RESTRICTED
PREPARATORY COMMITTEE PC/IPL/M/8
FOR THE 1December 1994
WORLD TRADE ORGANIZATION
(94-2572)
SUB-COMMITTEE ONINSTITUTIONAL ,
PROCEDURAL AND LEGAL MATTERS
MINUTES OFTHE MEETING HELD ON11NOVEMBER 1994
1. TheSub-Committee onInstitutional, Procedural andLegal Matters helditseighth meeting on
11November 1994 under theChairmanship ofMr.K.Kesavapany (Singapore).
A. Paragraph 8(b)(ii) oftheDecision establishing thePreparatory Committee
(i) Terms ofreference forWTO bodies
2. TheChairman recalled thattheSub-Committee had,atitsprevious meetings, approved terms
ofreference fortheWTO Committees onAgriculture, Balance-of-Payments Restrictions, andBudget,
Finance andAdministration. With regard toterms ofreference fortheWTO Committee onTrade
andDevelopment, work thereon hadrecently beencompleted, andtheproposed terms ofreference
together withastatement tobemade bytheChairman upon theirapproval, hadbeencirculated as
document 2736. Henoted thatfootnote 4ofthattextcalled foraction bytheSub-Committee with
respect totheprovisions inparagraphs 6and7.Inconformity withtheapproach followed forthe
terms ofreference ofother WTO Committees, hewould suggest these paragraphs bedeleted. Inview
ofthelatecirculation ofthisdocument, however, heproposed thattheSub-Committee revert tothis
matter atitsnextmeeting, bywhich timedelegations would hopefully beprepared toapprove the
proposed terms ofreference.
3. TheSub-Committee tooknoteofthestatement andsoagreed.
4. TheChairman, turning toterms ofreference fortheproposed WTO Committee onMarket
Access, recalled thatatitsmeeting on21October, theSub-Committee hadagreed thatplurilateral
consultations should beheldonthismatter. Asaresult ofthese consultations, agreement hadbeen
reached ondraftterms ofreference, aswellasonastatement tobemade bytheChairman atthetime
oftheirapproval, which hadbothbeencirculated asdocument 2626. Given thelatecirculation of
thisdocument, heproposed thattheSub-Committee consider theapproval oftheterms ofreference
contained therein atitsnextmeeting.
5. TheSub-Committee tooknoteofthestatement andsoagreed.
6. TheChairman, turning tothequestion oftheContact Groups, drew attention tothereport by
theChairman oftheContact Group onAgriculture, indocument 2463, withrespect totheAgreement
onSanitary andPhytosanitary Measures (SPS). TheContact Group hadreached agreement onaformat
forthenotification ofsanitary andphytosanitary measures andonother procedures relating to
notifications under theSPSAgreement, which hadbeencarefully worked outintheGroup. Onthe
question ofnotification requirements fortheWTO Committee onAgriculture, theContact Group had
meton31October andwould continue these discussions atafurther meeting on17November.PC/IPL/M/8
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7. TherepresentativeoftheEuropeanCommunitiessaidthatsincehisdelegationhadbeeninformed
onlyrecently thatthereport indocument 2463 would beconsidered atthepresent meeting, itwould,
forinternal procedural reasons, beabletogiveitsformal approval thereon onlyatthenextmeeting.
8. Therepresentative ofArgentina saidthat,inhisunderstanding, thereport under consideration
hadbeendiscussed andapproved already intheContact Group, including bytheCommunity.
9. TheChairman saidthattheCommunity 'srequest wasfortimetolookoverthetextonceagain
before theSub-Committee finally approved it.Accordingly, hewould propose thattheSub-Committee
revert tothereport indocument 2463 atitsnextmeeting.
10. Turning totheContact Group onAnti-Dumping, Subsidies andSafeguards, hesaidthatthis
Group hadheldfivemeetings since thesummer break, andhadundertaken adetailed examination of
notification requirements under several provisions oftheWTO Agreement onSubsidies and
Countervailing Measures. TheGroup expected topresent concrete proposals totheSub-Committee
laterinthemonth forstandard formats fornotifications under theprovisions inquestion. TheGroup
hadalsobegun, more recently, todiscuss procedural arrangements forarbitration proceedings under
Article 8:5oftheWTO Agreement onSubsidies andCountervailing Measures. Itwashoped thatat
leastonsomeoftheissues raised inthiscontext, theGroup would beinaposition alsotosubmit concrete
proposals totheSub-Committee laterinthemonth.
11. Asregards theContact Group onTRIPS, areport byitsChairman hadbeencirculated in
document 2666. Asreflected inthatreport, aprogramme ofwork aimed attheestablishment ofa
cooperativerelationshipbetweentheWTOandWIPO,andatechnicallevelworkingrelationshipbetween
theSecretariats ofthetwobodies, hadbeenworked outandinitiated. Itwashisintention tocirculate
aseparate report forconsideration attheSub-Committee 'smeeting ontheTRIMs matters thatthis
Contact Group hadbeenasked toaddress. Thatreport, together withthereport indocument 2666,
would beconsidered forapproval atthenextmeeting. Hesuggested thatthethree Contact Groups
continue thework thatremained before them withtheintention ofconcluding itandreporting tothe
Sub-Committee atthelatest byitsnextmeeting.
12. TheSub-Committee took noteofthestatements andagreed torevert tothereports in
documents 2463 and2666 atitsnextmeeting.
(ii) Rules ofprocedure forWTO bodies
13. TheChairman recalled thatatthe21October meeting oftheSub-Committee, delegations had
expressed thewishtoprovide additional comments onthenon-papers bytheSecretariat ondraftrules
ofprocedure fortheMinisterial Conference andfortheGeneral Council, aswellasonguidelines for
observer governments andintergovernmental organizations. Atthesamemeeting, theSub-Committee
hadrequested theSecretariat toprepare draftrules ofprocedure fortheTrade Policy Review Body
andtheDispute Settlement Body (DSB). Hedrewattention todocument 2627/Rev.1, which compiled
alloftheSecretariat 'snon-papers onthese subjects, andnoted thatallchanges fromprevious versions
hadbeenindicated intherevised texts, including thechanges thathadbeensuggested ataninformal
consultation heldon7November.
14. Therepresentative oftheEuropean Communities, referring toparagraph 3ofthedraftcriteria
andguidelines forobserver status forinternational intergovernmental organizations, saidthathis
delegation wished toseethewords "oroftheDispute Settlement Body" attheendofthatparagraph
incorporated inthefinaltextapproved bytheSub-Committee. TheDSBlayatthecoreoftheWTO
system andwasthemostsensitive areaoftheWTO 'sactivities. While itwould befortheWTO bodies
themselves, under paragraph 5ofthedraftcriteria, toconsider inviting international intergovernmentalPC/IPL/M/8
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organizations asobservers onacase-by-case basis, theCommunity would notwishtohavetheDSB
consider requests forobserver status fromsuchorganizations, particularly aslongasonedidnotknow
whatkindofaccess otherorganizations would beabletogranttheWTO atmeetings oftheirownbodies.
15. TheChairman saidthatthewords referred tobytheCommunity hadbeenputinsquare brackets
intheSecretariat 'srevised drafttextbecause ofanapparent divergence ofview astowhether they
should beincluded inthefinaltextapproved bytheSub-Committee. TheSecretariat would undertake
further consultations onthismatter untilthenextmeeting oftheSub-Committee.
16. Therepresentative ofIndia expressed support fortheCommunity 'sviewonthisissue.
17. Therepresentative ofPakistan asked whether theterm "international intergovernmental
organizations" included thefour organizations which were observers atthemeetings ofthe
Sub-Committee.
18. TheChairman saidthatitwashisunderstanding thatobserver status forthefourorganizations
referred tobyPakistan would bedetermined inthecontext ofanyformal arrangement forcooperation
andconsultation entered intowiththese organizations, asmentioned inparagraph 6oftheguidelines
currently before theSub-Committee. Headded thatthedraft criteria being drawn upbytheSub-
Committee would, oncetheywereadopted, beapplied onacase-by-case basis bytherelevant WTO
bodies intheirconsideration ofrequests forobserver status fromother international intergovernmental
organizations. Hethenproposed that,given thelatecirculation ofdocument 2627/Rev.1, theSub-
Committee revert totheconsideration ofthetextscontained therein atitsnextmeeting.
19. TheSub-Committee tooknoteofthestatements andsoagreed.
20. TheChairman drew attention toacommunication from theUnited States onrules ofethical
conduct inthesettlement ofdisputes, which hadrecently beencirculated (PC/IPL/W/12).
21. Therepresentative oftheUnited States saidhehoped thatdelegations would takethetimeto
review hisGovernment 'scommunication andsenditontheirauthorities forconsideration. Itwasclear
thattherewassubstantial support within theSub-Committee forthenotion ofethical guidelines insome
formtosafeguardtheintegrityandtheimpartialityofproceedingsconductedundertheDisputeSettlement
Understanding (DSU). Rather than submit aconceptual paper solateinthecourse ofthe
Sub-Committee'swork,hisdelegationhadsubmittedasetofdraftsthatcouldconstitutesuchasafeguard.
Theethical codeofconduct wasdesigned tocomplement theoperation oftheDSU. Itwould notreopen
issues thathadbeensettled during theUruguay Round, primarily because suchalevelofdetail had
notbeenreached during theRound. Itwould, moreover, apply directly topanellists, totheAppellate
Body andtoSecretariat officials. Theproposed rulesprovided foradisclosure bypanellists, Appellate
Body members andSecretariat officials ofpertinent information before dispute settlement proceedings
wereunder waysothatpotential conflicts ofinterest could beavoided. TheUnited States hadprepared
three different versions ofadraftdisclosure statement, oneforeachofthese types ofindividuals, to
beusedforthispurpose. Thedisclosure statements would takecareofpotential conflicts before they
becameproblems.Furthermore,theproposaladdressedtheneedforpanellists,AppellateBodymembers
andSecretariat officials totakecare, intheperformance oftheir duties during dispute settlement
proceedings, toadhere totherulesofethical conduct inorder tomaintain theirindependence andavoid
conflicts. TheWTO would provide, bymeans ofaseparate decision –adraftofwhich wasannexed
totheproposal –forthedisqualification fromfurther involvement inadispute ofanypanellist, Appellate
Body member orSecretariat official committing amaterial violation oftherules. Finally, there was
aneed, inthenewdispute settlement system, foraclerk ofthecourt, which theUnited States had
designated asa"Registrar". TheRegistrar would receive submissions anddirect themtotheappropriate
panels ortotheAppellate Body, andperform otherclerical functions, including receiving andprocessingPC/IPL/M/8
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thedisclosure statements. TheUnited States envisaged onestaffmember forthispurpose, possibly
from among thestaffassigned totheAppellate Body inthefuture.
22. Although therewasnotmuch timeleftinthelifeoftheSub-Committee, theUnited States placed
considerable importance onthequestion ofrulesofethical conduct, andbelieved thatitwasnotalone.
Ideally, itsproposal could beapproved bytheSub-Committee forinclusion among therecommendations
tobemade bythePreparatory Committee totheWTO. Hisdelegation believed thatthere wastime
foratleastonemeeting ofinterested parties, under theauspices oftheSub-Committee, towork through
theproposal. Onecould thendetermine howfarfrom afinished product thedraftproposal wasand
howmuch could bereflected inthereport ofthePreparatory Committee totheWTO. Hisdelegation
requested thattheSub-Committee proceed onthisbasis.
23. TheChairmansaidthatthematterraisedbytheUnitedStatesshouldbegivenseriousanddetailed
consideration.
24. Therepresentative ofCanada recalled thatwhen thisissuehadfirstbeenraised, hisdelegation
hadexpressed support forthedevelopment ofacodeofethical conduct. Hisdelegation therefore
supported finding some waytogiveasmuch consideration aspossible tothisinthetimethatremained
fortheSub-Committee toconclude itswork.
25. TheChairmanproposedthatherequestamemberoftheSub-Committeetoundertakeplurilateral
consultations onthismatter andtocarry theprocess asfarasitcould betaken.
26. TheSub-Committee tooknoteofthestatements andsoagreed.
B. Paragraph 8(b)(iii) oftheDecision Establishing thePreparatory Committee
– Arrangements foreffective cooperation withother intergovernmental organizations
27. TheChairman recalled thataninformal meeting ofheads ofdelegations hadbeenheldon
3November, atwhich theWTO 'srelations withtheUN/UNCTAD hadbeendiscussed. Averylarge
number ofdelegations hadprovided theirpreliminary views, onthebasis ofwhich hehadreached
thefollowing conclusions. With regard totherelationship between theWTO andtheUN,there had
beenaclearconsensusthattheWTOwasasuigenerisorganizationestablishedonthebasisofcontractual
rights andobligations. Delegations hadpointed outthat,unlike inthecaseoftheHavana Charter for
theInternational Trade Organization, theWTO Agreement didnotprovide foraformal relationship
withtheUN. They hadbeenoftheviewthat,inthelightofthese legalandconstitutional features
unique totheWTO, theindependence oftheWTO should bemaintained. They hadalsobeenofthe
view thatitwould beinappropriate tohave theWTO placed inaposition ofdependency and
accountability totheUNinviewofthelatter'spolicy driven nature anditslarger membership than
theexpected membership ofWTO. Atthesame time, delegations hadbeenagreed ontheneedfor
work tobeundertaken ontheestablishment ofacooperative relationship withtheUN,andhehad
suggested thatthisbeundertaken bytheGeneral Council oftheWTO.
28. Withregard totherelationship between theWTO andtheUNCTAD, therehadbeenaconsensus
ontheneedforeffective working relations between thetwoorganizations. Many delegations had
expressed theviewthatsuchrelations should beoperational asofdayoneoftheentry intoforce of
theWTO. TheSecretariat 'snon-paper indocument 2590 hadbeenconsidered asproviding agood
basis foridentifying further areas inwhich working relations wereneeded andwould beestablished.
Inthelightoftheconsensus forwork tobeundertaken indeveloping suchaworking relationship with
theUNCTAD, hehadinvited delegations tosubmit comments orinputs ontheSecretariat 'snote.PC/IPL/M/8
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Hehadfurther suggested thatoncethenotehadbeenrevised, he,together withtheSecretariat, would
approach theUNCTAD Secretariat toexplore howwork onthedevelopment ofsucharelationship
could beinitiated. Theresults ofthecontacts would bereported either totheSub-Committee orto
thePreparatory Committee.
29. Therepresentative ofEgypt saidhewished tomake clearthatwhile theWTO Agreement did
notprovide forformal relations withtheUN,itdidnotprevent themeither. Hisdelegation believed
thattheWTO should notenter intoaconfrontation withtheUN. What wasdeliberated intheUN,
particularly inthefieldofeconomic andtrade relations, represented anareaofcommon interest to
bothorganizations. TheWTO should notliveinisolation ofevents intheinternational community
asrepresented bytheUN. Thisshould beclear, andthematter ofrelations withtheUNshould be
decided bytheWTO, notbythePreparatory Committee.
30. Therepresentative ofMorocco saidthathisdelegation agreed fullywiththeconclusions drawn
bytheChairman. Heasked whether theChairman intended tocirculate thetextofhisconclusions.
31. TheChairman saidthathisconclusions would bemade available todelegations.
32. TheSub-Committee tooknoteofthestatements.
33. TheChairman, turning tothequestion ofrelations between theWTO andtheIMFandWorld
Bank, recalled thatatthemeeting oftheSub-Committee on7October, hehadindicated thatthe
Secretariat hadbeenrequested toprepare apaper identifying thearrangements thatwould havetobe
putintoplace withthese organizations by1January 1995. Thisnotehadrecently beencirculated as
document PC/IPL/W/10. Itappeared thatthere werethree separate areas ofwork inregard tofuture
relationships between theWTO andtheBretton Woods institutions, which could bedescribed as
functional, cooperative andpolicy-related. Thefunctional relationship required anunderstanding being
reached onhowtoaddress thoseaspects oftheUruguay Round Agreements thathadformal implications
fortheIMF/WTO relationship. These hadbeenaddressed intheSecretariat 'spaper under thesub-
heading "New Formal Relations". Thiscould bedone bymeans ofanexchange ofletters between
theDirector-General oftheGATT andtheManaging Director oftheIMF, orsome similar mechanism
toestablish these formal relations. These would relate primarily totheroleoftheIMFintheWTO 's
Balance-of-Payments Committee. Thebasis forcooperation oftheWTO withtheWorld Bank could
belessformal. While there were bothexplicit andimplicit references totheWorld Bank inthe
Agreement Establishing theWTO, these didnotrequire immediate formal action atthisstage.
34. Thesecond arearelated towork required toensure greater cooperation between theWTO and
thetwoBretton Woods institutions. Anumber ofproposals made intheUruguay Round Negotiating
Group ontheFunctioning oftheGATT System (FOGS) hadbeen reflected inSection 3ofthe
Secretariat 'spaper. These included, forexample, staffexchanges, intensified andmore structured staff
contacts, exchanges ofresults ofresearch andthejointexecution ofappropriate technical cooperation
projects. Inthisrespect, itmight benecessary toeventually specify thenature ofthearrangements
according towhich cooperation inthese areas could beintensified between theWTO, theWorld Bank
andtheIMF.
35. Third, andfrom apolicy perspective, itwasimportant tohaveaclearideaoftheissues that
needed tobeaddressed under theheading ofgreater coherence andconsistency inglobal economic
policy-making. Though theconcept ofcoherence hadnever beenclearly defined intheFOGS Group,
anumber ofissues relating toithadbeendiscussed. These hadbeendescribed inSection 2ofthe
Secretariat 'spaper. They related bothtoinconsistencies between GATT provisions andobligations
andmeasures taken inaccordance withpolicy advice given bytheWorld Bank andtheIMFontradePC/IPL/M/8
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andtrade-related issues, andtoavenues toaddress theinterlinkages thatexisted between policies relating
totrade, money andfinance.
36. Heproposed that, inpreparation fortheoperation oftheWTO Committee on
Balance-of-Payments Restrictions asof1January 1995, anexchange ofletters between theDirector-
General ofGATT andtheManaging Director oftheIMFbeprepared toprovide thebasisfortheIMF
toparticipate inthework oftheCommittee onBalance-of-Payments Restrictions. Heproposed that
nomore thanthisbedone before 1January 1995. Other matters, including closer institutional
cooperation, would beaddressed atalaterstage. Inthemeantime, written comments orsuggestions
ontheproposals intheSecretariat 'sdocument oncloser institutional cooperation withtheBretton Woods
institutions would bewelcome, andshould beforwarded totheSecretariat. Similarly, delegations '
written comments onwhatcould appropriately bedealtwithinthecontext ofgreater coherence and
consistency inglobal economic policy-making would alsobewelcome. After theWTO hadentered
intoforce, some mechanism could beestablished toexamine thisissue.
37. Therepresentative oftheEuropean Communities saidthathisdelegation recognized the
importance oftheissueofcoherence, andthatoneneeded toreflect onitandtofindways andmeans
totakethisintoaccount better thaninthepast. ButastheChairman hadstated, theFOGS Group
hadbeenpondering thisforalongtime, andhisdelegation believed thattheSub-Committee could
notcome toconcrete conclusions onthisinthetimethatremained foritswork tobeconcluded. There
wasnourgency onthisissue, anditsconsideration could bepostponed untilaftertheentry intoforce
oftheWTO.
38. Therepresentative ofAustralia agreed thattheSub-Committee, atitsnextmeeting, should
dealwiththerelationship between theIMFandtheWTO toallow thespecific mechanisms dealing
withbalance-of-payments tobeimplemented. Asregards theSecretariat 'spaper, thestatement inthe
firstparagraph thatoneofthefivefunctions oftheWTO was"toachieve" greater coherence inglobal
economic policy-making, wassomewhat moreambitious thantheprovision inArticle III:5oftheWTO
Agreement referring totheWTO 'scooperation, asappropriate, withtheIMFandthe"World Bank
withaviewtoachieving" greater policy coherence. Australia considered itimportant thatwhen the
WTO considered thequestion ofcoherence andconsistency, itfocused onissues thatrelated specifically
tothefunctions oftheWTO. Ontheissueofconsistency, itwould behelpful tohavemore specificity
ontheproblems thatmight beidentified under thisgeneral heading. Onealsohadtokeepinmind
thedifferent structure oftheWTO, IMFandWorld Bank when developing thevarious elements of
cooperation between these organizations, andtoreflect carefully onthelevelatwhich anyexchanges
ofletters needed totakeplace. TheChairman hadmentioned, forexample, anexchange ofletters
between theDirector-General oftheWTO andtheIMF. However, while theManaging Director of
theIMFwasalsotheheadoftheExecutive Board, theDirector-General oftheWTO would notbe
theheadoftheorganization. Rather, theheadoftheorganization would betheChairman ofthe
Ministerial Conference orperhaps theChairman oftheGeneral Council intheinterval between sessions
oftheMinisterial Conference. Astothemention intheSecretariat 'spaper ofthepossibility, which
hadbeendiscussed onvarious occasions, ofestablishing anoffice oftheWTO inWashington, his
delegation would wishtoreflect onthisfurther.
39. TheChairman saidthattheSecretariat 'spaper hadbeenbased oncomments andobservations
from delegations. Some oftheissues mentioned inthepaper would needconsiderable reflection, in
particular thequestion ofcoherence, andshould notberushed. Asregards theexchange ofletters
hehadproposed between theIMFandtheWTO, therewasaprecedent1tofallbackon,andthiscould
betaken intoconsideration inthisrespect
1SeePC/IPL/W/3, Annex 1andPC/IPL/W/10, page 2.PC/IPL/M/8
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40. Therepresentative ofCanada saidthatallagreed thatachieving greater cooperation inglobal
economic policy-making wasanimportant taskfortheWTO. TheSecretariat hadcorrectly identified
threekeyelements oftheUruguay Round textswhich pointed intherightdirection: first,Article III:5
oftheAgreement Establishing theWorld Trade Organization, which called ontheWTO tocooperate
withtheIMFandtheWorld Bank withaview toachieving greater coherence inglobal economic
policy-making; second, theMinisterial Declaration onthecontribution oftheWTO toachieving greater
coherence inglobal economic policy-making; andthird, thecallsforincreased cooperation between
theWTO andtheIMFandWorld Bank setoutintheMinisterial Decision onmeasures concerning
thepossible negative effects oftheagricultural reform programme onleast-developed andnet
food-importing developing countries. Henoted inthiscontext thatcooperation amongst international
economic institutions hadbeendiscussed attherecent G-7Summit meeting inNaples, Italy, where
leaders hadindicated thattheywould review progress towards cooperation between theWTO, IMF,
World Bank andtheOECD attheirnextsummit. Such cooperation wasessential ifthemomentum
fortrade liberalization wastobecontinued andtherapidly expanding agenda ofnewtrade issues was
tobeaddressed inacoherent manner.
41. TheSecretariat paper hadalsocorrectly stressed thatwork oncertain elements –suchasthe
formalization ofrelations arising directly outoftheUruguay Round results, inparticular theexpanded
rolewhich theIMFwould becalled upontoplayintheCommittee onBalance-of-Payments Restrictions
duetothebroadening ofWTO disciplines toinclude services –should beundertaken quickly. Canada
agreed thatthisrelatively straightforward stepshould betaken, asapriority, before theentry intoforce
oftheWTO, andsupported thesuggestion thatthiscould bedonethrough anexchange ofletters between
theDirector-General ofGATT andhisIMFcounterpart. TheSecretariat paper hadalsolisted aseries
ofstepswhich would increase thelevelofcooperation between thethree institutions atthestafflevel.
Greater sharing ofdocumentation anddata–thesharing ofconfidential dataamong Secretariats should
notbeviewedasanimpediment,sinceguidelinescouldbedeveloped–jointresearchandstaffexchanges,
heightened staff contacts atalllevels, joint technical assistance exercises, andmore reciprocal
representation thanhadbeenthecaseinthepastwere useful ideas which needed tobefleshed out.
Other ideasforincreasing cooperation andcoherence amongst organizations could include theconvening
ofjointworking groups orconferences ofexperts onissues ofmutual interest. Jointpublications of
keyfindings wereanother idea. These proposals would reduce administrative andresource costs on
theonehand, while increasing inter-agency understanding andanalytical capacities. Another broad
benefit would beanexpanded outreach capability foreachinstitution. Some ofthese could becarried
outonaninformal basis. Canada welcomed thediscussions which theDirector-General andsenior
GATT Secretariat officials hadalready hadwiththeIMFandtheWorld Bank, including attherecent
IMF/World Bank annual meeting.
42. These issues were, however, tooimportant tobelefttotheuncertainties ofinformal andoften
adhocefforts. Inmany cases, onewould wanttodevelop more formal relationships. Itwasstriking
tosee,despite informal efforts overtheyears oftheGATT todeepen itsrelations withtheIMFand
theWorldBank,justhowasymmetrictherelationshipspresentlywere.TheCONTRACTINGPARTIES
totheGATT 1947 themselves hadacertain responsibility forthissituation, since theyhadnotgiven
clearsignals tothetwoBretton Woods institutions. Thepresent meeting oftheSub-Committee provided
anopportunity togivethese signals. Itwashisunderstanding thattheExecutive Directors oftheIMF
would bemeeting inearly December todiscuss future collaboration with theWTO. Asthe
Sub-Committee setthecourse oftheWTO 'sfuture collaboration, itwould beuseful fortheIMFto
understand themajor preoccupations ofMembers, thetimeperiods envisaged, andthespecific forms
ofcooperation sought astheWTO came intobeing.
43. Therefore,inadditiontotheexchangeoflettersbetweentheDirector-GeneralandhisIMF/World
Bank colleagues dealing withissues suchastheexpanded roleoftheIMFintheCommittee on
Balance-of-Payments Restrictions, itwould beuseful fortheDirector-General toundertake anearlyPC/IPL/M/8
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exchange ofletters withtheManaging Director oftheIMFandthePresident oftheWorld Bankcovering
specific newmeasures ofcooperation. Thisexchange ofletters could setoutthedetails relating to
reciprocal access tomeetings, more formal patterns ofstaffconsultations andexchanges ofstaffand
information thatwereneeded toestablish arelationship among equals, onewhich recognized notonly
theinterlinkages between institutions dealing respectively withtrade, finance, andmonetary issues,
buttheirsignificant differences andcompetences. Once thespecific newforms ofcooperation had
beenestablished clearly, aliaison office should beestablished inWashington assoonaspossible after
theentry intoforce oftheWTO. Staffofthatoffice would beabletoprovide delegations inGeneva
invaluable advice astheytackled thebroader questions ofglobal coherence among trade, finance and
monetary policies, andtheconsistency ofrecommendations onthese.
44. TheSecretariat document hadidentified some oftherecommendations oftheFOGS Group,
andhadpointed todefinitional problems thatneeded toberesolved. While thework oftheFOGS
Group could, andwould, bedrawn upon, more up-to-date thinking would beneeded onhowbestto
pursue themandate thathadbeengiven byMinisters. Henoted thatarecommendation made inthe
pasttomandate Secretariat stafftoparticipate inthedesign ofIMF/World Bank-supported structural
adjustment programmes hadbeenresisted duetothedifferent nature oftheGATT/WTO andthe
IMF/World Bank. There hadalsobeenconcerns about confidentiality. While these might havebeen
valid, thedetailed knowledge which staffofaWTO liaison office would gainabout theoperational
requirements oftheIMFandtheWorld Bank would, attheveryleast, allow theWTO totakeamore
objective viewonthisissue.
45. Canada viewed thefollowing aspriority stepstobetaken intheareaofimproving international
economic cooperation, while fullyrecognizing thatsome ofthese priorities hadbudgetary andstaffing
implications. First, anexchange ofletters between theDirector-General andhisIMF/World Bank
colleagues setting outtheimmediate changes necessary intheirformal relationship stemming directly
fromobligations intheUruguay Round texts; second, anearlyexchange ofletters between theDirector-
General andhiscounterparts onspecific, formal stepstobeundertaken toincrease cooperation among
thethreeinstitutions, many ofwhich would beelaborations onelements intheSecretariat 'spaper dealing
withstaffcooperation; andthird, theearly establishment ofaWTO liaison office inWashington.
46. Therepresentative oftheUnited States saidthatwhile hisdelegation would respond tothe
Chairman 'ssuggestion andsubmit written comments atalaterdate, itbelieved thattheChairman 's
suggestions onpriority stepstobetaken appeared tobewellfounded. Hisdelegation alsoshared the
views justexpressed byCanada. Ontheusefulness ofhaving aliaison office inWashington, his
delegation believed thatthiswould notnecessarily depend onlyontheaccess theWTO representative
hadtomeetings oftheIMFandtheWorld Bank, astheSecretariat appeared tohaveconcluded inits
document. Thefunctions oftheoffice could include giving advice toIMFandWorld Bank staffon
possibleWTOramificationsofprogrammesinvolvingtraderégimesofMembers,aswellasobservership
atmeetings oftheIMFandWorld Bank. Thestaffcontacts would probably havethegreatest impact
when theIMF wasdeveloping itsprogrammes. They should notleadtoconcerns over cross-
conditionality,IMFacceptanceofWTOconsistencyasjustificationfortradepolicy,orWTOinvolvement
inIMFdeliberationsoverexchangeratepolicy,amongotherthings.Policyreforms,includingreductions
intariffs andnon-tariff barriers which wereundertaken inIMFandWorld Bank-supported programmes,
wereunilateral andwere supported byfinancial assistance. Inadvising amember, IMFandWorld
Bank stafftriedtohelpthemember dealwithanidentified problem andnottoenforce thelegalrights
ofother countries ortoseekcredit forthemember 'sliberalization intheWTO. However, therewere
policy areas inwhich IMFandWorld Bank advice hadruncounter, inthepast,toGATT standards
ofbehaviour andforwhich closer cooperation inthefuture might prove useful. Ataminimum, the
member andtheIMForWorld Bank staffshould beaware thatproposed action might beaviolation
ofWTO obligations andmight require compensation. Hereagain, aWTO liaison officer inWashington
would greatly facilitate thiskindofinformation flow.PC/IPL/M/8
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47. Therepresentative ofEgypt saidthattheimplications ofthesuggestions made byCanada and
theUnited States would havetobestudied carefully, inparticular theirfinancial implications. Egypt
wasinfavour offormal relations between theWTO andthetwoBretton Woods institutions. Theidea
ofanexchange ofletters between theDirector-General oftheneworganization andtheManaging
Director oftheIMFwasappealing, butonewould havetoexamine thecontents ofthatletter. The
suggestion thatthisbedoneasearly aspossible inorder toallow theparticipation oftheFund from
theverybeginning intheWTO Committee onBalance-of-Payments Restrictions should betaken into
consideration, asalsothattheletter should besigned bytheDirector-General oftheneworganization
andnotthatoftheGATT.Withregardtoachievinggreatercoherenceinglobaleconomicpolicy-making,
theSecretariat paper should bemore articulate inaddressing global economic policy-making atthe
international level, rather thanplacing toomuch emphasis oncoherence inmacro-economic policies
atthenational level. Distortions prevailing inworld tradeandintheworld economy should beaddressed
through greater multilateral surveillance. Itwasalsoimportant toemphasize thedifferences inthe
nature ofthework, thecompetence andtheauthority oftheSecretariats oftheWTO andtheother
institutions. Cooperation andcoordination between theSecretariats should beenvisaged while taking
thesedifferences intoaccount. Hecautioned against allowing theWTO Secretariat toomuch authority
tocomment oneconomic reform programmes eventhough thismight bemade bona fide.Ontheother
hand, governments would benefit from theexpertise oftheWTO Secretariat while negotiating their
reformprogrammeswiththemultilateralfinanceinstitutions.Staffcontactsshouldbekeptinperspective,
andstrengthened cooperation neednotnecessarily bethrough contacts atallstafflevels. Itmight be
enough iftheWTO wererepresented atthemeetings oftheBretton Woods institutions andviceversa.
Anadditional andimportant areaofcooperation related tothepossible negative effects oftheagricultural
reform programme onleast-developed countries andinthefollow uptotheMarrakesh Decision on
netfood-importing developing countries. TheSecretariat paper hadfailed toprovide options forsuch
cooperation.
48. Therepresentative ofHong Kong saidthat,asnoted onpage3oftheSecretariat 'spaper, global
coherence oftrade, finance andmonetary policies, while receiving considerable attention inthe
Uruguay Round negotiations andresults, hadnever beendefined noritsscope clearly established.
Thesubstance ofwhatconstituted theinterlinkages oftrade, monetary andfinance policies therefore
needed tobediscussed further andalltherelevant issues identified. Achieving greater coherence in
global economic policy-making wasanebulous concept which appeared toimply common objectives
andfunctions asbetween theWTO, theIMFandtheWorld Bank. Members should therefore look
intothisconcept since theywererequired todoso,butshould dososlowly andtodevelop aclearer
ideanotonlyofwhat wasmeant bycoherence, butalsoofwhere thedangers inlackofcoherence
lay.
49. TherepresentativeofArgentinaagreedwiththeChairmanthattheSub-Committeeshouldrestrict
itself, asanimmediate step,todoing what wasnecessary toprepare fortheoperation oftheWTO
Committee onBalance-of-Payments Restrictions. Onecould subsequently havealengthy discussion
oncoherence andconsistency inglobal policy-making, butthisneeded adegree offurther elaboration
which could notbeundertaken atthispoint because ofthelackoftime.
50. Therepresentative ofMalaysia saidthatthequestion ofcoherence wascertainly important.
Oneofthebenefits ofcoherence andclose cooperation between theWTO andtheBretton Woods
institutions would beincostsavings, particularly intheareaofcountry studies, forwhich each
organization visited thecountry inquestion often toobtain thesame kindofinformation. Ifitwere
possible fortheorganizations towork together andthereby toreduce costs ofthisactivity aswellas
theburden ofwork indeveloping countries inhaving torespond tosomany questionnaires, thatwould
beproof thatcoherence wasontheway. Asregards theestablishment ofaliaison office inWashington,
hequestioned whether thiswasworthwhile fromthepoint ofviewofitscostsandbenefits. Malaysia
would return tothissubject atalaterstage.PC/IPL/M/8
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51. Therepresentative ofSwitzerland saidthathisdelegation hadpresented itsviews ontheWTO 's
relations withtheIMFandWorld Bank atanearlier meeting, andwould submit written comments
attheappropriate time.
52. Therepresentative ofIndia saidthathisdelegation alsoattached importance totheWTO 's
relationship withtheIMFandWorld Bank. Hebelieved thatonehadtohaveanunderstanding on
thebroad parameters oftherelationship, todefine thenature oftherelationship andtoseewhatkind
ofinstitutional infrastructure would beneeded. Thebroad parameters ofapossible relationship were
established byArticle III:5oftheWTO Agreement, andheagreed withAustralia thatrelations between
theWTO andtheIMFandWorld Bank should bedefined by,derived fromandjustified bytheWTO
Agreement itself. Thenature oftherelationship would havetobedefined onthebasis offunction
andneed, rather thanonideology orpreconceived notions. Theinstitutional infrastructure would greatly
depend onthekindofunderstanding onehadontherelationship itself. Within those broad parameters,
hisdelegation waswilling toparticipate inanyconsultations theChairman might holdonthissubject.
53. Therepresentative ofChina saidthathisdelegation agreed thattherewasapolicy interlinkage
between theWTO andtheIMFandWorld Bank. China believed thatoneofthepreconditions for
global coherence andconsistency inthefields oftrade, financial andmonetary policy-making wasthe
global representativeness oftheorganizations concerned. Itnoted inthisrespect thattheIMFand
World Bank hadamore universal membership thanthatofGATT andtheexpected membership of
theWTO. Inthisregard, theWTO andGATT hadalotofwork todo.
54. Therepresentative ofMorocco saidthathisdelegation attached importance totheconcept of
coherence, eventhough theconcept hadnotyetbeenclearly defined. Thelinkage between theWTO
andtheBretton Woods institutions wasbothimplicit andexplicit intheAgreement establishing the
WTO andthroughout therelated WTO Agreements. Hisdelegation agreed withthepriorities setout
bytheChairman, andthatthemost urgent action should betoestablish thelegalbasis fortheIMF
toparticipate inthebalance-of-payments mechanism. Hisdelegation alsoagreed thatfurther
consideration should begiven totheconcept ofincreased coherence immediately aftertheentry into
forceoftheWTO, possibly bycreating appropriate mechanisms. Hesuggested thatajointconsultative
bodymight beestablished, which could address therelations among thethreeorganizations. Henoted
thatinnegotiations withtheIMFandWorld Bankrelating toeconomic reforms indeveloping countries,
foreign trade wasveryimportant. Yet,theGATT wasnever involved inthedrawing upofsuch
programmes. Once theWTO wasestablished, onecould trytoachieve something farmore substantial
suchthateachtimemeasures having animpact either ontrade orfinance orthecurrency ofanygiven
country were concerned, allthree organizations would beinvolved.
55. TheChairman proposed thathe,together withtheSecretariat, prepare adraftletter tobesent
totheManaging Director oftheIMFontheestablishment ofinstitutional relations between thetwo
organizations. Onthebasis ofthatdraft, theSub-Committee could address other questions, suchas
bywhom theletter should besentandtheextent oftheinvolvement oftheIMF.
56. TheSub-Committee tooknoteofthestatements andsoagreed.
C. Transitional Arrangements
57. TheChairman saidthat,ashehadindicated previously, thiswasasensitive issue withwide
ramifications, which hadledhimtoapproach itcautiously. Atthe21October meeting ofthe
Sub-Committee, hehadindicated thathewould beholding bilateral andplurilateral consultations on
thisissue. Onthebasis ofthese consultations, anon-paper hadbeenprepared bytheSecretariat and
circulated asdocuments 2752andCorr.1 thereto. However, asthepaper wasonlyavailable inEnglish
andhadonlyjustbeendistributed, hedidnotexpect substantive comments atthisstage, andhopedPC/IPL/M/8
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toconvene ameeting earlythefollowing weektoconsider thepaper. Meanwhile, heandtheSecretariat
would work atidentifying theelements considered necessary forasolution tothisissue. Thenon-paper
hadaddressed theheart oftheproblem, namely theissue ofdispute settlement. Asubsequent paper
would address related issues suchaslegal inconsistencies between theGATT 1947 andtheWTO
Agreement, non-reciprocal opening ofmarkets –theso-called free-riders issue –,procedural and
institutional duplication, andthetermination oftheperiod oftransition. While hewasworking with
theSecretariat ontheelements forasolution tothese issues, hewasnotinaposition tosaythatat
theendoftheprocess there would beagreement oncoexistence oftheGATT 1947 andtheWTO,
although hebelieved thatonewasinching towards thatprospect.
58. Onarelated matter, hehadrecently received acommunication from theChairman ofthe
Committee onTechnical Barriers toTrade (PC/IPL/W/13), forwarding tohimtheCommittee 's
recommendations aimed atensuring thatadequate procedures wereinplace toallow notifications to
bemade andprocessed during theperiod between theentry intoforce oftheWTO Agreement on
Technical Barriers toTrade andthefirstmeeting oftheCommittee established thereunder. Itwas
hisunderstanding thatthese recommendations would form partoftheoverall package regarding
transitional arrangements.
59. TheSub-Committee tooknoteofthestatement.
D. Paragraph 8(c)(iv) oftheDecision establishing thePreparatory Committee
(Composition oftheTextiles Monitoring Body)
60. TheChairman saidthattheChairman oftheContact Group onTextiles hadinformed himthat
theGroup hadmeton24October andhadhadauseful exchange ofviews onthequestion oftheTextiles
Monitoring Body (TMB). Thishadbeendoneinthelightoftheparameters setoutinArticle 8of
theAgreement onTextiles andClothing. Subsequently, theChairman oftheGroup hadheld
consultations withalarge number ofparticipants, bothinsmall groups andindividually, toobtain
additional views andsuggestions, andhadexpressed gratitude forthefullcooperation andsupport
received fromdelegations inthisprocess. This, together withtheflexibility thatparticipants hadshown
inthediscussions, hadledtheChairman oftheGroup tofeelcautiously optimistic thatasolution was
within reach, although more efforts would berequired andmore discussion would havetotakeplace
inorder tobridge thefinalremaining gaps. TheChairman oftheContact Group hadtherefore asked
foralittlemore timetofinalize thework, andwould begiven onemore week inwhich todothis.
61. TheSub-Committee tooknoteofthestatement.
E. Issues relating totheStanding Appellate Body
62. TheChairman recalled thatattheSub-Committee 'smeetings on7and21October, there had
beenaninitial exchange ofviews onthequestion oftheestablishment oftheStanding Appellate Body
andontheselection ofitsmembers. Following themostrecent discussion, hehadsuggested thathe
would prepare aworking paper onthissubject, which would include inputs from theSecretariat as
wellasfrom delegations. Hehadsince received several written contributions, andintended shortly
tocirculate thispaper. Hewould ensure thatallhadanopportunity foradetailed consideration of
theissues relating totheStanding Appellate Body atameeting tobeheldshortly. Hisinitial
consultations hadindicated thattherewasabroad agreement ofviews astothenature ofthebodyand
onthewayitshould beselected, andthattheoutstanding question washowmuch itsmembers should
bepaid.
63. TheSub-Committee tooknoteofthestatement.PC/IPL/M/8
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F. Report ofthePreparatory Committee totheWTO
64. TheChairman saidthatinaccordance withthetimetable agreed bythePreparatory Committee,
most work intheSub-Committees should becompleted orwelladvanced bymid-November.
Consideration would therefore havetobegiven todrawing upthereport ofthePreparatory Committee.
Hehoped tobeabletosubmit afirstdraftofthereport intimeforconsideration bytheSub-Committee
atitsnextmeeting. Asdelegations would havenoted fromtheairgram convening themeeting ofthe
Preparatory Committee on23November (PC/AIR/38), thepurpose ofthatmeeting would betoreview
progress onthisdraftreport. Unless heheard tothecontrary, thiswashowhewould intend toproceed.
Hestressed thatverylittletimewasleft,andthatthenextmeeting oftheSub-Committee would be
crucial ifonewastoreach thedeadline of23November assetbytheChairman ofthePreparatory
Committee.
65. TheSub-Committee tooknoteofthestatement.