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18March 1997
ORGANIZATION(97-1091)
Committee onRegional Trade Agreements
EXAMINATIONS OFTHE EFTA-BULGARIA FREE TRADE AGREEMENT,
THE EFTA-ROMANIA FREE TRADE AGREEMENT
AND THE EFTA-SLOVENIA FREE TRADE AGREEMENT
Note ontheMeeting of6November 19961
Chairman: H.E. Mr.Miguel J.Berthet (Uruguay)
1. TheCommittee onRegional Trade Agreements tookupitems B.VI, B.VII, andB.VIII ofthe
Agenda foritsSeventh Session, which included thefollowing:
2. Themeeting tookupthefollowing items:
A. General Introductory Remarks
B. Examination oftheEFTA-Bulgaria FreeTrade Agreement
C. Examination oftheEFTA-Romania FreeTrade Agreement
D. Examination oftheEFTA-Slovenia FreeTrade Agreement
A. General Introductory Remarks
3. Therepresentative ofNorway, speaking onbehalf oftheEFTA States, saidthathiscomments
wereapplicable toallthreeAgreements under examination. TheEFTA-Romania FreeTrade Agreement
hadbeenconcluded in1992, theEFTA-Bulgaria FreeTrade Agreement in1993andtheEFTA-Slovenia
FreeTrade Agreement in1995. TheParties hadnotified theAgreements inaccordance withGATT
Article XXIV. However, theexaminations oftheseAgreements hadnever beeninitiated intherelevant
Working Parties established forthem. Nevertheless, theParties hadprovided written answers toall
questions putforward relating totheAgreements. Noquestions hadbeenputforward ontheEFTA-
Slovenia Agreement. In1994, there hadalsobeen anattempt bytheParties tothese freetrade
agreements (FTAs) toaccelerate theworking party process, butthetransition phase fromtheGATT
totheWTO hadnotpermitted thecontinuation oftheexamination process. Hementioned thistoindicate
theParties 'interest inbringing theexaminations toaconclusion, withthegreatest possible transparency,
inlinewiththekeyaimsoftheWTO system. With thattransparency inmind, theParties hadalso
supplied theCommittee withnew, consolidated information ontheAgreements under review. The
information corresponded, toalarge extent, withthatforeseen under thenewly-introduced Standard
1Themeeting wasconvened inWTO/AIR/470.WT/REG12/M/1
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Format. Thatkindofhorizontal information afforded delegations abetter andmore comprehensive
perspective ontheAgreements andtheireffects. TheAgreements wereallbased onthesame structure
andhadsimilar substantive provisions andcommitments, buteachAgreement should beexamined
onitsownmerits. TheParties wereoftheviewthatalloftheAgreements wereincompliance with
therequirements andprovisions ofGATT Article XXIV, andthattheywereimplemented inaWTO-
consistent manner. TheAgreements thuscomplemented andadded totheliberalization achieved within
theGATT system, and,inparticular, asaresult oftheUruguay Round. TheParties totheAgreements
werefullycommitted totheletter andspirit andthestrengthening ofthemultilateral trading system.
B. Examination oftheEFTA-Bulgaria FreeTrade Agreement
C. Examination oftheEFTA-Romania FreeTrade Agreement
D. Examination oftheEFTA-Slovenia FreeTrade Agreement
4. TheChairman saidhewould firstopenthefloorforremaining questions thatdelegations might
havewithrespecttodocumentWT/REG12/2,whichcontainedupdatedinformationontheEFTA-Bulgaria
FreeTrade Agreement. Then theCommittee should treatquestions inthesame order asthatfollowed
bysections oftheAgreement.
5. TherepresentativeofBulgariasaidhesupportedtheapproach,mainideasandremarksexpressed
bytheEFTA representative inhisintroductory statement. Hisdelegation shared thevision andgeneral
outlook astotheAgreement 'simportance, itsimpact onthedevelopment ofBulgaria 'strade withthe
EFTA countries, anditspotentially significant roleintheoverall process oftheintegration ofBulgaria
intotheEuropean Economic Area. TheEFTA-Bulgaria Agreement wasanimportant factor inthe
development oftrade between theParties; itdidnotraiseobstacles orprejudices tothirdcountries,
anditwasincompliance withtherequirements andprovisions ofGATT Article XXIV andother WTO
rules.
6. Therepresentative oftheUnited States indicated thathisinstructions wereofageneral nature,
embracing alloftheAgreements under examination thatday,since issues seemed tospanthethree.
Inthepast,hisdelegation hadsaidmany times thatitsupported tradeintegration inEurope andcontinued
tosupport allagreements which were concluded inconformity withWTO rules. Indeed, theday's
examination wasgeared toward ascertaining thedegree towhich theAgreements under review met
thatstandard. Hisdelegation hadconcerns notonlywiththeWTO conformity ofseveral specific
provisions oftheAgreements, butalsowith effects ofthelarger webornetwork ofEuropean
Agreements.TheAgreementswerewithcountriesforwhichagriculturewouldbeanareaofcomparative
advantage, andforwhich agricultural products could certainly contribute significantly toeconomic
growth. Hisdelegation wastherefore concerned about agriculture having beenlargely excluded from
many oftheagreements, inspiteofcallsthatWTO Members should observe Article XXIV. Inaddition
toassessingtheconformityofeachagreementwithWTOobligations,thereviewprocessalsocontributed
tothetransparency ofthemultilateral trading system asawhole byincreasing understanding ofthe
intent, content andoperation ofeachagreement. Hisdelegation commended thework oftheParties
totheAgreements under review thatday,noting thattheirprovision ofinformation anduseofthe
Standard Format setanexcellent standard. Hehadafewspecific questions. Regarding statistics,
oneissue wasthatinformation anddataseemed tobeprovided onlyfrom theEFTA point ofview.
Forexample, thedatatreated EFTA imports andexports andshares oftotalEFTA trade, butdidnot
include corresponding figures fromtheperspectives ofBulgaria, Romania andSlovenia. Thisproblem
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Eastern European Countries (CEEC) hadgrown significantly overthelastthree years, itstillformed
onlyasmall partoftotalEFTA trade. Hisdelegation would liketoknow howimportant thetrade
wastotheCEEC countries andwhattheEFTA share oftrade was,including bysector, intheCEEC
countries. TheEFTA markets were established, sotheUnited States delegation knew howitfared
inthem, buttheCEEC markets were relatively newandexpanding, giving risetotheconcern that
thepreferential aspects oftheir trade could affect third parties. Hisdelegation would appreciate
information from thatperspective, notonlyfortheAgreements nowunder review, butalsoforthe
EFTA Agreements reviewed bytheCommittee inSeptember.
7. Therepresentative ofNorway, speaking onbehalf oftheEFTA States, saidhewelcomed the
United States 'support ofEuropean integration. Inresponse toconcerns mentioned overthewebof
agreements inEurope, henoted thatthistypeofwebwasseennotonlyinEurope -itwasaglobal
phenomenon. Hisdelegation recognized theWTO asbeing thecentre ofthatweb. Conformity with
WTO rules wasnotafacttobeassumed. TheEFTA States haddemonstrated theirwillingness to
provide allrelevant information onhowtheweboperated. Itwasnotunexpected thattheUnited States
hadraised thequestion ofagriculture, atopichewished toaddress laterintheday. Theexamination
asanexercise involved notonlyconformity butalsotransparency, andheappreciated thecompliment
fromtheUnited States delegate totheeffect thattheEFTA anditspartners hadsetanexcellent standard
ofproviding information inthename oftransparency. Asforthespecific question onstatistics, itwas
understandable thatthere would beinterest inseeing information from another perspective. His
delegation hadprovided therelevant information under GATT Article XXIV. EFTA imports were
conversely exports fromBulgaria, Romania andSlovenia, andthereverse wastrueforEFTA exports,
which wereimports forthose Parties. While theParties might provide more information, itwasthe
viewofhisdelegation thatsubstantially alltrade between theParties wascovered, andArticle XXIV
wasthussatisfied. Thiswasevident from theinformation theparties hadprovided.
8. Therepresentative oftheUnited States tookuptheissueofagriculture, noting thattheEFTA-
BulgariaAgreementhadaclausesayingthattheAgreementwasdesignedtofacilitatetradeinagricultural
products. Heasked whatwasmeant bytheclause, andwhether therewerecommon rulesanddisciplines
intheAgreements which applied toalltrade inagricultural products. Would thetrade liberalization
oftheAgreements extend tocover theagricultural products thatwerecurrently excluded fromtheFTAs,
and,ifso,didtheParties haveatimeschedule orageneral process inmind? Hisdelegation wished
toknow therationale forsome items being permanently excluded. Members helddiffering views on
what"substantially allthetrade" was. Itwastheviewofhisdelegation thatmeeting thatobligation
required anagreement tobemore comprehensive thanweretheEFTA-Bulgaria andother Agreements.
Onbehalf ofthedelegate fromJapan, whowasnotabletoattend theday'smeeting, heexpressed that
country 'sconcern thatifagriculture wereexcluded inafreetradeagreement, itseemed thatsubstantially
alltrade would notbecovered. Because theissue arose soconsistently inCommittee reviews, the
question ofhowagriculture factored into"substantially allthetrade" seemed tobeasystemic problem.
9. Regarding thefirstpoint onfacilitating trade inagricultural products, therepresentative of
Norway, speaking onbehalf oftheEFTA States, saidthatagricultural products werepartially covered,
asfarasprocessed agricultural products andfishwereconcerned. Thefacilitation oftrade language
wasnotamystery, asitalsoappeared inArticle XXIV. While theprecise meaning of"substantially
allthetrade" wasnotdefined, theEFTA delegation would contend thatwhat wasclear wasthatit
entailed lessthanalltrade. TheArticle wasoriginally drafted withtheknowledge thatFTAs might
beestablished inEurope. Itwasenvisaged thatanindividual member ofanFTAshould haveacertain
latitude withrespect tosome products, andthatlatitude wasunderstood tobepermitted bythephrase
"substantially allthetrade." Some parties toFTAs might wishtoavailthemselves ofthatlatitude,
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agricultural products werecovered onlypartially bytheFTAs, andbilateral agricultural arrangements
concluded between theindividual FTApartners covered some butnotalltrade inthatsector. That
wasafactthatdidnotdetract fromconsistency withArticle XXIV, inhisdelegation 'sview. Thistype
ofagreement should notbeapproached onasector-by-sector basis. Itwasimportant tonotethatthe
phrase usedinArticle XXIV:8(b) was"substantially allthetrade" andnot"trade insubstantially all
products." Theobligation wasthusnottodefine trade bysector orbyproducts, buttradeasawhole.
Agricultural trade hadtobeseenasapartof,andacontribution to,thetotalcoverage.
10. Therepresentative ofNorway continued, saying hewished toprovide some background to
theEFTA freetrade agreements. TheEFTA States hadconcluded separate bilateral arrangements
intheagricultural sector andhadnotincluded theconcessions within theframework oftheFTAs proper;
thiswasbecause therewasnocommon agricultural policy, orfreetradeinagricultural products, among
theEFTA States themselves. However, liberalization oftradeinthose products wassignificant, taking
intoaccount bothactual andpotential tradeinterests ofthepartners. Together withtheFTAs proper,
thebilateral agricultural arrangements embodied substantially allthetrade between theEFTA States
andtheirpartners. Asimilar practice wasapplied among theindividual EFTA States, andalsobetween
theEFTA States andtheEuropean Communities. Oneofthemainreasons whytheformation ofFTAs
waspermitted byGATT 1994wasthattheyencouraged growth andliberalization ofworld trade, and
itwasinthatspirit thattheParties totheFTAs under examination hadconcluded theAgreements.
TheAgreements weremeant tobecomplementary tomultilateral tradeliberalization andtheprinciples
oftheWTO, towhich theParties werefullycommitted. Thedatademonstrated thatasignificant part
ofagricultural imports intotheEFTA States from theirFTApartners wascovered bytheFTAs and
thebilateralarrangements.Regardingtheexpansionofcoverageofagriculturalproducts,suchexpansion
wasnotexcluded, inthattherewasanevolutionary clause intheAgreements, buttherewasnotimetable.
AreviewmechanismwasprovidedforinthebilateralarrangementsandinProtocolAtotheAgreements.
Withreference tothequestion posed onbehalf ofJapan regarding thesystemic concern, hisdelegation
wasnotoftheviewthatsuchasystemic problem existed. Ifthere weresuchasystemic concern, the
proper timetodiscuss itwaswhen systemic issues appeared ontheCommittee 'sagenda.
11. Therepresentative oftheUnited States saiditwasinteresting thatagriculture wasnotexcluded
butthatthere wasnotimetable. Helikened thesituation to"theroadofgood intentions" andsaid
itwould bemore satisfactory tohaveatimetable. Atimetable would benefit boththesignatories and
thirdparties. Hehadaslightly different approach to"substantially allthetrade," which brought up
aspecific question regarding theEFTA-Bulgaria Agreement. Sofarashisdelegation wasableto
ascertain, services andinvestment werenotincluded intheAgreements. What wasthereason fortheir
notbeing included, andwerethere plans tocover those areas inthefuture? Onabroader level, his
delegation wasinterested inobtaining information onthepercentage ofeachParty'stotaltradecovered
bypreferences, beyond justtheAgreements thatwere under review thatday.
12. Therepresentative ofNorway, speaking onbehalf oftheEFTA States, saidthat, inthe
agricultural sector, substantially alltradebetween theParties wasalready covered. Hecontended that
iftheParties hadatimetable toexpand thecoverage, theAgreements would cover alltradeandwould
effectively gobeyond therequirements ofArticle XXIV. With respect topermanent exceptions, he
referred tohisdelegation 'sprevious answer confirming thatinoneoftheannexes oftheAgreement,
therewereafewpermanent exceptions. Regarding thequestion onservices andinvestment, herecalled
thetiming oftheAgreement, noting thattheAgreement between theEFTA States andBulgaria was
afewyears oldandpredated theWTO; moreover, therewasnorequirement inArticle XXIV toinclude
services andinvestment. Also, there wasanevolutionary clause intheAgreement, anddiscussions
between thepartners weretaking place, though itwastooearly totellwhatthose discussions would
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course benotified totheWTO andtothisCommittee. Afurther point wasthatthere seemed tobe
anunderlying assumption concerning thesystemic significance ofhaving notincluded services and
investment; iftheUnited States 'representative wassuggesting thatinthisrespect theParties hadnot
fulfilled theirrequirements, theyhadtoreject thatassumption. Regarding theinformation requested
onthepercentage ofeachParty'stotaltrade covered bypreferences, hisdelegation considered that
question tobeirrelevant, asitfelloutside thescope oftheCommittee 'sagenda forthatday.
13. TherepresentativeoftheEuropeanCommunitiessaidthatheagreedwithallwhohadcontributed
tothediscussion onagriculture. Thequestion ofagricultural coverage seemed tobeanareaofpersistent
controversy anddifficulty withrespect totheinterpretation ofArticle XXIV. AstheParties tothe
Agreement hadnoted, itwasamatter forconsideration when theCommittee turned tosystemic issues.
Indeed, itseemed tobethesystemic pointemerging fromthose Agreements. LiketheEFTA delegation,
hedidnotviewquestions oftheinclusion ofservices andinvestment asasystemic issueperse.That
seemed tobeanareawhere thestructure oftherights andobligations oftheWTO Agreements were
clearenough: GATT Article XXIV provided forpreferential agreements covering tradeingoods, and
GATS Article Vprovided forpreferential agreements covering trade inservices. TheWTO didnot
yethaveaninvestment regime sufficiently developed toprovide rules onpreferential agreements.
14. Therepresentative oftheUnited States asked ifanyoftheParties provided bilateral preferential
treatment toagricultural products under MFN tariff quotas. Ifso,hisdelegation would appreciate
itiftheParties could specify them bytypeofpreference, onaproduct-specific basis. Heregretted
thatthestatistics onpreferential trade were, intheviewofhiscolleagues, notrelevant tothecurrent
discussion. Those statistics would seem tohelpplace incontext some ofthelarger trends andissues
thatconcerned allMembers.
15. Therepresentative ofNorway, speaking onbehalf oftheEFTA States, saidhewished toqualify
hisresponse thathisdelegation didnotfinditrelevant orproper toanswer aquestion onthepercentage
ofeachParty'stotaltradecoverage, bypreference. Itseemed improper toaskhisdelegation toprovide
thatinformation inthecontext oftheexamination; however, ifthequestion wereputinthesystemic
context, atanother time, hisdelegation would bewilling todiscuss it.With respect tothequestion
posed onMFN tariff quotas, hereferred theUnited States delegation tonotifications which hadbeen
made totheAgricultural Committee. Thename ofthenotification wastheNotification onthe
Administration ofTariff Quotas, inMA-1, andRealImports, inMA-2.
16. Therepresentative oftheUnited States saidhehadacouple ofquestions onmargins of
preference.Thisissuewassignificantforhisdelegationbecausemarginsofpreferencelinkedthevarious
agreements inEurope together. Heagreed thatthequestion ofhowtheoverlapping tariffpreferences
would mesh orinteract wasnotrestricted toagreements concerning onlyEuropean countries. How
didtheFTAs under review provide formargins ofpreference tobegranted tothirdparties, suchas
theEuropean Communities (EC)? Healsowished toknow howtherules oforigin would work for
those Agreements, astheyinteracted. Arelated question washowtariffreductions made bythevarious
Parties totheAgreements inconnection withtheUruguay Round would affect thelevels ofpreference
granted tothesignatories. Would thelevels ofpreference decline? Would anabsolute percentage
ormargin ofpreference persist?
17. Therepresentative ofNorway, speaking onbehalf oftheEFTA States, responded thatthe
meshing ofmargins ofpreference seemed aquestion suited tothesystemic discussion oftheCommittee
andwasnotrelevant fortheexamination oftheconsistency ofindividual FTAs. Itwasclearthatsuch
meshing tookplace whenever WTO Members were involved inanetwork ofpreferential trade
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thereseemed tobeatendency toward harmonization ofthepreferential treatment which hadbeengranted
under various agreements, nottheleastforpractical purposes. Anexplanation oftheworking ofrules
oforigin could begiven byexperts, ifnecessary. However, theinterlocking oftherules oforigin,
within various FTAs, was,again, aquestion which might beaddressed inthesystemic discussion.
TheParties were doing some work toharmonize rules oforigin, andthatwork would benefit third
parties initseffects. Regarding thelastsetofquestions, themargins ofpreference would naturally
notdiminishasaconsequenceoftariffreductionsresultingfromtheUruguayRound.Here,hisdelegation
wasreferring tobound duties. Themargins ofpreference between theapplied MFN ratesandthe
applied preferential ratescould float, depending ontheactual levelofduties applied bytheimporting
country, buttheywould floatwithin thebound GATT rate.However, therewerenoprovisions relating
toabsolute margins ofpreference thatshould bemaintained under theFTAs. Similar points hadbeen
made inSeptember during Committee examinations ofother EFTA agreements.
18. Therepresentative oftheUnited States saidthattheissues werecertainly important andwere
possibly systemic innature. TheCommittee should takecarenottorefertoomuch togeneral issues,
attheexpense ofspecific ones. Anysystemic issues related tospecific agreements andthecomponents
ofthem stillseemed relevant onthislower level, notjustonthesystemic level. Whenever anissue
spanned several agreements andseveral countries, itwastempting andinsome ways relevant torefer
theissue toalarger body ortoanalysis ofanissue larger thantheoneunder discussion. Itseemed
theCommittee needed toaddress thequestions atthemostpractical andspecific level, andnottohave
oneagreement refertheissuetotheanalysis ofanother agreement, oroneagreement refertheresponse
toadifferent category ofanalysis bytheCommittee. Ifitwould behelpful fordiscussion, theUnited
States 'delegation could provide inwriting itsquestions onmargins ofpreference andrulesoforigin,
sothatthesignatories, whohadfirst-hand experience withtheissues, might provide information. The
issues wereimportant, andanswers would behelpful andenlightening. Hisdelegation didnotwish
toencumber theCommittee withalong, technical discussion byexperts, butatthesametimeitseemed
unwise simply torefertheissues toadifferent aspect oftheCommittee 'swork. Hewaswilling to
submit thequestions inwriting, forfurther inclusion inreports orminutes, sothattheCommittee might
pursue theissues more concretely andmore substantially. Onadifferent subject, regarding import
andexport restrictions, hewondered whether anyoftheParties increased theirMFN ratesduring the
negotiations orprior totheentry intoforce oftheAgreement?
19. Therepresentative ofNorway, speaking onbehalf oftheEFTA States, saidhisdelegation agreed
thattheCommittee should becareful nottoreject questions bysimply saying theybelonged inadifferent
context. Hehadmade thepoint about thesystemic discussion because hisdelegation wasoftheview
thatthequestion wasnotspecific, butrather wasofamoregeneral nature. Hisdelegation hadresponded
fairly specifically tothequestion onmargins ofpreference, butitnonetheless would welcome thewritten
submission ofquestions bytheUnited States. Regarding import andexport restrictions, thequestion
seemed toresemble onewhich hadbeenraised concerning Poland intheEFTA 'sprevious examination.
According tohisunderstanding, there were noimport orexport restrictions introduced prior or
subsequent tosignature oftheAgreements. Bulgaria wasinaspecial position inthatrespect, nothaving
beenaWTO Member atthetimeandthusnothaving beenbound byMFN rates. Normally, acountry
acceding totheWTO would comply withrules during accession negotiations andnotintroduce that
typeofrestriction before orafterconcluding anFTA.
20. Therepresentative ofSlovenia saidthat,asfarasSlovenia wasconcerned, noMFN restrictions
hadbeenintroduced either during thenegotiations orafterwards.
21. Therepresentative ofRomania saidthat,regarding thequestion onquantitative restrictions
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hadnotintroduced anynewquantitative restrictions, either during theprocess ofnegotiation or
subsequent totheconclusion oftheAgreement. However, hisdelegation wasoftheviewthatsuch
anapproach should betaken exclusively withreference tothetimeatwhich theAgreement was
concluded. Thisseemed asystemic question fordiscussion inanother framework. Similarly, with
respect todutylevels, Romania hadnotmodified itsMFN duties, either during oraftertheconclusion
oftheAgreement.
22. Therepresentative oftheEuropean Communities saidthatthequestion posed bytheUnited
States might beasystemic one,butinanyevent proved tobeadifficult one. Ithadappropriately
beenasked oftheECdelegation thedaybefore, withrespect tosome ofitsagreements, anditwould
behelpful iftheUnited States would make thatparticular question generally available sotheCommittee
could consider itcarefully. Itseemed thequestion required tworesponses: onewastoanswer iton
afactual level, involving detailed algebra andanalysis ofprovisions, andtheother wastoconsider
itinterms ofwider-ranging, systemic issues.
23. Therepresentative oftheUnited States saidhewould submit thequestion inageneric fashion.
Hethenindicated that,inpresenting hisdelegation 'squestions, hehadintended forthemtobeapplicable
toalloftheParties totheexaminations under review. Hehadaremaining question ortwoonsafeguards
ortrade remedies. Heasked iftheAgreements provided thatamargin ofpreference bemaintained
ifandwhen asafeguard provision wasinvoked. Ifsuchaprovision hadeverbeeninvoked inthepast,
hewould appreciate itifdetails could bemade available. Hisdelegation alsoasked ifthere wereany
guidelines existing fortheoperation ofsafeguard provisions, oranoutline ofhowtheymight function,
similar tothose provided forinArticle XIX, sothatMembers might better understand what might
occur.
24. With regard tothequestion onsafeguards, therepresentative ofNorway, speaking onbehalf
oftheEFTA States, saidthatnomargin ofpreference wasrequired under theAgreements incases
where safeguard measures wereapplied. Article XIXwasobserved when applying safeguard measures
involving third-country trade. Nosafeguard measure hadinfactbeenapplied bythecurrent EFTA
States. Incases where theEFTA partners applied safeguard measures, information would beprovided
bythem. There wasnospecific information requirement concerning structural adjustment measures.
Henoted thatstructural adjustment measures were notsafeguard measures, andthusamargin of
preference could bemaintained. Moreover, safeguard provisions intheAgreements referred tovarious
cases inwhich theParties could resort tosafeguard measures. They provided thattheFTA'sJoint
Committee should bepromptly notified andshould consult regularly onsafeguard measures, witha
view totheir relaxation, substitution orabolition. Theappropriate measures tobetaken varied,
depending upon thebasis onwhich thesafeguard measures wereintroduced -competition, stateaid,
dumping, emergency action, re-export, serious shortage orfulfilment ofobligations. Inthesense of
GATT Article XIXandtheAgreement onSafeguards, safeguard measures entailed suspending inwhole
orinpartanobligation which wascausing orthreatening serious injury todomestic producers. For
tradewithin theFTAs under review, suspending anobligation orwithdrawing ormodifying concessions
would notbedoneunder thesafeguard provisions oftheAgreements, butrather under theprovisions
onstructural adjustment. Fortrade withthirdparties, measures would betaken inaccordance with
GATT Article XIX.
25. Therepresentative ofBulgaria saidthatBulgaria didapply some safeguard measures ona
temporary basis, butnotunder GATT Article XIX. Themeasures wereapplied temporarily fornew
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26. Therepresentative oftheEFTA Secretariat clarified references tosafeguard measures and
structural adjustment measures. Themechanism ofstructural adjustment wasnotatraditional safeguard
measure andwasusedmainly forinfant industries. Itwasatransitional measure, which allowed the
economies intransition tointroduce some additional protection foraperiod, toprotect infant industries.
What thestructural adjustment measure thenmeant wasthatBulgaria, Romania orSlovenia could
temporarily raisethealready lowered duties, within thetimeschedule established under theFTAs.
When theParty increased those duties, thepreferential dutymight stillbelower thantheMFN duty.
Although notinlinewiththeestablished schedule oftariffdismantling, thatkindofexceptional measure
which departed fromtheestablished tariff dismantling schedules would onlybetemporary. Itwould
bejustified forcertain sectors orcertain industries.
27. Therepresentative ofRomania saidhisdelegation concurred intheexplanation ofthedifference
between structural adjustment measures andsafeguard measures, which weredefined intheAgreement.
From afactual standpoint, hisdelegation wished toindicate that,since theentry intoforce ofthe
Agreement, Romania hadnotappealed toeither ofthose setsofmeasures.
28. Therepresentative ofKorea saidthattheareas ofanti-dumping andstructural adjustment had
beenaconcern ofhisdelegation during reviews ofother agreements, andthat,hereagain, hisdelegation
hadquestions related tothose areas. Intheanswers which hadbeenprovided toaspecific question
hisdelegation hadsubmitted, itwasindicated thatnoinjury wasattributed totheother countries, with
respect toanti-dumping andemergency actions. Theresponse noted thatRomania could exclude its
FTApartners fromtheemergency action taken under GATT Article XIX. Hisdelegation waspleased
tolearnintheanswer thatnon-members oftheFTAs could beassured thatnoinjury would beattributed
toother countries, butitwasnonetheless concerned about thepossibility ofthepartners toanFTA
being excluded from theaction, ifthere weresuchinjury. Itseemed thatwhen necessity called for
emergency action, usually thecause oftheproblem came fromthepartners, rather thanthirdparties,
because thepartners hadpreferential tariff rates. Itthusseemed oddthattheFTApartners could be
excluded fromtheemergency action when therewassome injury. Clarification would beappreciated.
Another point perhaps entailed asystemic issue. GATT Article XXIV:8(b) read: "Afree-trade area
shallbeunderstood tomean agroup oftwoormore customs territories inwhich theduties andother
restrictive regulations ofcommerce (except, where necessary, those permitted under Articles XI,XII,
XIII,XIV, XVandXX)areeliminated onsubstantially allthetradebetween theconstituent territories
inproducts originating insuchterritories." Theexceptions didnotspecifically include anti-dumping
andsafeguardmeasures,eventhoughagreementsexistingatthetimeofdraftinghadhadsuchprovisions.
Ittherefore seemed thatthose measures should beeliminated within FTAs. Hisdelegation wished
toheartheParties 'views onthediscrepancy between theeffects ofthose FTA provisions andthe
requirements oftheGATT, which saidthatsafeguards andanti-dumping measures should beeliminated
within theconstituent territories.
29. Therepresentative ofNorway, speaking onbehalf oftheEFTA States, saidthatinonerespect
itwaseasytoanswer thequestion, inthesense thatthere werenosafeguard measures inforce; thus
theParties could explain nothing more about thepractice thanthefactthatthere wasnopractice
currently. TheEFTA andtheother FTAParties would beartheconcerns inmind intheoperation
oftheAgreements. Thatwasnottosaythathisdelegation wasatthatpoint giving anyguarantees
orcommitments, butitwould treatcomments received inaserious andconstructive manner.
30. TherepresentativeofPolandsaidhewishedtocommentonthequestionrelatingtotheapplication
ofsafeguard measures under FTAs. HewasoftheviewthattheCommittee should notenter intoa
detailed discussion onthatspecific issueuntilithadmade acomparative analysis ofthewhole complexity
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thattherewerenotenough practical cases tobeexamined. Hisdelegation preferred thattheCommittee
raisetheissue atsome other point intime, when itwould beabletoseewhatthesafeguard clauses
inother agreements were, andwhen there would bemore critical experience.
31. TheChairman noted thattheCommittee hadsofarconsidered general questions related to
thethree Agreements. Heasked thedelegations ifthere were anyspecific questions ontheEFTA-
Romania FreeTrade Agreement.
32. Therepresentative ofRomania saidthattheAgreement between theEFTA States andRomania
waspartofthewider thrust towards European integration ofRomania. Hisdelegation considered the
Agreement tobeinlinewiththeglobal principles, rules anddisciplines ofGATT 1994. Asfaras
statistics wereconcerned, aquestion raised bytheUnited States, hehadafewfigures toofferfrom
theperspectiveofRomania,givingapictureofwhattradewiththefourEFTAStatesmeantforRomania.
First, asfarasRomania 'sexports were concerned, exports totheEFTA States represented 1.7per
centoftotalRomanian exports in1990, 2.4percentin1992 andonly1percentin1995. Asfaras
Romania'simportsfromtheEFTAStateswereconcerned,theEFTA'sweightinRomania'stotalimports
was2percentin1990, 2.1percentin1992 and2.2percentin1995. With regard tocoverage, his
delegation considered theAgreement tobeinlinewithGATT provisions stating thatsubstantially all
trade should becovered. Themajority ofimports andexports consisted ofindustrial goods. Of
Romania 'sexports in1992, 96.2percentwereindustrial goods, theremainder being agricultural goods;
in1994, therespective figures were94percentand6percent;andfor1995, thefigures were95.1per
centand4.9percent. Theproportions forimports weremore orlessthesame. In1992, industrial
goods amounted to96.3percentofthetotalRomanian imports fromtheEFTA States, andagricultural
goods were3.7percent. In1994, therespective figures were93percentand7percent,andin1995,
92.1percentand7.9percent. Fortheother specific questions thathadbeenposed, hehadfound
theanswers provided bytherepresentative oftheEFTA States tobeverycomprehensive.
33. Therepresentative ofColombia asked theParties totheEFTA-Romania Agreement whether
there hadbeenanyconcrete developments withrespect toArticle 30oftheAgreement, orwhether
whatthatArticle stated wasadeclaration ofprinciple.
34. Therepresentative ofNorway, speaking onbehalf oftheEFTA States, saidthatthequestion
concerned services andinvestment, andthat,similar totheanswer hehadgiven inthecontext of
Bulgaria, thematters werebeing explored inageneral waytoseewhether there wasscope forfurther
development oftheAgreements. Noconcrete result wasyetonthetable. When andifsucharesult
were achieved, theParties would notify theprogress totheWTO.
35. TheChairman turned totheEFTA-Slovenia Agreement, asking ifthere were anyspecific
questions.
36. Therepresentative oftheUnited States saidhisquestion wasdirected toward Slovenia butalso
related totheother Agreements. Henoted thatArticle 24oftheEFTA-Slovenia Agreement discussed
arbitration procedures. WhyhadthisArticle beenincluded intheAgreement withSlovenia, butnot
intheother Agreements?
37. Therepresentative ofNorway, speaking onbehalf oftheEFTA States, replied thattheEFTA-
Slovenia Agreement wasanewer agreement, andithadthusbeenpossible tointroduce intoitelements
suchasarbitration, which hadnotbeenripeatthedrafting oftheothers. Exploratory talks were
underway toseeifthose Agreements could beupdated withaclause onarbitration andpossibly other
clauses.WT/REG12/M/1
WT/REG16/M/1
WT/REG20/M/1
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38. Therepresentative oftheUnited States saidhehadtwoquestions regarding stateaidandstate
monopolies, which hewished todirect totheParties. Hisdelegation wasoftheviewthatstateaid
impacted alltrading partners, notjusttheparties toanagreement. Heasked theParties todescribe
anyrules theyweredeveloping oninterpretation orimplementation ofstateaid,andtoindicate how
fartheyhadprogressed indeveloping those rules. Regarding statemonopolies, hesaidhisdelegation
would appreciate itiftheParties would listentities thatwould qualify asstatemonopolies anddiscuss
howthearrangement might becovered byArticle XVII ofGATT 1994.
39. Therepresentative ofNorway, speaking onbehalf oftheEFTA States, saidthat,asfarasstate
aidwasconcerned, there werearticles inallthree oftheAgreements. They were notwide-ranging
provisions, butbasically provided fornon-discrimination incommercial practices. InboththeEFTA-
Bulgaria andtheEFTA-Romania Agreements, there wasanelement ofasymmetry, which wasnot
reproduced inthemoremodern EFTA-Slovenia Agreement. There werealsoannexes providing criteria
fortransparency concerning stateaid.Intheview oftheEFTA delegation, those requirements for
transparency wereatleastasstringent astheWTO rules. Asfarasmonopolies wereconcerned, there
wasnolistofutilities, butthose monopolies hadbeenorwereintheprocess ofbeing notified tothe
relevant WTO body, inaccordance withtheUnderstanding ontheInterpretation ofArticle XVII.
40. TherepresentativeofRomaniaconfirmedthat,inthecaseofRomania,therehadbeennotification
totherelevant bodies oftheWTO concerning state trading, inkeeping with theprovisions of
Article XVII andwiththeUnderstanding ontheInterpretation ofArticle XVII reached intheUruguay
Round. Asfarasstateaidwasconcerned, notifications hadrecently beenmade onsubsidies, which
hisdelegation invoked inlinewiththerights provided totransition countries inArticle 29.3ofthe
Agreement onSubsidies andCountervailing Measures.
41. TheChairman saidthatinlightoftheday'sdiscussion, another meeting would benecessary
tocomplete theexamination.
42. TheCommittee tooknoteofallthecomments made.