WORLD TRADE WT/REG/2
6November 1996
ORGANIZATION(96-4701)
Committee onRegional Trade Agreements
REPORT (1996) OFTHE
COMMITTEE ONREGIONAL TRADE AGREEMENTS
TOTHE GENERAL COUNCIL
Introduction
1. Nearly allMembers oftheWorld Trade Organization (WTO) areParties toatleastoneregional
trade agreement notified totheGATT ortheWTO; some Members participate inother regional
initiatives. Thenumber ofsuchagreements hasincreased inrecent years.
2. InameetingoftheGeneralCouncilheldon15November1995,itwasproposedthatacommittee
onregional trade agreements beestablished intheWTO asameans toimprove theorganization of
thework oftheWTO inthisarea,inparticular, withrespect tothereplacement ofmore than20active
working parties examining regional trade agreements, aswellastoprovide aforum intheWTO to
examine theimplications forthemultilateral trading system ofthegrowing number ofregional trading
agreements andinitiatives. Should suchacommittee becreated, therights andobligations ofMembers
would notbeaffected, andtheterms ofreference oftheexisting working parties would notbechanged.
TheGeneral Council, atitsDecember 1995 meeting, agreed inprinciple toestablish aCommittee on
Regional Trade Agreements, subject toagreement onitsterms ofreference andrelated matters.
3. TheCommittee onRegional Trade Agreements wasestablished bythefollowing Decision of
theGeneral Council on6February 1996 (WT/L/127):
"Having regard toagreements1which arerequired tobenotified, asthecase
maybe,under Article XXIV oftheGeneral Agreement onTariffs andTrade
(GATT) 1994, Article VoftheGeneral Agreement onTrade inServices orthe1979
Decision onDifferential andMore Favourable Treatment, Reciprocity andFuller
Participation ofDeveloping Countries;
Having regard tothebiennial reporting envisaged inParagraph 11ofthe
Uruguay Round Understanding ontheInterpretation ofArticle XXIV ofthe
GATT 1994; and
Acting pursuant toparagraphs 1and7ofArticle IVoftheAgreement
Establishing theWorld Trade Organization (WTO),
1Theterm "agreements" inthisDecision refers toallbilateral, regional, andplurilateral trade agreements
ofapreferential nature.WT/REG/2
Page2
TheGeneral Council hereby decides :
1. Toestablish aCommittee onRegional Trade Agreements, open toall
Members oftheWTO, withthefollowing terms ofreference:
(a) tocarry outtheexamination ofagreements inaccordance withthe
procedures andterms ofreference adopted bytheCouncil forTrade
inGoods, theCouncil forTrade inServices ortheCommittee on
Trade andDevelopment, asthecasemaybe,andthereafter present
itsreport totherelevant body forappropriate action;2
(b) toconsider howtherequired reporting ontheoperation ofsuch
agreements should becarried outand make appropriate
recommendations totherelevant body;
(c) todevelop, asappropriate, procedures tofacilitate andimprove the
examination process;
(d) toconsiderthesystemicimplicationsofsuchagreementsandregional
initiatives forthemultilateral trading system andtherelationship
betweenthem,andmakeappropriaterecommendationstotheGeneral
Council; and
(e) tocarry outanyadditional functions assigned toitbytheGeneral
Council.
2. ThattheCommittee shall report annually totheGeneral Council onits
activities."
Officers oftheCommittee were appointed bytheGeneral Council on16April 1996. These are:
Mr.Weekes (Canada) asChairman oftheCommittee, andMr.Berthet (Uruguay), Mr.Harbinson
(Hong Kong), Mr.Ravaloson (Madagascar) andMr.Willems (Belgium) asVice-Chairmen.
4. TheCommitteewillhaveheldsevenmeetingsbytheendof1996;on21-22May(FirstSession),
2-3July (Second Session), 29-31 July (Third Session), 17-20 September (Fourth Session);
7,10-11 October (Fifth Session); 31October (Sixth Session); and5-6,8November (Seventh Session).
There hasalsobeenaseries ofinformal consultations.
Work oftheCommittee during 1996
5. TheCommittee adopted itsRules ofProcedure (WT/REG/1) andprogramme ofwork for1996
atitsSecond Session. Thework programme provided foralltheitems ofitsterms ofreference to
beaddressed inabalanced manner, allowing theCommittee toprogress more effectively inallareas
ofitsmandate asaresult ofthesynergies which developed.
2TheCommittee willalsocarry outtheoutstanding work oftheworking parties already established bythe
Council forTrade inGoods, theCouncil forTrade inServices ortheCommittee onTrade andDevelopment,
within theterms ofreference defined forthose working parties, andreport totheappropriate bodies.WT/REG/2
Page3
(a) Examination ofregional trade agreements
6. Members drew attention totheneedfortheCommittee toassign apriority todealing with
thebacklog ofoutstanding examinations. Bytheendof1996, theCommittee willhavestarted, or
continued, theexamination of21regional tradeagreements outofthe32outstanding asofJune1996,
thusworking towards removing thebacklog (seeAttachment 1).
7. Theexaminationsofregionaltradeagreementsduring1996ledtoquestionsfromsomeMembers
concerning theinterpretation ofsome oftheWTO provisions pertaining toregional tradeagreements,
inparticular, ofArticle XXIV oftheGATT 1994, theUnderstanding ontheInterpretation of
Article XXIV oftheGATT 1994 andArticle VoftheGeneral Agreement onTrade inServices. In
some instances, theobservation wasmade thatexaminations were hampered bythelack, orlate
submission, ofrelevant information.
(b) Reporting ontheoperation ofagreements
8. Preliminary discussions onthisitemwere based onachecklist ofpoints prepared bythe
Secretariat (WT/REG/W/3). Members were oftheview thatthefulfilment ofthelegal obligations
toprovide forbiennial reporting ontheoperation ofagreements could helptoincrease thetransparency
ofregional trade agreements. They considered thattheprocedures togiveeffect tothisobligation
shouldbedesignedtooperateinanefficientmanner,takingintoaccountotherrelevantWTOprocedures.
(c) Procedures tofacilitate andimprove theexamination process
9. TheCommittee requested theSecretariat toprepare astandard format fortheprovision of
informationonregionaltradeagreementstofacilitateandstandardizetheprovisionofinitialinformation.
AtitsThird Session, theCommittee tooknoteofthenon-binding, voluntary Chairman 'sGuidelines
assetoutinthe"Standard Format forInformation onRegional Trade Agreements" (WT/REG/W/6).
Membersconsidereditanimportantcontributiontoimprovingtheproceduresforexaminationofregional
trade agreements, asitisintended toprovide timely andaccurate information asasubstitute forthe
initial question andreplyprocess. TheCommittee isconsidering theappropriate timeforthesubmission
oftheStandard Format. TheStandard Format hasbeendeveloped forgoods agreements; following
arequest bytheCommittee, theSecretariat ispreparing asimilar draftstandard format forinformation
onservices agreements foruseasappropriate.
10. TheCommittee isconsidering ajointsubmission bythedelegations ofAustralia, Hong Kong
andKorea (WT/REG/W/5), which proposed theadoption bytheCommittee ofguidelines forthe
examination ofregional trade agreements. TheCommittee isalsoconsidering asuggestion byJapan
fortheadoption ofguidelines fortheexamination ofregional trade agreements aimed ataddressing
thekindofproblems that,inJapan'sview, result from different interpretations ofArticle XXIV.
11. TheCommittee discussed anumber ofmatters relating tothenotification ofregional trade
agreements. With respect tothetiming ofnotifications, theCommittee isexamining thepossibility
ofestablishing ameans toconvey preliminary information relating toregional trade agreements prior
tothenotification itself. TheCommittee alsodiscussed twoapproaches todealing withnon-compliance
withnotificationobligations;eitherthroughtheCommitteeurgingMemberswhicharepartiestoregional
tradeagreements tocomply withtheirnotification obligations orthrough providing forthepossibility
ofcounter-notification. TheCommittee alsohadapreliminary discussion onthepossibility of
establishing asimplified examination procedure forregional trade agreements having minimal effects
oninternational trade. With respect tothereports ontheexamination ofregional trade agreements,
theChairman proposed anewformofreporting involving separating thereport intwoparts, whereby
theCommittee would takenoteofitsfactual part-reflecting thediscussions oftheCommittee -andWT/REG/2
Page4
adopt theconclusions afterhaving considered adraftversion. Thisremains amatter forconsideration.
TheCommittee alsodiscussed othermatters dealtwithintheSecretariat document "Note onProcedures
toFacilitate andImprove theExamination Process" (WT/REG/W/9).
(d) Systemic implications ofregional trade agreements andinitiatives forthemultilateral
trading system andtherelationship between them
12. TheCommittee hadapreliminary, inconclusive discussion onthisissue. Forthisdiscussion,
ithadbeforeitthe1995Secretariatpublication,RegionalismandtheWorldTradeSystem,whichprovides
anoverview oftherelationship between regional tradeagreements andtheGATT/WTO system during
thepast50years. Korea made asubmission (WT/REG/W/4) dealing withwhatitconsidered tobe
thechallenges, systemic issues, andobjectives fortheMinisterial Conference withrespect toregional
trade agreements andtheWTO system; itincluded awork programme onregionalism fortheWTO
in1997-98. Inthediscussion there weredivergent views. Members emphasized theimportance of
therelationship between regional trade agreements andtheWTO system. Some Members stressed
theneedtoaddress therelationship between regional trade agreements andtheWTO rules. Others
wereequally clearthatconclusions could notbedrawn ahead ofthenecessary examination oftheissues.
Theneed forMembers tocomply withtheir notification obligations withrespect topreferential
agreements wasalsonoted.
13. Inthecourse oftheexamination ofregional trade agreements carried outattheThird Session
oftheCommittee, Members identified anumber ofsystemic andhorizontal issues related totherelevant
WTO rules. Upon therequest oftheCommittee, these havebeenincluded inaninformal checklist
bytheSecretariat which willbeupdated toinclude other horizontal issues ofthesame nature referred
toinother Sessions oftheCommittee.
14. Following theChairman 'sproposal onhowtheavailable information could bepresented to
assist consideration ofsystemic implications, theCommittee requested theSecretariat toprepare material
forhorizontal (pilot) studies ontechnical barriers totrade andsanitary andphytosanitary measures
astheyappear inthetexts oftheregional trade agreements under examination. Inapreliminary
discussion based ontheSecretariat 'smaterial (WT/REG/W/8), various views wereexpressed regarding
theimplications fortheWTO. Further discussions wereneeded onthissubject. Inthatcontext, the
Chairman invited Members tosubmit relevant information withrespect towork being doneontechnical
barriers totradeandsanitary andphytosanitary measures inthecontext ofregional initiatives. Interest
wasexpressed bysome Members inexpanding thisexercise tocover other provisions.
15. Indiscussing theCommittee 'sreport totheMinisterial Conference, Members emphasized the
importance ofthecompatibility ofregional trade agreements withthemultilateral trading system.
16. AttheFourth Session, Korea tabled adraft decision fortheMinisterial Conference. The
United States hasalsotabled adraft recommendation. Discussions willtakeplace shortly onboth
proposals.
(e) Additional functions
17. Noadditional functions wereassigned bytheGeneral Council totheCommittee onRegional
Trade Agreements during 1996.WT/REG/2
Page5
Future Work Programme
18. There exists considerable scope fortheCommittee todevelop itswork within theexisting terms
ofreference. TheCommittee 'sfuture work programme willbuild onwork begun thisyear. Members
consider itimportant forMinisters inSingapore toendorse thefollowing aspects ofitsfuture work.
19. TheCommittee should continue theexamination ofregional trade agreements asoneofits
priority tasks fortheyears ahead. TheCommittee should make every effort towork toremove the
backlog andensure thatsuchabacklog doesnotreoccur.
20. TheCommittee should work towards early agreement onprocedures fortheeffective
implementation ofbiennial reporting ontheoperation ofagreements, inanefficient manner, taking
intoaccount other relevant WTO procedures.
21. Onprocedurestofacilitateandimprovetheexaminationexercise,theCommitteeshouldcontinue
thework already initiated. Thisshould include, interalia,thedevelopment ofavoluntary Standard
Format forInformation onServices Agreements, thedevelopment ofguidelines fortheexamination
ofregional trade agreements, andtheconsideration ofthenature andcontent ofreports.
22. TheCommittee should explore measures thatcould helpinincreasing theeffectiveness of
notifications -withrespect totheirtiming aswellastotheircontents -andexamine theoptions available
forensuring thatallregional trade andeconomic integration agreements involving WTO Members
arenotified totheappropriate WTO bodies.
23. Onsystemic matters, theCommittee should continue itsconsideration building onwritten
submissions andinterventions byMembers; ontheevolving checklist ofsystemic issues identified
inthecontext oftheexamination ofregional tradeagreements; andonhorizontal comparative studies
onselected elements ofregional agreements andinitiatives. Aspartofthiswork, theCommittee should
analyse, inanon-prejudicial manner, whether thesystem ofWTO rights andobligations, asitrelates
toregional trade agreements, needs tobefurther clarified with aview tomaking appropriate
recommendations totheGeneral Council, inaccordance withthemandate oftheCommittee.WT/REG/2
Page6
ATTACHMENT 1
Status ofExamination ofRegional Trade Agreements
Regional trade agreements examined in1996 (21)
Agreement Date ofExamination Round of
Examination
ECEnlargement -Goods 29/7/96 First
NAFTA -Goods 30/7/96 Second
EFTA-Hungary 17/9/96 First
EFTA-Israel 17/9/96 First
EFTA-Poland 17/9/96 First
EC-Czech Rep. 18/9/96 First
EC-Hungary 18/9/96 First
EC-Poland 18/9/96 First
EC-Slovak Rep. 18/9/96 First
MERCOSUR 20/9/96 Second
NAFTA -Services 10-11/10/96 Second
ECEnlargement -
Services11/10/96 First
EC-Bulgaria 5/11/96 First
EC-Romania 5/11/96 First
EC-Estonia 5/11/96 First
EC-Latvia 5/11/96 First
EC-Lithuania 5/11/96 First
EFTA-Bulgaria 6/11/96 First
EFTA-Romania 6/11/96 First
EFTA-Slovenia 6/11/96 First
EC-Turkey 8/11/96 FirstWT/REG/2
Page7
Other regional trade agreements already notified, tostart examination in1997 (14)
(a) Regional trade agreements notified before June1996 (8)1
- Central European FreeTrade Agreement (FTA)2
- Czech Rep.-Slovenia FTA2
- Slovak Rep.-Slovenia FTA2
- Hungary-Slovenia FTA2
- EC-Faroe Islands FTA
- Iceland-Faroe Islands FTA
- Switzerland-Faroe Islands FTA
- Norway-Faroe Islands FTA
(b) Newnotifications (6)
- Czech Republic-Romania FTA. Theterms ofreference fortheexamination ofthe
Agreement were adopted bytheCouncil forTrade inGoods on5July1996.
- Slovak Republic-Romania FTA. Theterms ofreference fortheexamination ofthe
Agreement were adopted bytheCouncil forTrade inGoods on5July1996.
- EFTA States-Estonia FTA.1Theterms ofreference fortheexamination ofthe
Agreement wereadopted bytheCouncil forTrade inGoods on19September 1996.
- EFTAStates-LatviaFTA.1ThetermsofreferencefortheexaminationoftheAgreement
were adopted bytheCouncil forTrade inGoods on19September 1996.
- EFTA States-Lithuania FTA.1Theterms ofreference fortheexamination ofthe
Agreement wereadopted bytheCouncil forTrade inGoods on19September 1996.
- Establishment oftheEuropean Community, Services. Theterms ofreference forthe
examination oftheAgreement wereadopted bytheCouncil forTrade inServices on
23September 1996.
1Three bilateral FreeTrade Agreements between Switzerland andtheBaltic countries, previously notified
totheGATT, were replaced bytherelevant EFTA Agreements, notified totheWTO after June 1996.
2TheCommittee wasinformed orally ofthereplacement ofthethree bilateral FreeTrade Agreements between
Slovenia andCzech Republic, Hungary andSlovak Republic bytheAgreement onAccession ofSlovenia tothe
Central European Free Trade Area.WT/REG/2
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ATTACHMENT 2
Documents fortheCommittee onRegional Trade Agreements
WT/REG/1 - Rules ofProcedure forMeetings oftheCommittee onRegional Trade
Agreements
WT/REG/W/1 - GATT/WTO Documents Issued fortheExamination ofRegional
Agreements
WT/REG/W/2 - Draft Rules ofProcedure forMeetings oftheCommittee onRegional
Trade Agreements
WT/REG/W/3 - Checklist ofPoints onReporting ontheOperation ofRegional
Agreements
WT/REG/W/4 - Communication from Republic ofKorea
WT/REG/W/5 - Communication from theDelegations ofAustralia, Hong Kong and
Korea
WT/REG/W/6 - Standard Format forInformation onRegional Trade Agreements
WT/REG/W/7 - Checklist ofPoints Raised byDelegations onProcedures toFacilitate
andImprove theExamination Process
WT/REG/W/8 - Systemic Implications ofRegional Trade Agreements andRegional
Initiatives fortheMultilateral Trading System
WT/REG/W/9 - NoteonProcedures toFacilitate andImprove theExamination Process