RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG49/M/1
26 October 1999
(99-4641)
Committee on Regional Trade Agreements
Twenty-Fourth Session
EXAMINATION OF THE FREE TRADE AGREEMENT BETWEEN
POLAND AND LITHUANIA
Note on the Meeting of 22 September 1999
Chairman: Mr Krirk-Krai Jirapaet (Thailand)
1. This meeting was convened  in document WTO/AIR/1166.
2. Under Agenda Item B.II, the Committee on Regional Trade Agreements (CRTA) took up the
examination of the Free Trade Agreement (FTA) between Poland and Lithuania.  The following
topics were discussed:
A. General Remarks
B. Section I – Background Information on the Agreement
C. Section II – Trade ProvisionsD. Section III – General Provisions of the Agreement
E. Section IV – Other Provisions
3. The Chairman said that the meeting was the second round of examination of this Agreement.
The Committee had already considered it in the Agenda of its 20th session in November 1998 and the
corresponding minutes had been distributed as  WT/REG/GEN/M/3.  The Committee had now before
it a set of responses to the written questions rece ived by the Parties in document WT/REG49/4/Add.1,
dated 27 August 1999.  He also drew the Committee's attention to the text of the additional Protocol
to the Agreement, distributed in document WT /REG/49/3.  The Committee would use the Standard
Format, in document WT/REG49/4, and its Addendum, to guide the debate.
4. The representative of the United States asked whether the minutes of the last meeting on the
examination of the Agreement had been circulated.  The representative of the Secretariat clarified that
they had been circulated on 4 Februa ry 1999 in document  WT/REG/GEN/M/3.
5. The Chairman said that the Committee would go into the specifics of the Agreement in line
with the Standard Format, starti ng with Section 1, "Background Information on the Agreement".  He
opened the floor for questions under this section, in particular with respect to "Trade data", on whichadditional information had been provided by the Parties.
6. The representative of Australia welcomed the information provided by the Parties in
WT/REG49/4/Add.1 in respons e to their previous questions.  He had only one further question on
page two of document WT/REG49/4/ Add.1.  Under the subsection on trade in industrial products the
Parties had provided helpful data on Lithuanian imports from Poland.  He asked whether the samedata for industrial products imported into Poland from Lithuania could be made available.WT/REG49/M/1
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7. The representative of Hungary said that the Committee was dealing with a case where a
Member and a non-Member had formed an FTA.  If a Member was providing its export and import
data, that really covered exports and imports of both sides.  In this case, it was only Poland's
responsibility to provide trade data.
8. The representative of the United States noted that the information on trade volumes did not
distinguish between trade covered by the RTA and trade on an MFN basis.
9. The representative of Canada asked whether Poland and/or Lithuania could confirm that all
trade in industrial products between the two countries would be duty-free by the time the FTA was
fully implemented.  Regarding trade in agricultural products, she wondered whether all trade was
either duty-free or conducted on an MFN basis.
10. The representative of the European Communities said that the Parties had already submitted
considerable information on the Agreement in document WT/REG49/4, which contained data
concerning the bilateral flow of trade betw een them.  He understood the comment by the
representative of the United States as relating to the possibility of distinguishing between trade
declared as preferential and trade declared as MFN.  In some cases, where the MFN tariff rate was
zero, such a distinction was impossible to draw.  Th e rules of origin, the paperwork or the statistical
collection process could be different but the tariff rate would still be zero.  That was perhaps part ofthe problem.  He was of the view that the information submitted in WT/REG49/4 in combination with
data provided on the treatment of different products under the Agreement enabled the Committee to
reach a verdict on trade coverage.
11. The representative of Canada referred to the point made by the EC that suppliers or importers
might not want to claim the preferential rate because of documentation, noting that, for this reason, it
would be useful if the Parties could provide information on the percentage of tariff lines which were
subject to duty-free entry and those left in the MFN ca tegory.  She still wished to get an answer to her
previous question on whether all tariff lines in industrial products would be duty-free by the end of the
implementation period.  Her delegation considered th is information to be important in determining
whether or not the provisions of Article XXIV had been met.
12. The representative of Hungary said that all of the questions posed were answered on page 2 of
document WT/REG49/4/Add.1.  There was a clear confir mation that all tariff lines would be duty-free
after a certain period of time.  There was also a breakdown of what was duty-free and what was not.
He reiterated his delegation's view that tariff line information did not constitute part of the
examination process.
13. The representative of Poland said, in response to the question from the Australian delegation,
that in 1998 duty–free industrial imports from Lithuania accounted for 79 million dollars and
constituted 61.63 per cent of Poland's industrial imports from Lithuania.  With respect to the question
posed by the representative of Canada, he confirmed that, as stated on page 2 of document
WT/REG49/4/Add.1, when the Agreement was fully implemented, all tariff lines of
HS Chapters 25-97 would be duty-free except for seven six-digit items from Chapter 35, which were
treated as agricultural products.  He added that, in terms of product coverage, nothing in theAgreement was different from provisions in other agreements Poland had with other partners of this
type.  He was also confident that the exclusion of certain items from Chapter 35 was a frequent
feature of other agreements which were similar to the FTA between Poland and Lithuania with respect
to agricultural products.  The information provided in the document explained what percentage of
imports from Lithuania entered the Polish market under what contractual conditions of the agreementin question.  He was of the view that answers to both the question related to industrial products and to
agricultural products clearly demonstrated that their agreement with Lithuania fully fulfilled the
requirement of "substantially all trade".  The delegation of Poland was also of the opinion that theWT/REG49/M/1
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tariff line approach requested by some delegations was not an indispensable requirement of the
conformity test provided under Article XXIV.
14. The representative of Norway said that she fully supported the positions of the delegations of
Hungary and Poland regarding the tariff line information requirements and was of the view that this
issue needed to be raised in the systemic debate.
15. The representative of Poland expressed his concern with respect to some of the requests
regarding statistical data computed on the basis of documentary characteristics of transactions, which
would require statistics indicating imports under MFN rates and imports under preferential rates.  His
delegation was of the view that such an approach was not required by the conformity test and would
render the process of examination extremely difficult.  It was neither related to the present system of
Polish statistics nor was it based on the requirements of Article XXIV of the GATT.
16. The representative of the United States said he agreed that zero and MFN tariff data were
most appropriate here and not what  was on documentary declarations.
17. The representative of Canada responded to the comments made by the representative of
Norway, pointing out that the issue of tariff line information had been raised numerous times in other
Committee meetings.  They were of the view that the provision of information on tariff lines that were
subject to MFN rates and preferential rates would give the Committee a context in which to viewRTAs.
18. The representative of the United States referred to the answer regarding implementation of
industrial tariffs and asked when the Agreement would be fully implemented.  He also asked if the
Agreement provided for either Party to maintain a margin of preference in favour of the other in
situations requiring safeguard measures, balance-of-payments restrictions or other contingencymeasures.  Lastly his delegation was looking forward to receiving a description of the rules of origin
regime for the Agreement.
19. The representative of Poland said that, as stated in Article I of the Agreement, the Parties
would gradually establish a free-trade area during a transitional period ending at the latest on
1 January 2001.  The deadline indicated in the Agreement needed to be read in the context of otherinformation provided with respect to the last phasing  out of industrial duties for automobiles, fuels
and steel products (to be effected by Poland on 1 January 2002).  Referring to preferential margins, he
said the difference between MFN rates and preferential treatment applied by either of the partners
needed to be seen in the context of the specific provisions of the Agreement.  There would always be
a margin of preference until the MFN rate reached the level of the preferential rate due to other
circumstances.  With respect to the application of various trade defense measures, the Agreement did
not contain anything more than provisions with respect to balance-of-payments protection, according
to which preferential agreements had no implication on the MFN application of this measure.
Price-oriented measures or restrictions with respect to other clauses needed to be tackled case by case.
20. The representative of the United States said that he realized the question relating to margin of
preferences was confusing.  The objective was to ensure that there were no provisions within the
Agreement that would inhibit the ability of either Party to commit to further bound MFN measures,including reductions to zero.  If, for example, there were a provision in the Agreement saying that
margins of preference needed to be maintained for ce rtain products, that could inhibit the ability of the
Parties to negotiate in the upcoming round or elsewhere.  Perhaps this explanation would clarify what
his delegation was looking for.  He once again posed the question with respect to rules of origin.
21. The representative of Poland welcomed the clarification and said that nothing in the
Agreement could inhibit the Parties in the process of general MFN liberalization.  These were twoWT/REG49/M/1
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different aspects of trade policy and they were committed to the multilateral trading system.  With
respect to rules of origin, it was his understanding that information provided by the Parties would be
available soon.  He added that the rules of origin of this Agreement were identical to the rules of
origin applied in other agreements in the European region.
22. As there were no other questions or comments, the Chairman wondered whether a new
meeting would be necessary to consider any outstanding questions on the Agreement and requested
the delegations to express their views in this respect.
23. The representative of Poland appealed to the Committee to approach this Agreement on an
equal basis as with respect to other similar agreements.  His delegation was of the view that the
factual examination had been completed, which of course did not prevent any Member of the
Committee from maintaining their systemic positions.  He strongly appealed to the Chairman for this
FTA to be sent to the report phase and not be singled out from the general package of agreements.
24. The representative of Hungary said that he supported the statement of the delegation of
Poland.  The Committee had not heard anything that day which would substantiate the continuation of
the factual part of the examination.  The outstanding issues, at least for some of the delegations, were
of a general nature and were not specific to this FTA.  Therefore, he supported the proposal that this
examination should be de facto  considered as concluded and that the Secretariat should begin the
drafting of the report, with the understanding that if there were some further developments in other
issues, they would be incorporated into the report later on.
25. The representative of the United States said th at the two prior interventions were well on the
mark.  They would have liked to have the tariff line information that had been requested by the
delegation of Canada as they considered it useful in the context of the "substantially all trade"determination when the time came to working on the conclusions of the report.  But since it was his
understanding that this information was not forthcoming, he did not see a reason to keep the
examination open for that purpose.  His delegation did have outstanding questions relating to rules of
origin, but from their standpoint the factual examination could be considered terminated with respect
to all other matters.  It was his hope that the answers that had been promised on the System ofEuropean Cumulation of Origin would be satisfactory for the Committee to prepare its report.
26. The Chairman concluded that the Secretariat could begin drafting the report on this FTA
between Poland and Lithuania.
27. The Committee took note of the comments made.
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