEC) had included a reference to this issue in paragraph 22. His delegation believed that neither the guidelines nor the provisions of paragraph 22 of the Ministerial Declaration were consistently enforced, and that Members should ensure that both were strictly implemented and that WTO meetings, both formal and informal, were kept within a reasonable number. As the General Council had been informed by its Chairman in February 1997, 2,340 meetings had been held in the WTO building in 1996. Factoring in the summer and the Christmas and New Year breaks, as well as other holidays through the year, this implied more than 10 meetings a day, which would require at least five persons per delegation to cover, not taking into account that most WTO delegations had interests to follow and meetings to cover in other Geneva organizations. As also indicated by the General Council Chairman in February, cancelled or rescheduled meetings had resulted in a cost of Sw F 90,000 in the first six months of 1996. Egypt believed this to be a waste of scarce resources that might be used more productively in other areas such as technical assistance. For these reasons, this issue was important, and its consideration now timely in order to ensure that the 1998 calendar of meetings strictly adhered to the guidelines and to paragraph 22 of the Ministerial Declaration. Egypt believed that to confront the issue, the Secretariat might be requested to present periodic reports on the frequency of meetings. The first report could be comprehensive, and provide detailed statistics on the number of meetings since the adoption of the guidelines and the effort being made to adhere to them, as well as the difficulties faced by the Secretariat in that regard. The report could also provide statistics to enable Members to monitor adherence to the guidelines and the progress with regard to the number of meetings and their spread through the year, as well as to monitor costs due to cancelled or rescheduled meetings. An alternative approach would be to establish a working group under the chairmanship of the General Council Chairman to examine this matter. The Chairman said that in his coordination meetings with other Chairpersons the importance of observing the guidelines for the scheduling of meetings had frequently been addressed. There was no doubt that the importance of these guidelines was fully recognized. However, one had to keep in mind that the WTO was an institution with a very broad scope. As compared to 1986, when there were 10 legal instruments under the GATT, the WTO now had under its purview 27 legal instruments, excluding Decisions and Understandings. During the same period, the number of standing bodies had increased from 14 to 33, with the increase in the subject matter of the WTO. The WTO membership was also continuously increasing. All these developments stemmed from the fact that Members had agreed to establish an organization with a broad scope and of a different nature, whose functioning therefore required more meetings. He had seen the tentative programme of meetings for 1998 which, in its present form, did not provide for more than two simultaneous formal meetings per day as required by the guidelines. This programme did not include informal meetings which, as all knew, were part of the consensus-building process in this Organization and which contributed to greater transparency. He wished to note that the recently issued WTO Daily Bulletin was also an attempt to alleviate the burden on smaller delegations which had difficulty in attending all meetings. He believed that the way to proceed on this matter was to hold consultations in which the two alternative

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suggestions made by Egypt could be addressed first. This was an important issue for all delegations, which should be addressed in a structured manner in consultations. The representative of Jamaica said his delegation fully agreed with and supported Egypt's statement, and agreed with the Chairman on the importance of this issue. Jamaica would be willing to support any initiative that would lead to the satisfactory resolution of this matter. The representative of Brunei, speaking on behalf of the ASEAN Members, supported Egypt's statement. The increase in both formal and informal meetings in the WTO had put their delegations in an untenable situation, leading them to prioritize their programme by attending selected meetings. Ministers in Singapore had recognized the problem and had agreed to paragraph 22 of the Ministerial Declaration. The ASEAN Member countries called on the General Council to effectively implement this provision. In doing so, it should be borne in mind that the increased number of meetings was the result of the increase in the number of WTO bodies. He noted that many meetings also had to be adjourned and rescheduled as a result of Members' inability to come to a consensus, mostly on procedural rather than substantive issues. If the WTO were to function effectively, a limit on the number of meetings should be accompanied by more efficient proceedings and decision making. The representative of India supported Egypt's statement and shared the concerns about the difficulties encountered by small delegations in coping with the increased number of meetings. That being said, India recognized that there was an inevitable increase in the number of meetings resulting from the increase in the number of legal instruments under the WTO and the consequential increase in the number of standing bodies. His delegation believed it was necessary for the Secretariat to keep track of the formal and informal meetings held daily, and to analyze after, say, 6 months, how the guidelines on scheduling of meetings were working. While he had no ready solution to the problem, he believed that an analysis of the formal and informal meetings held over a period of 6 months to a year would probably show that the meetings were not evenly spread over the available working days. As a result, the time slots available for holding meetings were further reduced. India supported the Chairman's suggestion that informal consultations be held in a structured manner, to see whether all could collectively arrive at a meaningful solution to the problem. The representative of Cuba associated his delegation with Egypt's statement. Small delegations were overwhelmed by the number of formal and informal meetings, and this matter required further consideration to ensure adherence to the decisions that had been taken earlier regarding the scheduling of meetings. The Chairman proposed that he hold structured consultations on this matter. The consultations, open to all, would be held as soon as possible and would take into account the suggestions made by Egypt on how to address this issue. The Secretariat would be requested to prepare some additional information for circulation to Members on this matter. The General Council took note of the statements and so agreed. 11. Observer status for international intergovernmental organizations

The representative of Egypt, speaking under "Other Business", expressed concern at the inconsistency in dealing with requests for observer status from certain international organizations in various WTO bodies. In some subsidiary bodies, some delegations had been eager to take a decision on certain requests. Other delegations had insisted, however, that no decisions be taken in the subsidiary bodies until those requests had been discussed and settled at the level of the General Council. Egypt looked forward to dealing with this issue more consistently with the cooperation of

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all. His delegation had on several occasions supported the requests by the Organization of African Unity (OAU), the Organization of the Islamic Conference (OIC) and the Islamic Development Bank in various WTO bodies, bearing in mind the relevance of their activities to the WTO and the interests of the countries members of these organizations. He requested information from the Chairman on the latter's efforts to find an acceptable solution soon to this issue. The Chairman said that he had been talking and consulting informally with delegations on the question of pending requests from international organizations for observer status in the General Council. Regrettably, the consultations, which he had been pursuing since the beginning of the year, had thus far been inconclusive. There were differing views concerning procedures and criteria for examining these requests. Some delegations favoured the establishment of across-the-board criteria to examine specific requests, while others favoured a highly restrictive orientation whereby only organizations with a close working relationship with the WTO should be given observer status. It had generally been recognized that the problem was complex, often coloured by political overtones. He had also on several occasions discussed this question extensively with the chairpersons of other WTO bodies subordinate to the General Council, from which it appeared that the general view in most bodies was not to rush into any decision but rather to await developments in the General Council. Certain bodies, such as the Committees on Trade and Development and Trade and Environment, had moved forward and dealt independently with the requests addressed directly to them. In the light of this, he had come to the conclusion that the only way to move forward was through the adoption of a pragmatic approach to requests on a case-by-case basis, based on the criteria already contained in paragraph 4 of the guidelines on observer status for international intergovernmental organizations (WT/L/161, Annex 3), without any additions or modifications. At the same time, he would invite chairpersons of the subsidiary bodies to proceed in a similar manner at any time they considered appropriate, either before or after the General Council had concluded its consideration of the requests before it. He announced that he would reactivate broad informal consultations with interested delegations on this matter as soon as possible. This had not been done earlier because of the priority attention that had had to be given to such questions as conditions of service of WTO staff and the preparations for the 1998 Ministerial Conference and the 50th anniversary commemoration meeting. He drew attention, for the purpose of these consultations, to an updated list of requests for observer status in the General Council that had recently been circulated (WT/GC/W/51/Rev.4). The representative of Brunei, speaking on behalf of the ASEAN Members, supported the OIC's request for observer status. The OIC had become increasingly involved over the years in economic programmes beneficial to its members. Its participation as an observer in the WTO would be advantageous to both organizations, and enable the OIC to better fulfil its responsibilities. The OIC's request should be given rapid and positive consideration in the General Council. The representative of Bangladesh strongly supported Egypt's statement. Any perceived inconsistency in Members' approach to the granting of observer status to international organizations would be unfortunate. Bangladesh supported the Chairman's intention to consult so that any differences in approach could be resolved, and a fair, equitable, consistent and across-the-board policy reached. Bangladesh believed that the three organizations referred to by Egypt had the necessary merit, institutional strength and the legal status to be observers in the General Council, and strongly recommended positive and rapid consideration of their requests. The representative of Argentina said that Egypt had raised a very substantive matter, and noted that under Rule 25 of the General Council's Rules of Procedure (WT/L/161), substantive discussions "shall be avoided" under "Other Business". He proposed therefore that the discussion on this item be closed, in the light of the Chairman's intention to hold consultations on this matter. The General Council took note of the statements.

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12.

United States - Recent action with regard to Korea under Section 301 of the Omnibus Trade and Competitiveness Act of 1988

The representative of Korea, speaking under "Other Business", said that on 1 October, the United States had identified Korea's automobile market practice as a "priority foreign country practice" under Section 301 of the Omnibus Trade and Competitiveness Act of 1988. Korea had raised this matter at the 6 October meeting of the Council for Trade in Goods,3 and wished to draw attention to it once again in the General Council in view of its serious implications for the multilateral trading system. His Government believed that the current automobile market practice in Korea was in conformity with its WTO obligations. Nonetheless, Korea had made sincere efforts to resolve the issue through consultations with the United States. It was regrettable, therefore, that the United States had decided to resort to its unilateral procedure at this stage. Korea believed that such action by the United States, which put undue pressure on its trading partners through unilateral domestic procedures, ran counter to the spirit and principles of the WTO Agreements. Korea reserved its rights under the WTO Agreements in this connection. In particular, if the procedures initiated by the United States resulted in nullifying or impairing Korea's legitimate interests in its export of goods and services to the United States, Korea would take appropriate measures in response in accordance with the relevant provisions of the WTO Agreements and through other legitimate means. The General Council took note of the statement. 13. Accession of Seychelles Chairmanship of the Working Party

The Chairman, speaking under "Other Business", informed the General Council that following his consultations, Mr. Berthet (Uruguay) had agreed to replace, as Chairman of the Working Party on the Accession of Seychelles, Mr. Ravaloson (Madagascar) who had left Geneva. The General Council took note of this information. 14. Accession of Azerbaijan Chairmanship of the Working Party

The Chairman, speaking under "Other Business", informed the General Council that he was still pursuing consultations concerning the designation of a Chairperson for the Working Party on the Accession of Azerbaijan. The representative of Azerbaijan, speaking as an observer, said that the economic reforms begun in Azerbaijan four years earlier now appeared irreversible, and Azerbaijan was transforming itself into a market-driven economy. The country was globalizing rapidly, and a key indicator of its efforts to integrate into the world economy was the reduction in import duties, which now stood at 15 per cent. All taxes on exports had also been eliminated, and Azerbaijan had begun the process of privatization and the opening-up of industries to foreign investment. The private sector was now allowed to invest in former key state-industries.

See G/C/M/23, item 8.

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In 1995, Azerbaijan had begun, in close cooperation with the IMF, the World Bank and the European Bank for Reconstruction and Development, the systematic implementation of market reforms in the financial sphere. Azerbaijan was currently engaged in preparing a Memorandum on its trade regime for submission to WTO Members. Its decision to accede to the WTO stemmed from its desire to use the wide opportunities of international markets to ensure the continuity of the process of foreign trade liberalization. Azerbaijan's deepening cooperation with the WTO had made it more active in its efforts to review its foreign trade practices and the reorganization of its institutions according to WTO standards. His Government was aware that the WTO accession process was complex, and hoped that the assistance of the Secretariat, Members and the Accession Working Party would help it to minimize the time period involved. The General Council took note of the statements. 15. Institutional reform and restructuring of the Secretariat

The Chairman, speaking under "Other Business", recalled that at its meeting on 24 April 1997, the General Council had adopted a Decision on the WTO Secretariat and senior management structure (WT/L/207) in which it had requested the Director-General to submit a report with his recommendations on this matter to the General Council as soon as possible but not later than October 1997. This report had recently been circulated to delegations (document no. 5553) and he intended to hold informal consultations thereon in the near future. The General Council took note of this information. 16. Implementation of the Agreements between the WTO and the IMF and the World Bank

The Chairman, speaking under "Other Business", recalled that the Decision on the Agreements between the WTO and the IMF and the World Bank (WT/L/194) provided, inter alia, that the Director-General hold consultations with Members, under the auspices of the Chairman of the General Council, and that these consultations should include reports on the coherence consultations between the Director-General and the Managing Director of the IMF and the President of the World Bank, as well as on other matters. A first report was being prepared, and consultations with Members would be held in the near future. The General Council took note of this information.