RESTRICTEDWORLD TRADE
ORGANIZATIONTN/RL/M/5
8 January 2003
(03-0061)
Negotiating Group on Rules
SUMMARY REPORT OF THE MEETING
HELD ON 25-27 NOVEMBER 2002
Note by the Secretariat
1. The Negotiating Group on Rules held a formal meeting on 25-27 November 2002.
A. ADOPTION OF THE AGENDA
2. The Group adopted the following agenda:
A. Adoption of the Agenda
B. Anti-Dumping
C. Subsidies and Countervailing Measures, including Fisheries SubsidiesD. Regional Trade AgreementsE. Other Business
- Requests for information from the Chairmen of the Special Session on Trade
and Development and the Group on Trade and Transfer of Technology
- Dates of formal meetings of the Group in 2003
B. ANTI-DUMPING
3. The Group first took up three submissions related in their entirety to this agenda item.
4. The first paper was entitled "General Contribution to the Discussion of the Negotiating Group
on Rules on Anti-Dumping Measures" (TN/RL/W/28).  The sponsors explained that the purpose of
the paper was to put their specific proposals in the context of their negotiating objectives in respect of
clarification and improvement of the AD Agreement , i.e., preventing abusive and excessive AD
measures, avoiding excessive burdens on responding parties in AD investigations and enhancing the
transparency, predictability and fairness of AD procedures by reducing ambiguities and avoiding
arbitrariness.  The need to reduce divergences of practice among Members was emphasized.
5. The second paper was entitled "Third Contribution to Discussion of the Negotiating Group on
Rules on Anti-Dumping Measures" (TN/RL/W/29).  The paper identified illustrative issues relating toprovisions that its sponsors sought to clarify and improve, including the definition of dumped imports,
definition of sufficient quantity of sales of the like product in the domestic market for determination
of normal value, constructed export price, conditions to disregard the export price practised,
cumulative assessment of imports, price undertaking/lesser-price rule, public notice, period of dataTN/RL/M/5
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collection for AD inve stigations and treatment in case of a large number of exporters, producers,
importers or types of products.  One sponsor suggested that, given the increasing number of issues
identified, it would be appropriate to categorise the issues, facilitate comparisons of related issues and
encourage the earlier solutions for these issues.
6. The third paper was entitled "Replies to Additional Questions to Our Second Contribution
(TN/RL/W/10)" (TN/RL/W/31).  The sponsors of this paper provided answers to questions and
comments previously posed by some participants  regarding an earlier submission (TN/RL/W/10).
7. In discussion regarding the "General Contribution" paper, one participant noted an overlap
between the sponsors' objective of avoiding excessive burdens on respondents and its own suggestion
to reduce investigation costs.  Another participant noted that the sponsors' view of the objectives of
the negotiations overlooked references in the Doha mandate to preserving the basic concepts,
principles and effectiveness of the AD Agreement  and to disciplines on trade-distorting practices.  Yet
another participant noted that the mandate was a balanced one containing three elements: clarifying
and improving current disciplines, preserving basic concepts, principles and effectiveness, and
addressing trade-distorting practices.  It was al so observed that the issue of developing Members'
interests was part of the mandate.
8. With respect to the particular issues identified by the sponsors as issues for negotiations in the
"Third Contribution", many participants made specific comments, including expressions of support or
opposition to particular proposals, or raised questions.  A number of participants noted the existence
of dispute settlement jurisprudence related to many of the issues.  One participant suggested that the
existence of such decisions obviated the need for clarification and improvement, while another
considered that the existence of such decisions rather demonstrated that existing rules requiredclarification and improvement.
9. With respect to the time-period for data collecti on ("POI"), queries were raised regarding the
relevance of a recommendation adopted in the ADP Committee on this issue1 and whether the
sponsors would be satisfied with that approach.  One sponsor responded that, while the
recommendation could be a good basis for discussion, some aspects of the issue not addressed in therecommendation could be explored, such as inclus ion of the entirety of the POI of the dumping
investigation in the POI for the injury determ ination.  Regarding cumulation, some participants
queried whether the threshold for negligible import volumes set forth in Article 5.8 of the AD
Agreement  did not already apply in the cumulation context.  One sponsor responded that Article 3.3
on cumulation cross-referenced Article 5.8 in respect of de minimis  margins but not in respect of
negligible import volumes.  Concerning a mandatory lesser duty rule, one participant expressed
support, but noted that the lesser duty rule must be applied in a non-discriminatory fashion.  Other
participants noted the need to explore methodologies  for calculating injury margins before taking a
clearer view on this issue.  Regarding the definition of undumped imports, one participant considered
that, while undumped imports should be considered in the assessment of injury, reassessment of thevolume of negligible imports could be conducted by netting out the non-dumped imports.  Concerning
sufficient quantity of sales, one participant  preferred that, where there were several categories or
types of subject goods, representativeness be determined on a category type/basis.  Regarding the
definition of related party, one participant considered that the definition in Article 4.1 should apply
throughout the AD Agreement .  This participant considered an interested party to be a party that fully
co-operates with the requirements of an investigation.
10. One participant noted the importance of the developmental dimension in the work of the
Group, while keeping in mind the distinction between problems caused by inexperience or lack of
resources of individual WTO Members on one hand and problems generated by the text of the AD
                                                     
1 G/ADP/6TN/RL/M/5
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Agreement  on the other.  This participant highlighted the need to address capacity constraints in
developing Members and new users of the AD Agreement  through technical assistance and capacity
building.
11. Another participant made specific comments and posed questions regarding proposals
previously considered by the Group (TN/RL/W/6 & 10).  This participant was of the view that most ifnot all of the issues relating to specific AD Agreement  provisions identified in these two submissions
were sufficiently clear or were subject to jurisprudence and therefore did not require any further
clarifications or improvements.  The issues discussed related to  constructed value; cyclical markets;
zeroing; cumulative assessment of injury; causal relationship between dumping and injury; threat of
material injury; facts available; lesser duty rule; sunset of AD orders; public interest; standing rules;
initiation standards; and injury determinations.
12. The Group next considered a paper entitled "Investigatory Procedures under the Antidumping
and Subsidies Agreements" (TN/RL/W/35).  The paper identified in general terms a range of topics
relating to procedural fairness, which the sponsor deemed to be a key principle of both the AD and
SCM Agreements .  The paper addressed such topics as: the availability of relevant information from
national authorities, maintenance of a public record, sufficient detail in determinations, conduct of
verifications, protection and disclosure of confidential information, detailed nationallegislation/regulation, judicial review, reducin g the costs of investigations, and technical
assistance/capacity building.  The sponsor noted that its paper did not contain proposals but rather
reflected issues for discussion, and welcomed others' views.
13. The paper attracted several comments and specific questions.  A number of participants noted
the importance of procedural fairness.  Several participants however considered that there should be abalance between the concepts of procedural and substantive fairness, and that simple procedures could
yield good results.  It was also observed that the more complex and detailed the procedures were, the
greater the administrative costs.  One participant noted that adoption of a system to allow limited
access to confidential information would require major changes to its legislation.  Several participants
welcomed the fact that the paper addressed both AD and CV procedures in a symmetrical manner.
14. A number of participants reverted to a submission previously in a previous meeting ("General
Contribution to the Discussion of the Negotiating Group on Rules on Anti-Dumping Measures",
TN/RL/W/28/Rev.1).  One participant queried whether international price discrimination was per se
objectionable, as it was a common practice justified based on differing market conditions.  The
concept of sanctuary home market and the logic behind it were questioned.  Several participants
opined that trade-distorting practices were not a central aspect of the Group's mandate, while certain
participants queried the scope of the concept of trade-distorting practices and its relationship to traderemedies.  The sponsor responded that, while trade-distorting practices were not the exclusive focus
of the Group, they were important and if disciplined could reduce the need for trade remedies.
15. The last paper presented under this agenda item was entitled "Morocco's Views Regarding
Negotiations on Rules and the Disciplines of the Agreement of Implementation of Article VI of
GATT 1994 and the Agreement on Subsidies and C ountervailing Measures" (TN/RL/W/36).  The
sponsor considered that, pursuant to the Doha mandate, the Rules negotiations should not reduce the
efficacy of the AD and SCM Agreements , which guarantee Members the right to take measures against
unfair trade practices (dumping and subsidization).  The negotiations should be limited to clarifying
and improving the rules so as to avoid abuse, notably by elaborating guidelines and improving
transparency in the application of the rules pursuant  to mutually agreed interpretations and practices.
The sponsor noted that trade remedy laws were a "security net" against unfair trade practices in a
liberalized commercial system, that such laws were needed to secure investment, and that small
economies were particularly vulnerable to distortions caused by unfair trade practices.  Regarding
Article 15 of the AD Agreement , the sponsor noted that differential treatment was justified byTN/RL/M/5
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asymmetric relations between developed and developing Members, so obligations under that Article
should not be extended to developing Members.
16. A number of participants then reverted to a submission considered at a previous meeting
("Second Submission of India (Anti- Dumping Agreement)", TN/RL/W/26).  One participant noted the
similarity between many of the proposals in that paper and those put forward by the "Friends" group.This participant supported many of the sponsor's ideas, but was concerned that the suggestion to
introduce sampling when assessing domestic industry support in the case of sectors composed of
small-scale or unorganised producers could allow investigations to be initiated without sufficient
support through the manipulation of the sampling tech niques.  Another participant inquired whether
the insertion of a provision relating to back-to-back AD investigations into the AD Agreement  would
change the substance of the AD Agreement  and thus go beyond the mandate in paragraph 28 of the
Doha Declaration.  It also asked whether developi ng Members would be able to wait 365 days to
initiate a new investigation in cases where there was a new complaint supported by evidence?
C. SUBSIDIES AND COUNTERVAILING MEASURES, INCLUDING FISHERIES
SUBSIDIES
17. Two papers relating to this agenda item were presented and discussed. A statement
foreshadowing a related future submission was also presented.
18. The first paper was entitled "WTO Negotiations Concerning the WTO Agreement on
Subsidies and Countervailing Measures" (TN/RL/W/30).  The sponsor considered that, with respect to
subsidies disciplines, negotiations should focus on making the disciplines in the current Agreement
workable and effective.  Regarding definitions, the sponsor referred to the need for greater clarity with
respect to "disguised" subsidies, that is, subsidies granted for general activities, such as research and
development, but which in fact directly benefited certain products.  It also identified the need for
greater clarity regarding subsidies provided by state-controlled entities under the covert direction of
government.  The sponsor also called for clearer ru les for local content subsidies.  Regarding export
financing, the sponsor noted the need to establish clear and consistent rules for all types of financing,
and considered the OECD Arrangement to be a tested and workable set of rules.  It identified the need
for more effective subsidy notification rules, and suggested penalizing partial or non-notification.  The
sponsor also noted the need to consider how to address environmental subsidies following the expiry
of the green box.  With respect to countervail, the sponsor proposed strengthening the rules,
increasing effectiveness and reducing the cost of c ountervailing investigations.  As for developing
Members, the sponsor considered that as a general principle multilateral subsidies disciplines should
apply without exception.  However, it was willing to give positive consideration to S&D treatment for
developing Members, on the understanding that th is would be temporary and would be drawn up only
following agreement on rules for non-exempted countries.  Least-developed Members, and perhaps
other low income and small economies, could be relieved of their notification obligations under
Article 25 of the SCM Agreement , with review of this aspect of their trade policy conducted in the
context of TPRM.
19. Following the presentation of this paper, divergent views were expressed by various
participants.  Regarding disguised subsidies, one participant inquired as to how this issue differed
from that of de facto specificity, while another queried whether the sponsor proposed that non-specific
subsidies should be actionable.  Regarding state-controlled entities, one participant suggested that
such entities were equivalent to "government", while another enquired as to why the "entrust/direct"standard was insufficient.  In regard to export financing, some participants, although noting
developing Member concerns, viewed the OECD Ar rangement to be a tested, workable and dynamic
set of rules aimed at creating a level playing field for all WTO Members while allowing a flow of
export credit financing to developing countries.  Other participants were highly critical, noting that
most WTO Members, particularly developing Members, were not party to OECD discussions, thatTN/RL/M/5
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developing Members faced a cost of financing disadvantage, and that the sponsor was seeking to
expand the scope of the safe haven provided for in the second paragraph of item (k) of the Illustrative
List of Export Subsidies.  On transparency and notifications, various participants recognized the need
for improvement, but several participants questioned the suggestion to penalize non-notifiers, andnoted  practical difficulties in identifying who should be penalized.  On environmental subsidies,
some participants supported the creation of a new non-actionable category for such subsidies; one
participant, however, queried how such an approa ch would relate to the "polluter pays" principle,
while another participant opined that such an approach would benefit only developed Members.  On
special and differential treatment, certain partic ipants endorsed the sponsor's suggested approach.
Other participants however expressed the view that such treatment should be permanent given the
structural disadvantages of developing Members.  Various participants rejected the proposition that
the negotiation of special and differential treatment should follow negotiation of the generallyapplicable disciplines; in their view, such treatment should be negotiated simultaneously with the
disciplines themselves.
20. The second paper introduced was entitled: "Special and Differential treatment and the
Subsidies Agreement" (TN/RL/W/33).  The sponsor noted that the current SCM Agreement  already
provided substantial and meaningful special and differential treatment ("S&D").  Proposals foradditional S&D raised the question of whether existing S&D provisions of the SCM Agreement  are
sufficient.  The sponsor was of the view that the SCM Agreement  does not endorse indiscriminate
subsidisation policies as an effective, permanent economic development tool, nor was it necessary to
expand the S&D provisions to sanction greater undisciplined subsidisation on the part of developing
Members to promote economic growth, development and trade.  Rather, the ultimate goal should be to
integrate all Members under a single set of subsidy disciplines as soon as practical, in order that all
Members could share the same rights and responsibilities, and reap the same benefits that trade
liberalisation under the WTO affords.  As this topic deserved further consideration and discussion, it
was proposed that the Secretariat survey the literature and make available to all participants the
important academic work that has been done in this area, and that a half-day be set aside to discuss thesubject early next year.
21. Although the paper was received favourably by some participants, it raised concerns for
others.  One participant noted that, while the SCM Agreement  was one of the few with effective S&D
provisions, they were not sufficient.  Several participants questioned the value of theoretical
economics, and noted that subsidization was necessary to offset the increased costs derived from the
structural disadvantages of developing Members.  It was observed that S&D was not mere transitory
protection, and one participant indicated it was considering the revival of Article 8 on non-actionablesubsidies to cover developing Members' subsidies.
22. One participant indicated that it would soon be making a submission on non-actionable
subsidies.
2  Such subsidies could be a tool for certain development policies within the multilateral
trading system.  Noting paragraph 10.2 of the Doha Decision on Implementation-Related Issues and
Concerns, this participant considered that the issue of the reintroduction of a category of non-actionable subsidies should be considered in the negotiations.  The Group could consider and decide
what categories of subsidies would be eligible, taking as a relevant basis for its examination the
categories appearing in Article 8 of the SCM Agreement .
23. Although the Group had before it no new submissions regarding fisheries subsidies, various
participants made statements regarding this issue.  One participant noted that it was time to start
developing a platform for negotiations.  In its view, proposals should be based on identification and
categorisation of different types of subsidies in the sector, as rules will operate differently depending
on the type of subsidies and its effects.  This work would also be important in debating which
                                                     
2 Subsequently circulated as document TN/RL/W/41.TN/RL/M/5
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subsidies should not be treated as actionable.  Another participant noted that certain subsidies could
have a favourable effect on sustainable development, while others had a negative impact on the
sustainability of the fisheries as well as having harmful trade distortive effects.  This participant
considered that the negotiations should focus on subsidies, such as direct payments and cost-reducing
transfers, that lead to overcapacity and overexploitation, and thus to distortion of trade.  It wassuggested that participants would benefit from a compilation of Members' notifications and the
categories of subsidies contained therein.
24. Another participant stated its view that the sectoral treatment of fisheries subsidies should not
lead to the fragmentation of the SCM regime, as the Doha Declaration states that the basic concepts,
principles and effectiveness of the SCM Agreement  should be preserved.  Several participants
reiterated their view that fish products are not uni quely heterogeneous, that no reasoned determination
has been made on the causality between fisheries subsidies and stock depletion, and that SCMremedies have been successfully imposed on fish products.  They considered that discussion on the
clarification and improvement of the SCM Agreement  should focus solely on trade distortions caused
by subsidies.  One participant stated that it was not prepared to move to the identification and
categorization of fisheries subsidies until the preceding points had been clarified.
D. REGIONAL TRADE AGREEMENTS
25. The Chairman noted that he would start the meeting in a formal mode and then turn into
informal mode afterwards.  Referring to the aide-mémoire  he had distributed informally, he hoped
that it would be useful for discussions.
26. The proponent of the Submission on Regional Trade Agreements  (TN/RL/W/32) recalled that
at the last meeting she had provided information on the basic contents of the proposal recentlydistributed to the Group.  Her country welcomed the efforts within the Doha Development Agenda
(DDA) trade negotiations towards enhancing the di sciplines and procedures regarding the regional
trade agreements (RTAs), and, in that regard, the Background Note of the WTO Secretariat
(TN/RL/W/8/Rev.1) and the submissions of several Members on the subject were highly appreciated.
Considering RTAs as an essential component of its liberal trade policy aiming at trade creation, hercountry, in addition to having formed a Customs Union with the European Communities, had
concluded 15 free trade agreements, of which 13 were fully in force.  Therefore, her country strongly
believed that the RTAs were a reality authorized by the WTO, as clearly set out in Article XXIV of
the GATT 1994, to contribute to its objective of trade liberalization.  RTAs found the sound basis at
their Members' economic, political and legal integration interests going beyond the elimination of
classical trade measures, even to the extent of establishing common regulatory frameworks.  With
respect to the clarification of the legal framework applying to RTAs, the submission indicated thatbasic transparency requirements such as notification, scope of information to be submitted, periodical
reporting, examination process and determining the legal status of the examination reports of the
Committee on Regional Trade Agreements (CRTA) appeared to be agreed upon more easily, and that
such group of issues would be considered as a good starting-point for the negotiations.  As to
improving the effectiveness of the CRTA, her country believed that the simplification of the generalrules of examination and the greater application of the "grandfathering" of the currently existing
RTAs would accelerate that process.  As a concrete suggestion towards the improvement of the
grandfathering approach, determination of an "expiry date", which could presumably be the date of
completion of the DDA negotiations, for the retroactive application of stricter new rules to the lately
notified RTAs, would increase the number of un-notified RTAs becoming part of the multilateralsystem.  As to the question of RTAs to be concluded after that date, apparently the new rules were to
be applied;  however, the ultimate objective of simplifying the overall system and the adoption of less
complex rules would consequently have some other positive effects for their examination.
Furthermore, grouping of certain set of existing agreements could be done by the CRTA prior to their
examination towards facilitating the process.  These groupings could be done on several basis such asTN/RL/M/5
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geographical separations, RTAs formed up through the enlargement of existing ones and overlapping
RTAs.  During the examination process in the CRTA, her delegation considered it more realistic to
put focus on the analysis of trade data and flows, instead of every provision included in the text of the
agreement.  Recognizing the reality that large numbers of WTO Members were becoming parties to a
wide diversity of agreements, her country was of the opinion that all RTAs should be notified to asingle body, namely the CRTA.  Finally, the submission included preliminary views on basic systemic
issues, namely "substantially all the trade" (SAT), rules of origin, regulatory harmonization within the
RTAs, and other issues.
27. Participants stressed that given the late submission of the proposal, comments were of a
preliminary nature.
28. Commenting on the preambular part of the proposal, one participant noted that while
geographical realities were important in considering the proliferation of RTAs, a more recent trendpointed to other reasonings for their conclusion;  these transcended the geographical aspect and
resulted in RTAs being concluded between countries of different regions.
29. Numerous participants requested further clarification on the proposal to operationalize
"grandfathering" through the setting of an "expire date" and how this was expected to increase the
number of un-notified RTAs becoming part of the multilateral system;  on whether this proposalmeant that RTAs notified prior to the "expire date" would not be subject to the new rules before that
date but would be after that date, or otherwise whet her it would simply not be subject to the new rules
at all; and on whether non-retroactivity was being sought for new rules only or also for clarified rules.
Noting that the proposal referred to "greater application of the "grandfathering" of the currently
existing RTAs", one participant indicated that it di d not seem that "grandfathering" was already being
applied in the WTO.
30. On the concept of "grandfathering" itself, most participants indicated that discussion on this
question should not be held in the abstract but should rather take place once some concrete results in
the negotiations have been attained.  It was also recalled that "grandfathering" might have wide
implications in particular vis-à-vis  the treatment of new parties to an existing RTA, the desirability of
maintaining two sets of rules, and the discriminatory element it created among Members.  A few
participants noted that requiring all RTAs to comp ly with any new rules by the same effective date
would preclude such discrimination among RTAs, whic h in all cases would not be appropriate.  The
suggestion that a transition period be provided to allow RTAs to conform to any new rules was
considered as meriting further attention.  One participant suggested that Members could consider
having different provisions for dealing with procedural and substantive issues.  The point was made
that the matter did not relate to a retroactive applic ation of any new rules, but rather their application
to future RTAs and those in force at the time of their adoption.  Following a request made on whether
background material existed on the concept of "grandfathering", the Chairman informed that,
following the request made at the last meeting, the Secretariat was working on a note to clarify the
conceptual and practical scopes of both "grandfathering" and "retroactive application of rules".
31. Various participants requested the proponent to further elaborate on the suggested grouping of
existing agreements prior to examination, in particular as to how such grouping could facilitate and
make more effective the examination.  It was noted that the CRTA, in scheduling examinations,
already provided for the grouping of some related and/or overlapping RTAs;  further, each RTA was
unique in itself and had to be examined on its own merit.  The point was also made that the
constituent parties of different RTAs might not want to join an examination together.  One participantsuggested a more comprehensive perspective for deal ing with that, by: (i) providing that the Trade
Policy Review Mechanism of Members parties to several RTAs focused the discussion on such RTAs,
so that an overall perspective on how they worked together could be provided;  and (ii) requestingTN/RL/M/5
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Members parties to an RTA to submit electronically a single schedule, which would include the tariff
rates for all preferential and MFN trade.
32. On the proponent's suggestion that examination should focus on the analysis of trade data and
trade flows, some participants considered that wh ile such an analysis was important and should be
improved, Members were free to raise any issue in accordance with their own interests and needs.  Itwas also questioned whether a quantitative analysis would suit best RTAs' dynamic nature, as it
provided a snapshot of RTAs at a given point in time.  Some participants expressed the view that
ultimately, deliberations of systemic issues, in particular SAT, would shape any improvements to the
Standard Format.  The point was made that the main problem with the Standard Format was that
precise tariff-line data and full details on how sector-specific provisions applied were not provided.
33. Significant support was shown for having all RTAs notified to the WTO being considered in a
single body, namely the CRTA.  However, a number of participants resisted that approach being alsoapplied to arrangements notified under the Enabling Clause;  for these, the  status quo  of submission to
and consideration by the Committee on Trade and Development (CTD) should be maintained.  One
delegation noted that the question of where to notify raised two broad issues which should be kept
separately, namely whether RTAs under the Enabling Clause were of a different nature than those
under Articles XXIV of the GATT and V of the GATS; and transparency, which would benefit fromthe notification of all RTAs to a single body.
34. Regarding the nature of arrangements notified under the Enabling Clause, a few participants
suggested that these amounted to an exchange of concessions between developing countries aiming at
enhancing their mutual trade;  they were thus no t comparable with RTAs under Article XXIV of the
GATT or Article V of the GATS.  It was also noted that the wide support shown in the NegotiatingGroup on Market Access to promote S outh-South trade had reaffirmed that objective.  One participant
noted however that more differences existed between the GATT and the GATS than between the
GATT and the Enabling Clause.
35. A few participants stressed that consideration of notifications within a single body meant that
all RTAs would be subject to the same degree of transparency, not that the rights and obligationsprovided for in each of the relevant WTO rules would be altered.  Others pointed out that
transparency was assured since CTD meetings were open to all Members.  One participant indicated
that separate notification procedures for RTAs among developing countries raised concerns on the
consistency of the process and the respective roles of the CRTA and the CTD;  however, given the
expertise of the sectoral Councils and the CTD, it would be advisable for the CRTA to inform those
higher level bodies of the results of its consideration of the notifications.  The point was also made
that, if consideration of notifications was possible in various bodies, the objective sought - i.e. tofacilitate procedures - would not be achieved.  Finally, it was noted that the Enabling Clause was
silent as to which body the notifications should be made, and a strict reading might point to the tariff
elements being notified to the CTD, the services el ements to the Council for Trade in Services and yet
non-tariff elements to a different body;  in that line, a single notification to the CRTA would simplify
procedures.
36. With respect to the proponent's suggestions on SAT, participants requested further
explanations with respect to the exclusion of major sectors, and to the reference made to "commonly
shared presumption that the volume of trade created within the RTAs exceeds the possible trade
diversions".  Some participants expressed concern with any approach that would consider appropriate
to exclude entire sectors from the coverage of an RTA;  that would bring the WTO backwards vis-à-
vis the results achieved at the Uruguay Round.
37. Participants generally viewed with concern the proliferation of different sets of preferential
rules of origin, and were in support of their ha rmonization in the long run.  Divergent views wereTN/RL/M/5
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expressed in relation to the proponent's suggestions that a single set of rules of origin apply among the
members of every RTA, and that this should be followed by a convergence among the rules of origin
of different regional integration schemes.  One participant noted that the cumulation aspects of the
Pan-European System, which followed that approach, had had a negative domino effect on MFN
trade, by providing benefits to certain third parties to a given RTA, but not to others.
38. Divergent views were also expressed regarding the proponent's proposal on regulatory
harmonization within RTAs.  Some participants welcomed the emphasis put on regulatory
convergence and harmonization, which tended to be of importance in more recent RTAs.  But it was
noted that the Group should explore the experience related to such harmonization, and in particular
whether it resulted or not in raising barriers towards third-parties' trade.  One participant observed that
the starting point in such discussion was the existence of very divergent approaches to domestic
regulation, with a key variable being the extent to which competition principles informed regulatoryframeworks;  for such participant, the regulatory  approach that was more consistent with trade
liberalization within an RTA context was mutual recognition and equivalence, rather than
harmonization.  The point was however made that the Group should not focus on the harmonization
versus equivalence debate in the context of RTAs, as their effects varied depending on how the
systems were constructed and implemented.
39. Some participants also requested further clarification on the proponent's reference to dispute
settlement mechanisms within RTAs;  in particular, the question was posed on whether any Member
had frequently employed such mechanisms so that  it could share its experience with the Group.
40. Thanking participants for all the preliminar y comments made, the proponent informed the
Group that the submission would be further enhanced during the course of negotiations.  Regarding
specific points, the proponent reaffirmed preferences for the "grandfathering" of RTAs notified up to
the expire date, so that these remained subject to current rules, as well as for the grouped examination
of similar RTAs.  While favouring a quantitativ e approach for dealing with SAT, the proponent
agreed to take into account Australia's proposal in any further enhancement of its submission.
Finally, the proponent shared with participants her country's positive experience with regulatoryharmonization upon the formation of a customs union.
E. OTHER BUSINESS
41. The Chairman informed the Group that he had re sponded on his own responsibility to letters
he had received from the Chairmen of the Committee on Trade and Development and of the Working
Group on Trade and Transfer of Technology requestin g information regarding developments in the
Rules Negotiating Group relating to the work of the other two bodies.  Copies of the responses were
made available to the Group.
42. The Group agreed that it would hold its next meeting on 3, 6 and 7 February 2003.  It further
agreed, as a working hypothesis and subject to review at its February 2003 meeting, to meet three
more times before the summer break: 24, 25 and 27 March; 5-7 May and 18-20 June 2003.  The
Chairman suggested that Participants seek to present any new papers for consideration at the February
meeting of the Group by 12 January 2003, in order to ensure that the Secretariat has sufficient time totranslate and circulate them in all three working languages in advance of the meeting.
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