RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG69/4/Add.1
16 February 2001
(01-0776)
Committee on Regional Trade Agreements Original:  English
EURO-MEDITERRANEAN AGREEMENT BETWEEN THE
EUROPEAN COMMUNITIES AND TUNISIA
Questions and Replies
Addendum
This document reproduces questions addressed to the Parties and the responses jointly
submitted by the European Communities and Tunisia.  The questions and replies set out below are
organized in accordance with documents WT/REG69/2.
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I. BACKGROUND INFORMATION ON THE AGREEMENT
1. Membership and Dates of Signature, Ratification and Entry into Force
While the Agreement had been applied by T unisia since January 1997 on a provisional
basis, with joint implementation effective Marc h 1998, it had not been notified to the WTO until
January 1999.  The answer to question 1 in document WT/REG69/4 indicated that the
Agreement had not been notified earlier, becaus e only the provisions on tariffs, not the full
Agreement, had been applied.  In our view, ag reements needed to be notified as soon as
implementation - provisional, partial or otherw ise – occurred, since Members were entitled to
be informed of departures from MFN treatmen t when a preferential tariff was implemented.
What changes, if any, had been made to Tunisi a's applied rates at the time the Agreement was
under negotiation, and subsequently when it was implemented by both Parties?  Was Tunisiarequired to maintain a margin of preference for imports coming from the EC?
As regards the absence of any notification at the time of the provisional application of the
Agreement by Tunisia, it should be noted that noti fication took place only when all Member States of
the European Union had ratified the Agreement and the Agreement had entered into force.Provisional application of the Agreement by Tunisia was undertaken for domestic policy reasons (to
encourage investment).  Nonetheless, the tariff provisions applied on a provisional basis were
implemented on an MFN basis.  Tunisia was not required by the Association Agreement to maintain,
and did not maintain, any margin of preference for imports from the EC over those from MFN
suppliers.
2. Type of Agreement
How does the new generation of Euro-Medit erranean agreements, which were referred
to in document WT/REG69/4, differ from the p revious generation of association agreements?WT/REG69/4/Add.1
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The Euro-Mediterranean Agreement betwee n the European Communities, their Member
States and Tunisia replaced the Co-operation Agreement between the European Community and
Tunisia which was signed on 25 April 1976.  The Euro-Mediterranean Agreement establishes an
Association between the parties.  The aims of the Agreement are wide-ranging and include: to provide
an appropriate framework for political dialogue; to establish the conditions for gradual liberalisationof trade in goods, services and capital; to promote trade and the expansion of harmonious economic
and social relations; to encourage integration of the Maghreb countries by promoting trade and
investment between Tunisia and other countries of the region; and to promote economic, social,
cultural and financial co-operation.
The scope of the Euro-Mediterranean Agreement is therefore broader than that of the earlier
Co-operation Agreement. That agreement was designed to give effect to a more narrowly definedrange of objectives, relating to the promotion of overall co-operation with a view to contributing to
the economic and social development of Tunisia and helping to strengthen relations between the
parties. The Co-operation Agreement therefore focused on measures in the fields of economic,
technical and financial co-operation and of trade.  The provisions of the Co-operation Agreement
most relevant from the trade perspective were designed to lead to the reduction and elimination oftariffs and quantitative restrictions applied by the European Communities to imports from Tunisia.
The Co-operation Agreement placed no reciprocal obligation on Tunisia to reduce or eliminate its
tariffs and quantitative restrictions on imports from the European Communities  This is in contrast to
the “new generation” agreement which is based on the principle of reciprocity.
Regarding the answer to question 3 in document WT/REG69/4, there was a twelve year
phase-in period.  However, paragraph 3 of the Understanding on the Interpretation of
Article XXIV of the GATT 1994  (the "Understanding") provides that ten years should be
exceeded only in exceptional circumstances.  The Committee had already considered a number
of agreements linking developed and developing countries where the maximum period wasexceeded on a very limited number of products.  However, according to U.S. calculations, nearly
one quarter of Tunisia's imports from the EC would be subject to a phase-out period exceeding
ten years.  Please explain how this delay in implementation is compatible with the requirements
of the Understanding.
The parties recognise that the length of the transitional period (12 years) exceeds that foreseen
in the Understanding on Article XXIV of the GATT 1994 as the maximum implementation periodexcept in exceptional circumstances (ie 10 years).  However, the parties consider that the sharp
difference between them in terms of their respective levels of development provides sufficient
justification in this case for the application of a longer implementation period as regards the
progressive tariff elimination by Tunisia of duties applied to imports from the EC. Tariff
dismantlement will begin at the latest in the fifth year of implementation of the Agreement: tarifflevels applicable during the last two years of the transition (ie years 11 and 12) will therefore already
be much reduced or marginal, as a result of the progressive elimination of duties on products within
this category.
II. TRADE PROVISIONS
3. Rules of Origin
How does the rules of origin system work with respect to Algeria?  How would Algeria
be eligible for cumulation, given that it was one of the countries included in the EC-Maghreb
link?  With respect to the response to quest ion 10 provided in document WT/REG69/4, please
clarify whether the pan-European-Mediterranean system of origin is already under
negotiation?  How would it differ from the pan-Eu ropean system of cumulation, and what is theWT/REG69/4/Add.1
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relationship between the two regimes?  Had the  Agreement between Egypt and Tunisia, which
was mentioned in the documentation and which seemed to be relevant in reviewing this
Agreement, particularly with respect to rules of origin, been notified to and examined by the
CRTA.
Cumulation with Algeria
Pursuant to the cumulation provisions, materials originating in Algeria will be considered as
originating in the Community for the purpose of  the EC-Tunisia agreement, provided they have
undergone working or processing in the Community beyond the minimal operations. Similarly,
materials originating in Algeria will be considered as originating in Tunisia for the purpose of the EC-
Tunisia agreement, provided they have undergone working or processing in Tunisia beyond theminimal operations. Furthermore, working and processing carried out in Algeria will be considered as
having been carried out in the Community (or Tunisia) when the products obtained undergo
subsequent working or processing in the Community (or Tunisia).
The above cumulation provisions are only applicable to the extent that identical rules of
origin are applied between the Community and Alge ria, between Algeria and Tunisia and between the
Community and Tunisia. Accordingly, cumulation is  not applicable for all products for which the
rules of origin of the agreement in force be tween the EU and Algeria (agreement of 1978) are
different from the rules of origin in the EC-Tunisia agreement.
Euro-Mediterranean cumulation of origin
In the Mediterranean, the Community is in negotiations for the conclusion of free trade
agreements (Euro-Mediterranean Agreements) with Syria, Egypt and Lebanon.  Negotiations were
opened but then suspended with Algeria.  In each of these negotiations, the Community proposes theintroduction of cumulation between all Mediterranean countries. The Euro-Mediterranean system is
not under negotiation between Tunisia and the EC.
Euro-Mediterranean cumulation of origin as comp ared to the pan-European cumulation of origin
The Community intends to introduce in the Euro-Mediterranean zone the same type of
cumulation as the one applicable in the pan-European zone. It is the system whereby goodsoriginating in any of the partner countries of the z one, will be considered as originating in another
partner country, provided they undergo further working or processing in that other partner country.
There is no cumulation between the partner countries of the Euro-Mediterranean zone and the
partner countries of the pan-European zone.
5. Safeguards
With respect to safeguard provisions:
(a) How do the safeguard provisions operate?
(b) What conditions are needed to be met for Tunisia to increase or re-introduce its
customs tariffs?
(c) What margin of preference is availabl e for goods arriving from the EC?
(d) Is Tunisia required to raise MFN tariffs by set amounts so as to protect a margin
of preference for goods or iginating in the EC?WT/REG69/4/Add.1
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(a) The three safeguard provisions, which are in conformity with GATT 1994 and the WTO
Agreement on Safeguards, operate as follows:
/g167 Exceptional measures of limited duration which derogate from the tariff elimination schedule
may be taken by Tunisia in the form of an increase or reintroduction of customs duties as setforth in Article 14 of the Agreement.  These customs duties may not exceed 25% ad valorem
and shall maintain an element of preference for products originating in the EC.
/g167 The EC or Tunisia may take appropriate measures on the basis of Article 25 of the
Agreement, where the increase in imports of a product occurs in such quantities and under
such conditions as to cause or threaten to cause:
- serious injury to domestic producers of like or directly competitive products
in the territory of one of the parties or
- serious disturbances in any sector of the economy or difficulties which could
bring about serious deterioration in the economic situation of a region.
The procedure to be followed is laid down in Article 27 of the Agreement./g167 In the case of serious balance of payment difficulties, Member States of the EU or Tunisia
may adopt for a limited period restrictions on current transactions, which may not go
beyond what is strictly necessary to remedy the balance of payments situation.
(b) The conditions needed to be met by Tunisia to increase or re-introduce its customs tariffs are
contained in Article 14 of the Agreement.  Thes e measures may only concern infant industries or
certain sectors undergoing restructuring or facing serious difficulties, particularly where thesedifficulties produce major social problems.
(c)-(d) Pursuant to Article 14 of the Agreement, Tunisia is allowed during a transitional period, and
in exceptional circumstances and provided that certain conditions are met, to increase or reintroduce
customs duties which have been reduced or abolished pursuant to Article 11 of the Agreement.  Such
increased or reintroduced duties may not exceed 25%  ad valorem and shall maintain an element of
preference for products originating in the EC. This  element of preference is not further specified.
8. Sector-specific Provisions
With respect to the answer to question 18 in document WT/REG69/4, please explain
how a reference quantity differed from a tariff-rate quota and why a reference quantity wasmore flexible than a tariff-rate quota.
Tariff quotas represent predetermined quantities of goods which can be imported into the
Community with the benefit of a preferential duty (concession on the MFN). When imports under the
tariff quota reach the predetermined level, the quota is exhausted and the MFN duty - or thepreferential duty outside the tariff quota if it exists - automatically becomes applicable for imports of
the goods concerned for the rest of the calendar.
Preferential duties subject to a reference quantity are applicable throughout the preferential
period, even for imports above the fixed reference quantity. The Community having regard to anannual review of trade flows, which it shall carry out, may make the product in question subject to a
Community tariff quota, the volume of which shall be equal to the reference quantity. In that case, for
quantities imported in excess of the quota, the common customs duty is, according to the product
concerned, applied in full or reduced.WT/REG69/4/Add.1
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With respect to the answer to question 19 of that same document, what measures were
planned in the case that new agricultural liberalization that should be applied from 1 January
2001 onwards?
Article 18 of the Euro-Mediterranean Agreement provides that, from 1 January 2000, the
Community and Tunisia are to assess the situation with a view to determining the liberalisation
measures to be applied by the two Contracting Parties with effect from 1 January 2001.  The EU
Council authorised the Commission to begin negotiations with the Republic of Tunisia with a view to
negotiating greater liberalisation of agricultural trad e, in keeping with the spirit of the Association
Agreement and the Barcelona process.  Following negotiations that were finalised at the end of
November, the two parties have agreed to amend Protocols Nos 1 and 3 with a view to further
liberalising agricultural trade in keeping with the Association Agreement.   If approved by the
decision-making authorities of the two Parties, these measures will enter into force in January 2001.
These (prospective) measures will involve the granting of additional liberalisation by both Parties.
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