RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG/M/22
4 June 1999
(99-2262)
Committee on Regional Trade Agreements
Twenty-Second Session
NOTE ON THE MEETINGS OF 29-30 APRIL AND 3 MAY 1999
Chairmen:  Mr. Jean-Marie Noirfalisse (Belgium),
Mr Krirk-Krai Jirapaet (Thailand), Mr Chul-Ki Ju (Korea)
A. ADOPTION OF THE AGENDA
1. The Twenty-Second Session of the Committee on Regional Trade Agreements (CRTA) was
convened in Airgram WTO/AIR/1063 dated 16 April.
2. The Chairman reminded the Committee that it had agreed to grant observer status on an
ad hoc basis to the Latin American Integration Association (LAIA).  It was agreed that LAIA would
retain this status during the next meeting.
3. The following Agenda was adopted:
A Adoption of the Agenda
B. Election of OfficersC. Systemic Implications of Regional Trad e Agreements for the Multilateral Trading
System and Relationship between them
D. Examination of Regional Trade Agreements
I. Status Report on the Examination of Agreements
II. System of European Cumulation of Origin
III. Interim Agreement between the European Community and Slovenia
IV. Customs Union between the European Community and the Principality of
Andorra
V. Free Trade Agreement between Turkey and Hungary
VI. Free Trade Agreement between Turkey and Romania
VII. Free Trade Agreement between Turkey and Israel
VIII. Free Trade Agreement between Turkey and LithuaniaIX. Free Trade Agreement between Hungary and Israel
X. Free Trade Agreement between Israel and the Czech Republic
XI. Free Trade Agreement between Israel and the Slovak Republic
XII. Central European Free Trade Agreement – Accession of the
Republic of Bulgaria
XIII. Free Trade Agreement between Slovenia and Estonia
XIV. Free Trade Agreement between Slovenia and Latvia
XV. Free Trade Agreement between Slovenia and Lithuania
E. Other Business
4. The Chairman said that his term of office in the Committee was now over and that he had
very much appreciated the skill and technical knowledge demonstrated by Members of the
Committee.  Before taking his leave, he wanted to take this opportunity to draw some conclusionsWT/REG/M/22
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from his work.  First, he stated his conviction that the CRTA was an important Committee in strategic
terms, since its work served to strengthen or w eaken the credibility of the Organization; second, he
expressed what he was sure was common support for the multilateral system; third, he said that
solutions to problems were often found by looking at the future.  This was especially true in relation
to regional trade agreements (RTAs) which would increasingly be part and parcel of the WTO. TheCommittee had to be forward-thinking in order to be successful; if it dwelt too much on the past, it
would run the risk of not being able to overcome the difficulties it faced.  The Committee needed to
retain a common and overall vision, which was to recognize the natural links between the
examinations of agreements and systemic issues.  It was also important to look for consistency and
coherence in the substance and methods used in the examination reports, and above all, in the context
of the conclusions drawn in these reports.  Finally, it should be recognized that the Committee could
only work on the basis of the tools available to it, in this case the agreements and nothing more.
B. E
LECTION OF OFFICERS
5. The Chairman said that according to the Committee's Rules of Procedure, the election of
officers should have taken place during the first meeting of the year, but that this had not been
possible due to other events.  He asked the Committee to endorse the formal election ofAmbassador Krirk-Krai Jirapaet (Thailand) as Ch airman of the CRTA.  Ambassador Krirk-Krai had
experience in all activities of the WTO, particularly in trade and investment, and was a colleague and
leader in the Organization.
6. The Committee agreed to elect Ambassador Krirk-Krai Jirapaet (Thailand) as Chairman.
7. For the positions of Vice-Chairpersons of the Committee, the Chairman proposed that
Ambassador Chul-Ki Ju (Korea) continue to serve as an Officer of the CRTA and that the other
Vice-Chairs be filled by Ambassador Guillerm o González (Argentina) and Mr. Andrew Stoler
(United States).  Finally, he thanked the Secretariat under the leadership of Mr. Peter Tulloch for the
superb job it had performed.
8. The new Chairman thanked the Members of the CRTA for the honour of electing him to the
Chairmanship and thanked Ambassador Noirfalisse for his kind words.  Ambassador Noirfalisse
would be remembered as a dynamic Chairman who had worked hard to advance the work of the
Committee and under whose Chairmanship progress had been made.  His parting speech had provided
lots of food for thought and he would take those words of wisdom into account.  He expressed his
hope that he would match Ambassador Noirfalisse's contribution to the work of the CRTA and that
the outgoing Chairman would contribute his institutional memory to the work of the Committee in the
coming year.
9. The Chairman continued, saying that the Committee had a heavy workload, given the
schedule of meetings for the rest of the year.  Examination reports for a number of agreements had
been drafted and were being discussed in informal meetings.  In addition, there was an ever-increasing
number of examinations underway and others which had not yet begun.  Apart from that, there was
the ongoing, sensitive discussion on the so-called systemic issues.  He would clearly need theCommittee's full cooperation in order to make head way in advancing the work programme in these
different areas.  He was fortunate to have the able  support of three Vice-Chairpersons and he expected
the additional support of a Vice-Chairperson from the Africa Group.  He regretted to say that he had
other pressing responsibilities in the next few days and he begged the Committee's indulgence to
allow him to carry them out.  He added that Ambassador Ju had agreed to take over as Chairman forthe remaining items on the day's agenda.WT/REG/M/22
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10. Several delegations expressed their thanks to the outgoing Chairman for his contribution over
the past year and welcomed Ambassador Krirk-Krai  and the new Vice-Chairmen to their respective
posts in the Committee.
11. The Chairman (Ambassador Ju) drew the Committee's attention to a joint initiative on
regional issues to be undertaken by the WTO Secretariat with the IMF and the World Bank
concerning research done by the latter agencies, particularly the World Bank.  It was proposed to hold
an informal seminar to discuss some of the findings of this research on Wednesday, 30 June 1999 in
the WTO.  The meeting would be open to Members and Observers and the objective was to expose
WTO Members to some of the work that had been carried out by the Washington agencies and to
expose the authors of the research to comments by WTO Members.  The seminar would take place as
part of the "coherence" mandate being pursued by the three agencies.  While it was not part of the
formal work of the Committee, it clearly had relevance for its work.  Members had been informed ofthis and other initiatives planned under the "coherence" mandate in a fax dated 8 April 1999 from
Mr. Eglin. Director, Trade and Finance Division.
C. S
YSTEMIC IMPLICATIONS OF REGIONAL TRADE AGREEMENTS FOR THE MULTILATERAL
TRADING SYSTEM AND RELATIONSHIP BETWEEN THEM
12. The Chairman said that since the creation of the CRTA this item had been placed on the
agenda of almost all meetings.  Thanks to oral and written contributions by delegations and the
Secretariat, the Committee currently had at its disposal a considerable amount of material on several
issues identified by delegations as requiring consideration.  The most recent document was the
Communication from Hong Kong, China on Systemic  Issues Arising from Article V of the GATS
(document WT/REG/W/34).  However, the Committ ee appeared to be somewhat blocked in its
discussions and it was not clear how to progress.  Was it that the Committee had simply not been able
to give adequate attention to all the materials available?  Would it be helpful if the Secretariat were to
prepare a synoptic paper summarizing, on a factual basis, the discussions that had already taken place
on the issues, updating an earlier note on the subject?  Should the Committee move to consider otherissues identified in its checklist?  The Committee needed to adopt a clear strategy on how to tackle the
systemic debate during the rest of 1999.  In that context, it was his opinion that the Committee should
decide, sooner rather than later, whether it was in a position to address the second part of item 1(d) of
its terms of reference, namely to "make appropriate recommendations to the General Council."  This
was reflected in paragraphs 15 and 16 of the Committee's 1998 Annual Report to the General Council
which had stated that "on systemic issues, the Committee held discussions on some important topics
and identified different approaches to these subjects; the need to move forward in the discussion ofsystemic issues was also recognized" and that in  1999 "it will also continue to examine systemic
issues, and, as appropriate, make recommendations to the General Council."  The Chairman asked for
Members' views on the general approach to handling systemic issues and whether it would be useful
to discuss this approach together with the idea of a synoptic paper in informal mode.  As there was no
objection, he announced that the meeting would become informal.
13. In reconvening the formal meeting, the Chai rman said that there seemed to be broad
agreement on having a synoptic paper, though there were different opinions as to whether individual
delegations' views should be identified.  It was ag reed that the Secretariat would prepare the synoptic
paper for the next formal meeting of the CRTA, taking into consideration all the points which had
been raised.  The Secretariat paper would be based on document WT/REG/W/12.  The Chairman thenturned the Committee's attention to the paper submitted by Hong Kong, China (document
WT/REG/W/34), saying that it was his understandin g that there had been a recent discussion of this
paper in the Council for Trade in Services; he wond ered if the delegation of Hong Kong, China would
update the Committee on these discussions.WT/REG/M/22
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14. In reference to the preparation of the synoptic paper, the representative of Hong Kong, China
said that he had not heard whether papers which had been submitted by delegations would be
cross-referenced, but he assumed that they would.  Turning to his delegation's paper, this had been
available to Members since late February 1999 and he  did not want to take up time by re-introducing
it.  Members were well aware of the problems of lack  of clarity that had been encountered in relation
to GATT Article XXIV and GATS Article V.  His delegation had attempted to go through all
paragraphs of GATS Article V, flagging areas where there were issues that needed to be discussed
and where matters were unclear.  In his opinion, the paper set out the issues quite clearly, and, while it
did not provide all the answers, it was important that the questions be addressed and resolved in order
to assess whether RTAs met the conditions laid down in Article V of the GATS.  He would welcome
other delegations' views on this matter.
15. The representative of Australia welcomed Hong Kong, China's paper as a useful and
constructive framework for considering the issue of RTAs covering services.  The paper raised some
important questions and highlighted the complex nature of the issues.  The reality was that economic
activity in any country was integrated and it would be inappropriate to consider GATS Article V in
isolation from GATT Article XXIV, particularly given that the GATT had provided the original
framework for the multilateral trading system which was built around the principle ofnon-discrimination.  As pointed out in the paper, GATS Article V:2 recognized this when noting that
consideration might be given to "a wider process of economic integration or trade liberalization
among the countries concerned".  One area where GATT rules were an obvious starting-point for the
interpretation of GATS Article V was on the issue of GATS Article V:1(b), which provided for the
"absence or elimination of substantially all discrimination … either at the entry into force of thatagreement or on the basis of a reasonable timeframe."  GATT Article XXIV:5(c) and paragraph 3 of
the Understanding on the Interpretation of Article XXIV of the GATT 1994 clarified that for trade in
goods, interim agreements leading to the formation of a free-trade area or customs union should do so
within a "reasonable length of time", which would exceed ten years only in exceptional
circumstances.  Therefore, it would be sensible to use the ten-year limit as a general starting point forclarifying the timing to be applied to RTAs covering services.
16. The representative of Argentina said that the paper submitted by Hong Kong, China was still
being studied by his authorities, but he had instructions to make the same preliminary comments he
had made in the Council for Trade in Services.  First, it was not very clear to his delegation what was
the purpose of the paper.  On first analysis, the impression given was that it was not aimed at a
systemic discussion but, rather, was really trying to start a renegotiation of the text of Article V of the
GATS at a particularly inopportune time. His authorities had a number of questions about the paperby Hong Kong, China.  His delegation wondered what practical experience lay behind the conclusion
that GATS Article V suffered from a "lack of clarity ".  According to the information supplied by the
Secretariat, of the 102 RTAs notified to the GATT/WTO, ten came under Article V of the GATS,
only six of which were being currently considered within this Committee.  Thus, the conclusion that
GATS Article V lacked clarity seemed somewhat premature.  GATS Article V had been the subject oflong negotiations during the Uruguay Round, and his delegation, together with others, had played an
active part in the negotiations of the text, particularly paragraph 6.  This paragraph introduced the
concept that the service suppliers of any other Member (not party to the integration agreement) would
be entitled to equivalent treatment provided that they engaged in "substantive business operations".
The inclusion of that language added a key concept to prevent such treatment being granted to non-established firms or firms which did not participate substantively in commercial transactions.  In the
same way as Article XXIV of GATT 1994, Article V of the GATS represented a notable
improvement in terms of precision.  The text included clear indications of what constituted substantial
sectoral coverage in footnote 1 which stated that it should cover the four modes of supplying services
(and it should be recalled that this topic was included after long discussions initiated  inter alia  by the
delegation of India).  Other questions are raised by  the Hong Kong, China paper.  For example, the
paper asks whether  paragraph 5 of GATS Article V is a complete departure from the obligations ofWT/REG/M/22
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the GATS, particularly Article II; it was by no means clear to his delegation what this question meant
as the departure had to occur within the framework of the GATS.  The idea was that integration
agreements were designed to liberalize still further (within the agreement) and in connection with the
generalized application of the MFN principle.  Paragraph 6 deals superficially with how to define
"substantial sectoral coverage".  It was, indeed, a typical discussion of "substantial coverage" inqualitative and quantitative terms.  It did not seem opportune or necessary to his delegation to provide
"further guidance" (as asserted in the paper) on what constituted "substantial coverage", still less
a priori .  If a sub-regional agreement excluded major service sectors, within its sub-regional trade, it
would obviously not pass the test.  This was to be considered in conjunction with the modes of supply
and the volume of trade involved.  Paragraph 7 raised the question of what was meant by the
movement of natural persons supplying services, which would appear, to say the least, to be artificial.
Mode 4 was only one of the modes and was still conditioned by GATS rules on the movement ofpersons.  This was temporary movement, whatever the nature of the labour relationship, as long as it
was consistent with the GATS.  It did not mean the liberalization of all movement of persons, but was
concerned with certain measures connected with such a movement.  The meaning of the word
"substantially" (referring to the elimination of discriminatory measures) was queried in paragraph 8
and the question was posed whether the term should be given greater precision.  The same might besaid with regard to agreement about the wo rd "promptly", for instance, which appeared inter alia  in
Article III of the GATS (Transparency).  Paragraph 9 made reference to Article V:1(b) and asked
what measures could be excepted in terms of integration.  The measures which could be excepted
were, of course, those that constituted exceptions and, consequently, it was not necessary to justify in
the schedules of obligations any such exceptions that were already covered by the agreement.  It waslikewise not correct – as maintained or implied in the paper – to suppose that the margin of exception
could not be extended to areas not covered by GATS disciplines.  In paragraph 10, the paper sought to
define the term "reasonable time-frame" in connection with the completion of integration processes,
but as yet there was little or no experience with this.  For instance, the European Union was more than
40 years old and had not yet fully completed its integration process.  In paragraph 11, the questionwas asked as to how participation in a wider process of integration should be measured; it could be in
terms of the elimination of barriers to trade, or, fo r instance, in terms of the participation in a process
of harmonization.  The Hong Kong, China delegation had answered its own question.  As for
paragraph 12, it was not possible to specify more precisely the margin of flexibility for developing
countries, an approach that his delegation shared, but which did not require further elaboration.
GATS Article V was quite clear:  when it mentioned the flexibility given to developing countries, it
was referring to the provisions of paragraph 1, and particularly subparagraph 1(b).  In paragraph 13,Hong Kong, China had raised a rather premature question – namely, how to calculate, or establish
ways of determining the overall result in terms of the raising or lowering of barriers to trade in
services.  More work was need in this area as well as in relation to alternative tests proposed for
measuring this impact, such as looking at the growth  of trade in a sector following the establishment
of the regional agreement.  What did growth mean?  Exports?  Production?  As for the proposal of the"historical trend", how was this to be measured?  Paragraph 16 mentioned two different aspects of
Article V: paragraph 5, which required 90 days adva nce notification of the withdrawal or modification
of a Member's schedule, and paragraph 7, regarding the enlargement or significant modification of an
agreement, which indicated that Members should "promptly" notify any such circumstance.  The
paper asked how the 90-day criterion in one case could be harmonized with the lack of a specificdeadline in the other.  However, the Argentine delegation understood that these were two completely
different questions, and it was thus not necessary to have a uniform criterion.
17. The representative of New Zealand said that his delegation was still examining the paper
submitted by Hong Kong, China, but had a number of preliminary comments to make.  While his
delegation agreed that it was useful to discuss the requirements of GATS Article V, Members neededto bear in mind that it might prove more difficult than in the goods area to develop elaborate
interpretations or formulas to clarify some of salient WTO concepts and requirements which applied
to RTAs in the services area.  With regard to paragraph 5 of the Hong Kong, China paper, hisWT/REG/M/22
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delegation's preliminary view was that the language of the chapeau was not intended to create a cover
for a departure of anything other than the MFN ob ligation of the GATS, otherwise the chapeau would
lead to absurd results.  Paragraph 6 of the paper, dealing with the "substantial sectoral coverage"
requirement raised a number of complex issues.  In terms of the footnote to Article V:1(a), his
delegation did not necessarily subscribe to the view that the exclusion of a single services sectorwould fail the test.  This was because the wording of the footnote seemed to involve a number of both
quantitative and qualitative considerations that would contribute to the overall assessment in each
individual case.  The reference to "number of sector s" seemed, in itself, to imply that not all sectors
might be covered in some agreements.  However, if these exclusions were limited and not
significantly further compromised by the volume of trade affected and the modes of supply, his
delegation would not necessarily see an agreement as failing the test.  He stressed that each agreement
had to be examined on its own individual merits in this regard.  Paragraph 7 of the paper also raised anumber of important issues.  However, it would be useful if the delegation of Hong Kong, China
would clarify what it meant by the phrase "any EI AS has to cover investment and labour mobility in
the sense of Modes 3 and 4."  For his delegation's part, it could see that an agreement that a priori
denied service providers the ability to invest would raise questions in this regard.  However, his
delegation did not see this condition as suggesting that a GATS Article V agreement had to containwithin it an investment agreement that extended national treatment.  Rather, more specific wording on
investment would be required to convey this idea.  Further, his delegation had noted that Article V did
not specifically address labour mobility issues; Article V bis, on the other hand, did.  With regard to
paragraph 8 of the paper, the concept of "substantially all discrimination" in GATS Article V:1(b) was
probably a little more difficult to formulate than the concept of "substantially all the trade" in GATTArticle XXIV.  In the latter case, some constructi ve proposals had been made that sought to apply
tariff line, trade volume, and percentage coverage tests to come up with an applicable formula.
However, it would appear to be more difficult to arrive at a similar percentage-type test in the services
context.  Once again, his delegation wished to note that a judgement needed to be made on the
individual merits of each trade agreement in ques tion.  With regard to the third bullet point of
paragraph 13, his delegation was of the view that the question concerning MFN exemptions had real
substance.  Withdrawals and modifications to sc hedules or modifications of MFN exemption lists
would need to be dealt with under the relevant procedures established under GATS Article XXI and
the Marrakesh Agreement, i.e. through the established waiver routes.  His final comment somewhat
echoed that of the Argentinian representative on paragraph 16 of the paper.  His delegation did not
consider that GATS Article V:5 should serve to define "prompt notification" under Article V:7.  More
broadly, Article V:5 related to the modifications of schedules and the 90-day notice periodcorresponded with the text in Article XXI:1 concerning modifications of schedules, whereas
Article V:7 referred to a different context.
18. The representative of Japan supported the aims stated in paragraph 2 of the
Hong Kong, China paper with regard to the developm ent of possible interpretations or guidelines and
the further elaboration of the "Standard Format for Information on Economic Integration Agreementson Services" (EIAS) in the future.  Although her delegation was still in the process of analyzing the
paper and had as yet no formalized position on the interpretation of GATS Article V, she wanted to
make some preliminary comments, paragraph by paragraph.  Referring to paragraph 3, which dealt
with inter-linkages between GATS Article V and GATT Article XXIV, her delegation was of the
view that the "wider process of economic integration or trade liberalization among the countriesconcerned" provided for in Article V:2 included, at least, RTAs identified in the goods area, such as
customs unions, free-trade areas and interim agreements leading to the formation of customs unions or
free-trade areas, all of which were covered by Article XXIV of the GATT.  Needless to say, the inter-
linkages did not imply that EIAS consistency w ith GATT Article XXIV automatically led to its
consistency with GATS, as trade in services and goods  had their own rules.  With regard to paragraph
5 and the chapeau of GATS Article V:1, her delegation considered that the scope of the exemptions
granted to EIAS included MFN obligations, but did not include other general obligations of the
GATS.  As regards paragraph 6 of the paper, which dealt with the "substantial sectoral coverage"WT/REG/M/22
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requirement of Article V:1(a), her delegation had expressed its views in an informal paper which had
been previously distributed and which would be re-circulated for the benefit of Members.  First, the
number of sectors should not exclude essential services which functioned as the infrastructure for
economic activity, such as transportation services.  Second, the volume of trade affected could be
judged by data on domestic economic activities, if data on trade in services was not available.  Third,the mode of supply should cover all four modes of supply, as was clearly stipulated in footnote 1 to
Article V:1(a).  In reference to paragraph 7 of the paper, dealing with the second sentence of footnote
1 of Article V:1(a), namely that "agreements should not provide for the a priori  exclusion of any
mode of supply", her delegation considered that no EIAS should a priori  exclude investment and
labour mobility in the sense of Modes 3 and 4.  As far as Mode 4, the movement of natural persons
was concerned, paragraph 2 of the Annex on Movement of Natural Persons Supplying Services  needed
to be taken into consideration.  Paragraph 2 of the Annex stated that the Agreement did "not apply tomeasures affecting natural persons seeking access to the employment market of a Member, nor would
it apply to measures regarding citizenship, residence or employment on a permanent basis".
Therefore, the movement of natural persons, which was exempted from the GATS framework, needed
to be included in the integration process for consis tency with the GATS.  In reference to paragraph 8,
dealing with Article V:1(b), the phrase "substantially all discrimination" as in the "absence orelimination of substantially all discrimination in the sense of GATT Article XVII", could be
interpreted as the modification of "conditions of competition" as was provided for in Article XVII:2
and 3.  With respect to the meaning of "substantia lly all", the same term in GATT Article XXIV:8(b)
might provide a hint, bearing in mind that an established interpretation of this term did not seem to
exist in the context of the GATT.  It was her de legation's view that it was generally understood to
mean the absence of restrictive trade regulations in exceptional items and sectors.  The application of
such an understanding to the meaning of GATS Article V:1(b) needed further reflection.  As noted in
paragraph 9 of the paper, the coverage of Articles which were excepted under Article V:1(b) should
be discussed.  Her delegation considered that measures permitted under Articles XI, XII, XIV
and XIV bis were not exhaustive.  The preamble of the GATS referred to "the right of Members to
regulate, and to introduce new regulations, on the supply of services within their territories in order to
meet national policy objectives".  Thus, some measures might need to be recognized as part of the
exemption list but this did not mean that an excessively wide range of exemptions should be
permitted, given that the role of an EIAS was to promote trade in services. What if coverage by the
GATS obligation under the national treatment clause  were excluded from the exemption list?  She
said that she had instructions on the licensing of professionals, safeguards, subsidies and so forth
which were addressed in paragraph 9 of the paper, but that she would pass over them because of timeconstraints.  The "reasonable time-frame" mentioned in paragraph 10, which was not specified in the
GATS, could arguably be considered to be five years in light of the time set for the next round of
negotiations in trade in services, scheduled to commence five years after the entry into force of the
GATS.  Finally, she agreed to make her delegation's comments available in written form.
19. The representative of the United States had only one item to raise.  His delegation had noted
that, without prejudice to whether any of the issues raised in the paper required further discussion,
paragraph 16 stated that Article V:7(a) required "prompt notification of the establishment or
modification of EIAS", which required Members to notify the agreement to the Council for Trade in
Services so that it could be examined by the CRTA for consistency with Article V.  He noted that this
obligation applied to all WTO Members, in all geographic regions, and at all stages of economicdevelopment.  It was not clear that all Members had been abiding by this obligation.
20. The representative of Korea said that it was apparent in the examination of individual
agreements that there was a need to address the lack of clarity in the provisions of GATS Article V.
The paper presented by Hong Kong, China raised impor tant points that should be considered in order
to achieve a clearer and common understanding of these provisions.  He would limit his interventionto a couple of general comments on the questions of how far RTAs should be allowed to derogate
from the obligations under GATS and how an applicable yardstick could be developed for "substantialWT/REG/M/22
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sectoral coverage".  He hoped to be able to revert to other issues contained in the paper at a later
stage.  RTAs constituted an important exception to the MFN principle of the multilateral trading
system and discriminated against the trade of non-parties.  For this reason, his delegation supported a
rigorous and narrow interpretation of the WTO provisions on RTAs, including Article V of the
GATS, that allowed the minimum level of discrimination towards the trade of third parties.  Thelanguage in the chapeau of GATS V:1 which stated that "This Agreement shall not prevent any of its
Members from being a party to or entering into an  agreement liberalizing trade in services" should be
interpreted in this light.  In his delegation's view, RTAs should not be allowed to derogate from the
key principles of the GATS, such as transparency and the fair administration of domestic regulations.
Likewise, the question deriving from Article V:1(b)  on whether parties to an RTA were entitled to
exempt other parties from emergency safeguard measures had to be approached with the goal of
safeguarding the interests of non-parties.  He added that the working party on GATS rules wasdiscussing issues related to establishing discip lines on emergency safeguards.  His delegation was of
the view that these disciplines should be applied on an MFN basis to parties to an agreement and third
countries alike, as provided for in GATS Article X:1.  Regarding the issue of "substantial sectoral
coverage", the footnote to Article V:1(a) listed three factors to be considered.  The Committee's
experience in examining individual RTAs pointed to th e need to develop further guidelines to assist in
the interpretation of compliance with these factors.  Although his delegation was aware of the
difficulty of establishing an objective threshold, either in terms of number of sectors or volume of
trade affected, the Committee should not shy away  from considering any viable approach.  The
representative of Japan had made an interesting suggestion that, in addition to the number of sectors
covered by an agreement, the Committee could look at whether certain basic sectors were covered.Certainly the exclusion of a basic services sector or sectors would not be consistent with the aim of
facilitating services trade among parties.  Even if the Committee found it difficult to agree on the
definition of basic or essential services sectors, it should always be conscious of this notion in the
examination of individual RTAs.  In view of the difficulty in obtaining statistical information on the
volume of trade, the size of the domestic market of the sectors concerned or their contribution to GDPcould be used as a reference.  Of course, the assumption on which this approach would be based
would need to be verified, namely that a sector representing more than a certain proportion of GDP
was bound to be significantly traded within the RTA.
21. The representative of Poland said that Hong Kong, China's paper was currently under scrutiny
in his capital, so that his observations were preliminary and of a general nature.  His delegation
wondered about the goal of this analysis, especially if the discussion developed into a full-scale
exercise.  His delegation held the view that such an exercise should be kept within the mandate of theCommittee and terms of reference for any exercise of this kind should be for the benefit of
participants.  At the same time, his delegation was of the opinion that the discussion should be carried
out without prejudice to the regular work of the Committee, i.e. without prejudice to the examinations
and reviews underway, particularly those dealing with trade in services.  Moreover, such a discussion
should not be viewed as a substitute for the examin ation process, nor should it slow its pace.  All
Members were aware of the fact that there were differences in the understanding of GATS Article V.
Any discussion of this issue should not widen these differences and should not be reflected in the
conclusions of ongoing examinations.
22. The representative of India said that his delegation was of the view that raising specific issues
and questions related to specific aspects of GATS Article V would help clarify matters that had
hindered past discussions, particularly during the review  of individual RTAs.  Fi rst, he wanted to state
his delegation's view of the Hong Kong, China paper's objectives, as he had heard one delegation say
that it hoped that the objective was not an attempt to renegotiate GATS Article V.  He was sure that
the delegation of Hong Kong, China would clarify this point also. The paper made an honest and
detailed attempt to identify those areas where the Co mmittee needed to focus its analysis in an attempt
to clarify the meaning of some of the terms in GATS Article V, as the Committee had attempted to do
in the context of Article XXIV.  These areas were obviously not exhaustive, and a difference ofWT/REG/M/22
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opinion existed on the various issues.  The comment had been made that it was too early to come to a
conclusion, since only six of the ten notified RTAs under the GATS were being examined.  He
wanted to make two points in this regard:  fi rst, as the examination of RTAs from the goods
perspective had shown, the issues and the provisions which lacked clarification were often common
across agreements, so it was likely that these issues would occur again and again, whether theCommittee had examined only a few agreements or all of them.  More importantly, it was better to
attempt to clarify issues at this stage when there were few agreements notified under GATS, rather
than reach the stage, as on the goods side, where there was a large number of agreements for which
the review process could not be concluded due to the lack of clarity.  Thus, the Hong Kong, China
paper had been presented at an opportune time.  While all the issues required detailed and deliberate
consideration, he wanted to highlight four specific areas of interest.  The first was the issue of
"substantial sectoral coverage", the primary factor which had been the subject of analysis in all theagreements that the Committee had reviewed thus far.  While the footnote to Article V:1(a) called for
an examination of the number of sectors and the volume of trade affected, it was not clear how to
determine whether all sectors had been covered or not.  A similar situation existed with regard to the
agreements on goods.  The second area of interest was the issue of the  a priori  exclusion of any mode
of supply.  Members were well aware that his delegation attached a great deal of importance to allmodes of supply, particularly Mode 4;  it was, therefore, important that the issue of the a priori
exclusion of any mode of supply be addressed.  His third and fourth points were related to
paragraphs 12 and 13 of the paper, dealing, respectively, with the flexibility accorded to developing
countries and the evaluation of whether an RTA had raised the overall level of barriers to the trade in
services vis-à-vis third countries; both were important and merited further deliberation.  Finally, hesaid that, to a large extent, the objective of s ubmitting the paper had been met, given the detailed
comments received.  He added that circulation of delegations' statements would be helpful, especially
if made in advance of the Committee's next meeting.
23. The representative of Canada said that he was aware that the Hong Kong, China paper had
been submitted to the Council for Trade in Services  and that discussions had begun in that forum.
Clearly, Article V of the GATS played an important role in the examination of RTAs, along with
GATT Article XXIV and other systemic issues, so there was a legitimate role for the CRTA to play in
the discussion of GATS Article V.  However, while the CRTA had a role in discussing the broad
policy questions associated with GATS Article V, GATT Article XXIV and other systemic issues, his
delegation did not consider it appropriate for the CRTA to develop interpretations of GATS Article V.
Furthermore, he hoped that any future discussion on GATS Article V would not serve as yet another
impediment to the speedy completion of the numerous examination reports before the Committee,many of which included services.
24. In relation to paragraph 3 of the Hong Kong, China paper, in which the question was raised
about the inter-linkages between GATS Article V and GATT Article XXIV, the representative of
Switzerland said that his delegation's view was that the wider process of economic integration existed
in more than agreements on trade in goods and services, as could be observed in the continuing
integration of the European Union.  Therefore, his delegation was of the opinion that making the
inter-linkage could restrain the scope of a wider process of economic integration.  This did not mean
that lessons could not be drawn from one area to the other.  As regards paragraph 5 of the paper, his
delegation was of the view that Article V well described the conditions under which an agreement
could deviate from the MFN principle.  As regards paragraph 6, he shared the view of others that"substantial sectoral coverage" could be fulfilled when one sector was not covered. The test should be
applied pragmatically on a case-by-case basis, and he hoped that the delegation of New Zealand
would maintain a consistent viewpoint on sectoral coverage when the vote was cast in Article XXIV
examinations.
25. The representative of the European Communities (EC) said that the papers submitted by Hong
Kong, China and Japan raised some complex issues.  Her delegation looked forward to the circulationWT/REG/M/22
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of the lengthy statements made by previous speakers and to reverting to them at a later stage. Given
that the Hong Kong, China paper was also being cons idered in the Council for Trade in Services, she
suggested that it might be useful to look at a tran sparency mechanism to ensure that Members of the
CRTA and of the CTS were aware of what was going on in each forum.  It might also be useful to
look at the scheduling of both bodies to ensure that there was no overlap when the issue wasdiscussed.  The Chairman thanked the EC representative for her suggestion and hoped that it would be
possible to find a way to accommodate her request.
26. The representative of Argentina wished to make a couple of comments in the light of the
discussion that had been held thus far.  First, given that the Hong Kong, China paper was being
discussed in two different fora, he was obliged to make the same statements and comments in both.
He requested that the Committee decide where these issues would be discussed, in order to streamline
the work of the Committee.  The second issue of concern was that it appeared that, as a result ofidentifying problems under GATT Article XXIV and GATS Article V, some delegations were
prejudging agreements before the examination process was complete.
27. The representative of Hong Kong, China thanke d delegations for the interest shown in its
paper and expressed the hope that this would be the beginning of a fruitful debate.  He requested that
delegations which had made detailed interventions submit them in writing, so that they could be giventhe consideration they deserved.  While he did not intend to respond to all the points raised, he wanted
to refer to some such points.  In response to the repr esentative of Argentina, he stressed that the paper
was not a proposal, but rather a set of issues and questions which his delegation wanted to see
addressed.  As indicated in the first paragraph of the paper, the list of issues was non-exhaustive and
without prejudice to the position of any WTO Member.  He hoped that this would reassure theArgentinian delegation.  Having said that, he reiterated his position that many of the phrases and
words used in GATS Article V were unclear.  The delegation of Argentina had made reference to
some of them; if Argentina had interpretations which it believed were clear, his delegation would
value looking at them in order to take the matter forward.  In response to the representative of
New Zealand's question on paragraph 7, he agreed that the issue had been phrased ratherprovocatively in the paper in order to elicit the sort of discussion that the Committee had had.  His
delegation's own view on the matter was that the Annex on the Movement of Natural Persons  clearly
applied, but this still begged the question as to what sort of cover there should be where commitments
had been undertaken or where this sector was within the EIAS.  Did it mean that there should be full
labour mobility within the terms circumscribed  in the Annex  in those sectors involved?  It would be
interesting to debate this question later.  In response to the point made by the delegations of Japan and
Korea on whether an essential or basic infrastructure service could be excluded from an EIAS, he saidthat his delegation had observed that transport (which was a fairly basic sector comprising, for some
Members, a large element of their services trade) was substantially carved out of the GATS, because
of the Annex on Air Transport Services  and the failure to reach conclusions on maritime transport
services.  A question that might be posed was whether an EIAS had to go further than what was
currently provided for in the GATS in order to m eet the test.  The second point was how these matters
might be assessed.  Footnote 1 to GATS Article V:1(a) made reference to the volume of trade
affected, but as all Members were aware, services data were not as good as they should be, and data
on trade in services were even worse.  Thus, the point made by the delegations of Japan and Korea
that domestic services statistics could be used was a valid one that deserved consideration.  Finally, in
response to the Canadian representative's point that the Committee should not try to developinterpretations of GATS Article V, he wondered how the assessment of RTAs might be concluded if
there was no agreement on the interpretation of certain words and phrases of the GATS.
28. The Chairman thanked Members for contributing to an interesting discussion related to GATS
Article V and the relationship with systemic issues and proposed that the Committee revert to this
issue at its next Session in July.  The Secretariat would take the views expressed in the day's meetingWT/REG/M/22
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into account in its synoptic paper.  He asked that delegations that had made lengthy statements submit
them in writing in order to promote transparency and clarity of the issues involved.
D. STATUS REPORT ON THE EXAMINATION OF AGREEMENTS
29. The Chairman said that there were several matters to be considered under Item D on the
Agenda.   First, the Committee had before it a list of the meetings planned for 1999, which included
the three remaining formal meetings of the CRTA, as previously announced.  These meetings were
principally to carry out the examination of individual agreements and to carry forward the discussion
of systemic issues.  The dates proposed for the next Session of the Committee had been changed from
those previously announced in order to meet the concerns of delegations with respect to the
multiplication of meetings in the second half of the year.  In addition, the Secretariat had included
dates for a series of informal meetings which were intended for the discussion of the texts of draftreports, based on the examinations.  The reason for including the informal meetings in the schedule
was to avoid the considerable difficulties that had been experienced in trying to arrange such meetings
in the past.  In addition, a report on the Status of Examination of Regional Agreements as well as an
updated informal note by the Secretariat providing background information on Regional Trade
Agreements Notified to the GATT/WTO and in Force in April 1999, had been circulated.  He stressedthat the Committee had a very heavy programme of work, which was, if anything, even heavier than
in previous years.  This resulted from the additio n of new agreements for examination while, as yet,
no reports had been adopted. Overall, the Committee was dealing with some 68 RTAs.  He
commented briefly on each of the main groupings.  In the first grouping, there were 34 RTAs for
which draft reports were under consideration; as noted, there had recently been or would soon beconsultations on these draft reports, and discussions were well advanced in some cases.  However, a
number of divergences still remained and he was considering how to proceed with interested
delegations to examine these divergences.  In the second grouping, there were four RTAs for which
the factual examination was well engaged.  The drafting of the reports had not yet started because
some additional information was to be provided by the Parties and, in light of that material, additionalmeetings might prove necessary.  The Secretariat had now distributed information concerning the
agreements between Canada-Chile and EC-Slovenia.  In the third grouping, there were 21 RTAs for
which the examination was under way.  He drew the Committee's attention to two agreements,
MERCOSUR and the EC-Turkey Custom s Union, and explained that, in both cases, the Secretariat
was in the process of calculating the general incidence of duties, but there were still some details to be
clarified with the Parties.  He expected that the Committee would soon be able to move forward on
the examination of these two important agreements.  The fourth group related to nine agreements forwhich the examination had not yet started.  In the fifth group, there were two agreements which had
yet not been transmitted to the CRTA for examination.  Under Item D of the Agenda, the Committee
would be continuing the factual examination of a number of RTAs and, hopefully, it would be
possible to conclude the factual examination on some or all of them.    This meant that the Secretariat
would then be able to begin drafting the reports and those drafts would be presented in informalmeetings during the year.  He hoped to schedule the first round of examinations of the new
agreements for the Committee's Twenty-Third Session in July.  The next informal meeting was
scheduled for 17-19 May.  At that meeting, the Committee would take up consideration of the
relatively advanced draft reports.  This included the CEFTA draft of 3 February, on which discussion
had been suspended at the last informal meeting, as well as the EFTA-Hungary draft report (as amodel for other EFTA agreements), dated 26 January.  In addition, there would be discussion of the
new versions of the draft reports on the NAFTA, ANZCERTA Services, EC Enlargement, EC
Association Agreements (with the EC-Hungary report as a model for other reports in that series), as
sent to delegations on 1 March.  The question of the "chapeau" to the conclusions to these draft
reports would also be taken up at that time.  Th is was clearly a heavy work programme.  Without
suggesting that the Committee ignore any important issues, it was important for Members to show
some good will in advancing the work programme.  It would be very unfortunate if the CommitteeWT/REG/M/22
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had to report to the Ministerial meeting that, in five years of the WTO, it had been unable to complete
a report on any agreement.  Each agreement was of course distinct, but, as was now obvious from the
various drafts, the general approach was similar in each case.
30. The representative of the European Communities said he shared the Chairman's hope that the
Committee could make progress on the examinations and complete as many as possible during the
course of the year.  He wished to clarify the stat us of the examination of the EC-12.  His delegation's
understanding was that the factual examination was complete, rather than being well engaged.
Similarly, he asked what, if anything, was necessary for the calculation of the general incidence of
duties of the EC-Turkey customs union.
31. The representative of Romania asked about the second category of reports, for which the
factual examination was well engaged, in particul ar in relation to the free trade agreement between
Romania and Moldova.  For this category of agreement, the Committee was still awaiting certainfactual information, but it was his delegation's understanding that all questions raised had been replied
to during the course of the examination and Members were satisfied with the replies given.  Secondly,
no further questions had been raised by any other Member within the agreed time limit.  His
delegation was ready to supply any other information as required, but he wanted to clarify the exact
status of this Agreement, particularly whether or not delegations were awaiting additionalinformation.
32. In response to the Romanian representative's question, a representative of the Secretariat said
that there was always some time allotted to delegations to see if further clarification was needed.  As
far as the data for the calculation of the general incidence of duties for the EC-Turkey customs union
was concerned, the Secretariat was in possession of all the data required and was currently processingit.  As far as the EC-12 was concerned, answers to some questions were pending.
33. The representative of the United States said th at the only practical way to determine whether
or not the examination of an Agreement had been concluded was to place the item on the Committee's
Agenda.  If no further questions were forthcoming, the factual examination could be concluded.
34. The Chairman thanked the Committee for its co mments and said he appreciated the support
shown and the willingness to move forward.  Obviously, the work programme was constrained by the
availability of information and he appealed to Members to show a spirit of cooperation to allow the
Committee to make progress.
35. (The minutes of the examination of the Agreements listed under agenda items D.II-XV are
being distributed as separate documents.)
E. OTHER BUSINESS
36. No items were raised under Other Business.
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