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This issue was originally reported by Matthew Fuchs. Address problems with the interaction between wildcards and substitution groups. Specifically, resolve the bug where if complex type A has a wildcard, and B restricts A, then it can restrict the wildcard to a set of elements that match the wildcard. Not all elements in the substitution groups of those elements necessarily match the wildcard - so B is not a subset of A. See (member-only link) http://lists.w3.org/Archives/Member/w3c-xml-schema-ig/2001Apr/0047.html, http://www.w3.org/2000/12/xmlschema-crcomments.html#x6 (http://www.w3.org/2000/12/xmlschema-crcomments.html#x6). Cf. RQ-135 (#component-consistency-and-validity). This item was discussed, and phase-1 agreement was reached, in the meeting of 2004-03-18 (http://lists.w3.org/Archives/Member/w3c-xml-schema-ig/2004Mar/0060.html). All we need to say to discharge this requirement is that restriction is transitive. The types derived by multiple restriction steps should also obey the wildcard. There was some doubt over whether the constructive rules of XML Schema 1.0 achieve this, but the definition of restriction in section 2 seems to entail it. According to the requirements document, phase-1 agreement has been reached.
On 20 October 2006, the WG agreed to close this issue as having been resolved, with the rationale: This is dealt with by the elimination of the constructive rules for restriction and the definition of the rule that elements locally valid against the restriction must be locally valid against the base. The consequence is that replacing a wildcard by a reference to an element does not necessarily constitute a valid restriction.