RESTRICTEDWORLD TRADE
ORGANIZATIONG/LIC/M/17
18 June 2003
(03-3261)
Committee on Import Licensing
MINUTES OF THE MEETING HELD ON 8 MAY 2003
Chairman:  Mr. Hiromichi Matsushima (Japan)
The Committee on Import Licensing held its seventeenth meeting on 8 May 2003.  The
agenda proposed for the meeting, contained in WTO/AIR/2081/Rev.1, was adopted as follows:
1. Members' compliance with notification obligations – Developments since the last
meeting........................................................................................................................ ...............1
2. Notifica tions................................................................................................................ ...............9
(i) Notifications under Articles 1.4(a) and 8.2(b) of the Agreement (publications and
legislation) ................................................................................................................... ...............9
(ii) Notifications under Article 7.3 of the Agreement (Replies to the Questionnaire on
Import Licensing Procedures) ..................................................................................................1 0
(iii) Notifications under Article 5 of the Agreement (new import licensing procedures,
changes to existing licensing procedur es and reverse no tifications)........................................11
3. Other business............................................................................................................... ..........13
(i) Requests from the Chairman of the Working Group on Trade and Transfer of
Technology and the Chairman of the Special Session of the Committee on Trade and
Development .................................................................................................................... .........13
(ii) Date and agenda of the next meeting........................................................................................ 13
(iii) Election of  offic ers...................................................................................................... ..............13
1. Members' compliance with notification obligations – Developments since the last
meeting
1.1 The Chairman informed the Committee that since the last meeting, 47 notifications had been
received from 30 Members under various prov isions of the Agreement on Import Licensing
Procedures.  However, as of the date of the meeting, out of a total Membership of 146, there remained
29 Members1 who had not submitted any notification since joining the WTO;  only 106 Members
(counting each of the EC member States individually) had submitted notifications of laws and
regulations (under Articles 1.4(a) and/or 8.2(b));  only a cumulative total of 105 Members hadsubmitted replies to the Questionnaire (under Article 7.3) since the entry into force of the WTO
Agreement;  Article 7.3 notifications had been received from only 57 Members in 2002 (EC member
                                                     
1 Angola, Armenia, Belize, Botswana, Central African Rep., Congo, Congo, Dem. Rep., Djibouti,
Dominican Rep., Egypt, El Salvador, Guinea, Guinea Bissau, Israel, Kuwait, Lesotho, Macedonia, Mauritania,Mozambique, Myanmar, Nicaragua, Papua New Guinea, Rwanda, St. Vincent & Grenadines, Sierra Leone,
Solomon Islands, Suriname, Tanzania and Thailand.G/LIC/M/17
Page 2
States counted separately), and from ten up to the date of this meeting this year;  only 42 Members
had notified new licensing procedures or changes in existing procedures (under Paragraphs 1-4 of
Article 5).  While Article 5.5 of the Agreement allowed Members to submit counter-notifications,
where a Member considered that another Member had not notified the institution of a licensing
procedure or changes in the procedures, up to the date of this meeting no such counter-notificationshad been received.   
1.2 The Chairman said that the Secretariat had reminded several delegations, informally, of their
pending notifications.  In addition to this, at the e nd of each year, the Central Registry of Notifications
sent to each Member a list of notifications that should be made under all WTO Agreements in the
following year;  this was followed up with periodic reminders from the CRN to those Members who
had not submitted the required notifications during the year.  The Secretariat had also remindeddelegations concerned of questions posed to them by other Members regarding their licensing systems
or notifications (which had been circulated in do cument series G/LIC/Q/-).  Since the last meeting,
written replies to  these questions had been provided by four delegations – Ecuador, the European
Communities, Haiti and Uruguay  – which had also been circulated  in the same document series,
G/LIC/Q/-.
2  Other delegations that were in a position to provide replies to the questions were
requested to do so at this meeting, keeping in mind that under the procedures adopted in the
Committee they were required to provide replies, in writing, to those delegations that had posed
questions, with copies to the Secretariat (G/LIC/4).
1.3 The representative of Venezuela stated that responses to the questions posed by the United
States in May 2002 (contained in G/LIC/ Q/VEN/3) would be submitted shortly.3
1.4 The representative of the United States expressed his appreciation to those Members who had
made submissions, and especially those who had notified for the first time, and to the European
Communities, Ecuador and Haiti who had provided responses to their written questions.  Notifyingthe licensing system or lack of one was central to the transparency obligations of this Agreement.
Such notifications and responses were an essential element of WTO Members' obligations, and
tangible evidence of the respect they owed each ot her as Members, to be both transparent in the
administration of their trade regimes and responsive to legitimate requests for information about
access to each other's markets.   He regretted that, as had been noted constantly in recent meetings,
even initial compliance with the notification requir ements of this Agreement fell below two-thirds.
He believed that a more concerted effort was needed by all Committee Members in this regard andsuggested that the Chairman communicate with all Committee Members, noting any identifiable
deficiencies, and asking them to review the status of their notifications with the Committee and, as
necessary, to bring them into line with the notification requirements of Articles 1, 5, 7 and 8.  The
United States thanked the Chairman and the Secretariat for their continuing encouragement to
improve compliance, such as sending reminders to Members on pending notifications and remindingthose delegations who had received questions posed by other Members to submit their replies.  He
hoped that the Chairman and the Secretariat, with input from Members, would continue to examine
how a useful offer of technical assistance could be made to those Members who believed they did not
have the capacity to fulfill those obligations.  Thus far no Member had requested such assistance.
1.5 With respect to specific questions that the United States had for various delegations, he
thanked the European Communities for their response to the questions the United States had posed
during the May 2002 meeting, i.e. why importers of organic fruit and vegetables were required to
obtain an import authorization prior to import and why this measure was not included in
G/LIC/N/3/EEC/4, Annex 1.  The European Communities had responded in November 2002 (inG/LIC/Q/EEC/2) that this requirement had been inst ituted to improve and complete the inspection of
                                                     
2 G/LIC/Q/ECU/2, G/LIC/Q/EEC/2, G/LIC/Q/HTI/2 and G/LIC/Q/URY/2.
3 Responses subsequently circulated in G/LIC/Q/VEN/4.G/LIC/M/17
Page 3
imported organic products;  that the Regu lation concerned (i.e. Commission Regulation
No. 1788/2001) had been notified to the Committee on Technical Barriers to Trade (in
G/TBT/N/EEC/2 of 6 February 2001);  and that the European Communities believed that this
requirement was not within the scope of the Agreement on Import Licensing Procedures.  He thanked
the European Communities for this response, but sought clarification as to why this measure did notmeet the definition of an import licence as defined in Article 1.1 of the Agreement, i.e. "as
administrative procedures used for the operat ion of import licensing regimes requiring the
submission of an application or other documentation (other than that required for customs purposes)
to the relevant administrative body as a prior condition for importation …" .  With respect to Mexico,
he noted that at the September 2002 meeting the representative of Mexico had stated that his
authorities were working with the relevant Governme nt officers to make their notifications as soon as
possible.  The United States looked forward to this submission.  With respect to Turkey, the UnitedStates had noted at the September 2002 meeting that Turkey  had not notified its import licensing
requirements for a number of agricultural products, including wheat, corn, rice, pet foods, certain
kinds of fruit contained in HTS Chapter 8, and distilled spirits other than whiskey contained in HTS
2208, and that it was hampering imports.  Althoug h Turkey had previously notified its import
licensing requirements for a number of industrial products, it had never notified import licensingprocedures on agricultural products to the Committee on Import Licensing, as required under Article 5
of the Agreement.  Importers continued to have problems securing import permits, especially during
harvest time, October, for a wide variety of imported products including fruit, bananas, rice, beans,
pulses and wines.  In addition, licence sizes and regulations continued to be changed by the Turkish
authorities without proper notification or warning to the WTO.  The United States again asked thatTurkey submit its notifications for agricultural products and update its annual notification of replies to
the Questionnaire to cover these products.  His authorities were also interested in answers to the
following questions:  were there any specific admini strative requirements related to import licensing
for commodities mentioned above, including any quantitative limitations on the amount of imports
allowed with a single import licence?  What was the number of import licences granted, the numberrejected and the quantity imported for the above-mentioned products by supplying country over the
last 24 months?  What was the administration responsible for import licensing requirements for the
above-mentioned countries and products and the legal authority for such actions?  With respect to
Costa Rica, the United States was concerned that Costa Rica sometimes delayed the issuance of
permits for rice beyond the Government of Costa Rica's rule that required a ten-day turnaround.  This
in some cases had caused sales to unravel as market conditions changed during these long periods of
delay.  The United States remained concerned and requested that Costa Rica explain to the Committeewhat steps they were taking to reduce these delays.  His authorities noted that a similar situation
existed with respect to exports to the Dominican Republic which required import licences.  There was
no record that the Dominican Republic had ever submitted a notification to this Committee.  His
delegation hoped that this would be remedied prior to the next meeting of the Committee when the
United States would outline its concerns in more detail.  With respect to Romania, at both the Mayand September 2002 meetings, Romania had been asked to explain whether the products covered in
notification G/LIC/N/ 2/ROM/3 were addressed in the currently notified legislation and Romania’s
replies to the Questionnaire.  The United States was looking forward to receiving an explanation in
writing, as requested by the Chair.  Finally, there was an extensive list of questions that the United
States would like to pose to China on its Tariff Rate Quota (TRQ) administration, specifically issues
involving licensing, commercially viable quantities, transparency and the Ministry of Commerce
automatic registration process.  As these questions had been given to the delegation of China only that
morning, and therefore they could not expect to have any responses at this point, the United States
would submit their questions to the Secretariat for circulation to Members
4, and hoped that the
Chinese delegation would provide responses.
                                                     
4 Subsequently circulated in G/LIC/Q/CHN/4.G/LIC/M/17
Page 4
1.6 The following were the questions that the United States posed to China5:
"Background on Tariff Rate Quotas (TRQs)
Licensing:   Paragraph 138 of the Working Party Report6 provides that China “would not
require a separate import licence approval for goods subject to a TRQ allocation requirement
but would provide any necessary import licence in the procedure that granted a quota
allocation.”  This was the concession China made in December 2000 that allowed China’s
overall accession negotiations to resume after they had stalled.  Paragraph 6.A of the TRQ
headnote (found in Part I, section I-B of China's Schedule of Concessions and Commitments
on Goods) states that:  "[a]ny additional requirement for importation will be automatic under
the terms of the Agreement on Import Licensing Procedures."  Despite these commitments,
endusers must apply twice for approval in order to obtain and utilize TRQ.  After receiving an
allocation from the SDRC (formerly SDPC) in the form of a “notice,” quota holders are
required under Article 17 of China’s Interim Measures on the Administration of Tariff-Rate
Quota for Agricultural Imports , to then apply for an Agricultural Tariff Quota Certificate by
bringing the notice and a signed contract to SDRC.
Article 2 of the WTO Agreement on Import Licensing Procedures confirms that no
government discretion is permitted in granting automatic import licences and it further
prohibits administration of automatic import licences in a manner that has trade-restrictive or
distortive effects on imports. It also requires approval “immediately upon receipt, to the extentadministratively feasible, but within a maximum of ten working days.”  In addition to being
required to go through two separate approval processes at SDRC for the same TRQ allocation
as described above, quota holders must obtain an import licence from AQSIQ pursuant to
AQSIQ Ordinance 7 (effective 20 March 2002).  This licence also requires a minimum of two
applications, does not appear to be justified on SPS grounds, and is being implemented insuch a manner as to act as an additional quantitative restriction. According to industry,
approval for this licence can take up to 30 days at each level of government.
Finally, endusers holding “processing trade” quota are subject to additional licensing
requirements which add additional steps to the process:  In order to utilise their allocated
quota, entities holding processing trade TRQ must apply for and obtain a “Processing Trade
Certificate” from MOC (formerly MOFTEC) befo re they can utilise their quota.  They must
also obtain a separate processing trade busines s licence as a precondition for obtaining a TRQ
allocation.  In the US view, these additional steps are trade restrictive and are not in
accordance with China’s obligation to provide any required licence in the procedure to grant
the quota, and to make “automatic” any additional requirement for importation.
Commercially Viable Quantities:  Paragraph 6.E obligates China to allocate TRQs in
commercially viable shipping quantities.  Article 3.5 (i) of the Agreement on Import
Licensing Procedures emphasizes the importance of issuing licences for products in economic
quantities.  However, reports from traders indicate that allocations of some commodities are
too small to be commercially viable, and as a result, endusers are either not applying for TRQor are not utilising their allocations because it is not economic for them or their agent.
Industry reports that some of the cotton TRQ allocations in 2002, for example, were as small
as 200 metric tons, which is well below what is considered a commercially viable shipping
quantity for cotton.  During bilateral consultations, China agreed that it had allocated some
TRQ in less than commercially viable quantities.  We asked China to modify the system toavoid this problem in the future and China agreed to consider.
                                                     
5 Subsequently circulated in G/LIC/Q/CHN/4.
6 WT/ACC/CHN/49.G/LIC/M/17
Page 5
Transparency:   The United States remains concerned with the lack of transparency in China’s
administration of TRQs.  The US Government and US exporters have experienced difficulty
discovering which entities have been allocated  TRQ, despite China’s commitment in the TRQ
headnote to administer the TRQ system in a transparent manner and to provide thisinformation within ten days upon request to SDRC (headnote, paragraph 6.F).  Our inability
to obtain this information makes it difficult to assess China’s implementation of its TRQ
obligations and appears to undermine China’ s commitment to “provide effective import
opportunities.”  During our bilateral consultations, China informed us that it did not intend to
provide additional information on the entities receiving allocations.  Industry requests to
SDRC for information on 2003 allocations have gone unanswered.
MOC Automatic Registration Process:    The Unites States is increasingly concerned that
MOC is limiting issuance of its automatic registration form (ARF) in an effort to restrict
imports of chicken meat and offal. Industry and traders recently reported that in March, MOC
ceased issuance of ARF to importers in Guangdong Province and in Shanghai, restricted
issuance to select importers. Although these reports are anecdotal, they are supported by tradestatistics (US chicken exports to China are off by nearly $100 million from levels two years
ago) and by the fact that Chinese domestic prices for major imported chicken cuts remain well
above landed costs plus tariff and VAT for imports.
Administration of Agricultural TRQs
The United States remains very concerned with China’s licensing regime for goods subject to
a TRQ allocation requirement.
We continue to believe that these licensing requirements are not in accordance with China’s
WTO commitments.
In an effort to seek accommodation, the United States engaged in bilateral consultations with
China on this issue in September 2002 and again in February 2003.
To date we have seen little progress, and no indication that China’s TRQ licensing
requirements will be brought into compliance with WTO obligations.
While the United States remains open to additional bilateral dialogue, we are nearing the
point where lack of resolution will force escalation of this issue.
TRQ Licensing
• Paragraph 138 of the Working Party Report states that China will not require a separate
import licence approval for goods subject to a TRQ allocation requirement, but will provide
any necessary import licence in the procedure that granted a quota allocation.
• Paragraph 6.A of China’s headnote on Tariff Quotas states that “Any additional
requirement for importation will be automatic under the terms of the Agreement on Import
Licensing Procedures.”
• This Agreement states that “automatic licensing procedures shall not be administered in
such a manner as to have restricting effects on imports”, and that applications should be
“approved immediately on receipt, to the extent administratively feasible, but within a
maximum of ten working days.”G/LIC/M/17
Page 6
-  Contrary to this commitment China main tains multiple licensing requirements that
occur outside of the procedure granting quota allocation and that do not appear to be
automatic.
-  End-users must apply twice to SDRC for a single allocation – once for the initial
allocation and a second time for SDRC’s approval  to use that allocation once the importer has
a signed contract.
-  Quota-holders must apply for and obtain, at both the local and national level, an
additional import licence from AQSIQ before the product can be imported.  We understand
that approval can take up to 30 days at each level of government.
-  Entities importing under TRQs reserved for processing, must obtain a separate
processing trade business licence and a “Processing Trade Certificate” in order to obtain a
TRQ allocation.
• These separate and multiple licensing requirements and the additional time and effort
expended by importers to fulfill them, are an undue burden on trade and appear to be in
conflict with China’s commitments.
-  China continues to require quota-holders to provide detailed, time-sensitive
commercial information, such as price and origin, prior to obtaining an import licence, and itrestricts the commercial terms that can be changed thereafter. Paragraph 6.A of the TRQ
headnote requires China to “establish a tariff-quota system that is open, transparent, fair,
responsive to market conditions, timely, minimally burdensome to trade, and reflects end-user
preferences.”
• This requirement unduly restricts an end-user’s ability to adjust to market conditions and
operate based on commercial considerations.
-  Please comment on the foregoing descripti on, explaining how in China’s view these
measures meet WTO requirements.
-  Please explain the steps China will take to eliminate the additional, non-automatic licensing
requirements for TRQ commodities or how it will bring these requirements into accordance
with its WTO commitments.
 -  Please explain how China’s TRQ licensing regime will be affected by the recent
government restructuring involving MOFTEC, and the SDRC.
• China prohibits the sale of products imported under “processing” TRQ from being sold on
the domestic market.  End-users who do sell these commodities or their products in the
domestic market are subject to penalties and to out-of-quota tariffs.
• This restriction on utilisation would appear to not accord with Article 3.2 and 3.5(h) of the
Agreement on Import Licensing Procedures (Article 3.2 provides that “non-automatic
licensing shall not have trade-restrictive or -distortive effects on imports additional to those
caused by the imposition of the restriction.”  Article 3.5(h) provides that “when administering
quotas, Members shall not prevent importation from being effected in accordance with theissued licences, and shall not discourage the full utilisation of quotas.”)G/LIC/M/17
Page 7
 -  Can China please explain how this restriction is consistent with its obligations under the
Agreement on Import Licensing Procedures, or explain what steps it will take to remove this
restriction?
Commercially Viable Quantities
• Paragraph 6.E obligates China to allocate TRQs in commercially viable shipping quantities.
Article 3.5 (i) of the Agreement on Import Li censing Procedures emphasizes the importance
of issuing licences for products in economic quantities.
• In 2002, there were many complaints from traders that some TRQs had been allocated in
quantities that were not commercially viable to ship.  Chinese officials acknowledged thisproblem and indicated interest in addressing it for the future.
-  What steps has China taken to ensure that it issues licences for products in commercially
viable quantities?
Transparency in TRQ administration
• The US remains concerned with the lack of transparency in China’s administration of
TRQs.
• With respects to licensing, the US Government and US exporters continue to experience
difficulty in obtaining information on which entities have been allocated TRQs and TRQ
import licences.
• China committed, in the TRQ headnote (paragraph 6.F) to provide this information within
ten days upon request to SDRC and to administer the TRQ system in a transparent manner.
-  Why does China refuse to provide this information?
-  What steps is China taking to provide this information within the agreed time
frame?
MOC Automatic Registration Process
• MOC’s automatic registration for imports of chicken meat and offal does not appear
consistent with the provisions for automatic licensing in the Agreement on Import Licensing
Procedures.
• We have received reports from our industry that MOC is restricting issuance of its
automatic registration form, a required document for importation, and that some major ports
have experienced prolonged periods, sometimes exceeding 30 days, during which no forms
were issued.
• We are concerned that this registration requirement is being used to quantitatively restrict
chicken meat and offal imports.  China’s WTO accession did not establish a quota for any of
these products.
-  Can China explain what objective it is trying to achieve with this registration form
and how this requirement is in accordance with China’s WTO commitments?G/LIC/M/17
Page 8
-  Can China address the reports that forms are not being issued in a prompt and
automatic fashion?
-  Could China please describe the steps it will take to eliminate or bring this
requirement into accordance with China’s obligations?
Administration of Auto Quotas
• China administers quotas for imports of automobiles and other goods listed in Annex 3 to
its Protocol of Accession7.
-  In accordance with Article 3.5(a) of the Agreement on Import Licensing
Procedures, please provide information on the administration of the restrictions, the import
licences granted for 2002 and the first four months of 2003, and import statistics for those
same periods."
1.7 The representative of the European Communities, echoing the concerns expressed by the
United States regarding the lack of notifications, said that her delegation too regretted that only
two-thirds of Members had met their notification obligations under the Agreement and therefore
encouraged the Chairman once again to continue working with the Secretariat to find a solution to this
situation.  As concerned the request by the United States for clarification following the European
Communities' responses to the US contained in G/LIC/Q/EEC/2, she had taken note and would give areply at the next meeting.
1.8 The representative of Turkey, in response to the US questions, recalled the general
explanation and remarks made by his delegation at the September 2002 meeting, drawing the attention
of the US to Turkey's views expressed in the SPS Co mmittee with regard to the document at issue, i.e.
"kontrol belgesi".  This document was granted by the Turkish Ministry of Agriculture on a simple
request by the importer indicating that the imported agricultural goods were fully in conformity with
the SPS legislation.  Therefore it was not a restricted or discretionary document, and was only a safety
measure.  His delegation had requested his authorities to provide written answers to the questions
posed by the US and also to complete its notifications to the Committee.
1.9 The representative of Mexico said that his authorities were in the process of preparing their
notification, to be submitted as soon as possible to this Committee.1.10 The representative of Egypt, making a general comment concerning the concept of
notification and the acceptability of the contents of a notification, said that the kinds of notifications
that the Committee received were either very comp rehensive with a lot of detailed information on
import licensing requirements, or very brief stat ing that the country concerned did not apply any
import licensing system.  He noted that the latter category of notification was not commented upon by
Members and was more or less accepted as it was, although he did not understand how a country
could not have an import licensing system.  For example, a multilateral environmental agreement that
most WTO Members were parties to, such as the Convention on International Trade in EndangeredSpecies (CITES), included an obligation of impor t licensing when importing endangered species of
wild fauna and flora.  Some parties to this Convention, in their notifications to this Committee, stated
that they did not have any import licensing, while others notified it to the Committee as an import
licensing requirement.  This kind of non-coherence was never discussed in the Committee.  He asked
whether there was logic in this kind of duplication.
                                                     
7 WT/L/432.G/LIC/M/17
Page 9
1.11 The representative of Pakistan, responding to the delegate from Egypt, said that he understood
the ambiguity in this situation.  For example, Pakistan had had an import licensing system whereby
every importer was required to obtain an import licence from the office of the Chief Controller of
Imports and Exports (CCIE) for any imports into the country, but after the promulgation and
implementation of the new order in the late 1980s or early 1990s, this licensing system had beendisbanded and importers were no longer required to  seek prior permission from the office of the
CCIE.  Henceforth there was no legal requirement and any importer wishing to import could open a
letter of credit straight away and conduct his business.  As regarded the second element of the
question, he thought that there were certain imports in virtually all Member countries that were
subject to import licensing, notified by many under GATT Article XX, which were acceptable in the
multilateral trading system, such as import licensin g requirements maintained for religious, health,
moral or security reasons, or those maintained pursuant to multilateral agreements, for example onimports of hazardous chemicals.  There were no quantitative restrictions or other restrictions on such
imports and it was a requirement with a view to monitoring on behalf of the Government imports of
products which fell under GATT Article XX.  Pakistan had notified Article XX requirements which
applied to a short list of items which necessitate d importers to inform the Government that they
intended to import those products into the country;   the authorities at the borders required these
importers to provide certain information.  He did not think that this was an import licensing system.
In general the import licensing system in Pakistan had been terminated, though for some Article XX
imports there were certain requirements with a view to monitoring such imports.  This, in his view,
was well within any Member's rights.
1.12 The Chairman, responding to the comments and suggestions made by the United States and
the European Communities regarding the work of the Secretariat and the Chairman in order to
facilitate Members in complying with their notification obligations, said that as had been stated
repeatedly by him as well as by his predecessors, the Committee was aware that compliance with
notification obligations was an important issue for the work of this Committee.  He was thereforepleased to see more positive and concerted attitudes towards ensuring that all Members continued to
make progress in fulfilling their notification obligations.  As he had already explained in his initial
remarks, the Secretariat had made considerable efforts to encourage Members to fulfil their
notification obligations by sending out reminders, convening informal consultations, assisting in the
preparation of notifications etc., and would continue to do so.  He hoped that the Secretariat would
receive more positive attitudes from Members and that more notifications would be submitted to the
Committee to make its work more fruitful.
1.13 The representative of China thanked the Chairman and the Secretariat for the efforts made in
preparing for this meeting.  As concerned the comm ents and questions received that morning from the
United States on China's import licensing system, he said that he would forward them to his capital.
1.14 The Chairman recalled that according to the Understanding on  Procedures for the Review of
Notifications in this Committee, all Members were required to submit their questions or replies in
writing and send copies of those questions or replies to the Secretariat for circulation to all Members.
1.15 The Committee took note of the statements made.
2. Notifications
(i) Notifications under Articles 1.4(a) and 8.2(b) of the Agreement (publications and legislation)
2.1 The Chairman recalled that Articles 1.4(a) and 8.2(b), and procedures agreed to by the
Committee, required all Members to publish their laws, regulations and administrative procedures
relevant to import licensing, and submit copies of any relevant publications or laws and regulations
upon becoming a Member of the WTO.  Any subsequent changes to these laws and regulations wereG/LIC/M/17
Page 10
also required to be notified.  He noted that as of the date of this meeting, only a total of 106 Members
(counting each of the EC member States individually) had submitted legislative notifications.  This
included two notifications received from Mongolia and Sri Lanka8 that week, which would be
available for review at the next meeting.  He urged all Members which had not yet provided any
information of their laws and regulations relevant to import licensing to submit their notificationswithout further delay.
2.2 The Chairman said that notifications from 14 Members were before the Committee for
review, received from China (G/LIC/N/1/CHN/1 and Add.1), Ecuador (G/L IC/N/1/ECU/1), the
European Communities (G/LIC/N/1/EEC/2/Add.4) , Hong Kong China (G/LIC/N/1/HKG/5),
Lithuania (G/LIC/N/1/L TU/1), Morocco (G/LIC /N/1/MAR/1/Add.1), Nami bia (G/LIC/N/1/NAM/1),
Saint Lucia (G/LIC/N /1/LCA/1), Senegal (G/LIC /N/1/SEN/1), Slovak Re public (G/LIC/N/1/SVK/1),
Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei)
(G/LIC/N/1/TPKM/3/Rev.1), United States (G/LIC /N/1/USA/2), Venezuela (G/LIC/N/1/VEN/1) and
Zambia (G/LIC/N/1/ZMB/1), and that copies of laws and regulations submitted under these
provisions were available in the Secretariat for consultation by interested Members.
2.3 The representative of the European Commun ities thanked China for the notification of its
legislation on import licensing.  Her delegation welcomed the fact that the procedure and the
timetable for issuing licences for quotas seemed to ha ve been fully respected by China, and found this
to be a positive element.  However she wished to reflect some concerns expressed by EC operators in
terms of transparency, as her delegation had already indicated in September 2002, particularlyregarding procedures to be followed and criteria to be met to obtain licences, as well as regarding the
management of these licences.
2.4 The Committee took note of the notifications and statements made.
(ii) Notifications under Article 7.3 of the Agreem ent (Replies to the Questionnaire on Import
Licensing Procedures)
2.5 The Chairman said that notifications from 26 Members were before the Committee for
review, received from China (G/LIC/N/3/CHN/1), Czech Repu blic (G/LIC/N /3/CZE/1/Add.1),
Ecuador (G/LIC/N/3/ECU/1/Add.1 and ECU/2), Esto nia (G/LIC/N/3/EST/3), European Communities
(G/LIC/N/3/EEC/5 and Add.1 and Corr.1), Hong Kong Ch ina (G/LIC/N/3/H KG/6), Jamaica
(G/LIC/N/3/JAM/1/Add.2), Kenya (G/LIC/N/3/KEN/2), Liechtenstein (G/L IC/N/3/LIE/4/Add.1),
Lithuania (G/LIC/N/3/LTU/1), Macao  China (G/LIC/N/3/MAC/5), Malawi
(G/LIC/N/3/MWI /1/Add.1), Morocco (G/LIC/N /3/MAR/3), Namibia (G /LIC/N/3/NAM/4), Oman
(G/LIC/N/3/O MN/1/Add.1), Poland (G/L IC/N/3/POL/2), Saint Lucia (G/LIC/N/3/LCA /1), Senegal
(G/LIC/N/3/SEN/2), Slovak Republic (G/LIC/N /3/SVK/1), South Africa (G/LIC/N/3/ZAF/4),
Switzerland (G/LIC/N /3/CHE/4/Add.1), Chinese Taipei (G /LIC/N/3/TPKM/1/Rev.1), Tunisia
(G/LIC/N/3/TUN/3/Add.3), Uruguay (G /LIC/N/3/URY /2/Rev.1), Venezuela
(G/LIC/N/3/VEN/1/Corr.1 and Corr.2) and Zambia (G/LIC/N/3/ZMB/1).  In addition, since the
airgram convening this meeting had been issued, th e Secretariat had received two notifications from
Mongolia9 and Sri Lanka10, which would be available for review at the next meeting.
2.6 As concerned the current status of notifications under Article 7.3, the Chairman informed the
Committee that since the entry into force of the WTO Agreement, replies to the Questionnaire had
been received from a cumulative total of only 105 Members (counting EC member States
individually).  The Agreement required all Members to submit replies to the Questionnaire, annually,
                                                     
8 Circulated in G/LIC/N/1/LKA/1.
9 Circulated in G/LIC/N/3/MNG/1.
10 Circulated in G/LIC/N/3/LKA/1.G/LIC/M/17
Page 11
by 30 September.  However only 57 Members (EC member States counted separately) had made
notifications under this Article in 2002, and only ten Members had notified in 2003 up to the date of
this meeting.  Noting that notifications were overdue from many Members, he requested Members to
submit their notifications without any further delay.  He further reminded Members that even those
which had not made any changes to their import licensing procedures since their previous notificationwere required to notify this fact to the Committee.
2.7 The representative of Australia welcomed China's notification (G/LIC/N/3/CHN/1) and said
that her delegation believed that there might be  some changes to the outline of China's import
licensing system, i.e. information given in reply 1 of their notification, hence she requested China to
provide a revised overview indicating which agencies were responsible in the new system for
administering tariff rate quotas, import quotas etc.  Her authorities were still interested in China's
import registration scheme on aluminium and therefore would appreciate a response to the questions
that her delegation had posed informally to China at the September 2002 meeting.
2.8 The representative of China said that in early March 2002 there had been a restructuring of
the Chinese Government organisations at the central level, and that this process of restructuring was
still underway.  He promised that Australia's concerns would be conveyed to the relevant government
agency now responsible, i.e. the Ministry of Comm erce, instead of the original MOFTEC.  He hoped
that his authorities would provide the Committee with input for further discussion.  Thanking the
delegate of the European Communities for her comments and questions raised, he said that given the
ongoing restructuring of China's administrative system covering import licensing, it would beadvisable to wait until the new functions of the Government agencies were clear, after which the
Committee would be able to have a more meaningful exchange of views.
2.9 The Committee took note of the notifications and statements made.
(iii) Notifications under Article 5 of the Agreement (new import licensing procedures, changes to
existing licensing procedures and reverse notifications)
2.10 The Chairman recalled that under paragraphs 1-4 of Article 5, Members which instituted
licensing procedures or changes in these procedures were required to notify the Committee of such
within 60 days of publication of these procedures, and that paragraph 2 of Article 5 listed the
information that should be included in such notifications.  Members also had to submit copies of
publications in which the information required in Article 1.4 would be published.
2.11 The Chairman said that three notifications were before the Committee for review, received
from Indonesia (G/LIC/N/2/IDN/1), Saint Luci a (G/LIC/N/2/LCA/2) and the United States
(G/LIC/N/2/USA/1).
2.12 The representative of the United States said that he had an extensive list of questions
concerning the notification from Indonesia which he would submit to the Secretariat for circulation to
all Members.11  As the delegation of Indonesia had only recently received these questions from the
United States, he did not expect a response at this meeting, but hoped that Indonesia would provide a
written reply to the US at some future point.  Indonesia’s submission, G/ LIC/N/2/IDN/ 1, raised a
number of questions concerning the actual operation of the licensing provisions notified, and did not
appear to fully reflect the scope and level of the measures as they were being experienced by
exporters.  On 22 October 2002, Indonesia had implemented an import licensing regulation, Decree
No. 732/2002 of the Minister of Industry and Trad e on Procedures for Importing Textiles.  The US
was seriously concerned that the import licensing requirement established by the Decree wasrestricting and distorting trade contrary to the Agreement on Import Licensing Procedures.  When his
                                                     
11 Subsequently circulated in G/LIC/Q/IDN/1.G/LIC/M/17
Page 12
authorities had raised this issue bilaterally in November 2002, they had been told that the measure was
simply a requirement for importers of textiles to re-register with the Ministry of Industry and Trade,
and that the import licensing system was being used to help overcome weaknesses in Indonesia’s
Customs Service and to combat anti-competitive behaviour and smuggling. The US review of the
Decree indicated, however, that various provisions went far beyond a registration requirement orlicensing procedure, in the following manner:  textile fabrics could only be imported by local textile
producers;  imports could only be used as raw mate rial or supplements for the production process of
the importers-producers and could not be sold or transferred to others;  all authorized importers had to
seek approval from the Ministry of Industry and Trade for the amount and the time schedule of their
imports;  importers also had to submit a monthly report on their imports to the Ministry of Industry
and Trade.  Failure to submit monthly reports would result in the revocation of import licences,
according to the Decree.  These limits on the use of imported textiles restricted the amount and type ofimports of these products.  The ban on sale of imported textiles in Indonesia and the requirement that
imports only could be used as raw materials or auxiliary materials for production processes appeared
to provide imported textile products less favorable treatment than textiles produced in Indonesia.
Such restrictions appeared to conflict with the provisions of Articles III and XI of the GATT as well
as Article 7 of the Agreement on Textiles and Clothing, which required all Members to abide byGATT 1994.  The US had serious additional concerns regarding whether the provisions of the
Agreement on Import Licensing Procedures were followed in issuing the Decree.  There was no
advance notice to the Committee, nor notification in a timely manner after implementation, which
occurred on 22 October 2002.  The notification itself, which had been circulated on 14 April 2003, did
not appear accurate and the US believed was missing attachments.  It was not clear whether therequired licences were automatically granted or not, assuming a firm met the conditions of the Decree.
Nor was it clear whether the licences were valid indefinitely if a firm filed the required monthly
reports, or whether firms needed to renew the licence s.  If firms needed to renew licences, what was
the procedure for doing so?  Furthermore, the required monthly reports appeared to require firms to
provide excessive amounts of information, and possibly to require firms to providebusiness-confidential information.  As a Member with an interest in textiles trade, the US requested
additional information and explanations from Indonesia on the operation of this licensing system, and
all relevant information concerning the following:  (i)  the administration of the restrictions;  (ii)  the
import licences granted over a recent period;  (iii)  the distribution of such licences among supplying
countries;  and (iv)  where practicable, import statistics (i.e. value and/or volume) with respect to the
products subject to import licensing.
2.13 The representative of Indonesia thanked the United States for the questions raised, which
would be conveyed to his capital for further clarif ication.  The following was therefore a preliminary
response.  With respect to the US' concern that the import licensing requirements established by the
said Decree were restricting and distorting trade contrary to the Agreement on Import Licensing
Procedures, he said that after careful study of the requirements, the Indonesian authorities were of theview that they were not trade-restricting or distorting.  They firmly believed that the import licensing
requirements established by the Decree were not contradictory to the Agreement.  As had been stated
in their consultations with the US in November 2002, it concerned simply a requirement for importers
of textiles to re-register with the Ministry of Industry and Trade;  the import licensing system was
being used to help overcome weaknesses in Indonesia's customs services, to combat anti-competitivebehaviour and smuggling.  His authorities had considered many instruments to deal with smuggling
which adversely affected fair trade and domestic products, distorted the market and significantly
reduced Government revenue.  His authorities considered import licensing procedures to be the best
solution to combat smuggling.  He hoped that the US would understand this situation.  As regarded
the US' view that various provisions of the Decree went far beyond a registration requirement orlicensing procedure, as textiles could only be imported by local textile producers, he informed the US
that nothing in the Decree discriminated between local and foreign producers and that they had the
same opportunities as long as they met the requirements.  According to Article 2.3 of the Decree,
imported textiles could only be used as raw materials or supplements for the production process of theG/LIC/M/17
Page 13
importers-producers and could not be sold or transferred to others.  This was one of the tools that
Indonesia used to control legal imports and contraband.  According to Article 7 of the Decree
importers must also submit a monthly report on their imports to the Ministry of Industry and Trade
and failure to do so would result in the revocation of  import licences.  As stated in the covering letter
submitting Indonesia's notification, his delegation had conveyed their apology for the delay innotifying this Decree to the Committee.  As concerned the US' comment that the notification itself did
not appear accurate and was missing attachments, he said that he had checked the notification
carefully but had not seen any missing attachments.  However he requested that the US specify which
attachments they felt were missing.  He firmly believed that the required licences were automatically
granted as long as the company concerned met the requirements of the Decree.  A company was only
required to provide the amount and category of textiles to be imported and the realisation of imports,
but not any business-confidential information.  The US was concerned that these limits on the use ofimported textiles restricted the amount and type of imports of these products;  that the ban on sale of
imported textiles in Indonesia and the requirement that imports could only be used as raw or auxiliary
materials for production processes appeared to provide imported textile products less favourable
treatment than textiles produced in Indonesia;  and that such restrictions appeared to conflict with the
provisions of Articles III and XI of the GATT as well as Article 7 of the Agreement on Textiles andClothing.  He was not in a position to provide any response to this question at this meeting but would
convey it, together with the rest of the questions, to his capital for further clarification.
2.14 The Committee took note of the notifications and statements made.
3. Other business
(i) Requests from the Chairman of the Working Group on Trade and Transfer of Technology and
the Chairman of the Special Session of  the Committee on Trade and Development
3.1 The Chairman informed the Committee that he had received two letters, from the Chairmen of
the above WTO bodies, requesting information on an y discussion, submission or other developments
relating to trade and technology transfer, and special and differential treatment, that had taken place in
this Committee, and that he had replied to both Chairmen that there had been no discussions,
submissions or other developments relating to either area.
(ii) Date and agenda of the next meeting
3.2 The Chairman informed the Committee that the Secretariat had reserved 2 October 2003  for
the next meeting of the Committee, on the understanding that additional meetings would be convened
if necessary.  Since it would be the last meeting of the Committee for that year, the agenda for that
meeting would include the second transitional review  of China, pursuant to Section 18 of the Protocol
of Accession of China (WT/L/432).
3.3 The Committee took note of the above.
(iii)  Election of officers
3.4 The Committee elected Miss Philippa Davies (Jamaica) as Chairperson of the Committee by
acclamation, to hold office until the end of the first meeting of 2004, under Rule 12 of the
Committee's Rules of Procedure (G/L/147).  It also elected Mr. Lucien Mazzega (France) as
Vice-Chairman by acclamation.
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