Copyright 1995 NLCIFT



Title:Understanding on the interpretation of article XVII



   UNDERSTANDING ON THE INTERPRETATION OF ARTICLE XVII OF THE
           GENERAL AGREEMENT ON TARIFFS AND TRADE 1994


     Noting that Article XVII provides for obligations on 
Members in respect of the activities of the state trading
enterprises referred to in Article XVII:1, which are required to
be consistent with the general principles of non-discriminatory
treatment prescribed in the GATT 1994 for governmental measures
affecting imports or exports by private traders;

     Noting further that Members are subject to their GATT 1994
obligations in respect of those governmental measures affecting
state trading enterprises;.

     Recognizing that this Understanding is without prejudice to
the substantive disciplines prescribed in Article XVII;

1.   It is agreed that in order to ensure the transparency of the
activities of state trading enterprises, such enterprises shall
be notified to the Council for Trade in Goods, for review by the
working party to be set up under paragraph 5 below, in accordance
with the following working definition:

     "Governmental and non-governmental enterprises, including
     marketing boards, which have been granted exclusive or
     special rights or privileges, including statutory or
     constitutional powers, in the exercise of which they
     influence through their purchases or sales the level or
     direction of imports or exports."

This notification requirement does not apply to imports of
products for immediate or ultimate consumption in governmental
use or in use by an enterprise as specified above and not
otherwise for resale or use in the production of goods for sale.

2.   It is agreed that each Member shall conduct a review of its
policy with regard to the submission of notifications on state
trading enterprises to the Council for Trade in Goods, taking
account of the provisions of this Understanding.  In carrying out
such a review, each Member should have regard to the need to
ensure the maximum transparency possible in its notifications so
as to permit a clear appreciation of the manner of operation of
the enterprises notified and the effect of their operations on
international trade.

3.   Notifications shall be made in accordance with the 1960
questionnaire on State trading (BISD, 9S/184), it being
understood that Members shall notify the enterprises referred to
in paragraph 1 above whether or not imports or exports have in
fact taken place.  

4.   Any Member which has reason to believe that another Member
has not adequately met its notification obligation may raise the
matter with the Member concerned.  If the matter is not
satisfactorily resolved it may make a counter-notification to the 
Council for Trade in Goods, for consideration by the working
party set up under paragraph 5 below, simultaneously informing
the Member concerned.    
5.   A working party shall be set up, on behalf of the Council
for Trade in Goods, to review notifications and counter-
notifications.  In the light of this review and without prejudice
to Article XVII:4(c), the Council for Trade in Goods may make
recommendations with regard to the adequacy of notifications and
the need for further information.  The working party shall also
review, in the light of the notifications received, the adequacy
of the 1960 questionnaire on state trading and the coverage of
state trading enterprises notified under paragraph 1 above.  It
shall also develop an illustrative list showing the kinds of
relationships between governments and enterprises, and the kinds
of activities, engaged in by these enterprises, which may be
relevant for the purposes of Article XVII.  It is understood that
the MTO Secretariat will provide a general background paper for
the working party on the operations of state trading enterprises
as they relate to international trade.  Membership of the working
party shall be open to all Members indicating their wish to serve
on it.  It shall meet within a year of the entry into force of
the Agreement Establishing the MTO and thereafter at least once a
year.  It shall report annually to the Council for Trade in
Goods.