RESTRICTED
WORLD TRADE TCA/M/3
19September 1996
ORGANIZATION(96-3691)
Committee onTrade inCivil Aircraft
MINUTES OFTHE MEETING OFTHE COMMITTEE
HELD ON19JULY 1996
Chairman: Mr.M.Abdel-Fattah (Egypt)
Page
A. Adoption ofAgenda 1
B. Consideration ofthestatus ofthe1979 Agreement onTrade in 1
Civil Aircraft under theWTO
C. Matters under Article 8.3 3
D. Matters under Article 9.5 4
A. Adoption ofAgenda
1. TheChairman noted thattheagenda forthismeeting wascontained inWTO/AIR/382. The
representative oftheUnited States saidhewished toraisetwoitems under "Other Business". The
firstrelated tothestatus ofthenegotiations initiated under Article 8.3ofthe1979Agreement onTrade
inCivil Aircraft (hereafter "theAircraft Agreement"). Thesecond related topastefforts toamend
theAircraft Agreement under Article 9.5inorder toadapt ittotheWTO framework. TheCommittee
adopted theagenda asamended.
B. Consideration oftheStatus ofthe1979Agreement onTrade inCivil Aircraft under theWTO
2. TheChairman recalled that,atthelastmeeting oftheCommittee on7June1996, hehad
submitted aproposal (hereafter "theChairman 'sproposal") comprised oftwodraftdecisions. One
draftdecision clarified some provisions oftheAircraft Agreement inthelightofthechanges brought
about bytheentry intoforce oftheMarrakesh Agreement Establishing theWorld Trade Organization
(hereafter "theAgreement Establishing theWTO"); theother provided fortheapplication ofthe
Understanding onRules andProcedures Governing theSettlement ofDisputes (hereafter "theDSU")
todispute settlement under theAircraft Agreement. Hesaidthatthismeeting hadbeencalled sothat
adecision could betaken onthismatter. AsSignatories werecommitted toending thepresent deadlock,
hethought hecould relyontheirbestefforts toreach anagreement onthebasisofhislatest proposal.
Hesaidhehadgoneasfarashecould toaccommodate thedivergent positions and,asaresult, could
notanddidnotintend toamend hisproposal orwithdraw itunless there wasaclear message from
themembers oftheCommittee todoso.
3. Hereiterated theimportance offinding asolution tothepresent situation urgently. Legally,
theAircraft Agreement wasstillaliveandSignatories seemed toberespecting theirobligations under
it.However, therewasnolegalsecurity, duemostly tothreefactors. ThefirstwasthelackofcertaintyTCA/M/3
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astotheapplicable obligations. Aslongasthesituation wasnotformally clarified, newissues might
beraised, constantly putting intoquestion theapplication ofcertain provisions oftheAgreement. The
other factors werethelackofanappropriate forum forconsultations andtheabsence ofanefficient
dispute settlement mechanism. Rights andobligations under theAgreement wereofquestionable value
ifparties could notconsult andhavethemenforced. Finally, herecalled thatinternational agreements
notonlyhadtobeapplied ingood faith, butthatgood faithwasalsorequired intheirinterpretation.
4. Therepresentative oftheEuropean Communities saidthattheChairman 'sproposal wasa
reasonable compromise, which hisdelegation wasprepared toaccept.
5. Therepresentative ofCanada saidthat,forhisdelegation, thepreferred course ofaction would
betofindasolution tothecurrent deadlock while improving theAgreement by,interalia,amending
Article 4onthebasis ofearlier proposals. Canada could support theChairman 'sproposal onthe
condition thatitwould notcreate future legalproblems withrespect totheexpansion ofthecoverage
oftheAgreement toinclude ground maintenance simulators. Thisitem, whose inclusion intotheAnnex
totheAircraft Agreement hadnotmetwithanyobjection inpastdiscussions, wasofparticular interest
toCanada. Thebasis oftheChairman 'sproposal, being aninterpretation oftheAircraft Agreement
rather thananamendment toit,wastoaddress theconcern ofatleastoneSignatory thatanyamendment
might change thecurrent relationship between thisAgreement andthelater-in-time Agreement on
Subsidies andCountervailing Measures (hereinafter "theSCM Agreement"). Canada 'sconcern was
whetherthisreasoningcouldpreventanylateramendmentoftheAircraftAgreement,includingextension
oftheproduct coverage oftheAgreement, ontheground thatitwould make theAircraft Agreement
later-in-timecomparedwithotherAgreementsannexedtotheAgreementEstablishingtheWTO(hereafter
"theWTO Agreements"). Such apossibility would simply exchange onesetoflegalquestions for
another. Ifhisdelegation could beassured thattheChairman 'sproposal would notprevent alater
extension oftheproduct coverage oftheAircraft Agreement, oranyother modification, hewould
support it.
6. Therepresentative ofJapan saidthatclarification ofthemeaning ofcertain provisions ofthe
Aircraft Agreement should bemade through theamendment procedure ofArticle 9.5oftheAgreement,
inorder tosecure legal certainty. Ashisauthorities were stillexamining thelegal nature ofthe
Chairman 'sproposal, hecould nottakeanyposition atthisstage.
7. Therepresentative oftheUnited States saidthattheChairman 'sproposal appeared torecognize
theimportance ofresolving allSignatories 'concerns about therelationship between WTO Agreements
intheprocess ofrectifying theAircraft Agreement. Inthatrespect, heunderstood thattheChairman 's
proposal would preserve thestatus quo,theAircraft Agreement remaining anearlier-in-time agreement
within themeaning ofthe1969 Vienna Convention ontheLawofTreaties compared toother WTO
Agreements. However, theChairman 'sproposal wasnotsufficient asitstood toresolve definitively
thelegalissues thatmight ariseregarding theapplication oftheAircraft Agreement totheinterpretation
ofother WTO Agreements intheevent ofadispute under theDSU. Hisauthorities hadmade anumber
ofproposals toamend thedraftprotocol andtheaccompanying decision contained inAIR/W/98 in
order toaddress thisproblem. Moreover, thedrafters oftheAircraft Agreement hadincluded specific
language -Article 8.8-ontherelationship between theAircraft Agreement andother plurilateral
agreements negotiated under theauspices ofGATT. Thatlanguage ineffect preserved theprimacy
oftheGATTandofthoseplurilateralagreementswithintheirspheresintheeventofadisputeconcerning
matters covered byboththeAircraft Agreement andoneofthese other agreements, unless theparties
tothedispute agreed otherwise. Hisunderstanding wasthatthecurrent process ofrectification was
apurely technical oneandthatitshould notmodify existing rights andobligations. Anysubstantive
revision would havetotakeplace within theSub-Committee under Article 8.3. Inhisview, the
Chairman 'sproposal might havethedisadvantage ofpreventing anyamendment oftheAgreement for
fearofchanging theearlier-in-time status quo.Inaddition, theChairman 'sproposal included adecisionTCA/M/3
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toapply theDSU totheAircraft Agreement. Because ofArticle 7.2oftheDSU, theChairman 's
proposal might notprevent consideration bypanels ofcertain language intheAircraft Agreement in
adispute under theSCM Agreement. Therefore, hisdelegation could notagree tothatdecision.
Furthermore, Article 3ofthefirstdecision intheChairman 'sproposal included language addressing
thespecific problems ofoneSignatory which could already befound inAnnex IItoAIR/W/98, but
didnotaddress explicitly theabove-mentioned concerns oftheUnited States, creating perhaps an
appearance ofimbalance. TheUnited States wasstillexamining whether theabove-mentioned problems
could besolved, e.g.,bydropping thedecision toapply theDSU totheAircraft Agreement andby
adding language toArticle 3similar towhathisdelegation hadproposed inNovember 1994 inorder
tobalance andclarify thatArticle, orthrough other changes. Without prejudice tothecontinued review
oftheChairman 'sproposal, theUnited States favoured aformal protocol andwished toexplore such
anoption, which would definitively change thetextoftheAgreement andthusaddress some ofthe
concerns raised byother delegations atthepresent meeting. TheUnited States would further address
thisissue under "Other Business".
8. TheChairman concluded thathisproposal wasnotacceptable andthattherewerenoalternatives
thatwould bereadily acceptable byalldelegations. Although thisexercise wasnotsubject toany
deadline andfurther consultations could beundertaken withtheaimofadapting theAircraft Agreement
totheWTO framework, theresults achieved bytheCommittee sofarwere verydisappointing. He
continued tothinkthatthelegalsituation oftheAircraft Agreement wasveryserious andraised systemic
issues fortheWTO. Heurged delegations tomake special efforts tofindanappropriate solution which
would clarify thestatus oftheAgreement. Several alternatives hadbeendiscussed andpossibly one
ofthemcould bethebasisforanagreement. If,onthecontrary, nosolution wasfound, theAgreement
would gradually become irrelevant.
9. TheCommittee tooknoteofthestatements.
C. Matters under Article 8.3
10. Therepresentative oftheUnited States (speaking under "Other Business") saidthat,since1992,
negotiations hadbeen under waytotrytosubstantively revise, improve andexpand theAircraft
Agreement. However, there hadbeennoprogress overthepasttwoyears, andthatsituation hadto
beaddressed. Therefore, hisdelegation proposed thefollowing options: either (i)theCommittee agreed
toterminate those negotiations; or(ii)theCommittee agreed toattempt toharvest those areas where
agreement hadbeenreached, inparticular Article 4oftheAgreement. These perhaps needed tobe
re-examined, butwould improve theAircraft Agreement. There hadalsobeensuggestions toinclude
additional items intheAnnex totheAgreement. Once thiswascompleted, thenegotiations under
Article 8.3could bebrought toaclose. Athird option wasthatanew, more precise andrealistic
mandate bedefined forthose negotiations. TheUnited States hadsuggested amandate directed at
improving andexpanding thedisciplines forlarge civilaircraft, asthatseemed tobetheonlyarea
where, inDecember 1993, there hadappeared tobeconsensus.
11. Therepresentative ofCanada saidthathisdelegation continued tohopethatasolution could
befound andthatbenefits thathadbeenagreed upon, forexample onArticle 4andonexpanded
coverage, could beincluded intheAgreement atthetimeofatechnical rectification.
12. Therepresentative oftheEuropean Communities expressed regret thatthepresent deadlock
could notbesolved onthebasis oftheChairman 'slatest proposal. Earlier attempts hadalready been
opposed bythesame delegation. Atthismeeting, thatdelegation hadreferred toideas which ithad
proposed earlier andwhich hadalready beenrejected bytheCommunities. Concerning thesubstance
oftheproposal made bytheUnited States, hecould notexpress anyviews atthisstage.TCA/M/3
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13. Therepresentative ofJapan saidthat,although hehadnotbeeninaposition toaccept the
Chairman 'sproposal, hewasgrateful fortheefforts theChairman hadmade tofindasolution tothe
present deadlock.
D. Matters under Article 9.5
14. Therepresentative oftheUnited States (speaking under "Other Business") raised thematter
oftheamendment oftheAgreement under Article 9.5andproposed including inthedraftprotocol
annexed toAIR/W/98 arevised version ofArticle 8.8.Hecirculated anamended textofArticle 8.8
together withanintroduction. Hepresented theproposal asastraightforward technical rectification
ofArticle 8.8.IntheviewoftheUnited States, theChairman 'sproposal didnotchange Article 8.8,
which continued toexist. Article 8.8dealtwithissues ofconflict ofinterpretation between theAircraft
Agreement andother agreements byhaving separate venues depending onthenature ofthedispute.
However, thiswasnolonger appropriate inthecurrent environment oftheunified dispute settlement
system under theDSU. IftheChairman 'sproposal were adopted, theinterpretation ofArticle 8.8
would beunclear. Thealternative proposed bytheUnited States would establish procedures thatwould
maintain thecurrent relationship between theAircraft Agreement andother agreements asestablished
byArticle 8.8in1979. Sucharectification wasintended tobeatemporary preservation ofthestatus
quoallowing theAircraft Agreement tobeamended totakeintoaccount theexistence oftheWTO.
Thisrectification would make theCommittee responsible forapplying theDSU procedures onlyto
matters notcovered byother WTO Agreements andtomatters alsocovered byother WTO Agreements
onlyiftheparties tothedispute soagreed. Thiswasconsistent withthecurrent wording ofArticle 8.8.
15. Headded thataformal protocol ofamendment which would update theagreement would allow
forlateramendments, would belegally clear andwould preserve thecurrent balance ofrights and
obligations. While thisproposal didnotestablish aunified dispute settlement system, itwasan
improvement andastepinthedirection oftheWTO dispute settlement system. Dispute settlement
would bebinding, would follow procedures parallel tothose oftheDSU, would make useofthe
Appellate Body andwould avoid thereason forthecurrent stalemate bynotreferring totherelationship
between twospecific WTO Agreements -theAircraft Agreement andtheSCM Agreement. Thiswould
notbeasubstantive revision, norwould itgivetheappearance ofprejudicing anydelegation 'sviews
onongoing orfuture negotiations ontherelationship oftheAircraft Agreement toother WTO
Agreements. Application oftheDSU procedures would prevent deadlocks intheinterpretation of
Signatories'obligations.However,forthismechanismtowork,prioragreementonseveralmodifications
totheDSU procedures should beincluded inthetextoftherectified Agreement. Suchmodifications
could beincluded inadefinition section intherevised textofArticle 8.8contained inAIR/W/98. The
needforaccompanying decisions bytheSignatories would thusbeobviated. Thetextcirculated by
theUnited States totheCommittee wasnotdrafted inlegalterms. Itwasmeant tospelloutclearly
thecontent oftheproposal forreview byother Signatories. Inthatcontext, heasked thatother
signatories agree toanother meeting oftheCommittee before theendofSeptember, notonlytoreview
thisproposal, butalsotoreview thestatus oftheAgreement andtheChairman 'sproposal, toelect
aChairman andtoconsider theother proposals oftheUnited States under Article 8.3.
16. Therepresentative oftheEuropean Communities saidthathewasnotinaposition toreact
toaproposal thathadjustbeentabled, although itseemed tobeverysimilar toothersuggestions already
discussed. Heproposed thatinformal consultations beheldtofixthedateofaCommittee meeting
intheautumn.
17. Therepresentative ofCanada saidthathisdelegation would consider anyproposal made to
trytosolve thecurrent problems under theAgreement. Canada favoured informal consultations to
consider further thisproposal andother aspects before setting thedateforanother formal meeting.TCA/M/3
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18. Therepresentative ofJapan saidthathisdelegation needed more timetostudy theUSproposal.
Hisdelegation reserved itsrights tocomment onthisproposal infuture.
19. TheChairman saidthatthecurrent situation, including pending proposals andtheholding of
informal consultations, would havetobeaddressed byanother Chairman, ashewould nolonger be
inaposition tocontinue tochair theCommittee afterthismeeting. Hehadconducted extensive
consultations withdelegations regarding theelection ofnewofficers andhoped thatSignatories would
quickly agree onanewChairman andVice-Chairman. Hethanked delegations fortheirefforts and
support during thisexercise andhoped thatasolution agreeable toallSignatories would befound soon.
20. TheCommittee tooknoteofthestatements.