RESTRICTED
WORLD TRADE WT/REG/M/2
14August 1996
ORGANIZATION(96-3218)
Committee onRegional Trade Agreements
Second Session
NOTE ONTHE MEETING OF2-3JULY 1996
Chairman: Mr.JohnWeekes (Canada)
A. Adoption oftheAgenda
1. Thefollowing agenda wasadopted:
A. Adoption oftheAgenda
B. Rules ofProcedure
C. Work Programme for1996
D. Procedures toFacilitate andImprove theExamination Process
E. Reporting ontheOperation ofAgreements
F. Systemic Implications ofAgreements andInitiatives fortheMultilateral Trading System
andtheRelationship between them
G. Other Business
B. Rules ofProcedure
2. TheChairman reminded Members thatrequests forobserver status hadbeenreceived from
several organizations, andhoped thatdecisions could betaken onthose applications aftertheadoption
oftheguidelines bytheGeneral Council. TheCommittee could, however, grant interim observer
status toother organizations ifdeemed necessary. Herecalled that,atthefirstSession, theCommittee
haddeferreditsdecisionontheapplicationforobserverstatusbytheFoodandAgriculturalOrganization,
theInternational Monetary Fund andtheWorld Bank tothepresent Session. Herecommended that
thethree Institutions begranted interim observer status andbeinvited tofuture meetings ofthe
Committee untiltheadoption ofadefinitive response totheirrequest afterthefinalization ofthe
guidelines onobservership bytheGeneral Council.
3. TheCommittee soagreed.
4. TheChairman recalled thattheCommittee hadhadextensive discussions ontheproposed Rules
ofProcedure ascontained indocument WT/L/150. Thecurrent draft before theCommittee in
WT/REG/W/2 followed closely therules ofprocedure oftheGeneral Council. Afewamendments
hadbeenmade inlinewiththecomments made bydelegations attheCommittee 'sfirstSession and
atinformal meetings. Aparagraph denoted "Statement bytheChairman" wasadded, which highlighted
theneedforflexibility inthenumber andduration ofthetenure ofoffice bearers, andtheimportance
ofdelegations receiving basic documents wellinadvance ofmeetings. Herecalled thatRule12,as
itappeared inWT/REG/W/2, should beamended toallow fortheappointment ofmore thanoneVice-WT/REG/M/2
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Chairperson. While Rule36maintained thepractice ofissuing summary proceedings ofmeetings,
thatdidnotprevent theCommittee from requesting anychange oftheRuleatalaterstage.
5. Therepresentative ofMexico reserved therighttomake sucharequest. Henoted that,as
reflected inthefootnote toRule36oftheRules ofProcedure oftheGeneral Council, thecustomary
practice ofGATT wastoallow theverification ofsummary records bydelegations.
6. TherepresentativeofJapansaidthatsummaryrecordsofmeetingsdidnotneedtobeexhaustive,
provided theyreflected asaccurately aspossible theviews expressed bydelegations. Thesummary
records should reflect unequivocally theimportance which hisdelegation attached totherulethatan
officer presiding overtheexamination ofanagreement should notcome from acountry which was
aParty totheagreement under examination.
7. Therepresentative ofKorea saidthat,while hisdelegation could accept therevised Rules of
Procedure, henevertheless hadsome suggestions forincorporation intotheRules: (i)elected office-
bearers should starttheirterms ofoffice attheendofthemeeting atwhich theywereelected; (ii)the
words "ortheChairperson" might beadded aftertheword "representative" inRule6oftheRules
ofProcedure oftheGeneral Council totakeaccount oftheestablished practice thattheChairperson
aswellasdelegations might suggest amendments oradditions totheproposed agenda; and(iii)the
words "theChairperson mayhowever atanytimerequest permission toactinthelatter capacity" might
beadded toRule15.Henoted thatRule16,which dealtwiththequorum necessary forameeting
would notbeapplicable, astheCommittee would adopt decisions byconsensus. Heaccepted the
Chairman 'ssuggestion thattheCommittee adopt theRules ofProcedure inWT/REG/W/2 andrevert
tothesuggestions made byhisdelegation atalaterstageafterdelegations hadanopportunity toconsider
them.
8. Therepresentative oftheUnited States saidthattheprerogative oftheGeneral Council to
determine thenumber andtermofofficers oftheCommittee should bereflected inthefirstsentence,
andnotinthesecond, ofthesecond paragraph oftheChairman 'sStatement. Hisdelegation would
submit therequest inwriting forconsideration anddiscussion byMembers atasubsequent meeting
oftheCommittee.
9. Therepresentative ofSwitzerland agreed withtheneedtomaintain therighttoverify records
ofmeetings. Thesuggestion made bytheChairman tointroduce amendments totheRules ofProcedure
atalaterstage wasanovel departure; however, ifthere wasaconsensus among Members inthat
regard, hisdelegation wasprepared tobeapartofit.
10. TheChairman saidthatdiscussions sofarhadshown clearly thatMembers wanted theRules
ofProcedure oftheCommittee tomirror those oftheGeneral Council. More timewasneeded for
reflection ontheproposed modifications. Heproposed thatMembers continue tohavetherightto
verify thesummary proceedings ofCommittee meetings.
11. TheCommittee soagreed andadopted therevised Rules ofProcedure (subsequently circulated
indocument WT/REG/1), italsoagreed torevert tothesuggestions made bythedelegations ofKorea
andtheUnited States atasubsequent meeting.
12. TheCommittee tooknoteofthefollowing statement made bytheChairman:
(i) Thetime-limits foreseen inRules 2(issue ofairgram), 3(distribution of,andinclusion
ofitemsin,theproposedagenda)and4(distributionofdocumentation)shallbeextended
fortheexamination ofregional agreement sinlightofthecomplexity ofthemattersWT/REG/M/2
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under consideration. Theexamination ofagreements willbeconducted inaccordance
withawork programme agreed uponintheCommittee andthedocumentation relating
totheexamination ofaregional agreement tobeconsidered atameeting shall be
circulated atleastfourweeks inadvance ofthemeeting.
(ii) Inorder toensure theefficient functioning oftheCommittee onRegional Trade
Agreements -asrecognized inparagraph 5.1ofthe"Guidelines forAppointment of
Officers toWTO Bodies" (WT/L/31) -theCommittee agrees toapply Rule12ina
flexible way,inparticular withrespect tothetermofoffice andthenumber ofOfficers.
TheCommittee considers thattheGeneral Council, indetermining Presiding Officers
for1997, should takeintoaccount thestateofthebacklog ofwork andthedesirability
ofcontinuity inthemanagement oftheCommittee initsfirst18months ofoperation.
13. TheChairman noted thattheRules ofProcedure justadopted would beforwarded totheGeneral
Council forapproval inaccordance withArticle IV:2oftheWTO Agreement.
C. Work Programme for1996
14. TheChairman recalled that,attheCommittee 'sFirstSession, hehaddistributed toMembers
aproposed time-table intended toguide theCommittee initswork. Careful planning wasneeded by
boththedelegations andtheSecretariat inthepreparation fortheexamination ofagreements. The
tasks thatlaidahead required themobilization ofconsiderable resources. Awelldefined timeframe
wascrucial iftheCommittee wastodischarge thetasksassigned toitbyMembers. Thenextmeeting
wouldbedevotedtothefirstroundofexaminationoftheAgreementbetweentheEuropeanCommunities
andAustria, Finland andSweden (ECEnlargement) ,andthecontinuation oftheexamination ofthe
North American Free Trade Agreement (NAFTA). Heindicated thatconsultations hadtaken place
between himself andAmbassador Willems, intheir capacities asChairmen, andtheParties tothe
Agreements. TheParties were intheprocess ofproviding theCommittee with therelevant supporting
documents, andhewashopeful thattheCommittee would beready tostart theexamination inearnest
atthenext meeting. Trade ingoods would bethemain focus oftheexamination process. While a
fullexamination oftrade inservices wasexpected totake place attheOctober meeting, delegations
could comment oridentify other issues connected with services already atthenextmeeting. Heurged
adoption ofhisproposed time-table, which, hehoped, could contribute tothesuccess oftheCommittee 's
work; itwould facilitate theadequate andtimely preparations byinterested Parties andtheupdating
ofinformation required fortheexamination ofeach agreement. Itwasnotarigid programme asit
could beadjusted totake account ofevents prevailing atthetime. Commenting ontheintervention
made bytherepresentative ofSwitzerland attheprevious Session, hesaidthatthetime-table could
beadjusted inorder topermit theCommittee tosimultaneously examine theFree Trade Agreements
between theEuropean Free Trade Association (EFTA) andtheBaltic States.
15. Therepresentative ofMexico indicated hisdelegation 'sinterest inhaving back-to-back reviews
ofagreements relating totrade ingoods andtrade inservices. While there were legal differences between
thetwo, anexamination ofboth segments would beuseful forallMembers. Hehoped thatdelegations
would beable toidentify issues relevant totrade inservices during theexamination ofthe
ECEnlargement Treaty. Asboth segments ofNAFTA hadbeen previously examined, hehoped that
theCommittee could make reasonable headway intheexamination process, andperhaps startdiscussing
itsreport atthemeeting scheduled forOctober 1996. Members should beinaposition tofully examine
agreements under review sothatthey could participate constructively intheexamination process. To
thatend, itwould beadvisable toallow some time between thedates ofthereviews ofNAFTA and
oftheECEnlargement bytheCommittee.WT/REG/M/2
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16. Therepresentative ofAustralia saidthatitwas important thattheCommittee submit areport
totheSingapore Ministerial Conference. Itwould bedesirable thattheCommittee consider adraft
report atitsOctober meeting, giving dueconsideration totheKorean papers before proceeding toits
adoption fortransmission totheGeneral Council.
17. Therepresentative ofJapan saidthattheexamination process needed tobeexpedited. Tothat
end, itwasimportant thatallrelevant documentation becirculated toMembers well inadvance of
meetings. Herecalled thatthecomment made bytheChairman oftheWorking Party onNAFTA at
theendofitsfirstmeeting wasthatthedebate hadbeen disappointing. Heblamed thestate ofaffairs
onthelack oftime forpreparation bythird parties andthedelay inthesubmission ofthereplies by
theParties tothequestions posed bythird parties, which had been received lessthan onemonth prior
tothedate oftheexamination. Hisdelegation could accept thesuggestion toconsider back-to-back
agreements relating totrade ingoods andtrade inservices, provided thatdelegations were given sufficient
time forpreparation.
18. TheChairman saidthathesawnocompelling reason why theCommittee could notmeet at
theendofJuly1996 toconsider theNAFTA Agreement. Theexamination should notbepostponed
solely because there wasadelay inthesupply ofsome information. Itwasvital fortheCommittee
toproceed assoon aspossible; afurther meeting might benecessary toconsider outstanding issues.
19. Therepresentative ofCanada saidthatreplies tothequestions which were posed bythird parties
would befinalized anddistributed toMembers very shortly, inanattempt toconform, tothegreatest
extentpossible,totherequirementofatimeperiodoffourweeksbetweendistributionofrelevantmaterial
andthedate ofthemeeting.
20. Therepresentative oftheEuropean Communities could accept theback-to-back consideration
ofagreements ongoods andservices, sofarasitwould improve theefficiency oftheCommittee. He
saidthatMembers should have theright toaskanyquestion; however, hisdelegation could notguarantee
thatitwould beinaposition togive adequate replies immediately.
21. Therepresentative ofArgentina recalled that, during theexamination ofMERCOSUR, his
delegation hadintimated toMembers thatanumber ofquestions which delegations hadputinrelation
toMERCOSUR felloutside theterms ofreference established byMembers. Theproposal made at
thatmeeting bytherepresentative ofMexico tohold back-to-back examinations ofgoods andservices
seemed practical, provided there would notbeanyinterference with theterms ofreference established
foraparticular agreement. Hewelcomed comments made inrespect oftheorganization ofwork of
theCommittee, inparticular theonemade bytherepresentative ofJapan, andwasready totake a
constructive partinconsideration thereof.
22. TheChairman saidthataflexible approach should beadopted when discussing matters under
consideration bytheCommittee. Heaffirmed theright ofMembers toaskquestions relating totrade
inservices attheforthcoming meeting oftheCommittee, where NAFTA andtheECEnlargement would
beconsidered. Hewould keep inmind thesuggestion made bytherepresentative ofMexico toallow
foracertain time period between theexamination ofthetwoagreements atfuture meetings ofthe
Committee. Henoted, however, atthatstage, there wasnotmuch scope forflexibility interms oftiming.
Herecommended thattheCommittee adopt hisproposed Work Programme for1996, taking intoaccount
theproposal thattheexamination ofthefreetrade agreements between EFTA andtheBaltic States
beconsidered atalater meeting. While flexibility haditsmerits, itwasnevertheless necessary tohave
acoherent Work Programme which would guide Members andtheSecretariat.
23. TheCommittee took note ofthecomments made andadopted theWork Programme.WT/REG/M/2
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D. Procedures toFacilitate andImprove theExamination Process
24. TheChairman referred todocument WT/REG/W/1 andsaidthatthelong listofagreements
tobeexamined bytheCommittee demonstrated themagnitude ofwork before theCommittee. There
were noformal procedures fortheexamination ofregional agreements intheWTO. TheCommittee
needed tostreamline theexisting mechanism soastoenable ittoeffectively tackle thebacklog. The
preliminary stage ofthesubmission ofquestions andthereceipt ofreplies hadbeen considered unduly
long, contributing totheinordinate delays which hadcharacterized theprocess. Herecalled the
Committee'sdecisiontoexploreavenuesforamoreautomaticsupplyofessentialinformation.Expediting
theprocess andensuring transparency should bethepriority fortheCommittee. TheSecretariat had
prepared andcirculated adraft standard format based onanhistorical analysis ofthetypeofinformation
which hadbeen solicited byMembers, entitled "Standard Format forInformation onRegional Trade
Agreements" anddated 18June 1996. Theformat, which covered only trade ingoods, wasintended
toprovide guidance, andassuch didnotprejudge thescope andcoverage oftheexamination. He
encouraged Members nottolimit their comments onthedraft only totrade ingoods, butalsotooffer
suggestionsontradeinservices.ThestandardformatproposedbytheSecretariatwouldenableexpediting
theexamination process. However, hecautioned against spending toomuch time ontheproposal, as
itwasbutonly onestepintheexamination process. Itwas hisintention totakeupthejoint proposal
byAustralia, Hong Kong andKorea ascontained indocument WT/REG/W/5 atalater stage.
25. Therepresentative oftheSecretariat saidthatthedraft standard format wasmeant toexpedite
theexamination process byreducing, wherever possible, thedelays thatwere associated withtheworking
party process, such asthefirststage oftheexamination process which involved questions from and
replies tothird parties. Indrafting theformat, theSecretariat hadtaken intoaccount theoralandwritten
questions which were frequently asked bydelegations, theterms ofreference ofworking parties and
thecomments made bythechairpersons ofthose working parties. Itwasnottheintention ofthe
Secretariat toformulate questions which sought toestablish theconformity with Article XXIV, or
otherwise, ofanyagreement. Thequestions hadbeen puttogether without anyulterior motive inmind.
Onequestion which featured prominently intheworking party process waswhether ornottheprovisions
ofanagreement differed from those oftheGATT. Questions onintellectual property were among the
three hundred andthirty-two questions puttoNAFTA Parties. Hereiterated thatthesubject matter
forthestandard format waschosen onthebasis offrequency ofoccurrence.
26. Noting thatthedraft standard format referred exclusively togoods, therepresentative ofMexico
said thataformat wasalso needed forservices since theCommittee might conduct back-to-back
examinations ofgoods andservices agreements such asNAFTA andtheECEnlargement. Hedrew
theattention toaninconsistency inSection IVoftheformat: while itreferred toprovisions other than
those related totrade ingoods such asintellectual property, government procurement, monopolies,
investment andcompetition policy, itfailed toinclude provisions onservices. Henoted thattheTrade-
Related Aspects ofIntellectual Property Rights Agreement (TRIPS) contained provisions similar to
those ofArticle XXIV oftheGeneral Agreement. Itwasessential toavoid unnecessary obligations
onParties toregional trade agreements. They should notberequired, forexample, tosubmit information
totheCommittee, which theywere already required tosubmit toanother Body under WTO rules. For
example, hedidnotseetheneed toprovide information onthetime-table fortheremoval ofquantitative
restrictions totheCommittee, except ifthey were applied pursuant toArticle XXIV oftheGeneral
Agreement. Members should notberequired toprovide information ontheir observance ofmost-
favoured-nation (m.f.n.) provisions intheCommittee which went beyond what wasrequired inthe
Committee onMarket Access. Hisdelegation wasoftheview thatthedistinction between agricultural
products andindustrial products assetoutinthedraft standard format wassuperfluous.WT/REG/M/2
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27. Therepresentative ofKorea, speaking onbehalf ofHong Kong andAustralia, introduced the
joint proposal contained indocument WT/REG/W/5 andsaidthat, based onpastpractice, thesponsors
hadattemptedtoidentifysomeelementswhichwouldimprovethefunctioningoftheexaminationprocess.
IfParties toregional trade agreements were tofollow astandard format tonotify their agreement to
theWTO, itwould greatly reduce thedelays thathadbeen experienced inthepast. Astandard format
would ensure thatbasic information wasavailable asanintegral partofanotification. Arequirement
tosubmit theinformation within areasonable timeframe would improve theefficiency oftheCommittee.
Such atime frame didnotneed tobebinding ontheParties; theintention wastouseitasageneral
guideline. Theproposal suggested thatitwould bepreferable ifaregional trade agreement wasexamined
bytheCommittee before itsimplementation bytheParties. Incase theproposal wasaccepted, the
examination process should notlastmore thanayear. Theproposal provided fortwoformal examination
meetings andafinal meeting foradopting thereport. Itwould beadvisable iftheproposal was
implemented initially foraperiod oftwoyears, allowing time fortheCommittee tousesuggested
procedures over fullcycles oftheexamination process. Onthebasis oftheactual experience gained,
theCommittee would thenbeabletodetermine whether changes were required. After theinitial period
oftwoyears, itwould alsobebetter placed todecide whether such procedures should beformally
consolidated. Theprimary objective oftheproposal wastopresent aclear picture oftheexamination
process andtostimulate discussion among Members.
28. Therepresentative ofBrazil saidthatitneeded tobequite clear thattheproposed Secretariat 's
draft standard format aswell asthejoint proposal byAustralia, Hong Kong andKorea would notbe
applicable toregional trade agreements which hadalready gone through aninitial examination process;
itwould notbeworth theeffort totryandchange theapplicable rules inthemiddle ofthegame.
Heagreed with therepresentative ofArgentina thatthere were perhaps situations where itwould be
inappropriate forParties toregional trade agreements tosupply certain information totheCommittee.
29. Therepresentative ofHong Kong saidthattheMembers sponsoring theproposal contained
indocument WT/REG/W/5 hoped thatitwould stimulate discussion onallaspects oftheexamination
process andcontribute totheCommittee 'sobjective ofimproving it.They were open tosuggestions
andcomments both onthebroad approach andontheelements outlined initsAnnex.
30. Therepresentative oftheEuropean Communities saidthatthedecision toexamine tworegional
trade agreements on29and30July1996 signalled theintention oftheCommittee totackle andclear
thehuge backlog ofwork. Hisdelegation wasoftheview thatgiven thenumber ofagreements to
beexamined, itappeared thatthere wasscope forsimplifying theexamination ofsome ofthem. The
Committeemightwishtodevotesometimeinduecoursetodiscussthatquestion.Hisdelegationattached
great importance tothestandard format compiled bytheSecretariat andwasoftheview thatitshould
retain itsinformal nature asasetofChairman 'sguidelines. Even asaninformal setofguidelines, the
format hadthepotential ofassisting inthecollection ofinformation. Hisdelegation wasalsoofthe
view thattheSecretariat might have amore pro-active roleincompiling theinformation tobeincluded
intheformat. Itwould notbeappropriate torequire Parties whose regional trade agreement hadgone
through thefirst phase oftheexamination toobserve theprovisions oftheformat, andwas his
understanding thatitwould apply only toagreements which hadnotentered themainstream ofthe
examination process. Heasked how trade-creation andtrade-diversion were defined, andfrom which
source such estimates would becomputed. Hisdelegation reserved theright tomake other suggestions,
including ontheprovisions relating toaccessions. Turning totheproposal tabled byAustralia,
Hong Kong andKorea, hesaidthat, while hisauthorities agreed with itscentral objective, they were
notsurewhether paragraph 1(c)oftheterms ofreference oftheCommittee required ittowork towards
theimprovement oftheexamination process. Aformalization ofprocedures wasnotneeded butrather
theintroduction ofmore pragmatism. Hesought clarification oftheterm "red-tape procedures" in
paragraph 4oftheintroductory part, andasked whether there would betime frames foreach successiveWT/REG/M/2
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stepoftheexamination process. Heagreed thatthetime frames should notbebinding asthatwould
bepremature andpresent difficulties toanumber ofdelegations.
31. Therepresentative ofSwitzerland agreed withtheEuropean Communities thatthedraft standard
format wasuseful, andthatitshould have anon-binding andinformal status. Such guidelines would
improve transparency andexpedite theexamination process. Hisdelegation wasintent onfollowing
theguidelines. Toaccord formal status tosuch adocument could pose some difficulties; itwould mean
going through some difficult negotiations, leading theCommittee toinvariably waste alotoftime
considering anissue which wasnotofhigh priority. Hisdelegation wasoftheview thatthestandard
format should notbeapplicable toagreements which hadalready gone through thefirstphase ofthe
examination procedure. Astandard format could, however, beuseful fortheupdating ofinformation.
Information requested from Parties toregional trade agreements should beofafactual nature, andshould
notrequire value judgements thatwould preempt assessment bytheCommittee. Hehoped thatindue
time, astandard format would bedeveloped fortrade inservices. Offering hisinitial reactions tothe
joint proposal byAustralia, Hong Kong andKorea, hesaid, thatwhile they were sympathetic tothe
objectiveofimprovingtheexaminationprocess,therewasnoneedtomaketheframeworkmorestringent.
Pastexperience haddictated otherwise; pragmatism wasrequired considering thelikely ramifications
oftheproposed procedures. Heagreed with therepresentative oftheEuropean Communities thatthe
Secretariat could play amore pro-active roletospeed upthework oftheCommittee andindicated that
theCommitteeshouldreflectontheissueofsimplifyingtheexaminationofsomeagreements,assuggested
bythelatter.
32. Therepresentative ofMorocco recalled thesupport which hisdelegation hadgiven tothe
development ofastandard outline butnoted thatthedraft submitted bytheSecretariat wastooambitious:
itsought information beyond what hadtraditionally been requested fortheexamination ofregional
trade agreements. Aformat should beneutral, requesting information onissues relevant totheagreement
under review, andofparticular interest tothird parties. Referring todocument WT/REG/W/5, hesaid
thatthesuggested time frames fornotification appeared tobetoostringent; there were cases where,
duetodomestic factors such astheparliamentary cycle, itwould notbepossible fortheParties tonotify
their Agreement within sixty days, astheir respective legislatures might nothave hadtheopportunity
toexamine it.That wasthereason why Parties were requested tonotify their agreements "assoon
aspossible," which demonstrated amore flexible approach.
33. Therepresentative ofJapan welcomed theexhaustive nature ofthedraft standard format and
asked hownotifications relating totrade inservices would behandled. Itwasimportant tohave aclear
conception ofwhich trade regulations would bealtered asaresult ofthesigning ofaregional trade
agreement, andwhether theywould bemore restrictive. Healsosuggested thatParties toregional trade
agreements provide information onthepossibilities forthird parties tojointheagreement andunder
what conditions. Heidentified twoissues which needed tobeaddressed toimprove theexamination
process: theclarification ofprocedures andtheexamination criteria, andthetime frames within which
theywere tobecompleted. Tightly fixed timeframes, assuggested intheproposal contained indocument
WT/REG/W/5, could leadtoincomplete andinexhaustive examinations. Inprinciple, thefour-week
timeperiod forthesubmissions ofquestions assetoutindocument WT/REG/W/5 should bemaintained.
Provision should bemade fortheright ofthird parties toaskmore questions during theexamination,
andacorresponding extension ofthetime period should beforeseen forreplies. Intheproposal, Parties
should have thepossibility toprovide responses during themeeting, ortoexplain thereason fortheir
inability torespond. Hisdelegation wasoftheview thatitwould bemore realistic toaddthewords
"asmuch aspossible" totheundertaking inthethird sentence ofitsparagraph 5.With reference to
paragraph 6oftheAnnex, itwasdifficult todetermine with certainty thenumber ofmeetings thatwould
berequired toexamine aparticular agreement. Itwaslikely, however, thatonemeeting wasnotsufficient
todealwith alarge andcomplex regional trade agreement. Issues such asthatwould perhaps bemoreWT/REG/M/2
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appropriately decided bytheChairman ininformal consultations withMembers. Inparagraph 9,eighteen
months should beatarget, notalimit forthecompletion oftheexamination ofaregional trade agreement.
Foralarge andcomplex regional trade agreement, thepossibility should exist toextend thelimit to
twoyears. Heagreed with therepresentative ofArgentina thattheexamination criteria needed tobe
discussed thoroughly. Hisdelegation expected tocirculate anon-paper onsome ofthose issues shortly.
34. Therepresentative ofAustralia considered thedraft standard format tobeanimportant first
steptofillalong feltneed bythose engaged intheexamination ofregional trade agreements. The
standard format would beimportant, irrelevant ofitsstatus: formal orinformal. Thetypeofinformation
tobefurnished inaccordance with thestandard format wasnecessary andcould help theexamination
process significantly. Hewelcomed theexhaustive nature oftheproposed standard format. AsMembers
haddifferent priorities andinterests, itwould beuseful toagree onthetype ofinformation thatwould
berequired. That would avert delays andensure thetimely completion ofthetasks assigned tothe
Committee. Heagreed thatestimating thetrade-creating andthetrade-diverting effects could pose some
problems, andmight invariably require Parties tomake value-judgments. While estimates prepared
byParties toregional trade agreements were likely tobebiased, they could stillserve auseful purpose
fortheCommittee. Hethanked theSecretariat forformulating indicative guidelines fortheprovision
ofbiennial reports.
35. Therepresentative ofCanada thanked theSecretariat foritspaper andwelcomed theexhaustive
nature ofit.Theacceptance oftheformat would helptheSecretariat andMembers toorganize themselves
inanefficient manner. Hisdelegation wasflexible about thestatus ofthepaper, andagreed with other
Members thatitshould apply tofuture examinations. Canada subscribed fully totheunderlying intent
oftheideas contained indocument WT/REG/W/5, inparticular toprovide better time frame forthe
process ofexamination andtoimprove ontheorganization oftheCommittee 'swork. Abetter sense
of"prompt notification" wasneeded andthesuggestions inthepaper were worth considering. The
Committee, however, needed todecide onthedegree offormality itwished toattach tothenotification
procedure. Thetime frame fortheexamination process would depend onthedegree ofcomplexity
ofeach agreement andthedegree ofinterest displayed byMembers. Arealistic time frame forthe
examination ofanew agreement would bebetween twelve andeighteen months.
36. TherepresentativeofthePhilippines,speakingonbehalfofASEAN,expressedASEAN'ssupport
fortheoverall thrust ofthesuggestions contained inWT/REG/W/5. Ensuring predicability, setting
uptime frames andavoiding discrimination among regional trade agreements through astrengthened
setofprocedures would benecessary tofacilitate theenormous taskahead. ASEAN wasconsidering
thesuggested time frames, inparticular tochange thetime limit forwritten questions andreplies from
sixtofour weeks. They would liketorevert tothereferral procedure atafuture session. ASEAN
regretted thattheproposed standard format only covered trade ingoods. Thegeneral treatment ofother
aspects inSection IVoftheformat wasnotsatisfactory. Forthesake ofcomprehensiveness, itwould
bebetter ifServices andTRIPS aspects ofregional trade agreements were further elaborated either
inthesame orinaseparate format.
37. Therepresentative ofHungary, subscribing totheobjective ofimproving andstrengthening
theprocedures fortheexamination ofregional trade agreements, welcomed theproposed standard format
andtheproposal byAustralia, Hong Kong andKorea. Thestandard format should take account of
thenotification andtransparency requirements under other relevant provisions oftheWTO Agreement.
Itwasimperative toavoid duplication, andoverburdening theParties toregional trade agreements.
Sheshared theview thatthestandard format should have aninformal status, andapply only tofuture
examinations. With respect todocument WT/REG/W/5, shesaidthatoneneeded toberealistic when
establishing deadlines intheexamination process.WT/REG/M/2
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38. Therepresentative oftheCzech Republic thanked theSecretariat forthedraft standard format,
andsaidthatitshould beanindicative document providing guidelines toMembers. Heagreed with
other delegations thatitshould apply only tonewexaminations. Itwasthewish ofhisdelegation that
asimilar format would bedeveloped fortrade inservices. Theformat could beused byMembers to
update information onagreements towhich they were Parties. Hesupported theproposal bythe
representative oftheEuropean Communities thattheSecretariat should playapro-active roleinensuring
thattheCommittee achieve itsmandate. Hewasoptimistic thatcertain issues would catch theattention
ofMembers, once theprocess ofcollecting andcollating information wasunder way: among them were
issues relating tothequestion ofwhether provisions inregional trade agreements hadcorresponding
ones intheWTO Agreement; thetrade-creating andtrade-diverting effects ofagreements; andchanges
intheexternal policies ofParties during thenegotiations fortheconclusion ofanagreement. His
delegation shared theviews ofthedelegations ofAustralia, Hong Kong andKorea, andintended to
contribute positively toefforts tostrengthen disciplines relating tonotification andexamination. His
authorities could, however, notsubscribe totheview thataregional trade agreement should benotified
toandexamined bytheWTO before itwasimplemented byitssignatories.
39. Therepresentative ofPoland welcomed thedraft standard format, andsaidthatitshould have
aninformal status, with aview toavoiding long-drawn outandcomplicated negotiations. Itshould
apply tonew examinations, andbeused toupdate information. Theformat should solicit factual
questions, such asthetrade-creating andtrade-diverting effects oftheagreement. Hisdelegation sought
clarification ofhow therequirement contained inpreambular paragraph 2forinformation related to
provisions inSection II1.2. TheCommittee should determine thetime frame fortheexamination of
aparticular agreement. Firm deadlines fornotification obligations, assuggested indocument
WT/REG/W/5, could present difficulties fortheParties.
40. Therepresentative ofNew Zealand welcomed theexhaustive nature ofthedraft standard format,
andnoted thatthesection ontrade provisions didnotcontain many novel questions, asseemed tobe
suggested bysome Members. Hereferred inparticular tothetime-tables fordismantling restrictions
onintra-trade, andthesectors which would remain outside thescope oftheagreement even after its
implementation. Thebreadth oftheformat andthefactthatitwould replace theformal question and
answer stage oftheexamination process justified aformal status fortheformat. While heappreciated
thedifficulties which would beencountered ifthedocument wasgiven aformal status, heshared the
view expressed bytherepresentative ofCanada, thattheParties would beexpected todemonstrate good
faith when providing information totheCommittee andMembers. Theproposal presented byAustralia,
Hong Kong andKorea hadtheright perspective even though itwasambitious. While theimplications
ofthesuggested time frame hadtobeconsidered, thatwould beapragmatic way toresolve an
unsatisfactory situation.
41. Therepresentative ofArgentina saidthatthedraft standard format embodied questions which
were normally outside thepurview oftheexamination process under Article XXIV. Such questions
could notbejustified under theUnderstanding ontheInterpretation ofArticle XXIV ofGATT 1994
norbythetermsofreferenceoftheCommittee.TheintroductoryparagraphintheSecretariat'sdocument,
which stipulated thattheformat wasbased onpastexperience under theGATT, wasdifficult toreconcile
with Section IV,which contained several novel elements such asintellectual property, government
procurement, monopolies, environment, investment andcompetition policy. Noprovision wasmade
forregional trade agreements intheTRIPS Agreement, neither could itbesaidthattheAgreement
onGovernment Procurement wasbinding onallMembers oftheWTO: itwasaplurilateral agreement,
anditwaswithin thepurview ofeach Member todecide whether ornotitwanted toaccede toit.The
issue ofmonopolies wasofacross-cutting nature, which could beincorporated provided there was
asufficient degree ofconsensus atafuture Ministerial meeting. With respect tothereference to
environment, nocomprehensive rules onthesubject existed intheWTO. Hewasaware thatsomeWT/REG/M/2
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work wasbeing done oninvestment intheOECD, andthatapaper oncompetition policy hadbeen
circulated byCanada. TheUnderstanding ontheInterpretation ofArticle XXIV wasclear astoits
requirements, anddidnotcover anyofthesubjects mentioned intheformat. Hecould notunderstand
why reference wasmade intheformat toquantitative restrictions. Paragraph 8(b) ofArticle XXIV
ofGATT 1994, which allowed theadoption ofrestrictive measures pursuant toArticles XI,XII,XIII
XIV, XVandXXhadoften been invoked asajustification oftheadoption ofenvironmental andsanitary
andphytosanitary measures. Article 5oftheAgreement onAgriculture prescribed amaximum limit
forthegrowth ofimports andwasimplicitly aquantitative restriction with trade-diverting effects and
hewondered whether thataspect wastobeexamined bytheCommittee onRegional Trade Agreements.
Hehadother similar questions andwanted tounderstand theintentions behind thepaper. Estimates
ontrade-creating andtrade-diverting effects were very subjective, anddiffered depending onthemodel
thatwasused, andalsoonwhether they were made forpolitical consumption. Theobjective ofthe
working parties under GATT 1947 hadbeen theexamination ofregional trade agreements inthelight
ofcontractual provisions, andwasnotintended tomake anypolitical assessments. Guidance wasneeded
ontheinformal nature ofanydevice toassist theCommittee initswork. Turning todocument
WT/REG/W/5, hesaidthat,while heagreed thatitwasimportant toorganize thework oftheCommittee,
hisdelegation wasnotyetready foradetailed analysis. Theobligation toupdate information onregional
trade agreements every twoyears inaddition toother obligations which would have timeframes required
diligence andclear priorities. While itwasnecessary toformalize thecurrent procedures toexamine
theagreements, itwasequally necessary todosoinaninformal andflexible manner. Hecautioned
against theintroduction ofnewrules under thepretext ofsystematizing andrationalizing theprocedures
forexamination.
42. Therepresentative ofMexico referred tothejoint proposal byAustralia, Hong Kong andKorea,
andbywayofpreliminary comments saidthat, while much could bedone toimprove theexamination
procedures, care should betaken nottointerpret theexisting provisions inabroad manner. The
Committee wasnotengaged inanegotiating exercise; itwasmerely trying torationalize existing
procedures fortheexamination ofregional trade agreements. Thedocument manifested aninterest
innegotiation, aswasevident inparagraph 7which referred topossible future work. Proposals tomake
substantive changes should notbeambiguous; such proposed changes could betaken upsystematically
according toanestablished programme ofwork. Heagreed with therepresentative ofMorocco that
flexibility wasneeded inthesetting oftime frames anddeadlines. Arequirement tonotify andexamine
anagreementbeforeitsimplementationbythePartieswasprobablynotrealistic,asitignoredthediffering
legislative cycles. That wasthereason why thedrafters oftheGeneral Agreement hadintroduced the
requirement thatParties toregional trade agreements notify them "promptly". Theideacontained in
thejoint proposal tohold twoformal examination meetings before theadoption ofthedraft report was
interesting, asitwould avoid unnecessary delays which hadcharacterized theworking party process
sofar. TheChairman should beatliberty toschedule further meetings asandwhen necessary after
consulting withMembers. Theconcept ofadeadline forreaching agreement withorwithout aconsensus
wasimportant; theactual intervals could bethesubject offurther discussion.
43. Therepresentative oftheUnited States thanked theSecretariat forthedraft standard format
andsaidthatitwould serve several main purposes. Itwould, forexample, create astandard body of
information foreach agreement, reduce theburden ofcollection andcollation ofrelevant initial
information, expedite thelaunching oftheexamination process after anagreement wasnotified and
provide aframework which thereports could build upon. Theformat should, however, notprejudice
theright ofMembers topose additional questions. Hisdelegation would, atthatstage, make afew
preliminary comments ontheproposed standard format. Hesupported theideaofinvolving theParties
inthereview process atanearly stage; astandard format could further thatobjective. Thebackground
information onanagreement could include thedateofratification byeach Party, thedateofnotification
totheWTO andtheBody towhich itwasnotified, with relevant document references. Heshared viewsWT/REG/M/2
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already expressed onthedesirability ofhaving asingle format with separate sections ongoods and
onservices. Hesuggested thattheParties totheregional trade agreements berequired tostate whether
their agreements covered both goods andservices: thatwould behelpful when theCommittee started
itswork onaservices section ofthestandard format. Theproposal indocument WT/REG/W/5 was
interesting asitcontained novel anduseful ideas. While hisdelegation agreed thattheexamination
process needed some structure anddiscipline, theapproach intheproposal wasunrealistically rigid
andwasunlikely toresult inincreased compliance. Inprinciple, hisdelegation wassympathetic to
theconcept ofanearly warning system, butitwasnotfeasible tohave aregional trade agreement
reviewed simultaneously bytheWTO andbythenational parliament. Moreover, itappeared tolack
anylegal basis. Itshould, however, bepossible fortheParties tonotify their agreement andanyrelevant
documentation totheWTO, even when theagreement hadnotbeen ratified bythelegislative authority.
That would help toimprove transparency, oneoftheprimary objectives ofthereview process. He
noted thattheNAFTA Parties hadreceived three hundred andthirty-two questions inthefirstround,
most ofwhich seemed nottohave been included inthestandard format. Itwasimperative thatMembers
retain theright topose questions notraised inthestandard format. Hereiterated hisdelegation 'sview
thatMembers should explore thepossibility ofsubmitting information electronically.
44. Therepresentative ofRomania noted thatthecreation oftheCommittee andtheestablishment
ofitswork programme showed thatthework towards improving andfacilitating theexamination process,
andmaking itmore flexible within theexisting legal framework wasalready under way. Aslong as
newdisciplines were notcreated, herdelegation would support theuseofastandard format tocollect
relevant information onaregional trade agreement. Thestandard format should offer guidelines and
beapplicable only tofuture examinations. Theproposal indocument WT/REG/W/5 seemed tohave
gone beyond itsstated purpose ofimproving theexamination process. Ariskexisted thatnew rules
anddisciplines could emerge, possibly with profound legal consequences; acase inpoint wasthe
requirement thatanagreement should benotified totheWTO before itsentry intoforce.
45. Therepresentative ofVenezuela shared theviews expressed bytherepresentative ofMorocco
onthestatus andscope oftheSecretariat 'sproposal andsought clarification onthequestion ofwhether
theformat wasintended tobeused forfuture examinations ofagreements incasethey were originally
notified, oralsoincases where existing agreements were extended tonewMembers. Sheagreed that
thetime frames suggested indocument WT/REG/W/5 needed tobemore flexible.
46. Therepresentative ofKorea welcomed thestandard format proposed bytheSecretariat, and
saidthatitcould serve asauseful input inthework oftheCommittee. Theattitude ofMembers to
thedocument would depend onitsstatus, which inturnwould determine itseffectiveness inimproving
disciplines. Several comments onthejoint proposal contained indocument WT/REG/W/5 hadbeen
very encouraging. Thesponsors would consider allthecomments andtrytoreflect them inabalanced
manner. Henoted theimportance oftime frames foranyimprovement oftheexamination process.
47. Therepresentative ofHong Kong welcomed theSecretariat 'sdraft paper, andnoted that,owing
tothedifferences inthenature andconstituent elements ofregional trade agreements, Members should
begiven thepossibility toaskspecific questions notincluded inthestandard format. Hewelcomed
allcomments onthejoint proposal contained indocument WT/REG/W/5.
48. TheChairman saidthatthediscussion sofarhadbeen constructive. TheSecretariat 'sproposal
forastandard format wasaimed atimproving theefficiency oftheexamination process, which had
inthepastbeen characterised byexcessive delays. Itwasapparent from theexperience gained sofar
thatsome method wasneeded toobtain basic data inamore efficient way. Hesuggested thatthe
Committee reflect onthequestion ofwhether theSecretariat ought toplay amore pro-active rolein
theprocess. Itwashisunderstanding thatthestandard format should apply only toagreements inrespectWT/REG/M/2
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ofwhich thequestion andanswer process hadnotyetstarted. Members seemed toprefer thatthe
standard format nothave thestatus ofaformal agreed decision; andthatitshould notpreclude the
possibility ofaddressing additional questions totheParties ofaregional trade agreement. While the
format would besatisfactory formost oftheagreements which hadbeen notified, Members needed
toreflect onthequestion ofwhether theformat should include questions onservices andonsome of
theissues enumerated under Section IVoftheSecretariat 'sdraft. Lastly, theCommittee might also
wish toreflect onthetime tobedevoted totheexamination ofaparticular agreement inrelation to
itsimpact onthemultilateral trading system.
49. TherepresentativeofArgentinasaidthattheUnderstandingontheInterpretationofArticleXXIV
provided that"Customs unions, free-trade areas andinterim agreements leading totheformation of
acustoms union orfree-trade area, tobeconsistent with Article XXIV must satisfy inter alia the
provisions ofparagraphs 5,6,7and8ofthatArticle." Any question which went beyond thecriteria
specified inGATT 1994 wasirrelevant. Care should betaken inensuring thattheformat fellwithin
theparameters oftheagreement reached byMembers, asembodied inGATT 1994 andtheterms of
reference oftheCommittee. Theideaproposed bytheChairman tostart working onthebasis ofthe
informal proposal oftheSecretariat wasacceptable, provided theCommittee was clear about its
parameters.
50. Therepresentative ofAustralia noted thattheCommittee 'sremit went beyond themandate of
working parties established under theGATT. Among other things, theCommittee hadbeen charged
with theresponsibility ofconsidering thesystemic implications ofregional trade agreements andtheir
impact onthemultilateral trading system. Thestandard format hadbeen drafted insuch awayasto
permit theCommittee toeffectively discharge allitsfunctions, including making recommendations to
theGeneral Council onthesystemic implications ofregional trade agreements inaglobalizing and
liberalizing world economy. While hisdelegation would notadvocate anexamination ofareas such
asenvironment andinvestment initswork todetermine theconformity ofagreements withArticle XXIV
forthesolereasonthatnomultilateraldisciplinesonthosesubjectsexisted,itdidconsiderthatinformation
onthose issues wascrucial foranexamination ofthesystemic implications ofregional trade agreements.
Heasked whether theproposed standard format wasintended toberelevant forpurposes other than
theexamination ofnotified agreements.
51. Therepresentative ofBrazil saidthattheCommittee needed torespect theterms ofreference
fortheexamination ofregional trade agreements. TheCommittee should carry forward thework of
theworking parties andnotstart afresh.
52. Therepresentative ofIsrael saidthatthetaskoftheCommittee would beeasier ifitwasagreed
thattheformat prepared bytheSecretariat would beanindicative document imposing noadditional
notification obligations.
53. Therepresentative ofMorocco saidthatheagreed thatcertain issues hadtobeclarified ifthe
Committee wanted tomake anyreasonable headway. There wasadifference between examining a
regional trade agreement andanalysing thesystemic effects ofregional trade agreements. Itwashis
understanding thatthedraft standard format wasmeant toimprove theexamination process byfacilitating
thecollection ofinformation. Itshould notcover matters which were clearly outside thescope of
Article XXIV andother relevant articles oftheWTO Agreement.
54. TherepresentativeofJapansaidthattheunderlyingreasonbehindArticleXXIVwastodetermine
whether thetrade regulations ofacountry hadbecome more restrictive after ithadbecome aParty to
aregional trade agreement. Theintegrity oftheprocess would becompromised iftheagreement was
tested only against therules specified intheWTO Agreement. Since more andmore regional tradeWT/REG/M/2
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agreements contained provisions covered insome oftheplurilateral agreements, ananalysis should
beundertaken todetermine theconsistency ofthetwosetsofprovisions. Henoted thatinthepast,
questions hadbeen asked about rules oforigin andlocal content requirements andhesawnoreason
why thepractice should bediscontinued. Hisdelegation wasoftheview thatitwasappropriate to
include Section IVintheSecretariat 'sdraft.
55. Therepresentative oftheEuropean Communities suggested thattheCommittee agree thatthe
purpose ofastandard format wastoexpedite theexamination process, andenable ittoclear thehuge
backlog. Itwasintended tofacilitate thecollection ofinformation andenable theCommittee toreview
theconformity ofanagreement with thecriteria spelt outinArticle XXIV ofGATT 1994 andthe
Understanding onitsInterpretation. Thestandard format should notcover issues which clearly fell
outside thescope oftherelevant provisions. If,however, information wasmade available onissues
which were notrelevant totheexamination process, itcould beused bytheCommittee toconsider
thesystemic implications ofregional trade agreements.
56. Therepresentative ofNew Zealand saidthatthedraft standard format wasmeant toexpedite
theexamination process byimproving thecollection ofinformation, andfacilitating theconsideration
oftheimpact ofanagreement onthetrading interests ofthird parties. From that angle, the
comprehensiveness oftheSecretariat paper wasjustified. Oneclear advantage oftheformat wasthat
itwould encourage theParties tohave acritical look attheir agreements anddetermine whether they
contained anyprovisions which would affect theinterests ofthird parties. Heagreed with the
representative ofAustralia thatanyinformation onthetrade-creation andtrade-diversion effects ofan
agreement would behelpful fortheCommittee 'swork. While heagreed with therepresentative of
Argentina with respect tothecoverage ofArticle XXIV, itwasforeach delegation todecide whether
itwould respond toquestions falling under Section IVofthedraft format. Itwasclear thataregional
trade agreement could affect thetrading interests ofthird parties, ifthatAgreement covered issues dealt
with under Section IV.
57. Therepresentative ofCanada agreed with therepresentatives ofAustralia andNew Zealand
thatthepurpose ofthestandard format wastogetasmuch information aspossible onanagreement.
While theconclusions ofanexamination hadtobebased strictly ontherequirements ofArticle XXIV,
informationontheoverallimpactoftheagreementwasimportantforreasonsoftransparency.SectionsI,
IIandIIIcovered elements essential tounderstanding thenature oftheagreement. They alsocontained
therelevant information which would assist theCommittee inevaluating theconsistency ofanagreement
interms oftherelevant rules oftheWTO. TheChairman oftheCouncil forTrade inGoods hadaffirmed
thatpoint when thefirst working party under theWTO wasestablished. While Section IVdidnot
bear ontheconsistency ofanagreement with theprovisions ofArticle XXIV, itwasnevertheless
important forreasons oftransparency.
58. Therepresentative ofColombia saidthatitwasevident thatthepurpose ofthestandard format
wastoelicit asmuch information aspossible onanagreement inasimplified andaneffective manner,
soastoenable theCommittee totestitsconsistency with therelevant rules oftheWTO. Thestandard
format should notcover matters which were notdealt with inArticle XXIV ofGATT 1994 orthe
UnderstandingonitsInterpretation.Preferentialagreementsbetweendevelopingcountriesweregoverned
bytheEnabling Clause, andParties tosuch agreements should beexcluded from supplying information
soughtintheproposedstandardformat.TherepresentativesofChileandArgentinaassociatedthemselves
with thatstatement.
59. Therepresentative ofKorea saidthatthestandard format hadseveral purposes, oneifthem
being toassist theCommittee initsevaluation ofthesystemic implications ofregional trade agreements
forthemultilateral trading system. Heagreed with therepresentative ofAustralia thatthestandardWT/REG/M/2
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format should cover allmeasures which affected trade andshould include other relevant issues such
asservices.
60. TheChairman recalled thattheCommittee hadasked theSecretariat tolook atpastpractice
andidentify thenature ofquestions thatwere puttoParties toregional trade agreements. Astowhether
asubject matter wasrelevant ornotdepended ontheobjective oftheexamination process. Heconcluded
from thedebate thatthere wasnodisagreement tousethestandard format asatoolforgathering
information. Differences ofopinion existed onwhat theformat should cover. Since almost all
agreements tobeexamined dealt exclusively with goods, thestandard format should prove tobeauseful
tool.Hefurthermorerecalledthatthetermsofreferencefortheexaminationofregionaltradeagreements
were fixed either bytheCouncil forTrade inGoods, theCouncil forTrade inServices, ortheCommittee
onTrade andDevelopment. TheCommittee onRegional Trade Agreements wascalled upon tocarry
outtheactual examination. With theexception oftwo,allagreements referred totheCommittee covered
trade ingoods.
61. Therepresentative ofRomania saidthatthetaskoftheCommittee wastwofold: tofacilitate
andaccelerate theexamination ofregional trade agreements, andtolook attheir systemic implications
forthemultilateral trading system. Thedifficulty arose because thetwoaspects were notkeptseparate.
Since aconsensus existed ontheneed forParties toregional trade agreements toprovide information
required byArticle XXIV andother relevant rules totheCommittee, thestandard format could reflect
thatobligation. Ifitappeared after thediscussion onthesystemic implications ofregional trade
agreements thatmore information would berequired forabalanced analysis, adecision could probably
beadopted tothateffect. Existing rules anddisciplines should notbeinterpreted broadly, soastojustify
theimpositionofadditionalburdensonPartiestoregionaltradeagreements.Considerationofthestandard
format asadocument intended tofacilitate andaccelerate theexamination oftheagreements would
help theCommittee initswork.
62. Therepresentative ofSwitzerland saidthattherules governing theexamination ofregional trade
agreements made nodistinction between agricultural products andindustrial products, andassuch the
distinction made bythestandard format wasunnecessary andwithout anylegal basis. Since thestandard
format wassupposed tobeafactual document, itwasdoubtful whether theinclusion ofestimates on
trade-creation anddiversions inSection I.4wasrelevant. Under Section I.5,duplication ofwork
undertaken bytheTrade Policy Review Body should beavoided. Turning toSection II.3, hesaidthat
theAgreement onRules ofOrigin didnothave provisions relevant topreferential trade agreements.
Requiring information onthatsubject wasoutside themandate oftheCommittee. While requesting
informationondisputesettlementprovisionsinaregionaltradeagreementcouldbeinterestingforreasons
oftransparency, nolegal requirement fornotification ofalternative procedures existed. Assuch,
Section III.4 appeared toimpose anadditional obligation. Commenting onSection III.5, hesaidthat
thepurpose oftheexamination ofanagreement wastodetermine solely whether itwasconsistent with
theprovisions ofArticle XXIV. Any other objective would lack anylegal basis.
63. Therepresentative ofPeru saidthatnegotiating astandard format would takeconsiderable time,
andassuch, would runcounter toitsintended purpose ofexpediting theexamination process. Heagreed
with therepresentative ofRomania thattheformat should nothave formal status andthatshould be
highlighted. Hesought deletion ofreferences tomonopolies andenvironment inSection IVofthe
format.
64. TherepresentativeofArgentinasaidthathecouldaccepttheSecretariat'sproposalonaninformal
basis, provided some changes were made. Hedidnotseetheneed foradistinction between industrial
andagricultural products; Article XXIV didnotconcern itself with sectoral coverage, butwith the
overall coverage oftheagreement. Hecalled forthedeletion oftheSections I.4andI.5. HenotedWT/REG/M/2
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thatprovision oftherequested information inSection II.1.1 wasmandatory under another Body ofthe
WTO andhence, itwassuperfluous torequire submission ofthesame information tothatCommittee.
Turning toSection II.1.2, hesaidthatapart from exceptions recognized under Annex 5oftheAgreement
onAgriculture, allrestrictions inthatsector needed tobenotified. Allnon-tariff barriers hadbeen
converted intotariffs, which were more transparent. Hewasnotsure what wasmeant bymeasures
having equivalent effect asquantitative restrictions; itcould notpossibly beawithdrawal ofaconcession,
asitwould bethesubject ofbilateral consultations orofadispute settlement procedure; itcould not
beasafeguard measure norarestriction under theminimum access provisions oftheAgreement on
Agriculture. Section II.2.2 aspresently drafted hadnolegal meaning; inthepost-Uruguay Round
framework, export restrictions either hadspecial status orthey were illegal. Hefurther stated that
Section II.5wasnotaproper topic fordiscussion intheCommittee. Thesame applied toSection III.1;
itwould appear thatitcould bemore appropriate tohave adiscussion onthesubject intheCommittee
onSubsidies andCountervailing Measures. Hewasnotsurewhat State-aid referred tointhecontext
ofthestandard format. Section IVwaswholly unacceptable andshould bedeleted. There were
practicallynomultilateraldisciplinesonthesubjectsenumeratedunderSectionIVandwheretheyexisted,
there wasnoconsensus ontheir scope.
65. Therepresentative oftheEuropean Communities saidthatthedraft standard format could assist
theCommittee initswork andgenerally expedite theexamination process. Hisdelegation wasofthe
view thatproper guidance needed tobeprovided inreplying toSection I.4; atime frame forthe
submission oftrade data should probably beindicated. Itwould beadvisable todefine theconcepts
oftrade-creation andtrade-diversion. InSection II.3, itwould beuseful toindicate thekind of
information thatParties would need toprovide ontheir rules oforigin. Itwould beinteresting toknow
whether provision wasmade forcumulation andwhether theagreement drew adistinction between
preferential andnon-preferential rules oforigin. Section III.3 needed tobemore explicit onwhat was
meant byaccession.
66. Therepresentative ofCanada sought clarification ofthelastsentence ofthesecond preambular
paragraph. Hewasnotsure whether data ontrade flows wasrequired during thephase-in period.
Inhisview, Section II.1.3 wassuperfluous, astheUnderstanding ontheInterpretation ofArticle XXIV
explicitly required Members toprovide information toassess theoverall impact ofduties andother
restrictive regulations ofcommerce.
67. TherepresentativeofHungarysharedtheconcernsexpressedbytherepresentativeofSwitzerland.
Itwasherunderstanding thattheacceptance ofastandard format would notprejudice theright of
Members toaskadditional questions andtorequest further information. Time needed nottobewasted
intrying tobeexhaustive. Thestandard format should fully reflect WTO provisions andavoid placing
unnecessary burdens onParties toregional trade agreements.
68. Therepresentative ofMexico saidthatitwasnecessary tobeclear onthestatus ofthestandard
format. Theabsence ofanylegal obligation should beexplicitly stated inanewfirstparagraph, and
itshould bemade clear thatthepurpose ofthedocument wastofacilitate anexamination ofallmatters
relevanttoobligationsofPartiestoregionaltradeagreementsestablishedpursuanttotheWTOAgreement.
Heagreed with therepresentative ofArgentina thatthedistinction drawn between agricultural products
andindustrial products wasunnecessary. Itwasadvisable tospecify atime-period inSection I.4.The
concepts oftrade-creation andtrade-diversion needed tobeclarified. Section II.1wasunnecessary
asMembers were obliged tosubmit therequested information totheCommittee onMarket Access.
Inanycase, itwasnecessary toclarify thescope ofSection II.1.1 andspecify thatbound rates asopposed
toapplied rates were tobetaken intoaccount. With reference toSection II.1.3, hedidnotseetheneed
toindicate themethod ofcalculation oftheCommon External Tariff. AsfarasSections II.5-8 andIII.1
andIII.4 were concerned, information should beprovided only iftheprovisions were different fromWT/REG/M/2
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those applied onamost-favoured-nation basis. Section III.5 should bedeleted, asreferences toother
trade agreements were bound tobestated inthedescriptive partoftheagreement. Section IVwas
premature andshould bedeleted.
69. Therepresentative oftheCzech Republic saidthathisintervention wasbased onthepresumption
thatthestandard format hadaninformal status andwasnotanegotiated document. Hisdelegation
didnotunderstand themeaning ofthesecond sentence ofthesecond preambular paragraph. The
distinction between agricultural products andindustrial products was unnecessary. The scope of
Section I.4needed tobeclarified with respect tothetrade datatobesupplies. Hisdelegation shared
theviews expressed which circumscribed theprovision ofestimates ontrade-creation anddiversion
tothose already inthepublic domain. Heassociated himself with theviews expressed bythe
representative ofSwitzerland asregards therequirement thatParties should provide information on
their external trade policy during thenegotiation oftheagreement andontherelations with other trade
agreements. Itshould alsobemade unequivocally clear thatsupply ofinformation under Section IV
wasvoluntary.
70. Therepresentative ofNew Zealand saidthatMembers, inproposing anychanges, should bear
inmind thatthestatus ofthedocument wasaninformal note. Some clarifications were needed. In
particular, itwould help iftime-periods were clearly defined. Hisdelegation wasinterested inthe
agricultural sector, butwould notinsist onintroducing separate classifications aslongastheinformation
given would becomprehensive. Information onchanges intrade policy (Section I.5), andmeasures
implemented between thedate ofsignature andthedate ofentry intoforce wasimportant. Itcould
assist theCommittee initsassessment ofanagreement. While Members were notunder alegal obligation
toprovide information oncertain subjects, itwould beintheinterest ofthemultilateral trading system
iftheydid.Transparency wasanideal towhich allMembers should becommitted. While heunderstood
theconcerns oftherepresentative ofArgentina with respect toquantitative restrictions, henoted that
itwaspossible forParties toaregional trade agreement toprovide information onanyquantitative
restriction which wasmaintained. Therequirement thatParties explicitly state therelation between
their andother agreements wasrelevant. Hisdelegation wasoftheview thatSection IVcould beuseful
andshould beretained. While theexisting rights ofsignatories totheTRIPS Agreement could not
beaffected byaregional trade agreement, thepossibility existed thatParties tosuch agreements could
grant each other more favourable benefits intheTRIPS area. Similarly, government procurement and
competition policy were relevant.
71. Therepresentative ofBrazil saidthatoneneeded tobeboth cautious andflexible indiscussing
thedraft standard format. Theongoing discussion wasnotanegotiation. Hesawthecomplexity of
thetask before theCommittee. Hecould notagree torequests forinformation oninvestment and
competition policy which were notregulated atthemultilateral level. Considering theimmense tasks
before theCommittee, especially thebacklog ofagreements tobeexamined, andthedifficulties of
collecting basic information onagreements, itwould notbeappropriate torequest theCommittee to
take onnew tasks. Heshared theview expressed bytherepresentative ofMexico thatitshould be
made clear thatthedocument wasaninformal paper andhadnolegal consequences. Unlike the
representative ofNew Zealand, hedidnotseeanymerit inretaining Section IV.Hewould, however,
notinsist onitsdeletion because oftheinformal status ofthepaper.
72. Therepresentative ofAustralia sawthestandard format asaworking tooldesigned toimprove
theefficiency oftheCommittee. Herdelegation favoured animprovement ofthedocument by
incorporating comments made without entering intoanegotiation onit.Shealsopointed outthatleaving
thesupply ofinformation entirely tothediscretion ofMembers would only postpone requests for
information atalater stage oftheexamination process. Herdelegation considered thattheCommittee
should advance quickly onthatissue. Itwasessential thattheCommittee could report toMinistersWT/REG/M/2
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inSingapore onimprovements ontheprocess. Shewaspleased thatthestandard format reflected some
ofthequestions which herdelegation hadposed inthepast. Inherdelegation 'sview, thestandard
format wasperfect andshesawnouseinspending anymore time onitsdetails. Given thegeo-political
andeconomic implications ofregionalism, itwould bebetter fortheCommittee tohave access toa
wider pool ofinformation sothatitcould make sound recommendations toMembers. Standardized
information helped bridge thegapinunderstanding different legal systems. Selective treatment ofone
sector over theother wasarecurring feature inmost regional integration agreements andwasgermane
totheinterpretation oftherules ofArticle XXIV. Herdelegation would seek thefullest information,
bothinthatCommittee andinother WTO Bodies, ondifferent treatment ofproducts inHSChapters 1-24
andChapters 25-99. Duplication needed tobeavoided. Parties toregional trade agreements should
notbeoverburdenedwithrequestsforinformation,especiallywheretheinformationwasreadilyavailable
from other Bodies oftheWTO. TheCommittee 'swork should becoherent andrespect theintegrity
ofthesystem asawhole. Turning toSection IV,shenoted thatmany regional trade agreements had
provisions onsome oftheso-called "new issues". Familiarity with thepositive effects ontrade among
constituent members ofaregional trading arrangement, even ifitwasnotrelevant tothelegal assessment
oftheagreement, could provide leads astotheconvergence andcompatibility ofregional trade initiatives
with themultilateral trading system. Inthepast, Parties toregional trade agreements hadvolunteered
information onthegrowth ofinternal andexternal trade. Asthestatus oftheformat didnotrequire
ittobesubject todetailed andrigorous analysis, sheconfined herself tothose remarks.
73. Therepresentative ofArgentina noted thateven aninformal document hadlegal consequences
andneeded tobetechnically precise. Itwould befictitious forthatCommittee toactasifthatnote
wasnotapartofthesystem. Heagreed with therepresentative ofAustralia thattheprocedures relative
totheexaminations needed tobeimproved. Itwascertainly possible toapproach aconsensus onideas
contained inaninformal paper with aview toenable theCommittee toproceed with itswork, andto
avoid duplication ofwork carried outelsewhere.
74. Therepresentative ofMexico saidthatanypartoftheproposed format towhich even onesingle
delegation objected, should beleftout.That would, however, notprevent anydelegation from providing
information.
75. TheChairmansaidthatthediscussionwasreallyaboutchangingthepastpracticewhichconsisted
ofbasing theinitial submission byParties toregional trade agreements onquestions andanswers, rather
than oninformal guidelines aswasproposed inthestandard format. Heacknowledged thatpast
experience with GATT 1947, including thatofthequestion andanswer process, might notbedirectly
relevant toGATT 1994. Heproposed thattheCommittee request theSecretariat toreflect further on
theissue, inthelight ofthecomments made atthatmeeting andcirculate arevised standard format
forconsideration atthenext meeting. Itwould beclearly specified thattheformat wasintended to
facilitate theCommittee 'swork anddidnothave aformal status.
TheCommittee took note ofthestatements made andadopted theChairman 'sproposal.
E. Reporting ontheOperation ofAgreements
76. TheChairmanintroducedtherelevantdocumentWT/REG/W/3andsuggestedthattheCommittee
consider theagenda item atitsnext meeting. Document WT/REG/W/3 listed thepoints thatcould be
relevant foradiscussion ontherequirement ofbiennial reporting interms ofparagraph 11ofthe
Understanding ofArticle XXIV oftheGATT 1994. Itincluded aninventory ofagreements forwhich
biennial reports might berequired: agreements which appeared tobecurrently inforce andwhich had
beennotifiedunderArticleXXIV,theEnablingClauseandwaiverprovisions.WhileagreementsnotifiedWT/REG/M/2
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under Article XXIV hadanunambiguous biennial reporting requirement, ithadyettobedecided whether
thatrequirement would beextended toagreements under theEnabling Clause andwaivers, andto
agreements related toTrade inServices. TheCommittee alsoneeded toconsider what would bethe
nature ofthereports; whether astandard reporting outline should bedeveloped, aspreviously suggested
bysome Members; which WTO Body should receive such reports; andwhether there should bea
follow up.
77. TheCommittee took note ofthestatements made andagreed torevert tothatitem atitsnext
meeting.
F. Systemic Implications ofAgreements andInitiatives fortheMultilateral Trading System
andtheRelationship Between Them
78. TheChairman recalled thattheagenda itemhadenjoyed considerable interest atthelastmeeting.
Heintended toinvite therepresentative ofKorea toformally introduce itsproposal contained indocument
WT/REG/W/4 andtheSecretariat tointroduce itspublication on"Regionalism andtheWorld Trading
System." Thetwodocuments would form thebasis foraninitial substantive discussion ofthesubject
matter. TheCommittee should alsodiscuss itsfuture work programme.
79. Therepresentative ofKorea recalled thatitsdelegation 'sdocument (WT/REG/W/4) hadalready
been presented totheinformal meeting ofHeads ofDelegations. Atthemeeting oftheGeneral Council
held on26June, theDirector-General hadsuggested thattheissue ofregionalism bedealt with bythat
Committee. Hisdelegation washopeful thattheCommittee would give fullconsideration totheissue
ofsystemic implications ofregionalism forthemultilateral trading system andwould come upwith
concrete recommendations totheGeneral Council, which, inturn, could make recommendations to
theMinisters atSingapore. Notwithstanding theexplicit mandate oftheCommittee, hewasoftheview
thattheissue could alsobeappropriately considered bytheinformal caucus ofHeads ofDelegations
ashehadalready suggested atthelastmeeting oftheGeneral Council. Themain suggestions related
tothefollowing aspects: Ministers should reaffirm their commitment tothemultilateral trading system
attheSingapore Ministerial Conference andpledge thatthey would takeadequate steps toensure that
regionalism complemented themultilateral trading system. Ministers would direct theGeneral Council
andpossibly thatCommittee, toembark onaspecific work programme inthecoming twoyears. That
work programme could: (i)identify those elements ofregionalism thatcould conflict withtheobjectives
andpractices ofthemultilateral trading system; (ii)study creative ways ofincorporating trade
liberalization initiatives within regional trade agreements intothemultilateral trading system; (iii)review
thevalidity ofthecurrent legal regime oftheWTO asregards regional trade agreements andspecifically
thequestion ofwhether Article XXIV ofGATT 1994 needed tobestrengthened inthelight ofthe
changing global environment; and(iv)redefine therelationship between theregional trade agreements
andthemultilateral trading system. Itwasimportant todetermine how themultilateral trading system
responded tothechallenge posed byregionalism andtoexamine thecorrect future relationship between
thetwo. Itwasanappropriate time toseriously examine those issues. Hisdelegation proposed an
evolutionary process. TheWTO wasadynamic andforward looking Organization andtheSingapore
Ministerial Conference needed toprovide animpetus totheWTO incarrying outsuch examinations.
TheCommittee onRegional Trade Agreements hadsome inherent constraints. There wasperhaps merit
toparallel thediscussions onthatsubject intheCommittee byfurther discussions intheGeneral Council
andbytheinformal Heads ofDelegations caucus.
80. Therepresentative ofSwitzerland welcomed theKorean paper (WT/REG/W/4) andsaidthat
itdealt with afundamental issue, which layattherootofthatCommittee. Thedocument, however,
seemed tohave drawn some hasty conclusions. Given thecomplexity ofthesubject, heurged MembersWT/REG/M/2
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toexercise caution andreflect inacritical manner before arriving atanyconclusions. Hequestioned
thejudgment setoutinthefirstparagraph, thattheevolution ofregional trade agreements posed serious
implications forthemultilateral trading system; hethought aprima facie case could notbemade to
support thatassertion. Forhisdelegation, thegeneral focus oftheKorean paper wasitself problematic.
Forhisdelegation, thegeneral focus oftheKorean paper wasitself problematic. Theobjective ofthe
Committee wastoensure themutual reinforcement ofregional trade agreements andthemultilateral
trading system. Paragraph 4ofthedocument appeared however toadvocate thecloser alignment of
regional trade agreements with theobjectives ofthemultilateral trading system: anagreement should
notbeseen asanendinitself butrather asatemporary scheme leading to"anintegrated, more viable
anddurable multilateral trading system." Heagreed with theview expressed thatMinisters atthe
Singapore Conference should giveguidance astothefuture agenda oftheCommittee. TheCommittee
would notbeinaposition torecommend totheGeneral Council thatitexamine theWTO 'slegal regime
onregionalism andmake thenecessary improvements, before acomprehensive debate hadtaken place
onthesystemic implications ofregional trade agreements. While hisdelegation could accept thefirst
tworecommendations inparagraph 9,itcould notagree tothesuggestion thatMinisters beasked to
direct theGeneral Council "toreview thevalidity oftheWTO 'scurrent legal regime onregionalism ...".
TheCommittee wasnotinvolved inanegotiation; recommendations toMinisters could only result
from ananalysis andpossibly aconsensus reached onthefunctioning orlack offunctioning ofthe
legal regime when applied toissues ofregionalism.
81. Therepresentative ofBrazil agreed withthestatement made bytherepresentative ofSwitzerland.
Hewasoftheview thattheCommittee wascertainly theappropriate forum todebate theissue of
multilateralism andregionalism. Hecautioned thatitmight notbedesirable forMinisters toconduct
atheoretical debate onthesubject inSingapore. While hisdelegation didnotseeregionalism asathreat,
itwasoftheview thattheimplications ofregionalism forthemultilateral trading system should be
discussed inthatCommittee. Thedebate could assist inassessing whether regionalism hadenhanced
themultilateral trading system.
82. Therepresentative oftheEuropean Communities saidthatthere wasnodoubt thattheissue
oftherelationship between regionalism andmultilateralism would beontheagenda oftheSingapore
Ministerial Conference. TheCommittee hadmade good progress, butmuch remained tobedone. The
Committee hadtocope with thebacklog ofreviews ofregional agreements andneeded toreview
analytical studies which hadbeen done onthatsubject. Theparameters ofthedebate, notmerely the
variables, hadchanged over thepastyears. Thenumber offree-trade areas hadincreased considerably
andtheratio ofm.f.n. trade topreferential trade continued tochange. Thescope oftheagreements
hadwidened tocover newsectors. Atthesame time, themultilateral trading system itself hadchanged
asaresult ofthenew commitments which hadbeen assumed under theUruguay Round. Concepts
were changing anditwasnecessary tobeclear onwhat wasbeing discussed. Amajor systemic debate
wasjustbeginning anditwould beinteresting toknow how itunfolded. TheWTO publication on
regionalism would enable theCommittee tomake apreliminary assessment; further analytical work
wascertainly necessary todetermine conclusively theeffect regionalism hadhadonthemultilateral
trading system. While hisdelegation waswilling toexamine alltheissues, itwould taketime andneed
further guidance from theSingapore Ministerial Conference. Hewasconcerned about thetendency
tomake rushjudgments about regional trade agreements based onpartial andpre-conceived ideas about
therelationship between regionalism andthemultilateral trading system. Itwasappropriate thatthe
Committee consider thatissue, although some particular difficulties would beinstore. Itwould not
beeasytoorganize, astheissues were fairly wide andtechnical innature, andinvolve highly procedural
questions. Hewelcomed document WT/REG/W/4 presented bytherepresentative ofKorea asa
contribution tothedebate. While hisauthorities expected Ministers togive instructions totheGeneral
Council atSingapore, they were alsooftheview thattheCommittee should beallowed tothoroughly
examine theissue, and, inthelight oftheexperience acquired, make appropriate recommendations toWT/REG/M/2
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theGeneral Council. Itwastooearly fortheCommittee toconclude thatafundamental improvement
oftherules wasneeded. Referring toparagraph 9ofthedocument, heasked clarification ofterms
such as"elements ofregionalism" and"creative means ofcapturing trade liberalization".
83. TherepresentativeofIsraelsaidthattheprovisionsofArticleXXIVandtherelatedUnderstanding
made itclear thatthecompatibility between regional trade agreements andthemultilateral trading system
could notbecalled intoquestion. Review ofanintegral partofthelegal framework asproposed in
document WT/REG/W/4 presented bytherepresentative ofKorea, inparticular paragraph 9(c), could
only beundertaken inamultilateral round oftrade negotiations. Several important issues other than
theones under discussion existed which alsoneeded tobereviewed andexamined bytheWTO. The
Committee should utilize itstime appropriately.
84. Therepresentative ofPakistan recalled earlier statements byhisdelegation made onother
occasions.Thesinglemostimportantchallengefacingthemultilateraltradingsystemwastheproliferation
ofregional trade agreements andinitiatives. Hewondered whether itwasbeing suggested thatthe
underlying reason forthatCommittee should bechanged. Hewaslooking forward toaconstructive
discussion onallissues, which, hehoped, would lead toaconvergence ofviews. Henoted thatthe
view thatregionalism wascomplementary tothemultilateral trading system hadmany adherents, also
inacademic circles. Thecontrary suggestion thatthemultilateral trading system wascomplementary
toregionalism gave risetoproblems. Arecent estimate placed world trade conducted onabasis other
thanm.f.n. tobearound 60percent. Rarely hadaregional trade agreement been found tobecompatible
with themultilateral trading system, aswasclear from thepublication bytheSecretariat. Views had
been expressed totheeffect thatsome provisions ofregional agreements conflicted with multilateral
rules andprinciples. Itwasclear thatMembers should analyze theSecretariat 'spublication from all
possible perspectives. Thegrowing proportion ofnon-m.f.n. trade affected thebalance ofrights and
obligations ofMembers. Apolitical impetus wasnecessary tolaunch athorough examination ofthe
impact ofregionalism onthemultilateral trading system anditscompatibility with thepurpose and
principles ofmultilateralism. Heagreed withviews expressed thattheSingapore Ministerial Conference
wasafitting forum tolaunch awork programme toidentify andanalyze acomprehensive range of
issues which were presented byanassessment oftheimpact andimplications ofregional trade agreements
forthemultilateral trading system. Hestressed thatdelegations likehiswere asking forawork
programme toreview closely therelationship between regional trade agreements andm.f.n. principles
andrules. Heshared theexpectation setoutinparagraph 9(e) oftheKorean paper thatthere be
appropriate recommendations tothesecond Ministerial Conference. Discussions inthatCommittee
could leadtoanunambiguous proposal fortheSingapore Ministerial Conference. Helooked forsupport
from theSecretariat insetting outtherange ofissues thatneeded tobeanalyzed.
85. Arepresentative from theSecretariat, inintroducing itspublication "Regionalism andtheWorld
Trading System", drew attention tothefactthattheSecretariat wassolely responsible fortheanalysis
andcontents ofthepublication. Chapter 1dealt with therules andprocedures intheGATT. Itdetailed
thedrafting history ofArticle XXIV andelaborated onthedisciplines ofArticle XXIV andtheEnabling
Clause. Itfaithfully recorded the47years oftheexamination oftheconsistency orotherwise ofregional
agreements with GATT rules. Itcovered Article VoftheGeneral Agreement onTrade inServices
andtheUnderstandingontheInterpretationofArticleXXIV.Chapter2oncustomsunionsandfree-trade
areas since 1948 identified twopeaks innotification ofagreements; thefirstinthe1970 'sandtheother
inthepost-1990 's,when notifications increased sharply. Three broad features ofpost-war regional
integration were identified: itwasprimarily centred inWestern Europe; thenumber ofagreements
concluded bydeveloping countries meeting original time-tables fortheestablishment ofafree-trade
area oracustoms union wassmall; andthelevel ofeconomic integration achieved between Parties
toagreements varied widely. Thedrafters hadanticipated thatArticle XXIV oftheGeneral Agreement
would deal primarily with customs unions; infact, alarge proportion ofagreements notified hadWT/REG/M/2
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established free-trade areas. While intra-regional trade inWestern Europe hadincreased inimportance,
trade with third parties hadnotgrown byanysignificant margin. Chapter 3examined theliterature
onthequestion ofhow trade andinvestment responded toregional integration agreements, andtheir
impact onthird parties. Empirical estimates suggested thatwith theexception ofagriculture, itwas
likely thattheformation oftheECandEFTA hadresulted inanexpansion ofworld trade. Thus creating
trading opportunities forthird parties, instead ofdiverting trade from them. Inseveral cases, integration
would leadtoanincrease inimports because oftheexpansion thatwould takeplace within theeconomic
unit. Acombination ofstaged tariff changes andthestimulus togrowth which aregional trade agreement
provided ledtoasituation whereby, apart from agriculture, there were very fewcases, ifany, where
exports ofthird parties hadsuffered anabsolute decline. Ontheimpact oninvestments, thestudy noted
thatempirical estimates available were limited primarily totheformation oftheEC. While noclear
conclusions emerged, thedata suggested thatthecreation ofthesingle market inthe1990s wasan
important impetus tothesignificant inflows offoreign investment. Thestudy alsoreviewed theliterature
ontheimpact ofregionalism onthetrade policies oftheMember countries andhadnotcome toany
firmconclusion. Some oftheliterature suggested thataregional trade agreement diminished theinterest
ofMembergovernmentsinfurthermultilateraltradeliberalization;thattheenlargedmarketwassufficient
toachieveanefficientscaleofoperationsandotheropportunitieshadlesspriority.Thecontraryargument
stressed thevalue of,asafirststep, facing foreign competition from companies established inpartner
countries oftheregion; after which companies would have gained confidence andtheability toface
truly global competition. Many inefficient firms went outofproduction which, inturn, reduced the
callforprotection andincreased interest inmultilateral liberalization. Third parties responded by
requesting accession orassociation, bycreating new regional trade agreements orbysupporting
multilateral liberalization initiatives. Thereport further examined non-tariff andtariff liberalization
intheareasoftradeingoods,subsidies,governmentprocurement,domesticpolicies(whereArticleXXIV
didnothave anexemption from national treatment), services, intellectual property protection anddispute
settlement. Thepublication concluded thatinthepost-war period, regional andmultilateral initiatives
were complements rather than alternatives inthepursuit ofmore liberal andopen trade. Regional
integration agreements contained both higher andlower levels ofobligations than theWTO; while
inthelatter casetheWTO complemented theliberalization achieved attheregional level; theconverse
wastrueintheformer case. With respect tothescope forimproving therules andprocedures and
compliance, herecalled thelack ofconsensus thathadcharacterized thereports ontheexamination
ofregional agreements. Insummary, theconclusions resulting from thestudy, were, first, thatitwas
notpossible tomake anapriori judgement onwhether free-trade areas orcustoms unions were good
orbadforthemultilateral trade system, butthatthedetails ofeach agreement hadtobeexamined;
second, thatpost-war regional trade agreements andthemultilateral trading system hadbeen broadly
complementary.
86. Turning torequests made totheSecretariat bytheCommittee, arepresentative oftheSecretariat
saidthat,asregards abibliography ofrelevant articles, thebibliography tothestudy wascomprehensive
andadditional references could beprovided. With regards totheinformation tobemade available
forfuture work, henoted thatmore indications were needed onwhat wasrequired. Theagreements
could belooked athorizontally foracomparison ofprovisions incertain areas such astechnical barriers
totrade; orvertically, comparing thecontents ofeach agreement.
87. Therepresentative ofCanada saidthathisdelegation hadfound thestudy very useful andit
hadprompted hisauthorities totakeacloser look attheissue. Hisdelegation shared theconclusions
thattherelationship between regionalism andmultilateralism hadoverall been very positive. Thestudy
showed theimportance oflessons which could bedrawn from theoperation ofregional trade agreements
forfuture multilateral trade liberalization. Henoted thatjustover ayear since itspublication, its
suggestion thatasingle body beestablished toexamine regional integration agreements hadbeen accepted
byMembers. Henoted thatsome ideas intheKorean paper deserved close attention. HisdelegationWT/REG/M/2
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supportedtheideathatMinistersattheSingaporeConferenceaddresstheissueofregionalismandreaffirm
theneed forconsistency ofregional trade agreements with themultilateral trading system. Italso
concurred with theview thatguidance besought onawork programme fortheCommittee interms
ofitsmandate onthesystemic implications ofregional trade agreements. Thework programme as
setoutinparagraph 9offered useful avenues, though precision needed tobegiven tothelanguage.
Acomparative orhorizontal analysis with aview todetermining ways toensure thatregional integration
agreements were notonly complementary, butthatthey reinforced theobjectives ofthemultilateral
trading system wassomething towhich hisdelegation gave thehighest priority.
88. Therepresentative ofHong Kong saidthatboth thestudy andtheKorean proposal recognized
thechallenge posed byregional trade agreements tothemultilateral trading system andpointed tothe
deficiencies inexisting rules. Regional trade agreements hadadirect correlation with themultilateral
tradingsystem.Theproliferationofregionaltradeagreementswouldinevitablyaffecttheglobaleconomy
andthemultilateral trading system intheyears ahead. Itwasessential fortheWTO toexamine without
delay therelationship between thetwoapproaches tointernational trade inacomprehensive manner.
Hisdelegation agreed with views expressed thatthefocus ofregional integration agreements wasno
longer ontariff liberalization, andthattherules needed tobereviewed inthelight ofthenew
developments intheworld economy. Inhisview, theKorean paper didnotprejudge theissue and
hesupported theelements contained inparagraph 9relating totheneed fordirection from theSingapore
Ministerial Conference.
89. Therepresentative ofJapan concurred withtherepresentative ofKorea thatguidance wasneeded
from Ministers ontheissue ofsystemic implications ofregionalism forthemultilateral trading system.
While itwasappropriate tointerpret theprovisions ofArticle XXIV inthelight ofnewrealities, certain
elements, such astherequirement thattariffs andother restrictive regulations ofcommerce should not
onthewhole become more restrictive, should notbecalled intoquestion. TheCommittee should first
examine thecompatibility ofregional integration agreements with WTO rules, without prejudging the
question whether regionalism would strengthen andcomplement themultilateral trading system. Enough
material existed ontheissue ofsystemic implications ofregionalism forthemultilateral trading system,
andassuch consideration oftheissue should proceed without delay.
90. Therepresentative ofSingapore saidthattheir concurrent experience with regionalism andthe
multilateral trading system showed thatregional trade agreements with anoutward orientation could
strengthen themultilateral trading system. TheWTO wasattheheart ofthemultilateral trading system,
around which revolved regional integration arrangements entered intobyWTO Members. Herecalled
therepresentative ofPakistan saying thattheproliferation ofregional trade agreements wasthemain
challenge facing themultilateral trading system incontemporary times; thatchallenge wastobetaken
upbytheCommittee, which wasresponsible forensuring thatregional trade agreements complemented
themultilateral trading system. Hereserved hisright tomake comments onparagraph 9ofthepaper
presented bythedelegation ofKorea. TheSecretariat 'sstudy gave agood basis fordiscussion ofsystemic
implications ofregionalism, andtherelationship between regionalism andmultilateralism.
91. Therepresentative ofMexico saidthatinhisview regional integration agreements complemented
themultilateral trading system; hewas, however, aware thatsome points ofconcern remained which
needed tobediscussed. Thediscussion could take place intheCommittee butacritical mass of
agreements hadtobeexamined before anyconclusions could bedrawn anditwasclear thatsuch a
detailed exercise would takealong time andhence could notbecompleted byDecember. Heinquired
whether theKorean proposal ineffect covered themutual interaction between theWTO andregional
trade agreements oronly theeffects ofsuch agreements ontheWTO.WT/REG/M/2
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92. Therepresentative ofAustralia strongly endorsed theKorean suggestion thattheSingapore
meeting address thatissue ofsystemic implications ofregionalism. Hisdelegation considered thecreation
ofthatCommittee asanimportant first step intherecognition ofthechallenges presented bythe
proliferation ofregional trade agreements. However, thatCommittee could notsetterms ofreference
forexamining regional integration agreements, norpronounce ontheir conformity with WTO rules
orprinciples: thatwasuptotheCouncil forTrade inGoods, theCouncil forTrade inServices and
theCommittee onTrade andDevelopment. Two important developments hadoccurred since the
conclusion oftheUruguay Round; thecommitment bycountries intheAsia-Pacific region toestablish
afreetrade areabytheyear 2020 (2010 forthedeveloped member countries), andtheagreement among
countries intheAmericas tocommence negotiations with aview toestablishing afree-trade areaby
theyear 2005. TheSingapore Ministerial Conference could notbutrespond toevents thathadimportant
ramifications fortheevolution ofthemultilateral trading system. Themultilateral trading system had
tomatch themost ambitious regional trade agreement, andhedrew attention toparagraphs 9(a)-(c)
inthepaper presented bythedelegation ofKorea, which deserved theclose attention ofMinisters in
Singapore. TheKorean proposal wasalsorelevant because, while theprovisions onnon-tariff barriers
totrade were atthattime perhaps themost important ones inregional trade agreements, there wasno
consensus onhow toexamine them inlight ofArticle XXIV. Theproposal provided thebasis fora
prudent response bythatCommittee onthebasis ofinstructions thatwould begiven byMinisters at
Singapore.
93. Therepresentative ofArgentina said thattheKorean paper wasaformal document, which
concerned alegitimate issue. TheCommittee hadbeen given themandate toreview theimplications
ofregionalism onthemultilateral trading system, andtoformulate appropriate recommendations to
theGeneral Council andassuch itwastheappropriate forum toreview thatissue. Thediscussions
had,forthemost part, concentrated onprocedural issues, butthenitwastimeforasubstantive discussion.
Theissue atstake wastheright toadvance atdifferent speeds tothesame goal; inmany cases regional
trade agreements hadmoved atafaster pace thanthemultilateral trading system. Inthelastthree years,
trade among MERCOSUR countries hadalmost doubled. Thesizeofthemarket wasanimportant
factorinattractinginvestment,andthatwasanimpetusfortheestablishmentofregionaltradeagreements.
Hewasconcerned thatthepoint would notbegiven sufficient weight inapurely legal analysis. In
afreetrade area, abasic level ofcommitment inalleconomic sectors wasneeded. Hewondered whether
those whoadvocated compatibility were ready tocommit themselves tothelevel ofliberalization attained
under afreetrade agreement, orwhether they sought totakeaGATT plusroute. TheCommittee had
theimplicit mandate todealwiththeissues putforward bythedelegation ofKorea. Torequest Ministers
toconfirm analready existing mandate could leadtoaproliferation ofpolitical statements. Heagreed
thatefforts should bemade toprevent theproliferation ofregional trade agreements from undermining
themultilateral trading system. Fragmentation ofthesystem would notbeintheinterest ofanycountry.
Thecontribution ofregional trade agreements tothereduction oftariffs andnon-tariff barriers ona
multilateral scale should notbeoverlooked.
94. Therepresentative ofPoland saidthattheCommittee wastheappropriate forum todiscuss that
important issue. Anexamination ofaneconomic phenomenon such asregionalism should beapproached
without apriori views. Each agreement needed careful examination; theexistence oftrade diversion
could beoutweighed byother factors. Economic analysis needed tobeundertaken inthecontext of
ageneral equilibrium. Thetwoapproaches totheliberalization ofworld trade were similarly important.
Thetaskwhich faced theCommittee wasimmense, asithadtocarefully review anumber ofagreements
before itwould beinaposition tomake positive recommendations ontheissue totheGeneral Council.
95. TherepresentativeofNewZealandsaidthathisgovernmenthadmanifestedinapolicydocument
itsreadiness toenter intoregional trade agreements, provided theydidnotstand inthewayofdomestic
trade policy reforms andoncondition thattheywere outward looking andstrengthened themultilateralWT/REG/M/2
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trade system; aregional trade agreement should becomprehensive andcontain noexceptions and
have aliberal accession clause permitting interested countries toaccede toit.HesawtheKorean paper
asauseful input todiscussions intheCommittee, andexpected apositive result from theSingapore
Ministerial meeting. Broadly agreeing with paragraph 9oftheKorean paper, hewasoftheview that
sufficient collective experience existed tostart adiscussion ontheissue.
96. TherepresentativeofMoroccosaidthattheissueofregionalismfellfirmlywithinthecompetence
oftheWTO; thepresent discussion oftheissue wasproof ofthat. Adiscussion wasnotanindictment
ofregionalism. There wasnoharm inMinisters 'reaffirmation oftheir general commitment tothe
multilateral trading system. Hisdelegation didnotagree with theview expressed intheKorean paper
thatregionalism posed athreat tothemultilateral trading system. Empirical studies hadshown that
trade preferences hadnotdistorted investment flows. Thegrowing vigour ofthemultilateral trading
system wasapparent from theobligations which were assumed byMembers during theUruguay Round
andtheincrease inthenumber ofcountries applying toaccede totheWTO. Regional trade agreements
wereonlyasteponthewaytoastrengthenedmultilateraltradingsystem.Morocco'sfreetradeagreement
with theEC,which would enter intoforce shortly, would liberalize over 1,000 tariff lines onanm.f.n.
basis. While hisdelegation wascertainly ready toenter intomore discussions, theCommittee should
notspent itstime reviewing theWTO legal framework. Theterms ofreference oftheCommittee were
clear; itwascalled togradually review thecurrent procedures with aview tostrengthening them.
97. Therepresentative oftheUnited States saidthatanexamination ofallpreferential agreements
falling under Article XXIV oftheGATT 1994, Article VoftheGATS andtheEnabling Clause in
thatCommittee would provide agood basis forexamining thesystemic implications ofregional trade
agreements forthemultilateral trading system. Itwasclear thattheterms ofreference ofthatCommittee
extendedtothewholeuniverseofregionaltradeagreements.Hewasconcernedthatthatwasnotreflected
intheKorean paper. Theexamination ofalltheagreements would bethekeytodetermining further
work. Creation oftheCommittee asthesingle forum forreview constituted afirst vital step The
experiences gained from examining regional trade agreements inthenew legal framework after the
Uruguay Round would determine what should bedone. Hewasconcerned about Members 'lack of
compliance with their notification obligations inrespect ofpreferential agreements. Alarge number
ofagreements hadnotbeen notified andcould thusnotbeexamined bytheCommittee. Hestrongly
urged countries who hadnotdone sotocomply with their notification obligations. Agood picture
ofthescope andvariety oftheagreements inforce wasessential foranaccurate assessment ofthe
systemic implications ofregional trade agreements, which inturn would enable theCommittee to
recommend appropriate policy responses. Thereport oftheCommittee totheGeneral Council had
toreflect itspost-Singapore work programme; andcould include acomplete listing ofregional trade
agreements thatfellwithin itsmandate. Hisdelegation didnotshare thesuggestion contained inthe
Korean paper tohave asimultaneous discussion ofthatissue after theSingapore Ministerial meeting
intheCommittee andinother Bodies oftheWTO. TheKorean paper alsoseemed tobeproposing
anew guiding principle, inparticular thatregional agreements should beseen asonly atransition to
amore integrated multilateral trading system. Heshared theviews expressed byarepresentative of
theSecretariat inintroducing thestudy thatWTO-consistent agreements strengthened themultilateral
trading system. Heexpected theCommittee tocarry outanobjective review oftheuniverse ofregional
trade agreements inthelight ofalltheelements initsmandate andoftheir linkages andtodetermine
ifthey complemented themultilateral trading system. That could beaccomplished intheframework
ofthecurrent programme ofwork oftheCommittee.
98. Therepresentative ofHungary welcomed theSecretariat 'sstudy andtheKorean proposal as
acontribution tothework oftheCommittee. TheCommittee needed toexamine acritical mass of
agreements, astheexperience thatwould beacquired bydoing sowould beofuseinanalysing the
systemic implications ofregional trade agreements forthemultilateral trading system.WT/REG/M/2
Page25
99. Therepresentative ofPeru saidthatitwasanempirical factthatregional trade agreements existed
andaccounted foralarge proportion oftrade. TheCommittee would ensure thereview ofagreements
onanongoing basis aswell astheir systemic implications forthemultilateral trading system. His
delegationagreedwiththeKoreanviewthattheMinisterialConferencereaffirmsthepoliticalcommitment
with respect tothecompatibility oftheagreements with theWTO provisions. Hesaidthatsince the
Committee hadbeen mandated toreview systemic issues relating toregionalism, hedidnotseethe
need fortheissue being alsoaddressed attheGeneral Council atthatstage. Conclusions could only
bereached,andappropriaterecommendationsformulated,afterthereviewofacriticalmassofagreements
bytheCommittee.
100. Therepresentative ofKorea appreciated theinterest expressed inhisdelegation 'sproposal.
Theinput bytheSecretariat hadgiven thedebate more substance andinterest. Hewasencouraged
bytheaccommodating stand taken bytherepresentative oftheEuropean Communities andwould take
uptheelements ofregionalism atafuture stage. Heagreed with therepresentative ofPakistan that
itwasbecoming increasingly difficult todetermine whether regional trade agreements complemented
themultilateral trade system orwhether itwasthereverse. Thefigure given bytheSecretariat that
outoftheexamination of69regional agreements, only sixhadbeen determined tobeconsistent with
themultilateral trading system, vindicated theKorean position thattheissue needed special attention
bytheMinisters inSingapore. There wasnoneed toawait theexperience gained from theexamination
oftheregional agreements asproposed bysome delegations. Asubstantial body ofinformation already
existed, which would enable theCommittee toproceed with itsanalysis oftheissue.
101. TheChairman welcomed theKorean intervention, andsaidthatthediscussion hadbrought to
thesurface certain ideas about theissue. Thewillingness tohave aconstructive debate augured well
forthefuture. Hedetected aconsensus tosubmit recommendations toMinisters attheSingapore
Conference with respect totheCommittee 'sfuture work. There wasnodoubt thattheCommittee would
gain experience from examining agreements, which would beofimmense help toitsanalysis ofthe
systemic implications ofregional trade agreements forthemultilateral trading system. Henoted that
most oftheavailable material focused ontariff implications ofregional trade agreements, but,inthe
light ofnewdevelopments, itseemed necessary toconsider other implications ofthose agreements as
well. TheCommittee should have abalanced view oftherealimpact ofregional trade agreements
onthemultilateral trading system. Heinvited views onthequestion ofhow theCommittee should
organize itsfuture work.
102. TherepresentativeofArgentinasaidthattheprovisionsofArticleXXIVdidnotextendtoregional
initiatives andthattheCommittee should exercise caution ininterpreting itsmandate.
103. TheChairman recalled thatthedecision oftheGeneral Council toestablish theCommittee
mandated ittoconsider thesystemic implications ofregional trade agreements andinitiatives forthe
multilateral trading system andtherelationship between them. Itwastherefore clear thattheCommittee 's
taskwasnotlimited toexamining agreements ontheir consistency with therelevant provisions ofthe
WTO. Theconsideration ofthesystemic implications ofregional trade agreements andinitiatives was
notalegal exercise. Given thescope ofthemandate, heexpected Members toparticipate effectively
inthework oftheCommittee andinvited delegations tocome forward with suggestions onafuture
work programme fortheCommittee. TheKorean example should beemulated byother delegations.
Theproposal submitted bythedelegation ofKorea wasanimportant contribution tothework ofthe
Committee, andhewould welcome anychanges theKorean delegation intended tomake inthelight
ofthediscussion. TheJapanese proposal, which hadbeen introduced under theagenda item dealing
with theprocedures tofacilitate andimprove theexamination process, included points germane tothe
discussion onsystemic implications.WT/REG/M/2
Page26
104. Hethen turned tothefuture work programme oftheCommittee. Analytical work wasneeded
topresent afullpicture ofthesituation. Inaddition totheexamination ofindividual agreements, he
suggested thattheCommittee look atcertain disciplines which cutacross agreements: technical barriers
totrade seemed aprime candidate; verylittle analytical work hadbeen done toexamine their implications
forthemultilateral trading system. Astariffs were reduced, therestrictive impact oftechnical barriers
onthemovement ofgoods andservices wasbecoming more relevant andwould continue todoso.
Itseemed anissue which didnotmeet alotofcontroversy. Therepresentative ofAustralia agreed
with theChairman 'ssuggestion. Ananalysis oftheimpact oftechnical barriers totrade wasanexcellent
ideaandcould provide some valuable insights fortheCommittee. Hisdelegation wasready toaccept
aChairman 'sproposal onthatissue. Theeffect ofpreferential rules oforigin wasperhaps another
subject forexamination byMembers. Therepresentative ofHong Kong hadviews similar tothose
justexpressed bytherepresentative ofAustralia. Hewould consult with hisauthorities and make a
statement atalater stage. Therepresentative oftheEuropean Communities considered thatathematic,
orhorizontal, examination ofcertain themes orissues wasaworthwhile suggestion. Herequested that
theessential features ofsuch anapproach, aswell asthenature oftheexamination beintroduced into
thework oftheCommittee. Therepresentative ofArgentina proposed toinclude theareaofsanitary
andphyto-sanitary measures inthelistofsubjects which would beexamined.
108. TheChairman proposed thathecome forward with aChairman 'spaper forconsideration by
theCommittee, which would include, ontheonehand, apilot study onaparticular issue andonthe
other, alarger work programme. Atitsnextsession, which wasplanned for29-31 July, theCommittee
would continue theexamination ofNAFTA andstart with theexamination oftheECEnlargement.
TheCommittee would alsobeasked toconsider modalities ofimproving theexamination procedures.
105. TheCommittee took note ofthestatements made andadopted theChairman 'sproposal.