RESTRICTED  
WORLD TRADE  WT/REG/M/14  
 24 November 1997  
ORGANIZATION  
 (97-5155)  
 
Committee on Regional Trade Agreements  
Fourteenth Session  
 
 
 
 NOTE ON THE MEETINGS OF 3 -5 NOVEMBER 1997  
 
 Chairmen:  H.E. Mr. John Weekes (Canada) and H.E. Mr. Jean -Marie Noirfalisse (Belgium)  
 
 
A. Adoption of the Agenda  
 
1. The Fourteenth Session of the Committee on Regional Trade Agreements (CRTA) was convened 
in Airgram WT O/AIR/707.  The Chairman  noted that under "Other Business" he would raise the matter 
of the calculation of weighted tariff rates in the context of the examination of the EC Enlargement, regarding 
which there had been consultations; the representative of the United States  indicate d that his delegation 
would raise the issues of documentation and scheduling of meetings under "Other Business".  The following 
agenda was adopted:  
 
A.Adoption of the Agenda  
B.Examination of Regional Trade Agreements  
-Central European Free Trade Agreement (Czech Republic, Hungary, Poland, Romania, Slovak Republic 
and Slovenia)  
-Czech Republic -Bulgaria  
-Slovak Republic -Bulgaria  
-Protocol on Trade in Services -Australia New Zealand Closer Economic Relations Trade Agreement  
-Treaties Establishing the European Union, Services  
-European Communities -Hungary Europe Agreement, Services  
-European Communities -Poland Europe Agreement, Services  
-European Communities -Slovak Republic Europe Agreement, Services  
C.Systemic Implications of Agreements and Initiatives  for the Multilateral Trading System and the 
Relationship Between Them  
D.Reporting on the Operation of Agreements  
 E. Other Business  
 
 
B.Examination of Regional Trade Agreements  
 
2. Reports on these examinations are being circulated  as separate documents.  
 
 
C.Systemic Implications of Agreements and Initiatives for the Multilateral Trading System and the 
Relationship Between Them  
 
3. The Chairman  recalled that at the last meeting the Committee had agreed on a three -pronged 
approach for tackling its work on systemic matters, encompassing a legal analysis of relevant WTO 
provisions, a horizontal comparison of RTAs and a debate on the context and eco nomic aspects of RTAs.  
The Committee had also agreed that it would begin this work with discussions on the issues of "other 
regulations of commerce" and "substantially all the trade".  At the previous meeting he had also indicated WT/REG/M/14  
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that documentation would  be evolving, with factual information on RTAs and background notes prepared 
by the Secretariat, and with notes presented by delegations.  
 
4. The Chairman  then said that the day's meeting represented the launching of debate on the t wo 
systemic issues.  The Committee had several documents on the table for the discussion.  The first one was 
the paper submitted at the last session by the Australian delegation, in relation to both "other regulations of 
commerce" and "substantially all th e trade".  A second document was a non -paper by Hong Kong, China, 
dated 4 November, concerning those same two systemic issues.  The two other documents were drafted by 
the Secretariat and concentrated on the question of "other regulations of commerce":  WT /REG/W/17 
detailed the drafting history of this term (for both Article XXIV of the GATT 1947 and the Understanding 
on the Interpretation of Article XXIV of the GATT 1994), and WT/REG/W/17/Add.1 elaborated on the 
legal issues that arose in working parties d uring the GATT years.  He did not expect that delegations would 
be able to comment on the notes by the Secretariat, since they had been distributed only recently, given the 
fact that it had only been one month since the Committee had agreed how it would pr oceed.  He suggested 
that the Committee begin with preliminary discussion on "other regulations of commerce".  
 
5. The representative of Australia  recalled that he had introduced his delegation's paper at the last 
session.  He requested that the paper be circulated as an official Committee document.  
 
6. The representative of Hong Kong, China  indicated that her delegation had prepared a paper on 
the concepts of "other regulations of commerce" and "substantially all the trade".  Her delegation welcomed 
the background notes by the Secretariat on "other regulations of commerce".  The notes pointed to the 
diversity of opinions rega rding the interpretation of the concept, as expressed in the examinations of the 
individual regional trade agreements (RTAs).  The fact that reports on these examinations had more often 
than not been inconclusive reaffirmed the need to treat with caution t he view that existing RTAs which had 
been examined in working parties were tolerated by the GATT/WTO.  Her delegation had elaborated this 
point in paragraphs 4 and 5 of its non -paper.  She called Members' attention to the following parts of the 
non-paper:  paragraphs 2 and 3, which contended that the exceptional nature of Article XXIV, in particular 
with regard to the MFN principle, pointed to the need for its provisions to be construed narrowly; paragraphs 
7 and 8, which emphasized the non -exhaustive natur e of the list of exceptions to the "other restrictive 
regulations of commerce" that were to be eliminated among constituent territories in Article XXIV:8(a)(i) 
and (b); and paragraphs  9-13, which argued that harmonization of the external regime of a custom s union 
envisaged in Article  XXIV:8(a)(ii) should avoid creating adverse effects on trade with third parties.  
 
7. The representative of Japan  expressed appreciation for the Secretariat papers and for the 
submissions by the delegatio ns of Australia and Hong Kong, China.  Regarding the Australian paper, he 
said his delegation had different views on whether safeguard measures should be applied by an RTA party 
to its partners.  A safeguard was a special measure used when a WTO Member exp erienced serious 
damage or difficulty, when there were serious economic and social costs raising political and social problems.  
If an RTA party faced such difficulties, it seemed illogical not to impose safeguard measures against its 
partners while imposi ng these measures against third countries.  His delegation's view was that safeguard 
measures should be applied on an MFN basis, in accordance with the Agreement on Safeguards.  
 
8. The representative of Canada  said that "other regul ations of commerce" and the related concept of 
"other restrictive regulations of commerce" were important in the context of today's trading environment as 
tariffs were diminishing in importance, with other regulations of commerce having a determinative imp act 
on effective market access.  Therefore these were significant concepts in general, not just with respect to 
RTAs.  There were two different aspects of the concept as framed in Article  XXIV:5 which demanded 
attention.  First, there was the matter of wha t was the scope of that concept within an RTA, and second, 
there was the question of effects on third parties.  It was important to read this paragraph in conjunction 
with Article XXIV:4, which stated that the purpose of an RTA had to be to facilitate trad e between 
constituent territories of RTAs and not to raise barriers to trade vis-à-vis other countries.  Perhaps the scope 
had been defined broadly because it had been felt that RTA parties needed to deal with many "other 
regulations of commerce" within th e RTA in order to establish conditions of fair competition among parties.  
The result might be that the parties had gone much further in their liberalization within the agreement,          WT/REG/M/14  
         Page 3 
 
which might increase the effective margin of preference that was granted to partners in the free -trade area 
(FTA); that increase in the margin of preference, however, did not in and of itself lead to the conclusion that 
overall the barriers were higher or more restrictive vis-à-vis third countries.  There was a need to have a 
much  more thorough examination.  The mere fact that further liberalization was taking place at the regional 
level should not lead anyone to conclude that there had been adverse effects on trade with third countries.  
Finally, there was the question of the link  of "other regulations of commerce" with other WTO Agreements.  
The Japanese delegate had mentioned safeguards, which had been a heavily debated topic in previous 
Committee meetings and in past working parties.  The Canadian delegation's position had been that the 
exclusion of an RTA partner in a global safeguard action under certain circumstances was consistent with 
the existing provisions.  But a generic issue that the Committee needed to bear in mind in considering 
"other regulations of commerce" was the  fact that safeguards, like other contingency protection instruments 
such as anti -dumping, countervailing duties or standards, were clearly of significance in negotiating RTAs in 
today's world; these developments at the regional level might in turn have an  impact on the multilateral 
system.  His delegation would like to devote more attention to the question of the relationship between 
RTAs and contingency protection instruments, to see if there were lessons for further multilateral 
liberalization.  
 
9. The representative of the European Communities  said he supported much of what had just been 
said by the Canadian representative.  He thanked the Secretariat and the delegations of Australia and Hong 
Kong, China for the quality material p rovided for the discussion.  He would attempt to set out some 
components of the broad landscape of "other regulations of commerce" as his delegation viewed it.  As the 
Canadian representative had noted, there was a fundamental link between Article  XXIV par agraphs 4 and 
5.  Paragraph 5 dealt with the protection of the position of third parties in either a customs union or an 
FTA, which was where the "not to raise barriers to the trade of other contracting parties" provision in Article 
XXIV:4 was given effect .  This was the lens through which the question of "other regulations of commerce", 
as opposed to "other restrictive regulations of commerce", needed to be considered.  There seemed to be 
proof of this in Article  XXIV:8(a)(ii), which was the other place wh ere "other regulations of commerce" 
appeared, again referring to the trade of territories not included in the customs union.  There were still 
questions regarding what was meant by the word "regulations", and here the Secretariat note 
(WT/REG/W/17/Add.1), particularly the part on quantitative restrictions which noted that "an examination 
of the provisions of the Agreement" (i.e. the GATT) "indicates that the term 'regulations' is consistently used 
to describe such measures as customs procedures, grading and  marketing requirements, and similar routine 
controls in international trade".  In other words, there was a potential definition which went considerably 
wider and which was more neutral than the Committee's debate so far.  There was a question as to whethe r 
Members were talking about a wide compass of regulations, including ones that were non -dimensional in 
that they did not have an effect on the actual volume or value of the trade, or whether they were talking 
about dimensional regulations of commerce whic h actually shaped the flow of trade.  The contrast was that 
the reference to "restrictive regulations of commerce" in Article  XXIV:8 was an interior definition describing 
the minimum parameters which an RTA had to meet in order to benefit from Article  XXIV 's fundamental 
derogation from Article  I; this description of the minimum relationship needed between the parties to an 
RTA looked inward, as opposed to the requirements of Article  XXIV:5, which looked outwards.  It 
seemed this was the basic structure the Committee should bear in mind when considering the various 
particular regulations in more detail.  A key question was whether "other regulations of commerce" focused 
on restrictive ones or was intended more broadly; the Committee would need to reflect on t he implications 
of either interpretation.  Regarding Article  XIX and the question of safeguards, he said the paper by 
Australia treated this question well.  The debate here raised another underlying question concerning the 
architecture of the operation of Article  XXIV:8 and the question of restrictive regulations of commerce:  
the difference between the permission in Article  XXIV for preferential arrangements to exist,  and the 
requirements in Article  XXIV:8 of what must be done if this broad permission wer e to be properly 
exercised.  That difference between what was permitted and what was required was also part of the 
distinction between "other regulations of commerce" and "other restrictive regulations of commerce".  The 
Australian paper seemed to argue th at Article  XIX measures must not be applied between the members of 
an RTA.  His delegation would take issue with the opening sentence of paragraph 22 of the Australia paper, 
which said that "a fully implemented customs union or free -trade area [did] not pe rmit anything between 
free trade between the partners to the arrangement and MFN treatment for third countries"; WT/REG/M/14  
Page 4 
 
Article  XXIV:8(a) and (b), with the "except where necessary" language, demonstrated that this was probably 
not the case.  He asked if the Austr alian delegation saw the elimination of Article  XIX measures between 
RTA parties as ultimately mandatory if use were made of the permission contained in Article  XXIV:8.  
His own delegation saw this as permitted but not mandatory.  This would be an interest ing aspect of the 
issue to explore.  Concerning the Japanese intervention on the same point, he said that in considering the 
argument that safeguard measures should be applied on an MFN basis (a notion his delegation did not 
accept), it was fundamentally i mportant to distinguish between a customs union and an FTA.  While not 
accepting the argument that safeguard measures should be applied on an MFN basis by a party to an FTA, 
his delegation nonetheless took the argument seriously; however, this argument cou ld not apply with respect 
to a fully implemented customs union.  The Committee needed to distinguish clearly between the two types 
of RTAs.  
 
10. The representative of Korea  said his delegation, too, welcomed the papers by the Austral ian and 
Hong Kong, China delegations, as well as the background notes by the Secretariat.  Regarding the 
relationship between Article  XXIV and the rest of GATT 1994 for the discussion of "other regulations of 
commerce",  of particular importance was Articl e XXIV's relationship with Article  I, which spelled out the 
MFN rule.  As was widely recognized by the Committee, Article  XXIV contained an important derogation 
from the MFN rule, giving RTAs special status.  There were two reasons for this.  One was histo rical, in 
that at the inauguration of the multilateral trading system fifty years ago, there had been entities similar to 
what were now known as RTAs, and it was necessary to grandfather them.  The other, more fundamental 
reason was economic or theoretical , in that it was considered desirable to promote free trade through RTAs 
as part of Members' collective effort to achieve world -wide free trade.  That spirit was contained in 
Article  XXIV:4 and was stated in the Preamble to the Understanding on the Interpr etation of 
Article  XXIV of GATT 1994, which said that Members recognized "the contribution to the expansion of 
world trade that may be made by closer integration between the economies of the parties to such 
agreements".  The raison d'être  of an RTA was its  function of liberalizing trade on a regional basis in the 
wider process of multilateral liberalization.  Therefore the exceptional status of Article  XXIV was 
understood in light of the building -block function of RTAs in furthering multilateral liberalizat ion.  The 
basic relationship between Article  XXIV and other GATT provisions, particularly Article  I, was important 
and should serve as a guiding principle in the Committee's attempt to interpret the relevant wordings of 
Article  XXIV, especially the phrase "other regulations of commerce".  Article  XXIV should not be used 
as a legal cover for GATT -inconsistent measures or trade policies which the parties to RTAs might take or 
maintain.  On many occasions RTA parties had attempted to justify GATT -inconsistent measures by 
resorting to the provisions of Article  XXIV, particularly with respect to the concept of "other regulations of 
commerce" in paragraphs  5 and 8(a).  His delegation was of the view that GATT Article  XXIV did not 
provide any additional rights to R TA parties.  Also, regulations of commerce should not become more 
restrictive with the formation of either FTAs or customs unions.  In this sense, the direction of the change 
in other regulations of commerce was important to his delegation, particularly in  the case of customs unions.  
The paper by the delegation of Hong Kong, China made an important point in paragraph 12 regarding the 
direction of harmonization in the context of customs unions:  "A fundamental question [was] whether the 
harmonization should  be directional, and, if so, whether it should be achieved through raising or lowering 
the respective barriers maintained by members of the customs union."  To his delegation the answer was 
obvious.  The extent of harmonization was important and deserved a ttention by the Committee in the 
future.  This seemed to relate to Article  XXIV:8(a)(ii), which stated that "substantially the same duties and 
other regulations of commerce" should be applied by RTA parties to third -party trade; with reference to this 
language, the Hong Kong, China paper stated in paragraph 11 that "the total harmonization of the external 
regime is not required".  In other words, if this harmonization required a further derogation from the MFN 
principle or an increase in barriers vis -à-vis third countries in terms of Article  XXIV:5(a), the parties should 
consider carefully whether that harmonization was really necessary.  From that perspective, it seemed there 
was a close link between Article  XXIV paragraphs  5(a) and 8(a)(ii).  Finally, he r eiterated the view that 
Article  XXIV did not provide any new rights to RTA parties that they would not have enjoyed in the 
absence of the RTA.  He called attention to paragraph  9 of the Secretariat's paper 
(WT/REG/W/17/Add.1), which described one argument regarding the scope and application of paragraph 
8(a)(ii):  "this rule gives the countries which are members of a customs union the right to apply restrictive          WT/REG/M/14  
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measures other than those which they would have been able to apply if the union had not been esta blished"; 
this argument was not acceptable to his delegation.  
 
11. The representative of Israel  expressed appreciation for the papers prepared and indicated that his 
delegation attached importance to these issues and would return wit h comments at a later date.  
 
12. The representative of Japan  said that he had found the Korean intervention to be convincing.  In 
analysing Article  XXIV, Members should look at WTO Agreements as a whole, rather than viewing the 
fifty-year-old provisions of Article  XXIV in isolation.  Article  I provided the guiding principle and 
embodied the spirit of the multilateral system.  The delegate of the EC had commented with respect to the 
structure of Article  XXIV, noting that paragraphs 4 a nd 5 dealt with third countries and that paragraph 8 
dealt with internal RTA matters.  These paragraphs needed to be taken together, and RTA parties needed 
to meet the requirements of each.  For example, in looking at a case of safeguards being applied onl y to 
third countries and not to RTA parties, it was important to keep in mind both Article  XXIV:4, which said 
an RTA party should not raise barriers to the trade of third parties, and Article  XXIV:5, which contained 
more detailed provisions on how RTAs sho uld not raise barriers to third parties.  The "except where 
necessary" language in Article  XXIV:8 did not refer to Article  XIX on safeguards or to Article  XXI on 
security exceptions; Article  XXI was not mentioned despite the fact that no country would give  up its right 
to impose restrictions for the safety of its nationals, so it seemed that the exceptions clause was an illustrative 
list rather than an exhaustive one.  He did not yet know his delegation's position on this, however.  He then 
requested the EC  representative to clarify his statement that an RTA could derogate from the MFN 
principle, in light of the position outlined regarding the relationship between Article  XXIV paragraphs 4 
and 5.  
 
13. The representative of the European  Communities  said he agreed with much of what the 
representative of Japan had stated, except with respect to the list of exceptions in Article  XXIV:8.  To 
clarify his own statement regarding the link between Article  XXIV, paragraphs 4 and 5, he said that 
paragraph 4 contained some apparently contradictory statements, including both the general statement that 
the contracting parties recognized that closer integration between economies and countries party to RTAs 
might be beneficial, and the statement that th e purpose of an RTA should be the facilitation of trade between 
the constituent territories, and not the raising of barriers to third -party trade.  So there was a recognition of 
the legitimacy of the policy goal and a recognition that the purpose of the po licy goal should be seen as the 
positive one of the facilitation of trade, and not to amount to a form of protectionism (though he would 
qualify this statement with respect to commercial defense questions).  Article  XXIV:4 contained a balance 
between the l egitimacy of forming an RTA and the responsibility as a "citizen of the GATT" to do so in a 
way which did not raise barriers to third -party trade.  In other words, where barriers were lowered 
legitimately and preferentially between the parties to an agreem ent, the net position of third parties should 
not be affected.  This was not surprising in light of international law on multilateral treaties, which held that 
generally, parties to a multilateral agreement could form subsequent agreements between a subset  of the 
membership of the wider agreement, varying their rights and obligations as between themselves, provided 
they did not abridge the rights of third countries to the wider, underlying agreement.  Article  XXIV:4 
seemed to do no more than to translate in to the language of trade policy that wider principle.  Against that 
background, Article  XXIV:5 concerned the relationship between the parties forming the preferential 
agreement and the rest of the GATT/WTO membership.  The point was to ensure that the net position 
of third parties was not abridged, that rights were not taken away, so that while a preferential agreement was 
formed, it did not raise barriers to the trade of other contracting parties.  That was the definition of the 
external relationship betwe en the parties to the RTA and the rest of the GATT/WTO membership.  
Article  XXIV:8 in contrast was an internal discipline.  There seemed to be no dispute that an FTA or 
customs union entailed a derogation from the general MFN provisions of Article  I;  his delegation's point, 
however, was that the RTA was a legitimate derogation and that legitimacy was conferred in each case by 
compliance with the provisions or definitions contained in Article  XXIV:8(a) or (b), provided that the 
customs union or FTA was oper ated in a manner which complied with the requirements of 
Article  XXIV:5(a) or (b), to ensure that the rights of third parties were not abridged.  That appeared to be 
the underlying architecture of the way Article  XXIV was intended to function.  As the dele gate from Japan 
had said, the drafting was fifty years old, and the reason the Committee was having this debate was that parts WT/REG/M/14  
Page 6 
 
of the Article had not stood the test of time very well.  But that underlying architecture set out the general 
relationship betwe en the RTA members and third countries, and provided the internal test which the 
agreement in question had to meet in order to benefit from the basic derogation.  This derogation was 
expressed in the opening line of Article  XXIV:5:  "The provisions of this  Agreement shall not prevent..."  
If that understanding of the general architecture were shared, then the rest of the Committee's debate would 
have a coherent framework within which various components and issues could be placed.  
 
14. The Chairman  said the drafters of the GATT fifty years ago probably had not anticipated how 
popular this derogation under Article  XXIV was to become.  
 
15. The representative of Switzerland  wished to flag an issue that had not been addressed, which his 
delegation viewed as related to the question of "other regulations of commerce".  In addition to reading 
Article  XXIV, his delegation had looked at other WTO provisions to see if there was men tion of this term 
or related concepts in connection with RTAs.  Paragraph 2(c) of the Enabling Clause seemed related.  It 
involved two aspects:  one was the possibility given to developing countries to reduce or eliminate customs 
duties on a mutual basis; the other, which seemed linked to "other regulations of commerce", dealt with the 
possibility to reduce or eliminate on a mutual basis non -tariff measures that were linked with trade between 
those developing countries.  There were specific conditions and c riteria in the Enabling Clause regarding 
this second aspect.  In addressing the issue of "other regulations of commerce", it would benefit the 
Committee to have as full a picture as possible, so it would seem worthwhile in the future for the Committee 
to look into whether this language was pertinent to the discussion on this issue.  The Secretariat could be 
invited to look into this.  
 
16. The representative of Uruguay  expressed appreciation to the Secretariat and to the delegations of  
Australia and Hong Kong, China for the papers provided.  He supported the statement by the EC 
representative regarding the relationship between the different paragraphs of Article  XXIV.  His 
delegation agreed that Article  XXIV was not intended to allow a group of countries to increase their barriers 
to trade from third parties, but rather to improve their relations and the circulation of trade among 
themselves, which was the basic condition; the Article included provisions on what conditions had to be 
met.  In spite of or perhaps because of its popularity, Article  XXIV had stood the test of time rather well.  
It had allowed the GATT/WTO membership to move forward in an orderly manner and to keep a certain 
control, guaranteeing that the basic tenet of not in creasing the barriers to third parties was maintained.  
Regarding safeguards, his delegation was of the view that safeguards applied by an RTA party did not 
necessarily have to be applied to the other parties; footnote 1 to the Agreement on Safeguards addr essed 
this point.  Regarding the point made on the Enabling Clause, his delegation was of the view that it was not 
necessarily part of the Committee's mandate to discuss this language; Members could look to see if there 
was anything in its provisions which  might be valuable, but that was an issue to be discussed in the Committee 
on Trade and Development.  
 
17. The representative of India  thanked the Secretariat and delegations for the papers which succinctly 
brought out several items o f interest.  Two issues relating to "other regulations of commerce" stood out in 
importance.  One issue, which had been highlighted in the Secretariat's paper, was the manner in which 
GATT -inconsistent measures in the context of RTAs should be treated.  A second issue was whether 
Members could adopt a more restrictive trade regime vis -à-vis third parties after entering into a customs 
union.  His delegation supported what the delegate of Korea had said regarding both of these issues.  He, 
too, wished to call  attention to paragraph 12 of the Hong Kong, China paper and paragraph  9 of 
WT/REG/W/17/Add.1.  It seemed improper for RTAs to use the provisions of Article  XXIV to justify 
GATT -inconsistent measures.  In the past there had been many cases in which certain  GATT -inconsistent 
measures, particularly in the field of textiles and in the context of the Multi -Fibre Agreement, had been 
introduced by parties joining a customs union and had been justified on the basis of Article  XXIV.  His 
delegation would like the C ommittee to have further debate on this issue and hoped to have a paper on this 
issue soon.  Regarding the second issue, views were split on the effectiveness of Article  XXIV.  The EC 
delegate had said the rights of third parties should in no way be abridg ed; but it was true that sometimes 
efforts toward harmonization resulted in a more trade -restrictive regime being applied to Members outside 
the customs union.  The broad objectives of the WTO were the same, in this Committee or in any other          WT/REG/M/14  
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body; whether referring to the lowering of tariffs or the removal of non -tariff barriers, at the heart of 
discussion was the notion of trade facilitation.  If trade facilitation was at the centre, it seemed that no 
provision, even if technically justified in the legal t ext, should lead to a regime that was more trade restrictive.  
Regarding the idea of derogating from the MFN principle, since a derogation implied something 
exceptional, the derogation should not be applied to such an extent that the MFN principle itself b ecame a 
derogation.  His delegation would suggest considering the issue in a more concrete manner by considering 
situation -specific examples.  For instance, one issue from the Secretariat's paper that the Committee could 
analyze was the question of whether , if a country with quantitative restrictions in place for balance of 
payments reasons entered into a customs union, it would mean that all other members of the customs union 
would similarly apply those quantitative restrictions.  
 
18. The representative of Australia  thanked the Secretariat and the delegation of Hong Kong, China 
for their papers.  The day's discussion had been quite useful.  His delegation agreed with the point made 
by the EC delegate and others about understanding the  relationship between Article  XXIV paragraphs 5 
and 8; this was of critical importance.  His own delegation's paper had focused on Article  XXIV:8 rather 
than Article  XXIV:5, which reflected Australia's concern over the extent to which an RTA met the intern al 
disciplines.  What the delegates of Japan and Korea had pointed to was also very interesting; the EC 
delegate had said Article  XXIV:5 governed the external requirements for an RTA and Article  XXIV:8 
governed the internal disciplines, but as the Japanese  delegate said, it was feasible that an RTA's internal 
disciplines could result in a raising of barriers to third parties.  The Committee should reflect on this.  He 
thanked the delegation of Hong Kong, China for pointing out the need to look carefully at the extent to 
which harmonization of the external regime was required.  Also, regarding the relationship between 
Article  XXIV paragraphs 5 and 8, the EC representative had described Article  XXIV:4 as requiring that 
there be no raising of the "net" barriers  to trade with third parties  - this argument had been made many 
times, in many contexts, and his delegation did not agree with it.  He also thanked the representatives of 
Korea, Japan and India for reminding the Committee that it needed to consider these q uestions in the 
context of the single undertaking of the WTO Agreements.  The Japanese characterization of 
Article  XXIV as being fifty years old seemed appropriate, and as the Indian delegation had recalled, the 
Committee needed to think about the Article' s relationship to the broad goals of the WTO, which were 
essentially those geared toward trade facilitation.  His delegation would like to return to this.  Regarding 
the comment by the delegate of Uruguay that Article  XXIV had stood the test of time well, it should be 
borne in mind that one reason why the Committee was engaged in this discussion was to proceed on the 
basis of disinterested analysis to see whether Article  XXIV had stood the test of time well.  As the delegate 
of Japan had noted, the Committe e needed to give more consideration to the nature of the exceptions in 
Article  XXIV:8.  There was not much guidance in the legal texts to aid the discussion.  As the Australian 
paper had suggested, the security exceptions Article was too sensitive and impo rtant to be used as a 
touchstone in this analysis.  To reply to specific questions raised by the EC delegation regarding the 
Australian paper, particularly where it addressed safeguards, he noted that his delegation's approach to 
Article  XIX was to look at  the economic rationale presumably underlying RTAs to draw conclusions on 
the applicability of safeguards.  As stated in the paper, it seemed that as far as WTO disciplines were 
concerned, the reason for concluding a customs union or an FTA was to take adv antage of and deepen the 
process of economic integration between the parties; otherwise, there presumably would be no political or 
economic point in having such an agreement, and such an agreement could not satisfy WTO disciplines.  
If that were the case, it would make no sense at the end of an RTA's transition period for the parties to apply 
such measures to each other.  The Japanese delegate had said that these exceptions needed to be looked 
at in relation to the other requirements of Article  XXIV, and th ere was a legitimate point about the effect 
of Article  XIX measures on the barriers to trade against third parties.  In response to the question by the 
EC delegate, he said that, as written in paragraph 22 of the Australian paper, his delegation did believ e that 
a fully implemented customs union or FTA did not permit anything between free trade between parties and 
MFN treatment for third countries.  Relevant to this question was the matter of transition periods, which 
would likely be discussed at a later st age. 
 
19. The representative of Japan  said his delegation shared the views of the delegation of India and 
agreed with many of the points made by the representative of Australia.  He requested further clarification 
in writing regardin g the explanation from the EC representative.  One point had been that an RTA could WT/REG/M/14  
Page 8 
 
differentiate treatment of third parties and RTA partners with respect to such measures as safeguards, which 
seemed to involve discriminatory application.  He questioned th e validity of this discrimination in light of 
Article  XXIV:4 and 5 of GATT and in light of Article  2:2 of the Agreement on Safeguards.  
Article  XXIV:4 and 5 should be observed at the same time.  If RTA parties met the requirements of 
Article  XXIV:5, they w ould automatically meet those of Article  XXIV:4.  As expressed by the delegates 
of India and Korea, RTA parties should not use Article  XXIV:8 as a basis for justifying MFN derogations; 
the EC representative had said that there was the possibility for legal  derogations, but, as the delegate of 
India had argued, "derogation" meant an exceptional departure from the guiding principle of the WTO.  
 
20. The representative of Mexico  said he did not share the view that, because Article  XXIV wa s fifty 
years old, it was obsolete.  Rather, the membership had reviewed the Article  during the Uruguay Round 
and had arrived at the Understanding on the Interpretation of Article  XXIV of GATT 1994.  The Article 
was just as up -to-date as other results of t he Uruguay Round.  Furthermore, given the documents presented 
by the Secretariat, the Committee needed to view various provisions with a more legalistic focus, rather than 
simply with a systemic one.  The Committee would not want to repeat the same argumen ts put forth over 
the years, in particular during the Uruguay Round.  He could not view Article  XXIV in the framework of 
other exceptions; some would see the Article as providing a right, and some would consider it as a waiver to 
Article  I, so that the sco pe of Article  XXIV covered all of GATT 1994 and all the WTO Agreements 
contained in Annex 1A which interpreted the provisions of GATT 1994.  
 
21. The representative of the European Communities  said he would try to clarify his delegati on's 
position at a later time.  He had four main points relating to the day's discussion:  First, Article  XXIV:5 
had to be considered with reference to paragraph 8; the whole point about the wider architecture was that 
there was a need to look at the whole  thing.  Second, the delegates of Korea and India had made strong 
points about restrictions in the context of customs unions.  This raised a question about the way in which 
regulations of commerce during the transition to a customs union were handled.  For  example, the 
transitional application of anti -dumping measures, which were other restrictive regulations of commerce, 
was a matter for the management of the transitional process; the textiles point suggested by the delegate of 
India could be seen in the s ame way.  This seemed to be a separate question worth flagging as an issue to 
return to.  Third, he had made a broader point that the way in which Article  XXIV paragraphs 4, 5 and 8 
were meant to operate, the rights of third parties were not to be abridged .  But also, it seemed that the rights 
of the parties entering the agreement were not to be abridged beyond the need to comply with 
Article  XXIV, which was significant as it went to the heart of the debate about such questions as whether 
duties were those which were "applied" or "applicable", and whether a Member had access to its other rights 
under the Agreement.  During the day's discussion, there had been an implicit suggestion that there was a 
loss of rights by the party entering into the agreement; thi s aspect needed to be treated next time the issue 
was discussed.  Finally, regarding the safeguards debate, it was his delegation's view that what was involved 
was the question of the operation of Article  XIX measures within the context of an FTA; as he ha d 
contended, it seemed a customs union was a special case, as it seemed that members of a customs union 
were permitted if not required not to apply Article  XIX measures among themselves.  But that did not 
preclude, within that context, the development of b ilateral safeguard measures which did not abridge the 
rights of third parties.  It was always open to the parties or to a sub -set of the parties to a multilateral 
agreement to vary their rights and obligations as between themselves, provided they did so in  a manner that 
did not abridge the rights of third parties.  This principle was as applicable in safeguards as it was elsewhere.  
 
22. The Chairman  said that the discussion had been solid, but since the topic "other regulations of 
commerce" had given rise to a number of sub -topics, it seemed that in the future discussions could be more 
structured.  The Committee should always bear in mind its mandate, remembering that this discussion was 
taking place in the context of the systemic aspe ct of the Committee's mandate, i.e. looking at the systemic 
implications of RTAs for the multilateral trading system.  Within that context, the following elements of 
discussion could be addressed in greater depth:  (i) the relationship between the differen t parts of 
Article  XXIV, in particular paragraphs 4, 5 and 8, (ii) the relationship between Article  XXIV and the other 
parts of the GATT and the WTO, (iii) identification of what measures or regulations were covered by the 
term "other regulations of commer ce", (iv) discussion of those measures or regulations, and (v) the difference 
between FTAs and customs unions.  It would be useful for the discussion to be informed by reference to          WT/REG/M/14  
         Page 9 
 
specific examples, without repeating what had been addressed in the examina tion process.  Delegations 
should be encouraged to come forward with discussion papers.  
 
23. The representative of Korea  said his delegation supported the Chairman's proposal; it also would 
favour the Secretariat's compiling a paper on the points made both today and in future Committee 
discussions.  
 
24.  The representative of the United States  said the discussion had been more fruitful than expected, 
given the fact that the papers had been circulated only recent ly.  Regarding the next steps, he agreed that 
for the process to be productive, the Committee should avoid a "free -for-all" throwing out of ideas and instead 
aim to have more narrowly defined issues designated for discussion.  Delegations should have suffi cient 
time for submitting and reviewing papers in advance of meetings.  Therefore, in addition to a more 
structured agenda, a schedule would be helpful for the participation of those delegations receiving 
instructions from capitals.  
 
25. The Chairman  said that, to give a more precise structure for the discussion of "other regulations of 
commerce", the airgram for the next meeting could identify what sub -issues would be discussed.  Because 
the Committee was still identifying points which delegations co nsidered important, it was premature to ask 
the Secretariat to start listing the elements of discussion as though the discussion had been conclusive.  The 
next discussion would be organized according to what he had outlined to afford maximum benefit.  He 
then opened the floor for statements on the issue of "substantially all the trade".  
 
26. The representative of Korea  said that the Committee should wait for Secretariat background notes 
on this issue before beginning discussion.  
 
27. The representative of Australia  said his delegation also looked forward to receiving the Secretariat 
background papers.  Discussion could be deferred until delegations had received the Secretariat's papers 
and had had an opportunity to digest them.  "Substantially all the trade" was in fact a fairly simple issue, in 
the sense that the divisions were well known.  His delegation would favour a discussion focusing on possible 
ways to deal with the problem over one which would repeat well -rehearsed differences.  
 
28. The representative of the European Communities  said that, even though the Committee had the 
Australian paper as a basis for discussion on "substantially all the trade", it would be beneficial to wait befo re 
commencing discussion.  His delegation did not think the issue was simple, either in theory or in practice, 
so it needed to be approached in a sober manner on the basis of sober preparation.  Secretariat papers 
were helpful because they provided a neutr al foundation upon which discussions could be based.  
 
29. The Chairman  said that the Committee could begin its discussion of this issue at the next meeting, 
which would allow time for delegations to receive the Secretariat's papers and prepare for the discussion.  
 
 
D.Reporting on the Operation of Agreements  
 
30. The Chairman  recalled that at the last meeting the Committee had requested that he work with the 
Secretariat to prepare a revised informal note on reporting requirements.  The revised note was drafted 
with reference to points made at the last me eting, in particular those which had indicated that the previous 
note had been too ambitious; it also took into account the concern expressed that whatever was done should 
reflect the fact that there were obligations with respect to reporting that existed across a wide range of RTAs.  
As a result, the Informal Proposal which had been circulated to Members was a compilation of the various 
reporting requirements for RTAs that existed under the Council for Trade in Goods (CTG), the Council 
for Trade in Service s (CTS) and the Committee on Trade and Development (CTD).  In this sense, it was 
not at all ambitious, as it was essentially a cataloguing of the different obligations that already existed, with a 
suggestion that the Committee make them fully operational b y submitting recommendations to those other 
bodies.  This would have the advantage of lending some coherence in terms of ensuring that there was RTA 
reporting in each of the instances where it was envisaged.  In addition to having the report go to the body  WT/REG/M/14  
Page 10 
 
having legal responsibility for it, the paper suggested that the report also come to this Committee, and it set 
out the purpose for which this reporting would take place, i.e. to promote transparency and to assist with 
the Committee's systemic work.  He a nd the Secretariat had tried to avoid creating the impression that this 
was an extension of the examination process or a prelude to dispute settlement.  To facilitate an exchange 
of views, he proposed that the Committee carry out discussion on the Informal  Proposal in an informal 
setting, and then switch back to the formal meeting to put various aspects of the discussion on record.  
 
31. The Committee agreed  to this way of proceeding and took up discussion in an informal meeting.  
 
32.  After the informal meeting, the Chairman  reopened the formal meeting.  To sum up what had 
been said during the informal session, he said that the Committee's discussion on the Informal Proposal 
had been useful and that a number of p reliminary suggestions for improvements had been made.  As to 
the basic approach of the paper, there seemed to be broad support that the best way for the Committee to 
discharge its mandate under item (b) of its terms of reference concerning reporting oblig ations was to build 
on the existing legal obligations with respect to the different types of agreements.  The Committee could 
continue its discussion at its next session, with the focus being on how procedurally to give effect to the 
various legal requirem ents that existed in this area.  There was a good spirit of cooperation, though of course 
there were some points of sensitivity.  
 
 
E.Other Business  
 
33.  The Chairman  said the United States delegation would raise two issues under "Ot her Business", 
which were the questions of documentation and the frequency of meetings.  He wished to share some ideas 
on the matter, in light of the Committee's experience.  The aim was to give the best conditions to delegations 
so that the Committee coul d fulfil its mandate in an orderly, economical and well -informed manner.  The 
Committee had inherited a very sizeable examination backlog, and other items on the mandate had also 
been time -consuming.  As a consequence, the frequency of sessions in the last  eighteen months had been 
quite high.  Today, many examinations were already at the stage of drawing conclusions.  Future 
examinations would benefit if delegations were given more time to absorb the documentation and prepare 
for meetings.  Perhaps the Comm ittee should endeavour to reduce the number of agreements examined 
in parallel, so as to concentrate its attention and accelerate the process.  The same reasoning could apply 
to the other aspects of the Committee's mandate.  
 
34. The representative of the United States  said that the issues of documentation and the frequency of 
Committee meetings were closely related.  Earlier this year, a number of examinations of RTAs had been 
unproductive because the parties to the RTAs being examine d had either not provided the necessary 
documentation for a meeting or had provided the information very late, in some cases on the day of the 
meeting.  The Committee then had discussed and agreed on operating procedures, including time -lines for 
the submi ssion of such documentation, as well as a process for the period after notification and prior to the 
first review meeting, including the point at which the RTA parties were to indicate whether they preferred 
to use the Standard Format or to receive written  questions.  The primary point of those new procedures 
was to ensure that the Committee had productive meetings and did not waste delegations' time.  This week, 
however, the Committee had experienced this sort of inefficiency.  There had been eight agreeme nts 
scheduled for review, which should have involved eight documents, typically in the Standard Format.  Of 
these eight documents, only one was received early enough to be translated; one was issued by the Secretariat 
one week in advance; two were received  only a few days before the meeting; and for four agreements nothing 
had been received prior to the meeting.  For the systemic and biennial reporting discussions, two 
documents, including several draft recommendations, were provided in the last few days be fore the meeting.  
The overall result, in his delegation's view, was that the past few days had not been productive; the 
Committee would have to devote additional time to the examination of agreements, and it perhaps had 
made only minimal progress in addre ssing systemic or reporting issues.  This led to his next topic, the 
frequency of meetings for the Committee.  In the recent past, the Committee had been meeting every four 
to six weeks under the guise of accomplishing aspects of its mandate.  But the Comm ittee was not 
accomplishing things, and it might actually be hindering the process.  Simply stated, delegations and the          WT/REG/M/14  
         Page 11 
 
Secretariat needed time to produce documents and adequately prepare for discussions.  With such a short 
interval between meetings, and w ith many other demands on delegations in the WTO, there simply was not 
enough time.  As the Secretariat drew up the schedule for the next six to eight months, his delegation would 
advocate meeting no more frequently than every six weeks, enforcing the rule s on submission of 
documentation in a timely fashion and arranging a better schedule for the systemic discussions.  Of course 
delegations would have to do their part in preparing and submitting documentation.  It would also be useful 
in scheduling future m eetings if some time for informals were built in.  Whether this was a free afternoon 
or a day wedge between formal meeting days, or some other configuration, such time would be important, 
particularly as the Committee spent more time drafting the conclusio ns of examinations.  Finally, his 
delegation requested that the Secretariat prepare annotated agendas for future meetings, particularly with 
respect to systemic and institutional discussions.  
 
35. The representative of the European C ommunities  said that, looking at the question from the side 
of the delegation with the most documents to prepare, it was simply the case that documentation took far 
longer than initially anticipated.  The process of preparation and of clearance in capitals , etc. was a factor 
which needed to be taken into account.  Meeting every six weeks, with an opportunity for informal 
consultations built in, seemed a sensible change to make.  
 
36. The representative of Uruguay  asked for clarification on the scheduling proposal.  It seemed that 
if the objective was to allow more time to prepare, meeting every six weeks would not afford more time to 
prepare but rather would allow less time to prepare.  
 
37. The Chairman  said that the Committee's ratio of meetings had been approximately once per 
month.  If the Committee instead met every six weeks, there would be fifty per cent more time to prepare.  
Perhaps the interval between meetings was too short, both in  terms of preparing documentation and in terms 
of allowing delegations to prepare for discussions.  There might be merit in having more dense or intensive 
sessions, less frequently.  The Committee had been making good progress on the examination backlog, 
which was the principle initial task it set for itself.  But it now had reached the stage where it had to draw 
the conclusions from that process, and he was somewhat concerned by the Committee's inability to do so 
thus far.  It seemed that the Committee now  needed to make a concerted effort to do this, particularly for 
some of the major agreements before the Committee (and earlier working parties) for the longest period of 
time.  In the end, if it were difficult to reach agreement on the biggest agreements i n terms of trade, it would 
be difficult to argue convincingly that the Committee should be reaching conclusions on the other 
agreements.  When the Committee finished this work, it would likely find that the burden of work was 
alleviated somewhat:  it would  not have as many examinations to conduct, and those examinations that it 
was conducting would be conducted in the light of experience gained from the backlog.  In addition, the 
Committee would have completed its work in improving the procedures for examin ations, as well as its work 
regarding the reporting aspect of its mandate.  Thus, it would essentially be left with the task of examining 
new agreements referred to it, plus its systemic work.  
 
38. The representative of Japan  said that for this Session he had received instructions similar to those 
of the United States delegate; however, examinations and discussions had been fruitful, despite the late 
arrival of documentation.  In light of the heavy l oad the Committee had had to carry, so far the frequency 
of CRTA meetings had seemed appropriate, and the Committee had made good progress with the backlog.  
As suggested, the Committee could also use informal meetings.  He recommended leaving the scheduli ng 
question to the Chairman and the Secretariat.  
 
39. The representative of Venezuela  said that if the Committee met less frequently but more intensively, 
this might require meetings that lasted a week and a half.  But this might the n eat up the interval between 
meetings, again allowing only four weeks between meetings.  
 
40. The representative of Korea  said his delegation supported what the delegate of the United States 
had said.  In addition, he noted that late  documentation made it even more difficult for newcomers to 
participate in meetings.  As to the frequency of meetings, he suggested allowing eight weeks between 
sessions, with informal meetings held in the meantime.  WT/REG/M/14  
Page 12 
 
 
41. The Chairman  said the discussion had been useful for getting a sense of delegations' frustration with 
respect to the related issues of documentation and the frequency of meetings.  He proposed that he work 
with the Secretariat to develop a proposal for next year's mee ting schedule.  He then turned to the issue of 
the preparation of the Committee's 1997 Report to the General Council.  The General Council would meet 
on 10 December, but reports needed to be adopted by committees before 27 November.  Since the 
Committee's next scheduled session was not until 3 -5 December, he proposed that the Committee convene 
a short, special meeting at 9:30 a.m. on 27 November.  The Secretariat would prepare a draft Report of a 
factual nature, which would be sent to all delegations for co mment.  Being of a factual nature, this draft 
Report would likely not give rise to controversy.  Because the Committee would meet again between the 
adoption of the Report and the meeting of the General Council, the Report could be modified to reflect 
any s ubstantial progress.  
 
42. The Chairman  then said his second point under this agenda item was related to the examination of 
the EC Enlargement.  In July the Committee had held an exchange of views regarding the ad hoc  
methodology prop osed for the calculations under Article  XXIV:5(a).  At that time some delegations had 
asked for more time to reflect on the proposal.  He had recently been informed that the outstanding issues 
had been settled.  He would now request the Secretariat to proc eed with the required calculations.  Since 
this could be done quickly, he hoped that the results of the calculations would be presented to the CRTA 
well before its December session, so that consideration of the matter could be put on the agenda of that 
session. 
 
43. In replying to the remark by the representative of Japan  that his delegation intended to register its 
remaining concerns with respect to the methodology, the Chairman  said that delegations would have the 
opportunity to mak e observations on what those calculations showed and to return with substantive 
comments at the December meeting, when the documentation would be on the table.  
 
44. The Committee took note  of the comments made.