RESTRICTED
WORLD TRADE WT/REG12/M/1/Rev.1
ORGANIZATION WT/REG16/M/1/Rev.1
WT/REG20/M/1/Rev.1
18December 1997
(97-5551)
Committee onRegional Trade Agreements
EXAMINATIONS OFTHE EFTA-BULGARIA FREE TRADE AGREEMENT,
THE EFTA-ROMANIA FREE TRADE AGREEMENT
AND THE EFTA-SLOVENIA FREE TRADE AGREEMENT
Note ontheMeeting of6November 19961
Chairman: H.E. Mr.Miguel J.Berthet (Uruguay)
Revision
1. TheCommittee onRegional Trade Agreements tookupitems B.VI, B.VII, andB.VIII ofthe
Agenda foritsSeventh Session, which included thefollowing:
A. General Introductory Remarks
B. Examination oftheEFTA-Bulgaria FreeTrade Agreement
C. Examination oftheEFTA-Romania FreeTrade Agreement
D. Examination oftheEFTA-Slovenia FreeTrade Agreement
A. General Introductory Remarks
2. Therepresentative ofNorway, speaking onbehalf oftheParties totheAgreements, saidthat
hiscomments wereapplicable toallthree Agreements under examination. TheEFTA-Romania Free
Trade Agreement hadbeenconcluded in1992, theEFTA-Bulgaria FreeTrade Agreement in1993
andtheEFTA-Slovenia FreeTrade Agreement in1995. TheParties hadnotified theAgreements in
accordance withGATT Article XXIV. However, theexaminations ofthese Agreements hadnever
beeninitiated intherelevant Working Parties established forthem. Nevertheless, theParties had
provided written answers toallquestions putforward relating totheAgreements. Noquestions had
beenputforward ontheEFTA-Slovenia Agreement. In1994, there hadalsobeenanattempt bythe
Parties tothesefreetradeagreements (FTAs) toaccelerate theworking party process, butthetransition
phase from theGATT totheWTO hadnotpermitted thecontinuation oftheexamination process.
Hementioned thistoindicate theParties 'interest inbringing theexaminations toaconclusion, with
thegreatest possible transparency, inlinewiththekeyaimsoftheWTO system. Withthattransparency
inmind, theParties hadalsosupplied theCommittee withnew, consolidated information onthe
Agreements under review. Theinformation corresponded, toalargeextent, withthatforeseen under
1Themeeting wasconvened inWTO/AIR/470.WT/REG12/M/1/Rev.1
WT/REG16/M/1/Rev.1
WT/REG20/M/1/Rev.1
Page2
thenewly-introduced Standard Format. Thatkindofhorizontal information afforded delegations a
better andmore comprehensive perspective ontheAgreements andtheireffects. TheAgreements were
allbased onthesame structure andhadsimilar substantive provisions andcommitments, buteach
Agreement should beexamined onitsownmerits. TheParties were oftheview thatallofthe
Agreements were incompliance withtherequirements andprovisions ofGATT Article XXIV, and
thattheywereimplemented inaWTO-consistent manner. TheAgreements thuscomplemented and
added totheliberalization achieved within theGATT system, and,inparticular, asaresult ofthe
Uruguay Round. TheParties totheAgreements werefullycommitted totheletter andspirit andthe
strengthening ofthemultilateral trading system.
B. Examination oftheEFTA-Bulgaria FreeTrade Agreement
C. Examination oftheEFTA-Romania FreeTrade Agreement
D. Examination oftheEFTA-Slovenia FreeTrade Agreement
3. TheChairman saidhewould firstopenthefloorforremaining questions thatdelegations might
havewithrespecttodocumentWT/REG12/2,whichcontainedupdatedinformationontheEFTA-Bulgaria
FreeTrade Agreement. Then theCommittee should treatquestions inthesame order asthatfollowed
bysections oftheAgreement.
4. TherepresentativeofBulgariasaidhesupportedtheapproach,mainideasandremarksexpressed
bytheEFTA representative inhisintroductory statement. Hisdelegation shared thevision andgeneral
outlook astotheAgreement 'simportance, itsimpact onthedevelopment ofBulgaria 'strade withthe
EFTA countries, anditspotentially significant roleintheoverall process oftheintegration ofBulgaria
intotheEuropean Economic Area. TheEFTA-Bulgaria Agreement wasanimportant factor inthe
development oftrade between theParties; itdidnotraiseobstacles orprejudices tothirdcountries,
anditwasincompliance withtherequirements andprovisions ofGATT Article XXIV andother WTO
rules.
5. Therepresentative oftheUnited States indicated thathisinstructions wereofageneral nature,
embracing alloftheAgreements under examination thatday,since issues seemed tospanthethree.
Inthepast,hisdelegation hadsaidmany times thatitsupported tradeintegration inEurope andcontinued
tosupport allagreements which were concluded inconformity withWTO rules. Indeed, theday's
examination wasgeared toward ascertaining thedegree towhich theAgreements under review met
thatstandard. Hisdelegation hadconcerns notonlywiththeWTO conformity ofseveral specific
provisions oftheAgreements, butalsowitheffects ofthelarger webornetwork ofEuropean
Agreements.TheAgreementswerewithcountriesforwhichagriculturewouldbeanareaofcomparative
advantage, andforwhich agricultural products could certainly contribute significantly toeconomic
growth. Hisdelegation wastherefore concerned about agriculture having beenlargely excluded from
many oftheagreements, inspiteofcallsthatWTO Members should observe Article XXIV. Inaddition
toassessingtheconformityofeachagreementwithWTOobligations,thereviewprocessalsocontributed
tothetransparency ofthemultilateral trading system asawhole byincreasing understanding ofthe
intent, content andoperation ofeachagreement. Hisdelegation commended thework oftheParties
totheAgreements under review thatday,noting thattheirprovision ofinformation anduseofthe
Standard Format setanexcellent standard. Hehadafewspecific questions. Regarding statistics,
oneissue wasthatinformation anddataseemed tobeprovided onlyfrom theEFTA point ofview.
Forexample, thedatatreated EFTA imports andexports andshares oftotalEFTA trade, butdidnot
include corresponding figures fromtheperspectives ofBulgaria, Romania andSlovenia. ThisproblemWT/REG12/M/1/Rev.1
WT/REG16/M/1/Rev.1
WT/REG20/M/1/Rev.1
Page3
wascommon toother EFTA freetrade agreements aswell. While EFTA trade withtheCentral and
Eastern European Countries (CEEC) hadgrown significantly overthelastthree years, itstillformed
onlyasmall partoftotalEFTA trade. Hisdelegation would liketoknow howimportant thetrade
wastotheCEEC countries andwhattheEFTA share oftrade was,including bysector, intheCEEC
countries. TheEFTA markets were established, sotheUnited States delegation knew howitfared
inthem, buttheCEEC markets were relatively newandexpanding, giving risetotheconcern that
thepreferential aspects oftheir trade could affect third parties. Hisdelegation would appreciate
information from thatperspective, notonlyfortheAgreements nowunder review, butalsoforthe
EFTA Agreements reviewed bytheCommittee inSeptember.
6. Therepresentative ofNorway saidhewelcomed theUnited States 'support ofEuropean
integration. Inresponse toconcerns mentioned overthewebofagreements inEurope, henoted that
thistypeofwebwasseennotonlyinEurope -itwasaglobal phenomenon. Hisdelegation recognized
theWTO asbeing thecentre ofthatweb. Conformity withWTO ruleswasnotafacttobeassumed.
TheEFTA States haddemonstrated theirwillingness toprovide allrelevant information onhowthe
weboperated. Itwasnotunexpected thattheUnited States hadraised thequestion ofagriculture, a
topichewished toaddress laterintheday.Theexamination asanexercise involved notonlyconformity
butalsotransparency, andheappreciated thecompliment fromtheUnited States delegate totheeffect
thattheEFTA anditspartners hadsetanexcellent standard ofproviding information inthename of
transparency. Asforthespecific question onstatistics, itwasunderstandable thattherewould beinterest
inseeing information fromanother perspective. Hisdelegation hadprovided therelevant information
under GATT Article XXIV. EFTA imports were conversely exports from Bulgaria, Romania and
Slovenia, andthereverse wastrueforEFTA exports, which were imports forthose Parties. While
theParties might provide more information, itwastheviewofhisdelegation thatsubstantially alltrade
between theParties wascovered, andArticle XXIV wasthussatisfied. Thiswasevident from the
information theparties hadprovided.
7. Therepresentative oftheUnited States tookuptheissueofagriculture, noting thattheEFTA-
BulgariaAgreementhadaclausesayingthattheAgreementwasdesignedtofacilitatetradeinagricultural
products. Heasked whatwasmeant bytheclause, andwhether therewerecommon rulesanddisciplines
intheAgreements which applied toalltrade inagricultural products. Would thetrade liberalization
oftheAgreements extend tocover theagricultural products thatwerecurrently excluded fromtheFTAs,
and,ifso,didtheParties haveatimeschedule orageneral process inmind? Hisdelegation wished
toknow therationale forsome items being permanently excluded. Members helddiffering views on
what"substantially allthetrade" was. Itwastheviewofhisdelegation thatmeeting thatobligation
required anagreement tobemore comprehensive thanweretheEFTA-Bulgaria andother Agreements.
Onbehalf ofthedelegate fromJapan, whowasnotabletoattend theday'smeeting, heexpressed that
country 'sconcern thatifagriculture wereexcluded inafreetradeagreement, itseemed thatsubstantially
alltrade would notbecovered. Because theissue arose soconsistently inCommittee reviews, the
question ofhowagriculture factored into"substantially allthetrade" seemed tobeasystemic problem.
8. Regarding thefirstpoint onfacilitating trade inagricultural products, therepresentative of
Norway saidthatagricultural products werepartially covered, asfarasprocessed agricultural products
andfishwere concerned. Thefacilitation oftrade language wasnotamystery, asitalsoappeared
inArticle XXIV. While theprecise meaning of"substantially allthetrade" wasnotdefined, theParties
totheAgreements would contend thatwhatwasclearwasthatitentailed lessthanalltrade. TheArticle
wasoriginally drafted withtheknowledge thatFTAs might beestablished inEurope. Itwasenvisaged
thatanindividual member ofanFTAshould haveacertain latitude withrespect tosome products,
andthatlatitude wasunderstood tobepermitted bythephrase "substantially allthetrade." Some parties
toFTAs might wishtoavailthemselves ofthatlatitude, withrespect tovarious products. AsfarasWT/REG12/M/1/Rev.1
WT/REG16/M/1/Rev.1
WT/REG20/M/1/Rev.1
Page4
coverage wentintheAgreements under examination, agricultural products werecovered onlypartially
bytheFTAs, andbilateral agricultural arrangements concluded between theindividual FTApartners
covered some butnotalltrade inthatsector. Thatwasafactthatdidnotdetract from consistency
withArticle XXIV, inhisdelegation 'sview. Thistypeofagreement should notbeapproached ona
sector-by-sector basis. Itwasimportant tonotethatthephrase usedinArticle XXIV:8(b) was
"substantially allthetrade" andnot"trade insubstantially allproducts." Theobligation wasthusnot
todefine trade bysector orbyproducts, buttrade asawhole. Agricultural trade hadtobeseenas
apartof,andacontribution to,thetotalcoverage.
9. Therepresentative ofNorway continued, saying hewished toprovide some background to
theEFTA freetrade agreements. TheEFTA States hadconcluded separate bilateral arrangements
intheagricultural sector andhadnotincluded theconcessions within theframework oftheFTAs proper;
thiswasbecause therewasnocommon agricultural policy, orfreetradeinagricultural products, among
theEFTA States themselves. However, liberalization oftradeinthose products wassignificant, taking
intoaccount bothactual andpotential trade interests ofthepartners. Together withtheFTAs proper,
thebilateral agricultural arrangements embodied substantially allthetrade between theEFTA States
andtheirpartners. Asimilar practice wasapplied among theindividual EFTA States, andalsobetween
theEFTA States andtheEuropean Communities. Oneofthemainreasons whytheformation ofFTAs
waspermitted byGATT 1994wasthattheyencouraged growth andliberalization ofworld trade, and
itwasinthatspirit thattheParties totheFTAs under examination hadconcluded theAgreements.
TheAgreements weremeant tobecomplementary tomultilateral tradeliberalization andtheprinciples
oftheWTO, towhich theParties werefullycommitted. Thedatademonstrated thatasignificant part
ofagricultural imports intotheEFTA States from theirFTApartners wascovered bytheFTAs and
thebilateralarrangements.Regardingtheexpansionofcoverageofagriculturalproducts,suchexpansion
wasnotexcluded, inthattherewasanevolutionary clause intheAgreements, buttherewasnotimetable.
AreviewmechanismwasprovidedforinthebilateralarrangementsandinProtocolAtotheAgreements.
Withreference tothequestion posed onbehalf ofJapan regarding thesystemic concern, hisdelegation
wasnotoftheviewthatsuchasystemic problem existed. Ifthere weresuchasystemic concern, the
proper timetodiscuss itwaswhen systemic issues appeared ontheCommittee 'sagenda.
10. Therepresentative oftheUnited States saiditwasinteresting thatagriculture wasnotexcluded
butthatthere wasnotimetable. Helikened thesituation to"theroadofgood intentions" andsaid
itwould bemore satisfactory tohaveatimetable. Atimetable would benefit boththesignatories and
thirdparties. Hehadaslightly different approach to"substantially allthetrade," which brought up
aspecific question regarding theEFTA-Bulgaria Agreement. Sofarashisdelegation wasableto
ascertain, services andinvestment werenotincluded intheAgreements. What wasthereason fortheir
notbeing included, andwere there plans tocover those areas inthefuture? Onabroader level, his
delegation wasinterested inobtaining information onthepercentage ofeachParty'stotaltradecovered
bypreferences, beyond justtheAgreements thatwere under review thatday.
11. Therepresentative ofNorway saidthat,intheagricultural sector, substantially alltradebetween
theParties wasalready covered. Hecontended thatiftheParties hadatimetable toexpand thecoverage,
theAgreementswouldcoveralltradeandwouldeffectivelygobeyondtherequirementsofArticleXXIV.
Withrespect topermanent exceptions, hereferred tohisdelegation 'sprevious answer confirming that
inoneoftheannexes oftheAgreement, therewereafewpermanent exceptions. Regarding thequestion
onservices andinvestment, herecalled thetiming oftheAgreement, noting thattheAgreement between
theEFTA States andBulgaria wasafewyears oldandpredated theWTO; moreover, there wasno
requirement inArticle XXIV toinclude services andinvestment. Also, therewasanevolutionary clause
intheAgreement, anddiscussions between thepartners were taking place, though itwastooearly
totellwhatthose discussions would leadto.However, ifthose discussions ledtoamendments totheWT/REG12/M/1/Rev.1
WT/REG16/M/1/Rev.1
WT/REG20/M/1/Rev.1
Page5
Agreements, thechanges would ofcourse benotified totheWTO andtothisCommittee. Afurther
point wasthatthere seemed tobeanunderlying assumption concerning thesystemic significance of
having notincluded services andinvestment; iftheUnited States 'representative wassuggesting that
inthisrespect theParties hadnotfulfilled theirrequirements, theyhadtoreject thatassumption.
RegardingtheinformationrequestedonthepercentageofeachParty'stotaltradecoveredbypreferences,
hisdelegation considered thatquestion tobeirrelevant, asitfelloutside thescope oftheCommittee 's
agenda forthatday.
12. TherepresentativeoftheEuropeanCommunitiessaidthatheagreedwithallwhohadcontributed
tothediscussion onagriculture. Thequestion ofagricultural coverage seemed tobeanareaofpersistent
controversy anddifficulty withrespect totheinterpretation ofArticle XXIV. AstheParties tothe
Agreement hadnoted, itwasamatter forconsideration when theCommittee turned tosystemic issues.
Indeed, itseemed tobethesystemic pointemerging fromthoseAgreements. LiketheEFTA delegation,
hedidnotviewquestions oftheinclusion ofservices andinvestment asasystemic issueperse.That
seemed tobeanareawhere thestructure oftherights andobligations oftheWTO Agreements were
clearenough: GATT Article XXIV provided forpreferential agreements covering trade ingoods, and
GATS Article Vprovided forpreferential agreements covering trade inservices. TheWTO didnot
yethaveaninvestment regime sufficiently developed toprovide rules onpreferential agreements.
13. Therepresentative oftheUnited States asked ifanyoftheParties provided bilateral preferential
treatment toagricultural products under MFN tariff quotas. Ifso,hisdelegation would appreciate
itiftheParties could specify them bytypeofpreference, onaproduct-specific basis. Heregretted
thatthestatistics onpreferential trade were, intheviewofhiscolleagues, notrelevant tothecurrent
discussion. Those statistics would seem tohelpplace incontext some ofthelarger trends andissues
thatconcerned allMembers.
14. Therepresentative ofNorway saidhewished toqualify hisresponse thathisdelegation did
notfinditrelevant orproper toanswer aquestion onthepercentage ofeachParty'stotaltradecoverage,
bypreference. Itseemed improper toaskhisdelegation toprovide thatinformation inthecontext
oftheexamination; however, ifthequestion were putinthesystemic context, atanother time, his
delegation would bewilling todiscuss it.With respect tothequestion posed onMFN tariff quotas,
hereferred theUnited States delegation tonotifications which hadbeenmade totheAgricultural
Committee. Thename ofthenotification wastheNotification ontheAdministration ofTariff Quotas,
inMA-1, andRealImports, inMA-2.
15. Therepresentative oftheUnited States saidhehadacouple ofquestions onmargins of
preference.Thisissuewassignificantforhisdelegationbecausemarginsofpreferencelinkedthevarious
agreements inEurope together. Heagreed thatthequestion ofhowtheoverlapping tariffpreferences
would mesh orinteract wasnotrestricted toagreements concerning onlyEuropean countries. How
didtheFTAs under review provide formargins ofpreference tobegranted tothirdparties, suchas
theEuropean Communities (EC)? Healsowished toknow howtherules oforigin would work for
those Agreements, astheyinteracted. Arelated question washowtariffreductions made bythevarious
Parties totheAgreements inconnection withtheUruguay Round would affect thelevels ofpreference
granted tothesignatories. Would thelevels ofpreference decline? Would anabsolute percentage
ormargin ofpreference persist?
16. Therepresentative ofNorway responded thatthemeshing ofmargins ofpreference seemed
aquestion suited tothesystemic discussion oftheCommittee andwasnotrelevant fortheexamination
oftheconsistency ofindividual FTAs. Itwasclear thatsuchmeshing tookplace whenever WTO
Members wereinvolved inanetwork ofpreferential trade agreements. Margins ofpreference couldWT/REG12/M/1/Rev.1
WT/REG16/M/1/Rev.1
WT/REG20/M/1/Rev.1
Page6
bedifferent between thevarious free-trade partners, although there seemed tobeatendency toward
harmonization ofthepreferential treatment which hadbeengranted under various agreements, notthe
leastforpractical purposes. Anexplanation oftheworking ofrulesoforigin could begiven byexperts,
ifnecessary. However, theinterlocking oftherules oforigin, within various FTAs, was,again, a
question which might beaddressed inthesystemic discussion. TheParties were doing some work
toharmonize rules oforigin, andthatwork would benefit thirdparties initseffects. Regarding the
lastsetofquestions, themargins ofpreference would naturally diminish asaconsequence oftariff
reductions resulting from theUruguay Round. Here, hisdelegation wasreferring tobound duties.
Themargins ofpreference between theapplied MFN rates andtheapplied preferential ratescould
float, depending ontheactual levelofduties applied bytheimporting country, buttheywould float
within thebound GATT rate. However, there were noprovisions relating toabsolute margins of
preference thatshould bemaintained under theFTAs. Similar points hadbeenmade inSeptember
during Committee examinations ofother EFTA agreements.
17. Therepresentative oftheUnited States saidthattheissues werecertainly important andwere
possibly systemic innature. TheCommittee should takecarenottorefertoomuch togeneral issues,
attheexpense ofspecific ones. Anysystemic issues related tospecific agreements andthecomponents
ofthem stillseemed relevant onthislower level, notjustonthesystemic level. Whenever anissue
spanned several agreements andseveral countries, itwastempting andinsome ways relevant torefer
theissue toalarger body ortoanalysis ofanissue larger thantheoneunder discussion. Itseemed
theCommittee needed toaddress thequestions atthemostpractical andspecific level, andnottohave
oneagreement refertheissuetotheanalysis ofanother agreement, oroneagreement refertheresponse
toadifferent category ofanalysis bytheCommittee. Ifitwould behelpful fordiscussion, theUnited
States 'delegation could provide inwriting itsquestions onmargins ofpreference andrulesoforigin,
sothatthesignatories, whohadfirst-hand experience withtheissues, might provide information. The
issues wereimportant, andanswers would behelpful andenlightening. Hisdelegation didnotwish
toencumber theCommittee withalong, technical discussion byexperts, butatthesametimeitseemed
unwise simply torefertheissues toadifferent aspect oftheCommittee 'swork. Hewaswilling to
submit thequestions inwriting, forfurther inclusion inreports orminutes, sothattheCommittee might
pursue theissues more concretely andmore substantially. Onadifferent subject, regarding import
andexport restrictions, hewondered whether anyoftheParties increased theirMFN ratesduring the
negotiations orprior totheentry intoforce oftheAgreement?
18. Therepresentative ofNorway saidhisdelegation agreed thattheCommittee should becareful
nottoreject questions bysimply saying theybelonged inadifferent context. Hehadmade thepoint
about thesystemic discussion because hisdelegation wasoftheviewthatthequestion wasnotspecific,
butrather wasofamoregeneral nature. Hisdelegation hadresponded fairly specifically tothequestion
onmargins ofpreference, butitnonetheless would welcome thewritten submission ofquestions by
theUnited States. Regarding import andexport restrictions, thequestion seemed toresemble onewhich
hadbeenraisedconcerningPolandintheEFTA'spreviousexamination.Accordingtohisunderstanding,
therewerenoimportorexportrestrictionsintroducedpriororsubsequenttosignatureoftheAgreements.
Bulgaria wasinaspecial position inthatrespect, nothaving beenaWTO Member atthetimeand
thusnothaving beenbound byMFN rates. Normally, acountry acceding totheWTO would comply
withrules during accession negotiations andnotintroduce thattypeofrestriction before orafter
concluding anFTA.
19. Therepresentative ofSlovenia saidthat,asfarasSlovenia wasconcerned, noMFN restrictions
hadbeenintroduced either during thenegotiations orafterwards.WT/REG12/M/1/Rev.1
WT/REG16/M/1/Rev.1
WT/REG20/M/1/Rev.1
Page7
20. Therepresentative ofRomania saidthat,regarding thequestion onquantitative restrictions
andthepossible modification ofdutyratespriortoorafterconclusion oftheAgreement, hisGovernment
hadnotintroduced anynewquantitative restrictions, either during theprocess ofnegotiation or
subsequent totheconclusion oftheAgreement. However, hisdelegation wasoftheviewthatsuch
anapproach should betaken exclusively withreference tothetimeatwhich theAgreement was
concluded. Thisseemed asystemic question fordiscussion inanother framework. Similarly, with
respect todutylevels, Romania hadnotmodified itsMFN duties, either during oraftertheconclusion
oftheAgreement.
21. Therepresentative oftheEuropean Communities saidthatthequestion posed bytheUnited
States might beasystemic one,butinanyevent proved tobeadifficult one. Ithadappropriately
beenasked oftheECdelegation thedaybefore, withrespect tosome ofitsagreements, anditwould
behelpful iftheUnited States would make thatparticular question generally available sotheCommittee
could consider itcarefully. Itseemed thequestion required tworesponses: onewastoanswer iton
afactual level, involving detailed algebra andanalysis ofprovisions, andtheother wastoconsider
itinterms ofwider-ranging, systemic issues.
22. Therepresentative oftheUnited States saidhewould submit thequestion inageneric fashion.
Hethenindicated that,inpresenting hisdelegation 'squestions, hehadintended forthemtobeapplicable
toalloftheParties totheexaminations under review. Hehadaremaining question ortwoonsafeguards
ortrade remedies. Heasked iftheAgreements provided thatamargin ofpreference bemaintained
ifandwhen asafeguard provision wasinvoked. Ifsuchaprovision hadeverbeeninvoked inthepast,
hewould appreciate itifdetails could bemade available. Hisdelegation alsoasked ifthere wereany
guidelines existing fortheoperation ofsafeguard provisions, oranoutline ofhowtheymight function,
similar tothose provided forinArticle XIX, sothatMembers might better understand what might
occur.
23. With regard tothequestion onsafeguards, therepresentative ofNorway saidthatnomargin
ofpreference wasrequired under theAgreements incases where safeguard measures were applied.
ArticleXIXwasobservedwhenapplyingsafeguardmeasuresinvolvingthird-countrytrade.Nosafeguard
measure hadinfactbeenapplied bythecurrent EFTA States. Incaseswhere theEFTA partners applied
safeguard measures, information would beprovided bythem. There wasnospecific information
requirement concerning structural adjustment measures. Henoted thatstructural adjustment measures
werenotsafeguardmeasures,andthusamarginofpreferencecouldbemaintained.Moreover,safeguard
provisions intheAgreements referred tovarious cases inwhich theParties could resort tosafeguard
measures. They provided thattheFTA'sJoint Committee should bepromptly notified andshould
consult regularly onsafeguard measures, withaview totheirrelaxation, substitution orabolition.
Theappropriate measures tobetaken varied, depending uponthebasisonwhich thesafeguard measures
wereintroduced -competition, stateaid,dumping, emergency action, re-export, serious shortage or
fulfilmentofobligations.InthesenseofGATTArticleXIXandtheAgreementonSafeguards,safeguard
measures entailed suspending inwhole orinpartanobligation which wascausing orthreatening serious
injury todomestic producers. Fortrade within theFTAs under review, suspending anobligation or
withdrawing ormodifying concessions would notbedone under thesafeguard provisions ofthe
Agreements, butrather under theprovisions onstructural adjustment. Fortrade withthirdparties,
measures would betaken inaccordance withGATT Article XIX.
24. Therepresentative ofBulgaria saidthatBulgaria didapply some safeguard measures ona
temporary basis, butnotunder GATT Article XIX. Themeasures wereapplied temporarily fornew
orrestructured industries.WT/REG12/M/1/Rev.1
WT/REG16/M/1/Rev.1
WT/REG20/M/1/Rev.1
Page8
25. Therepresentative oftheEFTA Secretariat clarified references tosafeguard measures and
structural adjustment measures. Themechanism ofstructural adjustment wasnotatraditional safeguard
measure andwasusedmainly forinfant industries. Itwasatransitional measure, which allowed the
economies intransition tointroduce some additional protection foraperiod, toprotect infant industries.
What thestructural adjustment measure thenmeant wasthatBulgaria, Romania orSlovenia could
temporarily raisethealready lowered duties, within thetimeschedule established under theFTAs.
When theParty increased those duties, thepreferential dutymight stillbelower thantheMFN duty.
Although notinlinewiththeestablished schedule oftariffdismantling, thatkindofexceptional measure
which departed fromtheestablished tariff dismantling schedules would onlybetemporary. Itwould
bejustified forcertain sectors orcertain industries.
26. Therepresentative ofRomania saidhisdelegation concurred intheexplanation ofthedifference
between structural adjustment measures andsafeguard measures, which weredefined intheAgreement.
From afactual standpoint, hisdelegation wished toindicate that,since theentry intoforce ofthe
Agreement, Romania hadnotappealed toeither ofthose setsofmeasures.
27. Therepresentative ofKorea saidthattheareas ofanti-dumping andstructural adjustment had
beenaconcern ofhisdelegation during reviews ofother agreements, andthat,hereagain, hisdelegation
hadquestions related tothose areas. Intheanswers which hadbeenprovided toaspecific question
hisdelegation hadsubmitted, itwasindicated thatnoinjury wasattributed totheother countries, with
respect toanti-dumping andemergency actions. Theresponse noted thatRomania could exclude its
FTApartners fromtheemergency action taken under GATT Article XIX. Hisdelegation waspleased
tolearnintheanswer thatnon-members oftheFTAs could beassured thatnoinjury would beattributed
toother countries, butitwasnonetheless concerned about thepossibility ofthepartners toanFTA
being excluded from theaction, ifthere weresuchinjury. Itseemed thatwhen necessity called for
emergency action, usually thecause oftheproblem came fromthepartners, rather thanthirdparties,
because thepartners hadpreferential tariff rates. Itthusseemed oddthattheFTApartners could be
excluded fromtheemergency action when therewassome injury. Clarification would beappreciated.
Another point perhaps entailed asystemic issue. GATT Article XXIV:8(b) read: "Afree-trade area
shallbeunderstood tomean agroup oftwoormore customs territories inwhich theduties andother
restrictive regulations ofcommerce (except, where necessary, those permitted under Articles XI,XII,
XIII,XIV, XVandXX)areeliminated onsubstantially allthetradebetween theconstituent territories
inproducts originating insuchterritories." Theexceptions didnotspecifically include anti-dumping
andsafeguardmeasures,eventhoughagreementsexistingatthetimeofdraftinghadhadsuchprovisions.
Ittherefore seemed thatthose measures should beeliminated within FTAs. Hisdelegation wished
toheartheParties 'views onthediscrepancy between theeffects ofthose FTA provisions andthe
requirements oftheGATT, which saidthatsafeguards andanti-dumping measures should beeliminated
within theconstituent territories.
28. Therepresentative ofNorway saidthatinonerespect itwaseasytoanswer thequestion, in
thesense thatthere werenosafeguard measures inforce; thustheParties could explain nothing more
about thepractice thanthefactthatthere wasnopractice currently. TheEFTA andtheother FTA
Parties would beartheconcerns inmind intheoperation oftheAgreements. Thatwasnottosaythat
hisdelegation wasatthatpoint giving anyguarantees orcommitments, butitwould treatcomments
received inaserious andconstructive manner.
29. TherepresentativeofPolandsaidhewishedtocommentonthequestionrelatingtotheapplication
ofsafeguard measures under FTAs. HewasoftheviewthattheCommittee should notenter intoa
detailed discussion onthatspecific issueuntilithadmade acomparative analysis ofthewhole complexity
ofthose issues, asregulated invarious other FTAs. Apremature discussion would bedifficult, givenWT/REG12/M/1/Rev.1
WT/REG16/M/1/Rev.1
WT/REG20/M/1/Rev.1
Page9
thattherewerenotenough practical cases tobeexamined. Hisdelegation preferred thattheCommittee
raisetheissue atsome other point intime, when itwould beabletoseewhatthesafeguard clauses
inother agreements were, andwhen there would bemore critical experience.
30. TheChairman noted thattheCommittee hadsofarconsidered general questions related to
thethree Agreements. Heasked thedelegations ifthere were anyspecific questions ontheEFTA-
Romania FreeTrade Agreement.
31. Therepresentative ofRomania saidthattheAgreement between theEFTA States andRomania
waspartofthewider thrust towards European integration ofRomania. Hisdelegation considered the
Agreement tobeinlinewiththeglobal principles, rules anddisciplines ofGATT 1994. Asfaras
statistics wereconcerned, aquestion raised bytheUnited States, hehadafewfigures toofferfrom
theperspectiveofRomania,givingapictureofwhattradewiththefourEFTAStatesmeantforRomania.
First, asfarasRomania 'sexports were concerned, exports totheEFTA States represented 1.7per
centoftotalRomanian exports in1990, 2.4percentin1992 andonly1percentin1995. Asfaras
Romania'simportsfromtheEFTAStateswereconcerned,theEFTA'sweightinRomania'stotalimports
was2percentin1990, 2.1percentin1992 and2.2percentin1995. With regard tocoverage, his
delegation considered theAgreement tobeinlinewithGATT provisions stating thatsubstantially all
trade should becovered. Themajority ofimports andexports consisted ofindustrial goods. Of
Romania 'sexports in1992, 96.2percentwereindustrial goods, theremainder being agricultural goods;
in1994, therespective figures were94percentand6percent;andfor1995, thefigures were95.1per
centand4.9percent. Theproportions forimports weremore orlessthesame. In1992, industrial
goods amounted to96.3percentofthetotalRomanian imports fromtheEFTA States, andagricultural
goods were3.7percent. In1994, therespective figures were93percentand7percent,andin1995,
92.1percentand7.9percent. Fortheother specific questions thathadbeenposed, hehadfound
theanswers provided bytherepresentative oftheEFTA States tobeverycomprehensive.
32. Therepresentative ofColombia asked theParties totheEFTA-Romania Agreement whether
there hadbeenanyconcrete developments withrespect toArticle 30oftheAgreement, orwhether
whatthatArticle stated wasadeclaration ofprinciple.
33. Therepresentative ofNorway saidthatthequestion concerned services andinvestment, and
that,similar totheanswer hehadgiven inthecontext ofBulgaria, thematters were being explored
inageneral waytoseewhether therewasscope forfurther development oftheAgreements. Noconcrete
result wasyetonthetable. When andifsucharesult were achieved, theParties would notify the
progress totheWTO.
34. TheChairman turned totheEFTA-Slovenia Agreement, asking ifthere were anyspecific
questions.
35. Therepresentative oftheUnited States saidhisquestion wasdirected toward Slovenia butalso
related totheother Agreements. Henoted thatArticle 24oftheEFTA-Slovenia Agreement discussed
arbitration procedures. WhyhadthisArticle beenincluded intheAgreement withSlovenia, butnot
intheother Agreements?
36. TherepresentativeofNorwayrepliedthattheEFTA-SloveniaAgreementwasaneweragreement,
andithadthusbeenpossible tointroduce intoitelements suchasarbitration, which hadnotbeenripe
atthedrafting oftheothers. Exploratory talkswere underway toseeifthose Agreements could be
updated withaclause onarbitration andpossibly other clauses.WT/REG12/M/1/Rev.1
WT/REG16/M/1/Rev.1
WT/REG20/M/1/Rev.1
Page10
37. Therepresentative oftheUnited States saidhehadtwoquestions regarding stateaidandstate
monopolies, which hewished todirect totheParties. Hisdelegation wasoftheviewthatstateaid
impacted alltrading partners, notjusttheparties toanagreement. Heasked theParties todescribe
anyrules theyweredeveloping oninterpretation orimplementation ofstateaid,andtoindicate how
fartheyhadprogressed indeveloping those rules. Regarding statemonopolies, hesaidhisdelegation
would appreciate itiftheParties would listentities thatwould qualify asstatemonopolies anddiscuss
howthearrangement might becovered byArticle XVII ofGATT 1994.
38. Therepresentative ofNorway saidthat,asfarasstateaidwasconcerned, there werearticles
inallthree oftheAgreements. They were notwide-ranging provisions, butbasically provided for
non-discrimination incommercial practices. InboththeEFTA-Bulgaria andtheEFTA-Romania
Agreements, therewasanelement ofasymmetry, which wasnotreproduced inthemoremodern EFTA-
Slovenia Agreement. There were alsoannexes providing criteria fortransparency concerning state
aid.IntheviewoftheEFTA delegation, those requirements fortransparency wereatleastasstringent
astheWTO rules. Asfarasmonopolies were concerned, there wasnolistofutilities, butthose
monopolies hadbeenorwereintheprocess ofbeing notified totherelevant WTO body, inaccordance
withtheUnderstanding ontheInterpretation ofArticle XVII.
39. TherepresentativeofRomaniaconfirmedthat,inthecaseofRomania,therehadbeennotification
totherelevant bodies oftheWTO concerning state trading, inkeeping with theprovisions of
Article XVII andwiththeUnderstanding ontheInterpretation ofArticle XVII reached intheUruguay
Round. Asfarasstateaidwasconcerned, notifications hadrecently beenmade onsubsidies, which
hisdelegation invoked inlinewiththerights provided totransition countries inArticle 29.3ofthe
Agreement onSubsidies andCountervailing Measures.
40. TheChairman saidthatinlightoftheday'sdiscussion, another meeting would benecessary
tocomplete theexamination.
41. TheCommittee tooknoteofallthecomments made.