RESTRICTED  
WORLD TRADE  WT/REG/M/13  
 5 November 1997  
ORGANIZATION   
 (97-4814)   
Committee on Regional Trade Agreements  
Thirteenth Session  
 
 
 
 NOTE ON THE MEETING OF 30 SEPTEMBER - 1 OCTOBER 1997  
 
 Chairman:  Mr. John Weekes (Canada)  
 
 
A. Adoption of the Agenda  
 
 
1. The Twelfth Session of the Committee on Regional Trade Agreements (CRTA) was 
convened in Airgram WTO/AIR/684.  
 
2. The following agenda was adopted:  
 
A. Adoption of the Agenda  
B. Systemic Implications of Agre ements and Initiatives for the Multilateral Trading 
System and the Relationship Between Them  
C. Reporting on the Operation of Agreements  
D. Examination of Regional Trade Agreements  
 - EC-Turkey Customs Union  
- EC-Faroe Islands (Government of Denmark) Free Trade Agreement  
 
3. The Chairman  started by dealing with some organizational matters. Regarding the 
replacement of two of the Committee's Vice -Chairmen, he reported on the consultations he had 
conducted and proposed that Messrs. Claude Bouah -Kamon, Ambassador of Côte d'Ivoire, and 
Jean-Marie Noirfalisse, Ambassador of Belgium, be appointed as Vice -Chairmen of the 
Committee.  For continuity, Ambassador Lode Willems had agreed to continue to preside over the 
development of the conclusions for the  NAFTA examination. The proposed distribution of work 
among Officers of the Committee would be submitted to delegations. The Committee agreed  to 
appoint the two Vice -Chairmen.  
 
4. The Chairman  continued, noting that a proposed Schedule of meetings had been  circulated 
for the rest of 1997. Regarding a request for CRTA observer status submitted by the Latin 
American Integration Association (LAIA, or ALADI in Spanish), he said the Committee would 
need to revert to the matter of observership mor e generally at a later stage.  
 
B. Systemic Implications of Agreements and Initiatives for the Multilateral Trading System 
and the Relationship Between Them  
 
5. The Chairman  recalled that over the summer Committee Members aimed to agree on the 
structure and the procedures for tackling the Committee's work on systemic matters. He said that WT/REG/M/13  
Page 2 
he had conducted three rounds of open -ended informal consultations and that the following points 
reflected the results of such consultations:  
 
● To serve as a tool for the C ommittee's discussions on systemic issues, the 
Secretariat would compile factual information on RTAs. This would be an 
evolving exercise, with blocks of information being distributed to Members as 
soon as they were processed.  
 
● With respect to the substan ce of the discussion, the Committee would tackle the 
systemic issues listed in document WT/REG/W/16 with a three -pronged 
approach, which would encompass:  
 
- a legal analysis of relevant WTO provisions;  
 
- horizontal comparisons of RTAs;  
 
- a debate on the context and economic aspects of RTAs.  
 
● As a background for these discussions, the Secretariat would prepare documents 
dealing with the systemic issues viewed from these three different angles, as 
appropriate. To start with, it was suggested that the Committee ask the Secretariat 
to prepare background notes on the questions of "other regulations of commerce" 
and "substantially all the trade".  
 
6. The Chairman  also stressed that the three -pronged approach would allow all delegations to 
emphasize the app roach they saw as most important; that the systemic debate should be conducted 
without prejudging the results; and that the discussion on those issues should not be seen as a 
negotiating exercise on WTO rules for RTAs. He also invited delegations to contri bute with 
written papers on the different topics of the systemic debate. The Committee agreed  on the 
approach proposed by the Chairman.  
 
7. The representative of Switzerland  requested that the Chairman's statement be distributed in 
written form.  
 
8. The re presentative of Australia  introduced a background paper on the issues of 
"substantially all the trade" and "other regulations of commerce". In the paper his delegation had 
tried to set out the legal debate surrounding the issues. Summarizing points of the paper, he said 
that, while there had been a good deal of debate over what "substantially all the trade" entailed, 
with no consensus emerging on how the term should be applied with respect to customs unions 
or free -trade areas (FTAs), records revealed that the debate could be divided into two schools of 
thought. One school seemed to use quantitative criteria for "substantially all the trade", and the 
other seemed to use qualitative criteria. On the quantitative approach, in the past there had been 
various su ggestions for a percentage -of-trade figure that would set a threshold for meeting the 
"substantially all the trade" requirement. The qualitative approach had tended more to emphasize 
complete coverage of all sectors of trade. There was a history to both of  these approaches. If 
eventually there were to be a reconciliation of these two views, it might be in the direction of 
some threshold figure that would satisfy the advocates of both schools. His delegation for the time 
being was not trying to put forth any  solutions; rather, it was trying to set out the state of the 
debate. There were of course other factors that might need to be considered in the discussion of 
this issue, some of which had been discussed previously. One factor was the fact that 
Article  XXIV allowed for the possibility of interim agreements leading to the formation of 
customs unions or FTAs. There was also the broader question of whether an interim agreement 
with a timetable could possibly exempt entire product sectors from the liberalizing provisions of  
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an agreement. It might also be necessary to consider the meaning of the words "sector" or "major 
sector". Delegations were no doubt well aware of the long history of discussion on this issue.  
 
9. The representative of Australia  continued, say ing that the other issue on which the 
Committee would be beginning debate was "other regulations of commerce". This issue, too, had 
a long history of discussion, and his delegation was attempting in the paper to set down some of 
the elements of that past d iscussion. As was widely known, there were articles that were clearly 
covered by Article XXIV  - i.e. Articles XI, XII, XIII, XIV, XV and XX; but there had been 
longstanding debate on whether Article  XIX should be part of the list. It seemed important to 
discuss the relevance of Article XIX to Article  XXIV. In addition to a discussion on the legal 
history of this issue, the Committee could examine the issue from an economic perspective. When 
a customs union or FTA was concluded, it seemed the parties were ag reeing by definition to a 
measure of economic integration that went well beyond what would normally be achieved by an 
MFN -based policy. Presumably, parties to such agreements were seeking to achieve efficiencies 
in their internal market; if that were the c ase, the Committee could usefully discuss whether the 
parties to such agreements would actually want to use Article XIX against each other in order to 
delay the very efficiencies they presumably were seeking through the agreement. So, in addition 
to lookin g at the issue from a strictly legal perspective, there was an opportunity for interesting 
discussion on the economic rationale of customs unions and FTAs. The paper was intended as a 
first contribution to what his delegation hoped would be a fruitful and non-prejudicial discussion 
in future meetings.  
 
10. The representative of the United States  said the approach proposed would be useful. His 
delegation attached importance to beginning with analytical consideration of the concept of "other 
regulations of co mmerce"; "substantially all the trade" could be given consideration subsequently. 
He thanked the Australian delegation for submitting a paper on both issues.  
 
11. The representative of Hong Kong  requested that discussions be structured according to a 
time and item -specific programme and that all information presented be available to delegations 
well beforehand. His delegation would favour a programme whereby individual elements 
identified in the checklist of systemic issues would be pursued according to the  horizontal and 
contextual approach described by the Chairman; these should be taken up at designated, 
pre-assigned sessions, with background information covering, as appropriate, negotiating history, 
past interpretations, horizontal comparisons and possib ly economic implications, with such 
background information prepared and issued beforehand. The debate would not need to be 
conclusive on any given issue before moving on to others. In that regard, his delegation would 
support a work programme that would be  progressive, always moving forward.  
 
12. The representative of the European Communities  commended the Chairman for the process 
of informal consultations which had taken place, the results of which his delegation fully 
endorsed. His delegation did not have  strong views on whether "substantially all the trade" or 
"other regulations of commerce" should be treated first; the relative priority would likely emerge 
naturally. His delegation welcomed the Australian paper as a good embarking point. Each 
delegation now had to consider the extent to which it would make contributions.  
 
13. The representative of Uruguay  welcomed the Australian paper and said his delegation 
would reflect on it. Allowing issues to emerge spontaneously as the Committee progressed in its 
discussions and as delegations came forward with papers seemed to be an appropriate way of 
proceeding, rather than devoting time to procedural matters.  
 WT/REG/M/13  
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14. The representative of Japan  requested that GATS issues be considered simultaneously with 
GATT issues,  whenever related, as would be suitable for the concepts of "substantially -all-the-
trade" and "substantial coverage". His delegation also welcomed the Australian paper. He 
requested that the Secretariat prepare papers step by step.  
 
15. In response to the intervention by the delegate of Uruguay, the representative of the 
United  States  said that, as had emerged from the informal consultations, it was preferable to have 
a structured discussion. This would allow solid preparation for meetings.  
 
16. The Chairman  said that, at the next meeting, the Committee would start consideration of 
the "substantially all the trade" and "other regulations of commerce" concepts. The paper 
distributed by Australia would be on the table, as well as any documentation which  could be 
prepared by the Secretariat. He stressed that it was too early to plan further at this stage but that 
in the future a structure for the work would be helpful.  
 
C. Reporting on the Operation of Agreements  
 
17. By way of introduction, the Chairman  recalled that the biennial reporting requirement dated 
back to 1971, when the GATT Contracting Parties decided that a calendar should be established 
for the examination, every two years, of reports on preferential agreements, though no such 
calendar had be en in effect in the last ten years. This reporting obligation had been reaffirmed in 
paragraph 11 of the Understanding on the Interpretation of Article XXIV of GATT  1994 but had 
not yet been made operational.  
 
18. The Chairman  further expressed his perception that the exchange of views which had taken 
place in the Committee when considering, as mandated, how the requirement should be carried 
out represented a sufficiently solid ground on which to build. The Secretariat had been  requested 
to prepare a note laying out reporting options in line with comments made during Committee 
meetings, which had been sent to delegations as an Informal Note, dated 22 September 1997. To 
facilitate an exchange of views, he then proposed to suspend  the formal meeting and consider the 
matter informally.  
 
19. The Chairman  resumed the formal meeting of the Committee's Thirteenth Session by 
summing up informal discussions on how to carry out the required reporting on the operation of 
RTAs. This was the first instance in which the subject was treated at length in the Committee, 
with the active participation of many delegations. He said that the exchange of views had been 
useful though not conclusive. A detailed analysis of the different issues involved ha d taken place, 
on the basis of the Secretariat's Informal Note. Also, the Note had helped to identify points which 
were generally acceptable and areas which were controversial.  
 
20. The Chairman  then proposed to work with the Secretariat to incorporate int o a revised 
Informal Note the views expressed by delegations during the informal debate. The Note should be 
constructed so as to focus first on the objectives to be pursued and then on ways to operationalize 
them. Given the different ideas expressed, some options might also be suggested in the Note.  
 
21. The Committee agreed  to the Chairman's proposal.  
 
D. Examination of Regional Trade Agreements  
 
22. The Committee examined two agreements: the EC -Turkey Customs Union and the Free 
Trade Agreement between the  EC and the Faroe Islands (Denmark).  Reports on these examinations 
were to be circulated as separate documents.