RESTRICTED
WORLD TRADE WT/REG3/M/6
16December 1997
ORGANIZATION(97-5515)
Committee onRegional Trade Agreements
EXAMINATION OFTHE ENLARGEMENT OFTHE EUROPEAN COMMUNITIES:
ACCESSION OFAUSTRIA, FINLAND AND SWEDEN
Note ontheMeeting of5December 1997
Chairman: Mr.JohnWeekes (Canada)1
1. TheCommittee onRegional Trade Agreements continued theexamination oftheTreaty of
AccessionofAustria,FinlandandSwedentotheEuropeanCommunities(ECEnlargement)underagenda
itemCofitsFifteenth Session. Themeeting dealt withthecalculation ofthegeneral incidence of
duties oftheECEnlargement.
2. TheChairman recalled that, asnoted during thefifthround ofexamination oftheEC
Enlargement, theCommittee hadnotyetcompleted thegeneral incidence assessment under Article
XXIV:5(a) forwhich theSecretariat 'scalculations ofweighted average tariff rates were needed.
Paragraph 2oftheUnderstanding ontheInterpretation ofArticle XXIV oftheGATT 1994 (the
Understanding) elaborated ontheprovisions ofparagraph 5(a)ofArticle XXIV. Itreferred inparticular
totheapproach tobeadopted inthe"evaluation ...ofthegeneral incidence oftheduties [andcharges] ...
applicable before andaftertheformation ofacustoms union", which wasto"bebased uponanoverall
assessment ofweighted average tariff ratesandofcustoms duties collected." Relevant parts ofthe
Understanding spelled outthat"theassessment shall bebased onimport statistics foraprevious
representative period tobesupplied bythecustoms union, onatariff-line basis andinvalues and
quantities, broken down byWTO country oforigin" andthat"theduties andcharges tobetaken into
consideration shallbetheapplied ratesofduty." Furthermore, theUnderstanding explicitly mandated
theSecretariattoperformthecalculationof"theweightedaveragetariffratesandcustomsdutiescollected
inaccordance withthemethodology usedintheassessment oftariff offers intheUruguay Round".
3. TheChairman stated thatinthecaseoftheECEnlargement, theSecretariat needed tocompute
twocomparable averages ofapplied tariffratesweighted byimport statistics foraprevious representative
period, onereflecting thesituation atthetimeoftheEnlargement andanother corresponding tothe
situation before theEnlargement. Following arequest made bytheCommittee on29July1996, he
conducted informal consultations withrespect tothedetailed method tobefollowed bytheSecretariat
inmaking thecalculations, asthespecial circumstances surrounding theentry intoforce oftheEC
Enlargement Treaty andthestatistical problems raised thereof seemed toprescribe theneedofadopting
adifferent method thanstrictly theapproach provided intheUnderstanding.
4. TheChairman reported that,onthebasisofinformal consultations withinterested delegations,
hehadbeenabletosuggest anadhocsolution tocarry outthecalculations thatwasatvariance from
what wasprovided for,bothinterms oftheperiods tobecompared andthetariff datatobeused.
Thatadhocmethod wasfinally agreed upon, under certain conditions, amonth before theday'smeeting
1Themeeting wasconvened inWTO/AIR/735.WT/REG3/M/6
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andhehadtherefore instructed theSecretariat, onbehalf oftheCommittee, toproceed withthe
calculations onthatbasis.
5. TheChairman stated thatadescription ofthemethod used, aswellastheresults ofthe
calculations, werecontained intheSecretariat 'snoteWT/REG3/3. Itwashisunderstanding thatthe
Committee considered suchadhocmethod ashaving beendeveloped withaunique situation inmind,
notatallinvalidating theapproach defined inparagraph 2oftheUnderstanding, norprejudging its
interpretation, andnottobetaken asaprecedent forsimilar calculations inthefuture.
6. Therepresentative oftheEuropean Communities saidthat,inthecourse oftheCommittee 's
consideration oftheECEnlargement toinclude Austria, Finland andSweden, questions hadbeenasked
about themethodology forcalculating thegeneral incidence ofduties under Article XXIV:5 using EC-
supplied datawhich recorded bound rather thanapplied rates. Ithadbeennoted thattheUnderstanding
referred totheuseofapplied ratesinthose circumstances. TheEChadlooked closely atthepoint
raised, andtwopoints wererelevant tothatquestion. First, inthecaseoftheoverwhelming majority
ofindustrial products, theECbound andapplied tariff rateswereidentical. Second, inthefewcases
where thatwasnotso,theeffect ontheoverall calculations was,intheEC'sview, sosmall astobe
almost unmeasurable. Onthecontribution tothecalculation ofthegeneral incidence ofduties from
agricultural products, hestressed thespecial circumstances surrounding theECEnlargement, atthe
timeoftheentry intoforce oftheWTO Agreements andtheintroduction ofthetariffication obligations
foragricultural products. Anaccurate and,asfarastheECwasconcerned, useful andrealistic picture
ofthegeneral incidence ofduties necessitated theselection ofadifferent dateforagricultural products
thanthedateusedforindustrial products.
7. Therepresentative ofJapan thanked theSecretariat forhaving made thecalculations. Hewould
notchallenge theresults ofthecalculations. Following thereceipt ofawritten explanation from the
EC,hisdelegation agreed withtheadhocmethod ontheunderstanding thatthatshould notseta
precedent, asstated bytheChairman. Thatshould bereflected intheconclusions ofthereport of
theexamination oftheECEnlargement.
8. Therepresentative oftheUnited States agreed thatthefactthattheUruguay Round results
entered intoforce atthesame timeoftheECEnlargement created anunique circumstance andthat
thesolution found wasappropriate. Shenoted theimportance ofthefactthatthecalculations ofthe
general incidence included theresults ofArticle XXIV:6 negotiations, andthatthathasoften notbeen
thecaseinthepast.
9. Therepresentative ofSwitzerland stated thattheEChadnotyetconcluded negotiations with
hiscountry onthesubject oftheECEnlargement withrespect toArticles XXIV:6 andXXVIII. His
delegation hadconsistently indicated totheCommittee thestateofthatmatter. Unfortunately, there
hadbeenlittleprogress since thelastmeeting. Recently theEChadindicated thatitwasprepared
togiveafollow-up toitsrequest forcontinuing consultations onthatmatter, andSwitzerland welcomed
thatdevelopment. Despite those positive signals, hisdelegation wasstillnotinaposition wereitcould
indicate anappropriate datewhere those negotiations would befinalized. Against thatbackground,
Switzerland formally objected theproposed addendum totheECSchedule CXL, submitted indocument
G/L/65/Rev.1/Add.2 of21October 1997.
10. Therepresentative ofUruguay stated thathewasnotopposed tothesolution found. Hehoped
thatthesame typeofflexibility inattention tospecial circumstances would beapplied toother future
cases.
11. Therepresentative ofCanada asked foraclarification onthestatement bytherepresentative
oftheUnited States, sinceparagraph 4ofdocument WT/REG3/3 stated thatthecalculations weremadeWT/REG3/M/6
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using thebound ratesof1January 1995. Replying tothis,therepresentative oftheSecretariat stated
thattheresults ofArticle XXIV:6 were notincluded inthecalculations ofthegeneral incidence. If
thathadbeenthecase, theresult would haveshowed alower dutyregime thantheonereflected in
thecalculations, butnotsubstantially different. Responding toaquestion posed bytherepresentative
oftheUnited States onwhether those compensations agreed upon before theentry intoforce ofthe
ECEnlargement Treaty hadbeentaken intoaccount inthecalculations, theChairman stated thatthe
Understanding made clearthatpartofwhatcould beconsidered ascompensation foranyincrease in
abound dutyinaprevious existing customs territory could beprovided bydutyreductions inother
tariff linesinthecourse oftheformation ofthecustoms union. Inthatsense, some ofthepackage
ofagreement relating toArticle XXIV:6 negotiations wasalready inplace atthetimeoftheEC
Enlargement.
12. TheChairman stated thatthatmorning debate closed theprocess offactual examination ofthe
goods aspect oftheECEnlargement. Itwashisintention tostartdrafting theconclusions andput
inmotion theprocess ofinformal consultations assoonaspossible. Ontheservices side,hehadbeen
informed thatoutstanding issues werestillbeing actively pursued bilaterally byinterested delegations.
TheCommittee would revert tothisissue atanearly date.
13. TheCommittee tooknoteofthecomments made.