RESTRICTED
WORLD TRADE WT/COMTD/1/Add.9
28April 1997
ORGANIZATION(97-1836)
EXAMINATION OFTHE SOUTHERN COMMON MARKET AGREEMENT
Note ontheMeeting of10-11 October 19951
Chairman: H.E. Mr.Christen Manhusen (Sweden)
1. TheWorking Party began theexamination oftheAgreement establishing theSouthern Common
Market (MERCOSUR). Themeeting tookupthefollowing topics:
- General Remarks
- TheElimination ofDuties andCharges andOther Restrictions intheParties 'Reciprocal
Trade
- TheCoordination ofMacroeconomic Policies
- TheEstablishment ofaCommon External Tariff andtheAdoption ofaCommon Trade
Policy inRelation toThird States orGroups ofStates
- Rules ofOrigin
- Measures Affecting Imports from Third Countries
- National Treatment
- Commitments Under Latin American Trade Integration Association
- Accession
- Dispute Settlement
- Trade Data
- Trade Creation/Trade Diversion
- MERCOSUR andIntegration Efforts intheWestern Hemisphere
- Services
- Other Areas
- Transparency inImplementing theAgreement
General Remarks
2. TheChairman introduced thefirstmeeting oftheWorking Party ontheSouthern Common
Market Agreement (MERCOSUR) between Argentina, Brazil, Paraguay andUruguay. Henoted that
theAgreement would beexamined inlight oftherelevant provisions oftheGATT, including
Article XXIV andtheEnabling Clause. Astheprocess ofestablishing acommon market hadadvanced
overthepastyear,theParties hadsubmitted atextoftheAdditional Protocol totheTreaty ofAsunción,
which setouttheinstitutional structure ofMERCOSUR.
3. Therepresentative ofUruguay, speaking onbehalf oftheMERCOSUR Parties, saidthatthe
Working Party exercise would serve transparency andpredictability. TheParties were oftheview
thattheMERCOSUR integration process wascomplementary tothemultilateral trading system and
1Themeeting wasconvened inWTO/AIR/159.WT/COMTD/1/Add.9
Page2
fullyinlinewiththerelevant GATT rules. Having beencrafted withtheserulesinmind, theAgreement
wassigned on26March 1991. Itspurpose wastopromote thedevelopment ofthefourcountries through
thecreationofanextendedeconomicareawhichwoulddeepenparticipationintheinternationaleconomy.
Asafirststage towards theattainment ofthese objectives, atransition period lasting until
31December 1994 wastoallow timeforimplementing theTrade Liberalization Programme. This
Trade Liberalization Programme included totaltariff reduction andtheelimination orharmonization
ofnon-tariff measures. On1January 1995 thecustoms union entered intoforce, which entailed a
common external tariff (CET) andstandards foritsapplication, aswellasthecoordination oftrade
policies withrespect tothirdparties.
4. Therepresentative ofUruguay thendescribed theTrade Liberalization Programme ingreater
detail. Appearing asAnnex 1oftheAsunción Treaty, theTrade Liberalization Programme established
gradual, linear andautomatic tariff reduction among theParties. There wasaninitial 47percent
reduction intarifflevels ineachcountry, followed byreductions of7percentevery sixmonths, resulting
inazerotariff by31December 1994. IntheviewoftheParties, thistariffreduction programme was
adecisive factor behind thesubstantial increase experienced inintra-MERCOSUR trade. However,
certain products hadbeenlisted asexceptions orhadbeentheobject ofsafeguards during thetransition
period, aspermitted inAnnex 4oftheAsunción Treaty. InAugust 1994 theParties established a
timetable tobring tariffs forsuchexceptions down tozero, aspartofwhatwascalled theRegime for
theFinal Adaptation ofMERCOSUR. Linear andautomatic reductions intariff levels weretotake
place overafour-year period forArgentina andBrazil andoverafive-year period forUruguay and
Paraguay. Theaimwasbotheconomic andpolitical, asthereductions promoted smooth structural
adjustment andexposed thevarious sectors tomore competitive conditions. Turning tonon-tariff
restrictions, hestressed thatArticle 5(a)oftheAsunción Treaty called fortheelimination ofall
restrictions totradeby31December 1994. TheMERCOSUR Parties haddrawn adistinction between
non-tariff restrictions which hadtobeeliminated, andnon-tariff measures which would besubject to
aharmonization process. Forthemost part, measures requiring harmonization were those which
concerned plant andanimal health, technical standards, environmental protection andsecurity.
Elimination wasalready under way, andtheharmonization process wasindifferent stages of
implementation andwasbeing supervised byMERCOSUR 'sTrade Commission.
5. Therepresentative ofUruguay thenturned totheCET, saying itwasafundamental aspect
oftheeffort toopentheMERCOSUR economies. MERCOSUR 'sCETwassetfullypursuant tothe
provisions ofArticle XXIV:5. Theweighted average oftheCETwaslower thantheweighted averages
ofthetariffs previously applied bytheindividual Parties. TheCET tariff levels ranged from zero
to20percent. While theCET entered intoforce on1January 1995, there were fivecategories of
exceptions. First, there werenational exceptions. TheParties haddecided inAugust 1994 toallow
Argentina, Brazil andUruguay tomaintain amaximum of300items asexceptions totheCETuntil
1January 2001, andtoallow Paraguay upto399items asexceptions. TheParties hadsubsequently
drawn upschedules forthesenational exceptions. Thesecond category ofexceptions wasthatofcapital
goods. Forthiscategory, thenational tariffs ofthefourcountries weretoconverge towards aCET
of14percent, withArgentina andBrazil adjusting tothislevelbytheyear2001 andUruguay and
Paraguaydoingsoby2006.Thethirdcategoryofexceptionsinvolvedcomputerandtelecommunications
goods. Thenational tariffs would converge ata16percentrateby1January 2006. Theothercategories
ofexceptions weretheautomotive andsugar sectors. Duetothespecial characteristics ofthese two
sectors -bothfrom aneconomic andasocial point ofview, andinviewofthefactthatproduction
andmarketing inthese sectors, globally, weresubject toextremely special rules -itwasagreed that
theywould receive special treatment. Aspecial group wascreated toadapt thesugar sector tothe
customs union. Fortheautomotive sector, atechnical adhoccommittee wasestablished todraw up
aproposal foracommon MERCOSUR regime toenterintoforce on1January 2000. There wasalso
approval ofthelistsofproducts tobeexcepted from theCET onthebasis thattheywere apartof
theRegime fortheFinal Adaptation tothecustoms union. Regarding standards fortheapplicationWT/COMTD/1/Add.9
Page3
oftheCET, itwasagreed thatthere would benotonlyacommon nomenclature inMERCOSUR, but
alsoacustoms code, rulesoncustoms procedures, andstandards oncustoms valuation, which would
bedetermined according toWTO rules. MERCOSUR rulesoforigin hadastheirfundamental basis
theprovisions oftheWTO (asdidallMERCOSUR instruments oftrade policy) andoftheWorld
Customs Organization. Theorigin ofproducts listed asexceptions totheCEThadtobeverified when
theproductswerecirculatingamongtheMERCOSURcountries.Theseproductshadtomeetthegeneral
requirement forachange inthetariffposition, when applicable, orregional value-added requirements
of60percent.
6. Therepresentative ofUruguay then turned toother instruments oftrade policy. In
December 1994, MERCOSUR 'sexecutive organ, theCouncil oftheCommon Market andtheCommon
Market Group, hadapproved aseries ofdecisions andresolutions forimplementing thecustoms union,
tobring theCETintoforceon1January 1995andtosetoutthecommon tradepolicy measures required
toapply it.Among those measures, theParties werepresently updating rulesonunfair practices against
thirdparties, using asabasistheelements approved intheUruguay Round. There werealsocommon
regimes forrules oforigin, freezones, export processing zones andspecial customs areas, aswell
asaMERCOSUR customs code, which wasinthecourse oflegislative approval, andasetofcustoms
standards, which wereofanoperational nature andwhich hadbeenharmonized andapplied commonly
bytheParties. Anewinstitutional structure wascreated forMERCOSUR, which wascurrently
undergoing parliamentary ratification bytheParties. TheTrade Commission ofMERCOSUR was
established toenforce theCETandthecommon tradepolicy. TheCommission, inturn,setupanumber
oftechnical committees toimplement theAgreement according tovarious timetables andtoanalyze
specific areas. Among theseweretheTechnical Committee onTariffs Nomenclature andClassification
ofGoods; theTechnical Committee onCustoms Affairs, dealing withallissues ofcompetence ofthe
national customs administrations oftheParties, aside fromthose handled bythepreviously mentioned
technical committee; andtheTechnical Committee onTrade Rules andDisciplines, dealing withrules
oforigin, freezones, export incentives andspecial import regimes. Also, there were theTechnical
Committee onPublic Policy Distorting Competitivity, which drew upproposals forharmonizing or
dismantling measures ofpublic policy thathaddistortive effects oncompetition within theregion;
theTechnical Committee onDefense ofCompetition; theTechnical Committee onUnfair Practices
andSafeguards, which drafted common regulations onunfair tradepractices andonsafeguards vis-à-vis
thirdparties; andtheTechnical Committee onConsumer Defense. Finally, there weretheTechnical
Committee onNon-Tariff Restrictions andMeasures; theTechnical Committee ontheAutomotive
Sector, which waspreparing adraftcommon regime fortheautomotive sector forconsideration by
theTrade Commission before 31December 1997; andtheTechnical Committee ontheTextiles Sector,
which tookintoaccount theWTO 'sAgreement onTextiles andClothing. Inaddition, there wasa
special group setupforthesugar sector, which, asmentioned, wasinvolved withtheRegime forFinal
Adaptation tothecustoms union.
7. TherepresentativeofUruguaythenspokeaboutMERCOSUR'scoordinationofmacroeconomic
policies, noting thatthiswasconceived ofasaprocess tobedeveloped gradually, rather thanasa
target tobemetbyasetdate. While theprocess hadthusfarnotmaterialized intheshape ofspecific
agreements, frequent contacts atvarious levels bytheParties 'economic authorities hadresulted in
preliminary guidelines formacroeconomic coordination. Priority wastobegiven tomacroeconomic
policy mechanisms mostdirectly linked totrade. Thecoordination ofsectoral policies hadalsobeen
subject tointense technical work, covering suchareasasindustry, agriculture, energy, transport, labour
andsocial security, allowing foragrowing convergence ofpolicies intheParties 'sectors.
Macroeconomic policies would beassessed twice ayearatmeetings oftheCouncil oftheCommon
Market andatmeetings oftheParties 'economics ministers andcentral bankgovernors. TheParties
would seektomaintain macroeconomic balances infiscal, monetary andexchange areas, asthesewere
important notonlyforthecountries independently, butalsofortheregional integration process asa
whole.WT/COMTD/1/Add.9
Page4
8. Therepresentative ofUruguay thenprovided anoverview oftheinstitutional structure of
MERCOSUR. MERCOSUR wasalegalpersonality under international law,having theauthority to
contract, toappear incourt, toconclude headquarters agreements, etc.Thelegal personality was
exercised bytheCouncil ofMERCOSUR attheministerial level. Theroleofnegotiating andsigning
agreements could bedelegated byexpress mandate. There weresixorgans, which weretheCouncil
oftheCommon Market, theCommon Market Group, theMERCOSUR Trade Commission, theJoint
Parliamentary Commission, theEconomic Social Consultative Forum, andtheMERCOSUR
AdministrativeSecretariat.Theonlybodieswithdecision-makingpowerweretheCouncil,theCommon
Market Group andtheTrade Commission. TheCouncil, made upofforeign relations ministers and
economic ministers, wasthehighest body ofMERCOSUR, responsible fordrawing uppolicy and
taking decisions toensure thatdifferent targets weremet.TheCommon Market Group wastheexecutive
body, comprised ofrepresentatives from theforeign affairs ministries, theeconomic ministries and
thecentral banks. TheTrade Commission wasresponsible forassisting theCommon Market Group.
Italsoenforced tradepolicies andfollowed matters related totradewiththirdparties. Itwascoordinated
bytheforeign affairs ministries. TheJointParliamentary Commission wasthebodywhich represented
theparliaments oftheParties. Itsmain function wastospeed updomestic legislative adoption and
implementation ofMERCOSUR standards andrules, anditalsohelped intheharmonization work
oftheintegration process. Itwascomprised ofmembers oftheparliaments. TheEconomic andSocial
Consultative Forum wastheconsultative body representing economic andsocial concerns. The
MERCOSUR Administrative Secretariat wasthesupport bodyofthewhole MERCOSUR system and
wastheonlyorgan withpermanent headquarters. TheAdministrative Secretariat maintained theofficial
archives ofMERCOSUR documents andcarried outauthenticated translations forMERCOSUR. It
regularlyinformedthePartiesofthemeasuresimplementedbyeachofthem.AllMERCOSURdecisions
weretaken byconsensus andweremandatory, whether taken bytheCouncil, theGroup, ortheTrade
Commission. Once arulewasagreed upon, theParties weretoadopt necessary measures toensure
itsimplementation andwere thentoinform theAdministrative Secretariat. TheSecretariat wasto
announce this,andtheruleswould come intoeffect 30dayslater. TheMERCOSUR dispute settlement
system wasaimed atsolving disputes linked totheAsunción Treaty, waswellasanydisputes stemming
fromtheinterpretation ofornon-compliance withtheguidelines fromtheTrade Commission. Prior
tojudicial proceedings, there wasasettlement procedure forclaims orcomplaints presented tothe
Trade Commission. Before thefullCET process wastobecompleted, theParties were toadopt a
permanent dispute settlement system.
9. Therepresentative ofUruguay thendiscussed MERCOSUR inthebroader context ofthe
multilateraltradingsystem.HesaidtheMERCOSURintegrationprocesswasimportantnotonlybecause
itoffered greater opportunities fortheregion 'seconomic development, butalsobecause itcould
contribute togrowth inworld trade. Themain economic indicators showed MERCOSUR tobein
linewiththegoalofachieving openeconomies. Thus, resources within theregion should beallocated
inawaywhich responded toprice signals oftheworld market. Thisgoalwasconsistent withthe
aimssetoutinthepreamble oftheAgreement Establishing theWTO, which called forincreasing real
income andeffective demand through mutually advantageous understandings geared toward the
elimination ofdiscriminatory treatment ininternational trade andthesubstantial reduction oftariffs
andother barriers totrade. TheMERCOSUR Parties haddemonstrated thewilltomeetthese goals,
notonlyataregional levelbutalsoatamultilateral level. With itsenvisaged maximum import duty
of20percent,theCETwasinkeeping withtheposition thatregional integration could make apositive
contribution toliberalization andtheexpansion oftradeingoods andservices. MERCOSUR hadbeen
apartoftheLatin American Trade Integration Association (LAIA) which wasexamined onabiannual
basisbytheCommittee onTrade andDevelopment. ThishadledtheContracting Parties toestablish
aWorking Party onMERCOSUR. MERCOSUR should beexamined inlightoftherelevant provisions
oftheEnabling Clause andArticle XXIV. IntheParties 'view, MERCOSUR complied withthose
provisions foranumber ofreasons. First, thecustoms union substantively encompassed allthetrade
oftheParties, ascalled forinArticle XXIV:8. Second, theTrade Liberalization Programme wasgearedWT/COMTD/1/Add.9
Page5
toward theelimination oftariffs andtheremoval ofother barriers totrade between theParties asof
1January 1995 (with theexception ofalimited number ofitems, which, asnoted, were subject to
anadaptation process fortheprogressive andautomatic elimination ofthepresent duties overaspecified
period oftime), ascalled forinArticle XXIV:7. Third, asof1January 1995, theCEThadbeenin
effect (with theexceptions referred toearlier), ascalled forinArticle XXIV:7 and8.Fourth, the
weighted average oftheCETwasconsiderably lower thantheweighted averages ofthetariffs which
theParties hadapplied prior totheentry intoforce oftheCET, ascalled forinArticle XXIV:5; the
harmonized tradelawswereconsiderably lessrestrictive thanpriortothestartoftheintegration process,
ascalled forinArticle XXIV:5 and8.Finally, thetariffreduction hadbeencarried outinaccordance
withthetimetable established. Inshort, integration added dimension tothemarket, allowing greater
economies ofscale andspecialization oflabour andencouraging investment andtechnological
development. Italsofurthered theaimsofthemultinational trading system bybeing open, predictable
andtransparent. MERCOSUR thusconstituted aprerequisite forthefullparticipation oftheregion
intrade.
10. TherepresentativeofVenezuelasaidhisdelegationhadbeencarefullyfollowingthedevelopments
inMERCOSUR, inviewoftheconsiderable economic magnitude ofthissub-regional entity whose
combined GDP represented more than50percentofLatin American GDP, andwhich constituted
a190million-persons market. Asexpressed inthedocumentation submitted, theAsunción Treaty
waspartofthe1980 Montevideo Treaty, ofwhich Venezuela wasalsoamember, andbothTreaties
shared theobjective ofacommon market. Furthermore, theMERCOSUR Parties andthemembers
oftheCartagena Agreement, together withother Latin American countries, hadbegun tocoordinate
forthecreation ofaLatin American FTA fortheyear2005. Concerning thisexamination, his
Government expected thattheconclusions would confirm theMERCOSUR customs union 'sconformity
withtheprovisionsofArticleXXIV,aswellaswiththeEnablingClause.Inthisrespect,theinformation
provided made itpossible toaffirm thatthiswasaneconomic integration experience thatwasinline
withArticle XXIV:5(a), inthatthecustoms duties applied since thecustoms union 'screation hadnot
onthewhole increased withregard totrade withnon-Parties. MERCOSUR alsoseemed tocomply
withparagraph 8(a)oftheArticle XXIV, asithadforthemost parteliminated thecustoms duties
andother restrictive trade regulations onthetrade among theParties. AstheCommittee hadbeen
told,theschedules ofexceptions tothetariff reductions werelimited incoverage, andatimetable had
beensetfortheconvergence ofthose exceptions intotheCET overamaximum period ofsixyears
(upto2001). Itwasalsoimportant toverify thatMERCOSUR hadshown positive results, interms
oftradecreation, during itsshortlifetodate. Asindicated intheAppendix todocument W/COMTD/1,
between 1990-1993, imports within theMERCOSUR countries hadgrown by123percent;thisgrowth
hadoccurred without prejudice totheimports byMERCOSUR countries fromtherestoftheworld,
which hadgrown by56.2percentoverthesame period. Thiscorroborated theestimate appearing
inAnnex 5ofthesame document which saidthere hadbeenUS$7.3 billion worth oftrade creation.
Thefigures indicated, therefore, thatMERCOSUR wasbeginning tostand outasasuccessful example
ofopeneconomic integration which hadremained intact, despite thenational crisis intheregion at
theendof1994, which hadhadaconsiderable impact oninternational reserves andontheexchange
ratesofLatin American countries, despite thefactthattheregion 'seconomies hadbeenconsiderably
better prepared infacing thiscrisis thantheyhadbeenintheearly1980s, interms ofnon-tariff measures,
rules andstandards. Hisdelegation welcomed theMERCOSUR Parties 'efforts tofollow WTO
provisions, especially theirincorporation oftheWTO rules intonational law. Venezuelan foreign
policy wasaimed atachieving astrategic association formutual benefit withtheMERCOSUR countries.
Thehighpriority which hisauthorities attached tothatobjective reflected theimpact ofregional
integration andrising intra-Latin American trade ontotalexports from Venezuela. Those trade ties
withMERCOSUR countries hadbeenintensifying inrecent years, particularly those withBrazil. For
example, discussions onelectrical intra-connection between thesouthern states ofVenezuela andthe
north ofBrazil were currently underway, andprogress hadbeenmade inassociation plans between
thestatepetroleum corporations ofVenezuela andBrazil. Allofthispointed tothecommencementWT/COMTD/1/Add.9
Page6
ofnegotiations foraformal economic integration agreement between Venezuela andMERCOSUR
inthenearfuture.
11. Therepresentative oftheEuropean Communities welcomed theMERCOSUR Parties andsaid
hisdelegation approached regional integration inanopenandpositive spirit. Regionalism, however,
should notdistract members fromtheneedforfurther multilateralization. Ittherefore seemed imperative
toensure thatregional tradeagreements (RTAs) conformed withthemultilateral disciplines andacted
asacatalyst forfurther liberalization atthemultilateral level. TheCommunity wasoftheviewthat
therevival ofintegration inLatin America -ofwhich MERCOSUR wasagood example -would
contribute totheconsolidation ofdemocracy andfoster economic development inthecountries ofthe
region. MERCOSUR, withits190million people, itsGDP ofapproximately US$500 billion, and
it'svolume ofinternal trade, could undoubtedly contribute topolitical andeconomic stabilization.
Hisdelegation therefore wasapproaching thismeeting withnopreconceived ideas, butrather with
anopenspirit, moved byconcerns fortransparency andcompliance.
12. Therepresentative oftheUnited States thanked theMERCOSUR Parties fortheirinformative
introductory statement. Herdelegation supported economic integration andtrade liberalization asa
means offostering thegrowth ofbothindividual countries andtheglobal trading system atlarge. It
wasapositive signthattheParties, while concerned withconsolidating andexpanding thedisciplines
agreed tobythefourcountries, hadremembered tolookoutward andtoparticipate intradeliberalization
inother fora. Herdelegation noted theParties 'efforts toenter intoarrangements withavariety of
other countries andregional groups, including thefree-trade area(FTA) exercise thatwastaking place
intheWestern Hemisphere. Because sub-regional trading groups played suchanimportant partin
theglobal trading system, RTA examinations werecritical. With theexpansion ofglobal trade and
theproliferation ofsub-regional arrangements, itwasincreasingly important forMembers tounderstand
fullytheimplications ofthese agreements fortrade, onbothacountry andamultilateral basis. This
awareness would enable allcountries totakefulladvantage ofopportunities offered byeconomic
integration activities; italsoensured thattheWTO disciplines which Members hadworked sohard
toestablish would continue tobetheguiding principles ofalltradeagreements. Herdelegation thanked
theMERCOSUR Parties forthework theyhaddoneandwould dotohelpMembers understand this
important RTA.
13. Therepresentative ofSwitzerland saidhisdelegation welcomed theMERCOSUR countries '
efforts toward greater economic integration. Those integration efforts could bring about development
oftrade intheMERCOSUR region, andinturnpromote theeconomic development oftheParties.
Theregional integration ofMERCOSUR might alsoleadtoincreased integration inworld trade, which,
ofcourse, waslinked torespect formultilateral rules fortrade, particularly those oftheWTO. In
assessing compatibility withtherelevant provisions oftheEnabling Clause andGATT 1994, his
delegation considered theWorking Party tobeinapreliminary phase, which wastobemarked by
transparency.HethankedtheMERCOSURPartiesfortheinformationtheyhadprovided,whichallowed
Members tohaveabetter picture ofthepresent situation, particularly regarding theupdating ofthe
CET andtheschedule ofexceptions.
14. Therepresentative ofJapan welcomed theMERCOSUR Parties andthanked them forthe
information provided. Itwaswellknown thathisdelegation regarded RTAs asamajor derogation
from thefundamental WTO principle ofmost-favoured-nation (MFN) treatment. RTAs werebeing
established inincreasing numbers andhadgrown insizeandscope, surpassing allexpectations held
atthetimeofthedrafting oftheGATT; today, theycovered asignificant portion ofworld trade.
Considering thisstateofaffairs, Japan considered itnecessary toexamine therelationship between
themultilateraltradingsystemandRTAs.Hisdelegation,representingoneofthemajortradingcountries
notparticipating inanyRTAs, wished toreiterate thefollowing views: First, RTAs should begoverned
bythestrictdisciplines oftherelevant WTO provisions, withparties bearing inmindthefactthatRTAsWT/COMTD/1/Add.9
Page7
constituted amajor derogation from theMFN principle. Second, itwasimportant thatanynegative
effectsofRTAsonathirdpartybeminimized,andthatthebenefitsaccruingfromtheresultingexpansion
oftrade beshared. Third, hisdelegation considered itimportant toreview theoperation ofanRTA
onaregular basis, inaddition toexamining itatthetimeofitscreation orexpansion. Fourth, itshould
beunderstood thattheEnabling Clause, while allowing preferential treatment among less-developed
countries, didnotrelaxtheGATT requirements concerning RTAs. ItwasclearthattheMERCOSUR
Agreement sought toestablish aCETandtoeliminate tariffs among theParties; theWorking Party
should beexamining whether theAgreement mettherequirements ofArticle XXIV. However, in
spiteoftheclearefforts bytheMERCOSUR Parties, moretimeandinformation wereneeded toexamine
theAgreement thoroughly.
15. Therepresentative ofCanada saidthisexamination wasparticularly important because ofthe
significance oftheMERCOSUR Agreement forLatin America. MERCOSUR wasthebiggest market
inLatin America andconstituted Canada 'sprimary trading partner intheregion. Hisdelegation wanted
tounderstand fullyallthechanges thathadbeenimplemented inthetraderegimes ofthefourcountries,
soastoassess theimpact onCanadian exporters. Hisdelegation wished toexpress disappointment
inthedelays inthescheduling oftheexamination andinthesubmission ofsome ofthenecessary
information. Hethanked theParties fortheirdetailed introductory statement, butadded thatsome
timewould beneeded todigest thenewinformation. Thisfirstmeeting wasnevertheless important
forachieving transparency; itwasonlythrough enhanced understanding thatMembers would beable
toassess whether theAgreement wasinconformity withWTO rules. Inthatrespect, hisdelegation
would payparticular attention totheimplementation oftheCET, notably inrelation totheUnderstanding
andtheobligation tosubmit documentation andengage inconsultation ontariff policy matters. His
delegation would alsofocus ontheestablishment ofcommon policies atthesectoral levelsoastoknow
whether duties andother regulations ofcommerce, asawhole, werenotmade more restrictive bythe
application ofacommon regime.
16. Therepresentative ofKorea thanked theMERCOSUR Parties fortheirdetailed introductory
explanation. Hisdelegation shared theconcern expressed bythedelegation ofJapan withrespect to
theproliferation ofRTAs.
17. Therepresentative ofMexico welcomed theParties, saying hisdelegation viewed RTAs as
potentially complimentary tothemultilateral trading system. Theprocess ofMERCOSUR integration
wasbroad andcomplex. Itwasanextremely important Agreement, bothataregional level andin
terms ofworld trade.
18. Therepresentative ofColombia joined other delegations inwelcoming andthanking the
MERCOSUR Parties. TheAgreement wasveryimportant toLatin American countries. Intheview
ofhisdelegation, thistypeofintegration didnothamper world trade liberalization, butrather was
anessential component ofit,enabling countries atdiffering levels ofdevelopment toparticipate more
effectively inworld trade. Theexamination exercise wasareflection ofMembers 'shared philosophy
ofensuring RTA compatibility withthemultilateral trading system. Heexpected theMERCOSUR
examination toclarify issues regarding thesignificance orthescope oftheAgreement andtoshedlight
onimprovements thatcould bemade. TheMERCOSUR integration process could beuseful notonly
inachieving better andmore balanced development fortheParties, butalsoforserving asanexample
forother countries involved inintegration processes.
19. Therepresentative ofNorway stated thathisdelegation regarded RTAs ascomplementary to
themultilateral trading system solongastheycomplied withtherelevant WTO provisions. IfRTAs
alsocontributed toeconomic andsocial developments inthecountries involved, theyshould beregarded
inanevenmore positive light. Hethenthanked theParties fortheinformation theyhadoffered.WT/COMTD/1/Add.9
Page8
20. Therepresentative ofAustralia alsoexpressed thanks totheParties fortheircomprehensive
opening statement. Hisdelegation wasgenerally pleased withtheresponses provided toquestions it
hadsubmitted.
21. Therepresentative ofChile wished tohighlight theimportance oftheliberalization goals and
theintegration process which hadcome about intheLatin American area,ofwhich MERCOSUR was
animportant example. Argentina, Brazil, Uruguay andParaguay hadintroduced acustoms union to
thearea, while Chile andMexico hadopted forFTAs. Also, Chile wasatpresent negotiating atype
offree-trade association withMERCOSUR, which herdelegation hoped would further increase trade,
notonlyamong Chile andtheMERCOSUR Parties, butalsoamong thirdparties, inkeeping withthe
concept ofopen regionalism. Sheexpected thisexamination toconclude successfully, showing the
compatibility ofthisAgreement withEnabling Clause andother WTO provisions.
22. Therepresentative ofUruguay saidthat,indeed, MERCOSUR entailed anopenintegration
process. MERCOSUR wasnever intended tobeaclosed fortress ofimport substitution. TheParties
werelooking beyond theirownintegration process andwerefullyinvolved inahemisphere integration
process, asmentioned bytherepresentative oftheUnited States. Also, aframework agreement was
being negotiated withtheECforliberalization oftrade. Inaddition, theParties were involved in
preliminary discussions foraneconomic cooperation association withAustralia andNewZealand.
Theopenintegration process within theframework ofMERCOSUR wasnottheoretical innature; over
thelastfouryears, itsfourdeveloping countries hadundertaken anenormous taskandhadimplemented
important structural adjustment programmes, andtheyhadcommitted themselves toexpanding the
integration process outwards, becoming involved inother integration processes.
23. TheChairmandirectedattentiontothequestionsandrepliesfoundindocumentsWT/COMTD/1
andtheaccompanying Corrigendum 1andAddendum 2.Hesuggested thattheWorking Party proceed
section bysection, according tothemajor headings ofthemain document.
TheElimination ofDuties andCharges andOther Restrictions intheParties 'Reciprocal Trade
24. Therepresentative ofKorea saidthattheMERCOSUR introductory statement hadindicated
thatquantitative restrictions were being eliminated. Ontheother hand, theresponse from the
MERCOSUR countries tothewritten questions hadstated thattheremainder ofnon-tariff restrictions
would beeliminated orharmonized by31December 1994. These responses seemed toconflict. Was
there afixed schedule fortheelimination oftheremainder ofthenon-tariff restrictions? Ifnot,how
didtheMERCOSUR Parties justify thisinconnection withArticle XXIV:8(a)?
25. Therepresentative ofJapan saidhehadthesame question ashisKorean colleague. His
delegation alsowished tohavealistoftheproducts tobeexempted fromtheeliminations andwanted
toknow thecriteria forsuchexceptions.
26. Therepresentative oftheUnited States saidthatArticle XXIV required duties andother
restrictions ofcommerce tobeeliminated onsubstantially allthetrade, within areasonable amount
oftime. Some ofthishadbeenaddressed, butherdelegation would appreciate alisting ofthose items
thatwould beexcluded fromharmonization attheendofthetime-period, aswellasabriefexplanation
ofthephase-out schedules thatweretotakelonger thantheten-year timeperiod provided forinthe
Understanding. Hernextquestion wasonthestatistical taxthatArgentina maintained. While the
response inthesecond partofdocument WT/COMTD/1/Add.2 indicated thatthistaxdidnotapply
toMERCOSUR countries, butitdidnotindicate whether thelevelofthetaxstillcorresponded tothe
actual costs associated withmaintaining thestatistical base. Another question waswhether the
MERCOSUR Parties hadadopted anyself-help orsafety measures among themselves thatweredifferentWT/COMTD/1/Add.9
Page9
fromthose applied tothirdparties; ifso,whatwasthejustification forthedifferential treatment? A
fourth question concerned thewayMERCOSUR designated specific points ofentry intoeachcountry
tofacilitatethemovementofgoods,particularlyagriculturalproducts.Howdidthisportsystemoperate?
Wasitopentoimports fromthirdparties? What approval documents wereusedinthissystem? Her
delegation would appreciate acopyofthedocuments. Finally, thereappeared tobedifferences between
thetreatment afforded toproducts offree-trade zones inBrazil andArgentina andproducts offree-trade
zones inUruguay andParaguay. Forexample, products fromtheTierra delFuego andManaus free-
trade zones reportedly could enter thetrade ofBrazil andArgentina duty-free regardless oforigin,
while exports from theUruguayan andParaguayan free-trade zones were subject torules oforigin
andtheCET. HowdidMERCOSUR intend toeliminate theinconsistencies inthetreatment ofproducts
inthese free-trade zones?
27. Therepresentative oftheEuropean Communities saidhisdelegation would appreciate receiving
thecomplete listoftheheadings oftheHarmonized System thatwerenotyetduty-free andanindication
ofthetradevolume involved foreachoftheseproducts. Also, theECwished toreceive more detailed
information onthenon-tariff measures thatwerestillinforce intheareas oftechnical standards, plant
andanimal health, andenvironmental protection andsafety; italsowasinterested inlearning thedetails
ofhowthose measures would beharmonized. What wasthebasisforharmonization ofthose measures?
Moving on,herequested alisting byParty ofallmeasures adopted according toArticle 50oftheTreaty
ofMontevideo. Document L/7540 listed some ofthose inthereply toquestion 1.8,buthisdelegation
would liketohaveacomplete listofthemeasures inforce. Hethennoted thatthereply toquestion 1.2
indocument WT/COMTD/1 indicated thatMERCOSUR ’ssafeguard clauses were based onGATT
Article XIXbutthattheywereadapted totheinstitutional functioning ofMERCOSUR. What exactly
wasthisadaptation andwhat were thepeculiarities oftheinstitutional framework? Referring toa
question putforward bytherepresentatives ofKorea andJapan, hesaidthathisdelegation, aswell,
looked forward tohaving information onthecriteria foreligibility fortheadaptation regime. Finally,
regarding non-tariff restrictions, henoted thatthereply toquestion 1.3inWT/COMTD/1 stated that
theMERCOSUR countries hadmade adistinction between non-tariff restrictions tobeeliminated and
other measures ofanon-tariff nature. What wasthecriteria fordistinguishing these twosetsof
measures?
28. Therepresentative ofAustralia saidhisquestion related totheUnited State’sinquiry onthe
statistical tax.Hewished toreceive additional information onthecostofservices rendered, aswell
asanexplanation astowhythestatistical taxwasnowcollected onasmaller volume oftrade. He
alsosought clarification inrelation tohisdelegation 'soriginal question 1.9,where ithadsought
confirmation ontheexisting rateofthisstatistical tax.MERCOSUR 'sresponse hadconfirmed the
existence ofthestatistical taxat3percentonallimports bound initsnational list.Inthefollow-up
Australian question ontheelimination ofArticle VIIIcharges andduties among MERCOSUR Parties
(question 110), MERCOSUR confirmed thatalltrade among MERCOSUR Parties would beexempt
from suchduties andcharges. Inthatcontext, herequested either thedelegation ofArgentina or
MERCOSUR toindicate theArticle justifying thisstatistical taxandtoofferitsviewonhowobligations
ofArticle 2:1(b) oftheUnderstanding would bemet.
29. Therepresentative oftheUnited States saidthatinthepastArgentina hadrebated taxes on
some exports. Wasthisstillthecase? Wasthere different treatment onthisrebate forMERCOSUR
Parties thanforthirdparties?
30. Therepresentative ofUruguay saidhewould firsttakeupthequestion putforth byseveral
delegations concerning non-tariff restrictions. TheMERCOSUR Parties hadidentified allnon-tariff
measures affecting trade. They thenhadclassified theseastowhether theywerecovered byArticle 50
oftheTreaty ofMontevideo, which intheirviewwasbasically atranscription ofGATT Articles XX
andXXI. These werethencategorized according towhether theypertained topublic morality; securityWT/COMTD/1/Add.9
Page10
(e.g., regulation ofimports andexports ofweapons); human lifeorsafety; plantoranimal safety; the
trade ofgoldorsilver; articles ofnational heritage orofarchaeological, artistic, orhistorical value;
andtheexport useorconsumption ofnuclear materials, radioactive material, oranyother material
thatcould beusedinthedevelopment oruseofnuclear energy. Ifthemeasures fellintooneofthese
categories,theyweredeemedtotranscendtrademattersandwereclassifiedasmeasurestobeharmonized
among thecountries insuchawayastolimiteffects ontrade. TheParties hadtaken thisinventory
andwerenowintheprocess ofharmonizing themeasures. Thework wasbeing donebyatechnical
committeeoftheTradeCommission,referredtoinhisintroductorystatement.Thosenon-tariffmeasures
which didnotfallintooneofthecategories ofArticle 50justmentioned wereslated forelimination.
Thefollowing wasthelistofmeasures thatdidnotmeetthelegitimate objectives contained inGATT
Articles XXandXXIandArticle 50oftheTreaty ofMontevideo: InthecaseofArgentina, there
were measures dealing withtheproduction offowlandeggsforreproduction, arequirement fora
statistical orhealth inspection certificate forimports oftobacco, andrestrictions onimports ofalfalfa
lucerne seeds. InthecaseofBrazil, theParties hadeliminated aprohibition ontheimport ofpleasure
craftboats, thepre-approval requirement fortheimport ofwheat flour, andthepre-approval requirement
forimports ofsugar, alcohol, honey andresidual honey. InthecaseofParaguay, theParties had
eliminated theprohibition onimports ofalonglistofproducts which hadbeencovered byDecree 1869
of1994. Finally, inthecaseofUruguay, therehadbeenawaiver onthepre-authorization requirement
fortheimport ofwheat flour. None ofthese measures were covered bytheexceptions allowed by
GATT Articles XXandXXIorbyArticle 50oftheMontevideo Treaty. Theremainder ofthemeasures
(e.g., sanitary andphytosanitary measures) werebeing harmonized, andinthiswayanattempt was
being made topreserve thenon-trade objectives while obtaining common regulation orharmonized
regulation, soastoavoid anytrade-distorting effects within theregion. Theprocess fortheelimination
ofnon-tariff restrictions would continue. TheUnited States hadasked whether anystandards orrules
hadbeenadopted regarding health andsafety andwhether there hadbeenanyharmonization ofsuch
ruleswhich would notapply among theMERCOSUR Parties, butwhich would apply tothirdparties;
theanswer wasno.Theexisting harmonization ofsanitary andphytosanitary rulesdidnotimply any
discriminatorytreatment.Foragriculturalgoods,MERCOSURhadadoptedaregimeconcerningsanitary
andphytosanitary measures prior tothecompletion oftheUruguay Round. Theregime hadbeen
approved initially inAugust 1993 andwasavirtual transcription oftheAgreement onSanitary and
Phytosanitary Measures (SPS). Inviewofthepositive effect ofthisAgreement inestablishing criteria
andaprocedure fortheimplementation ofsanitary andphytosanitary non-tariff typerestrictions, the
Parties adopted thisinternally inMERCOSUR andwereadjusting theregime legally andinstitutionally
totheSPSAgreement. Subsequent totheadoption ofthisSPSregime, aseries ofquarantine measures
hadbeenadopted regarding tradeincertain fruits andvegetables. These hadbeenharmonized amongst
thefourcountries. Because these SPSmeasures concerned production activities forthese products,
theywould beannexed totheSPSAgreement.
31. Therepresentative ofUruguay thenturned tothequestion onthetreatment offreezones.
MERCOSUR treated goods coming fromallfreezones asgoods coming fromthirdparties. Inother
words, these goods weresubject totheCET. There wasaprovision intheAgreement onthismatter,
which stipulated thatexceptions could begranted tothisprinciple. However, adecision wasadopted
inAugust of1994thattheMember States shallapply thenational tariffinforce togoods coming from
free-trade zones, industrial freezones, export-processing zones andspecial customs zones orareas.
Thedelegation oftheUnited States hadreferred tospecial customs zones; thisconcerned Article 6
ofthatdecision, inthatthespecial customs areas existing inManaus inBrazil andTierra delFuego
inArgentina, which hadbeensetuponaccount oftheirparticular geographical location, would be
abletooperate under thepresent regime until2003. Regarding safeguard clauses, hesaidthatthe
safeguard regime referred tobythedistinguished ECdelegate applied during atransition period, which
ended on31December 1994. There wascurrently nointra-MERCOSUR safeguard regime inforce.
Thus, thequestion regarding theadaptation wasnotrelevant. There was,however, aMERCOSUR
working group which wasworking onasafeguard regime forimports fromthirdparties. ThetechnicalWT/COMTD/1/Add.9
Page11
committee responsible fordrafting thisproposed regulation wastosubmit thedrafttotheexecutive
body ofMERCOSUR bytheendoftheyear. Thedrafttheywere working ontookasabasis the
existingrulesandstandards.Regardingtariffs,therewastheadaptationregimewhichappliedtoproducts
onthelistscheduled forfinaladaptation toMERCOSUR. Theadaptation regime wastemporary and
would runforfouryears forArgentina andBrazil andforfiveyears forParaguay andUruguay. The
second characteristic oftheadaptation regime forthose products wasthatthetariffs were subject to
alinear andautomatic reduction onayearly basis. Thistariffreduction regime wasopeneventoWTO
Members forconsultation. Thisinformation wasavailable indocumentation theParties hadprovided.
Thefourcountries hadagreed ontheproducts andtherateoftariff reduction. Theeligibility criteria
werethefollowing: First, those products thathadbeencovered bysafeguards byanyofthecountries
overthetransition period (i.e.from1990 to1994) wereincluded. Second, theTrade Liberalization
Programme forthetransition period hadestablished aprocess fortariff reductions every sixmonths.
Originally, thelistofproducts thatwould beexempted fromthistariffreduction programme hadbeen
determined individually bytheParties, andproducts were being eliminated from thislistattheend
ofevery year. Alimited number ofthese products hadnothadatariff reduction asof
31December 1994. Ofthegoods notaffected bythetariff reduction asofAugust 1994, countries
could choose those products thatwould remain asexceptions totheTrade Liberalization Programme.
Inshort, eligible products werethose thathadbeencovered bysafeguards overthetransition period
orthose products which remained onthelistofexceptions totheTrade Liberalization Programme as
ofAugust 1994. After thetransition period, therewould benosuchexceptions inintra-MERCOSUR
trade. Inaddition, therewasamechanism whereby Parties could individually takesome products out
oftheadaptation regime andspeed upthetariff reduction process.
32. Therepresentative ofArgentina tookupthequestion which concerned theapplication forexport
rebates. InviewofthefactthatMERCOSUR wasasingle customs territory andthushadthesame
characteristics asaninternal ordomestic market, taxrebates didnotapply toproducts thathadalready
reached fullliberalization. There weresome cases, suchascapital goods, where suchrebates continued
toapply.Regardingthestatisticaltax,hesaidthat,inadditiontotheinformationprovided,hisdelegation
would beabletoprovide information bilaterally orintheWTO body dealing withmarket access.
ThiswasnotaMERCOSUR problem.
33. Therepresentative oftheUnited States referred tothestatement made intheMERCOSUR
introduction thatthere wasaliberalization time-frame oftwelve years forcapital goods and
telecommunications. Howdidthefour- andfive-year phase-out periods forthetariffs mesh withthe
twelve years forcapital goods andtelecommunications?
34. Therepresentative ofUruguay explained thatthereference toafour-year period forArgentina
andBrazil andafive-year period forParaguay andUruguay concerned thetime-periods setforthe
totalelimination ofresidual tariffs onthelimited listofproducts which werestillsubject totariffs in
trade among theMERCOSUR Parties. Thelisthadbeendrawn uponthebasis ofcriteria already
referred to,andthere were linear andautomatic tariff reductions untilthezerotariff wasreached.
Thisappliedtointra-MERCOSURtrade.Thereferencetocapitalgoodsandtelecommunicationsreferred
toadifferent issue -i.e.theCET -andinthisregard, were exceptions totheCET. Thefour
MERCOSUR Parties would haveaCETof14percentforcapital goods asof1January 1995. The
phase-out deadline forcapital goods wastheyear2001forArgentina andBrazil and2006forUruguay
andParaguay. Thegradual achievement ofa16percentrateforinformation technology wasthesame
forallfourcountries, andwould bereached by2006. TheUnited States 'delegation hadthusreferred
totwodifferent issues. Capital goods andinformation technology wereexceptions totheCET, whereas
thefourandfive-year phase-out period concerned theoverall elimination oftariffs onintra-MERCOSUR
trade.WT/COMTD/1/Add.9
Page12
35. Therepresentative ofKorea saidhisdelegation hadthatdayposed onequestion concerning
thetime-limit bywhich thenon-tariff restrictions would bephased out.Ifthereweregoing tobesome
remaining non-tariff restrictions, howcould theybejustified inconnection withparagraph 8(a)of
Article XXIV? Arelated question concerned thenewly introduced non-tariff restrictions. Inthewake
oftheconsultations conducted bytheBalance ofPayments Committee regarding import quotas for
automotive products, hisdelegation hadasked aquestion ontheeffects ofthese newrestrictions on
theMERCOSUR Parties. Theanswer indicated thatthisessentially would depend upon reciprocal
treatment byother Parties. Would thatbethegeneral mode ofapplication forthenewly-introduced
non-tariff restrictions?
36. Therepresentative ofJapan saidhisdelegation 'sfirstquestion concerned SPSmeasures. After
harmonization wasfinished, would theMERCOSUR Parties implement those measures independently
orimplement common measures forMERCOSUR? Thesecond question concerned data. Withrespect
toexceptions totheelimination ofduties onreciprocal tradebetween theParties, could theMERCOSUR
Parties provide trade dataandindicate theirshare oftotaltrade.
37. Therepresentative ofUruguay referred tothequestion bythedelegation ofKorea andsaid
there wasnodeadline ortime-frame forharmonization orelimination ofthenon-tariff restrictions.
What remained were some which required alengthier procedure inthenational jurisdictions ofthe
fourcountries, duetothefactthattheyhadaconstitutional basis orwere ofacertain legalnature.
Astotheircompatibility withArticle XXIV:8(a), theParties wereoftheviewthatthese restrictions
were marginal anddidnotconstitute restrictive regulations ofcommerce. Turning tothequestion
concerning linking work tothatoftheBalance ofPayments Committee, theideaseemed inappropriate,
given theWorking Party'sterms ofreference. Regarding thequestion ontheautomotive sector, for
thesakeoftransparency andmaintaining thecooperative andinformative approach, hewould refer
totheMERCOSUR regime andnottheindividual policies ofParties. TheCouncil ofMinisters of
theCommon Market hadresolved inDecember 1994 thattheautomotive regime ofMERCOSUR,
bothinitsinternal trade aswellasinanyforeign relations ofMERCOSUR, should beregulated by
acommon automotive regime, which would bedrafted bytheTrade Commission. Thiscommon regime
wastoenter intoforce on1January 2000, andthecommon regime fortheautomotive industry was
tobeapproved by31December 1997. Thisproposal hadtocontain thefollowing elements: total
liberalization ofintra-zone tradeforproducts intheautomotive sector; aCETfortheautomotive sector;
andabsence ofnational incentives which could distort competition intheregion. Hethenaddressed
thequestion putbythedelegation ofJapan concerning SPSandwhether therewould beasingle measure
orindependent measures foreachParty. Thetaskundertaken inthecorresponding technical committee
wastoharmonize standards andrules, sothere would bereciprocal treatment without necessarily
implying aunification oflegislation. Insome cases itmight benecessary tohaveasingle ruleor
standard, butthegeneral criterion wastoharmonize legislation andregulations intheSPSareas. The
aimofthisharmonization process wastoensure thattheeffects ontrade besimilar -inother words,
toavoid anydistortions totradewhich might stemfromtheapplication ofdifferent rules. Theprinciple
wasnottoseeksingle legislation. Astothequantitative aspect referred tobythedelegation ofJapan,
theadaptation regime -i.e.theproducts which atpresent stillwereandtransitionally subject tothe
application ofcustoms duties within MERCOSUR -covered 4.76percentofoverall intra-MERCOSUR
trade.
38. Therepresentative ofKorea clarified thathisquestion hadbeenthefollowing: when anew
non-tariff restriction wasintroduced, would thatrestriction beapplied toother Parties toMERCOSUR
onthesame linesasitwasapplied tonon-parties?
39. Therepresentative ofVenezuela saidhehoped thattheWorking Party would conclude that
MERCOSUR wascompatible withWTO rules. Hereferred tothetime-frame among Parties forthe
convergence oftariffs intheadaptation regime andsaidperhaps heandtherepresentative ofUruguayWT/COMTD/1/Add.9
Page13
hadbeenreferring todifferent issues inquestion 3.2.TheChairman saidchapter 3.2would beaddressed
later. Therepresentative ofUruguay alsoreserved hiscomment untilthen.
Macroeconomic Policies
40. Therepresentative oftheUnited States asked foranupdate ontheharmonization offiscal,
monetary orfinancial policies. Henoted thatthetaxtreatment imposed bythefourMERCOSUR Parties
differed substantially, particularly withrespect toindirect taxes onbusiness operations. Thismight
leadcapital andeconomic activity toconcentrate inacountry withamore favourable policy. He
wondered whatplans MERCOSUR hadtoaddress suchissues.
41. Therepresentative oftheEuropean Communities asked forupdated information onthesectoral
policies thathadbeendecided uponindocument L/7540. Herequested asummary ofthediscussions
leading todecisions.
42. Therepresentative ofUruguay saidthattheMERCOSUR Parties hadnotsetanytarget dates
orspecific goals formacroeconomic commercial policies. Theyweredrawing onhistorical experience.
Henoted thattheministers ofeconomics andthegovernors ofcentral banks heldtheirmeetings within
theframework oftheCouncil ofMERCOSUR, which served asaforum fortheexchange ofinformation
between thehighest authorities. Regarding sectoral policy areas, progress hadbeenmade insuchareas
astransborder transport. Aworking group hadbeenestablished tolookatenergy issues, though no
specific policy hadevolved. Concerning thevarying taxlevels among thecountries, aworking group
hadbeenestablished which hadidentified asymmetrical aspects resulting fromthedifferent constitutional
structures.
TheEstablishment ofaCET andtheAdoption ofaCommon Trade Policy inRelation to
Third States orGroups ofStates
43. TheChairman noted theCorrigendum withregard toparagraphs 3.2and3.8.
44. Therepresentative oftheUnited States saidsheshared thedisappointment expressed byseveral
delegations about thepaceofthesubmission ofinformation, particularly regarding tariff andtrade
data. Since countries might break tariff bindings intheprocess offorming acustoms union, there
werespecific procedures thathadtobefollowed, including thenotification ofthetariff schedules for
thenewcustoms union toallow fornecessary compensation. Herdelegation wasofviewthatBrazil
hadbroken anumber ofitstariff bindings intheprocess ofadopting theMERCOSUR CET. This
breach ofbindings hadnotbeenproperly notified andhadnotresulted innegotiations toprovide
compensation totheaffected parties. Furthermore, thelackofprecise datamade itdifficult toassess
theimpact oftheseviolations. Forexample, therewereproblems withthreeyears ofimport datarelating
toBrazil 'sUruguay Round nomenclature. Moreover, itappeared thattheother three MERCOSUR
Parties hadnotbroken anybindings, though alackofprecise dataprevented anactual determination.
Shestressed thatWTO rulesclearly specified thatnegotiations withaffected Members weretobegin
prior tothebreach oftariff bindings. Sherequested theparties toMERCOSUR toprovide complete
tariff andservices schedules, forbothintra-MERCOSUR andthirdparty trade, which would indicate
thedegreetowhichrateshadchangedforthestartofcompensationnegotiations.SincetheMERCOSUR
PartiescurrentlymaintainedtheirWTOSchedulesasindividualgovernments,tariffandservicesschedules
forMERCOSUR asacustoms union didnotexistintheWTO sense. InAugust 1995 MERCOSUR
hadconsidered arequest foranexpansion ofthelistofexempted products. Didsuchalistexistnow,
andweretherechanges envisioned? Sheasked iftheMERCOSUR Parties required legislative approval
tomake changes totheCETortotheratescharged onproducts currently excluded fromit,andsheWT/COMTD/1/Add.9
Page14
requested copies oftherelevant national legislation. Therepresentative ofUruguay replied that
MERCOSUR would provide comments inwriting andwould alsoprovide preliminary answers tothese
questions.
45. Therepresentative ofJapan saidhisdelegation hadfound awiderange ofexceptions tothe
CET, namely capital goods, information technology andtelecommunications equipment andnationally
sensitive commodities. Moreover, theconvergence oftheexceptions totheCETwould insome cases
takeeleven years. Some oftheexceptions were common among thefourParties, andothers were
national exceptions decided individually. The question oftheCET'sconformity with
Article XXIV:8(a)(ii) needed further attention. Heasked theMERCOSUR Parties toelaborate on
thecriteria fordetermining exceptions, toexplain therationale fortheeleven-year transition period,
andtoprovide trade dataforthose exceptions indicating their share oftotal trade. Because
Article XXIV:5(a) required thattheduties andother regulations ofcommerce should notonthewhole
behigher ormore restrictive thanthegeneral incidence oftheduties andregulations ofcommerce
applicable intheconstituent territories priortotheformation ofsuchaunion, hisdelegation welcomed
thenews thatthetrade-weighted average, orCET, waslower thanratesofMERCOSUR Parties prior
totheformation oftheunion. However, more detailed information tosubstantiate thiswould be
appreciated. ACETlevelexceeding thetariffs oftheUruguay Round Schedule ofeachParty constituted
abreach ofGATT Article IIobligations. Insuchacase, inaccordance withGATT Article XXIV:6
andtheUnderstanding, theprocedure setforthinArticle XXVIII hadtobecommenced before tariff
concessions were modified orwithdrawn inconnection withtheformation ofacustoms union. His
delegation hadnoticed thatthisprocedure hadnotbeenrespected withthecoming intoforce ofthe
MERCOSUR CET, andtheinterests ofthirdparties hadbeenadversely affected. Heasked foralisting
oftheCET, particularly fortariff linesthatexceeded thelevelofthebound tariffratesoftheUruguay
Round. Hisdelegation requested theMERCOSUR Parties tocommence Article XXVIII negotiations.
Inthisregard, hisdelegation would appreciate import statistics fortherelevant products bycountry
oforigin overthelastthree years. Healsorequested anindication ofwhich principle suppliers were
affected. Finally, withrespect toagriculture, heasked howtheMERCOSUR Parties dealt with
commitments inmarket access, domestic support andexport subsidies.
46. Therepresentative ofAustralia saidthattheMERCOSUR Parties hadnoted intheirreply that
theCETwould befixed intotalconformity withtheprovisions ofArticle XXIV:5 andthattheParties
would respect allother GATT obligations, including Article XXIV:6. However, heshared some of
thedoubts expressed bytherepresentative oftheUnited States andrequested anopportunity for
consultation onthispoint.
47. Therepresentative ofCanada noted thatMERCOSUR wasacustoms union andnotanFTA.
Hestressed thattimely documentation would allow anassessment astotheneedforArticle XXIV:6
negotiations. Hereferred toinformation submitted bytheParties totheSecretariat andsuggested that
itscontent beclarified, particularly regarding tarifflineswhere theremight beaneedforarenegotiation
under Articles XXIV:6 andXXVIII. Heasked ifinformation hadbeensubmitted ontrade patterns
andsupplier rights andonthemethodology involved, particularly regarding thetreatment ofother
preferential trade under theLAIA.
48. Therepresentative oftheEuropean Communities asked formore information ontheCET,
particularly whether thelistofexceptions hadbeenenlarged bythedifferent Parties.
49. Therepresentative ofPoland referred tothereplies toquestions 3.6and3.7inWT/COMTD/1
andnoted thattheinformation ontheCETwasbased onweighted averages. Heasked whether this
rulewasapplicable noworwhether itwould beapplicable inthefuture. Hewondered whether
MERCOSUR tariffs would belower thanthose setindividually byParties previously, andwhether
theCET wasanaverage ofthefulltariffs orsetline-by-line.WT/COMTD/1/Add.9
Page15
50. Therepresentative oftheUnited States asked forabriefdescription about thetreatment of
agriculture inMERCOSUR.
51. Therepresentative ofUruguay wassurprised that,inspeaking ofArticles XXIV:6 andXXVIII,
delegations hadnotmade reference totheofficial communication, found indocument L/7615, which
hadbeensubmittedbytheMERCOSURPartiesshortlyaftertheadoptionoftheCETinDecember1993.
Thishadstated thattheParties were willing toreview itsapplication andholdconsultations with
interested delegations, pursuant toparagraph 4oftheEnabling Clause andArticle XXVIII. Heasked
thatthedocument beincluded among theexamination documents. Information hadbeensubmitted
thatmorning detailing theadaptation regime forproducts temporarily subject totheapplication ofintra-
MERCOSUR duties ineachofthecountries; thiswould helptheWTO Secretariat toassess whether
MERCOSURentailedahigherdegreeoftariffprotectionthanthePartieshadpreviouslyhadindividually.
ThePartieshadprovidedinformationonnationaltariffsandimporttradeoverthelastavailablethree-year
period, aswellasinformation ontariffs applicable toproducts thatwere temporarily exempted and
theleveloftariffs tobeapplied when thetarget tariffwasreached. Hewould soonprovide information
onthenational tariffnomenclature ofeachParty andtheiradjustment towards theCET. Theinformation
would verify thatMERCOSUR hadlower tariffprotection thantheprevious levels ofthefourindividual
customs territories. Regarding thenotification ofchanges inautonomous tariffs, hisdelegation was
notoftheviewthatsuchanobligation existed. Rather, there wasanobligation tonotify when there
wasawithdrawalofconcessionsthroughindividuallyimplementedbindings.AMERCOSURmechanism
hadbeenestablished inAugust 1995todealwiththepossible introduction ofprovisional exceptions.
TheParties would notify theSecretariat ofanydecisions taken inthisregard. Heexplained that
Resolutions 7and22oftheCommon Market Group allowed fortheCETtobetemporarily lowered
toallow equilibrium ofsupply anddemand. Regarding agricultural issues, hisdelegation would respond
ingreater detail atalaterdate. Atthisstage, eachcountry wasresponsible fortheimplementation
ofitscommitments under theWTO Agreement onAgriculture.
52. Therepresentative oftheUnited States asked iftheMERCOSUR Parties intended towithdraw
theirindividual Schedules forgoods andservices, ortomerge them intotheMERCOSUR Schedule.
Shenoted thatbefore abinding wasbroken, notification musttakeplace, which hadnotbeenthecase.
ShesaidtheEnabling Clause didnotprovide alegalbasis foracountry tomodify itsschedule asa
result ofacustoms union; Article XXIV:6 allowed suchmodification withreference toArticle XXVIII.
Thisinmind, sheasked bywhatlegalbasistheParties intended tomodify theirSchedules andatwhat
stage theyplanned todoso.Herdelegation wasofview thatMERCOSUR waslegally vulnerable
onthispoint.
53. TherepresentativeofUruguaysaidMERCOSURwouldsoonnotifyitsmodificationofindividual
bindings. Asfarasexceptions totheCET were concerned, some tariffs would bekepthigher than
thebound rateoncertain items. Heemphasized thattheMERCOSUR Parties would fullycomply
withArticle XXVIII andtheaccompanying Understanding ontheInterpretation ofArticle XXVIII
ofGATT 1994.
Rules ofOrigin
54. Therepresentative oftheUnited States asked howMERCOSUR 'srulesoforigin adhered to
theprinciples setoutinAnnex II,paragraph 3(a)oftheGATT Agreement onRules ofOrigin, which
required thatrulesoforigin beclearly defined. Sheasked iftheMERCOSUR Parties hadconsidered
making anychanges totherulesoforigin since theTreaty ofAsunción wassigned. Ifso,shewanted
explanations astotherationale behind thechanges andastotheprocess forrenegotiation. Shenoted
thateither governmental bodies orprivate sector designates were authorized toissue certificates for
specific sectors andsaidherdelegation wished toknow whatmechanism existed among thedifferentWT/COMTD/1/Add.9
Page16
groups toaddress questions about individual decisions orabout theconsistency ofpractices. By
Articles 3and4ofAnnex IItotheMERCOSUR Agreement, theParties could establish ordetermine
more specific requirements oforigin. Sheasked iftheseruleswerepublished andnotified totheWTO,
andwhether theyweredeveloped asacomprehensive exercise orasaresult ofadhocindividual cases
which thentended toevolve intorules. Shecitedthatnocentralized authority regulated thecertificates
oforigin, which determined theproducts which benefitted fromtheMERCOSUR preferential tariff
rates. Itappeared thatthecertificates hadtobeissued byaproducer orexporter, thencertified by
anofficial department orauthorized association. Shewondered ifthecertificates would bevalid for
180daysfrom thedateoftheirissue, orifthedateofcertification wasnotrelevant totheperiod of
validity. Concerning Articles 11and12,sheasked ifadeclaration wasthesamethingasacertification.
Concerning Article 13,sheasked ifacertificate oforigin would cover allimports ofsuchgoods for
180days, orforaparticular shipment. Shewondered ifadvice toanimporter fromonecountry was
considered binding onanother, inconformity withAnnex IIoftheWTO Agreement onRules ofOrigin.
Ifnot,sheasked ifrelief would beallowed toanimporter thathadrelied onconflicting advice. She
thenasked howimporters andexporters could obtain anindependent review ofanorigin determination.
55. Therepresentative ofKorea referred totheopening statement bytherepresentative ofUruguay
whowhich hadindicated thatproducts would beeligible forintra-regional trade iftheregional value-
added content was60percent ormore. Heasked ifthere hadbeenachange intariff headings, as
theresponse contained indocument L/7540 hadputthefigure at50percent. Ifso,whathadbeen
therationale forthechange?
56. Therepresentative ofJapan saidhisdelegation wasalsointerested inArticles 3and4of
Annex IIoftheMERCOSUR Agreement, andasked foranupdate onMERCOSUR developments
along thisline. Wastheharmonization ofrules oforigin tobecompleted within three years ofthe
initiation ofwork? What rules oforigin would beapplied intheinterim?
57. Therepresentative ofCanada asked whether there wereother marking rules besides rules of
origin thatwere applied inthecontext oforigin determination. Heasked if,forcertain sectors or
industries, there wereother conditions required toobtain preferential treatment, suchasperformance
requirements.
58. Therepresentative ofUruguay saidhisdelegation wasofviewthattheAgreement onRules
ofOrigin wasnotpartofGATT 1994andconsequently would notbeanintegral partofthefinalreport
ofthisexamination. However, sincerulesoforigin werebecoming increasingly relevant ininternational
trade, heagreed torespond inwriting toquestions. HesaidMERCOSUR hadclearandstraightforward
rules. Prior to31December 1994, MERCOSUR hadmaintained fournational tariffs anddiffering
degrees ofprotection. Thus, there hadbeenaregime forrules oforigin at50percent, asreferred
tobytherepresentative ofKorea. Once thecustoms territory would beconsolidated, there would no
longer bearegime forrules oforigin forintra-MERCOSUR trade, duetotheCET. Since
1January 1995, MERCOSUR hadtwopossibilities fortheapplication ofrules oforigin, onebeing
forproducts which wereexempt from theapplication oftheCETandonebeing forthose which had
inputs thatcomprised more than40percentofthefinaltotalf.o.b. value. Before 31December 1994,
thefigure hadstood at50percent; withintegration, thefigure hadbeenchanged to60percent.
59. TheChairman noted acorrection inparagraph 5.3found inCorrigendum 1.
Measures Affecting Imports from Third Countries
60. Therepresentative ofJapan asked about anti-dumping andcountervailing duties andwhether
theywouldexcludeintra-MERCOSURtradeinthecasethatsuchmeasureswereinvokedbyanindividualWT/COMTD/1/Add.9
Page17
Party. Herequested explanations ofthelegal grounds forthese measures andoftherationale for
safeguard measures andbalance ofpayment measures.
61. TherepresentativeoftheEuropeanCommunitieswasawarethatMERCOSURwasintheprocess
ofdrafting legislation onsafeguard measures. Hisdelegation requested more detail onthetime-frame
envisaged andtheproposed common setofrulesgoverning unfair practices. Herequested therelevant
anti-dumpingandcircumventionlegislationandaskedwhetheraproductimportedintooneMERCOSUR
Party wassubject toananti-dumping investigation intheentire grouping.
62. Therepresentative oftheUnited States saidsheappreciated theexplanations about the
harmonization ofnon-tariff measures buthadfound them somewhat general. Article XXIV clearly
stated thatthere should beanexamination ofthegeneral incidence ofduties andother regulations of
commerce toensure thattheywerenotmore restrictive afterthecustoms union wasinplace. Would
measures bemore restrictive, going tothelowest common denominator? Interms ofAnnex II,what
didthecitation ofaregulation mean? Would aregulation citedforelimination beeliminated without
thepromulgation ofadditional legislation? Sheasked whatwould result fromtherestrictions designated
forharmonization andwhatsortoftimetable existed fordecisions bytheCommon Market Group.
63. Therepresentative oftheEuropean Communities asked therepresentative oftheUnited States
whether theissue concerned non-tariff measures.
64. Therepresentative oftheUnited States saidquestions related tohowtheharmonization on
specific measures would occur, andwhether theparticular objectives forharmonization insectors such
asplant andanimal health, foodsafety, andtechnical standards would follow WTO standards. She
requested asynopsis ofthethreedocuments mentioned intheresponse toquestion 53.Shethenasked
whatsortofconsultations onunfair trade practices wereenvisioned bytheParties. Thepurpose of
anti-dumping andcountervailing dutymeasures should notbetorestrict imports, butrather tooffset
themargin ofunfair tradeandinjury. TheParties hadstated thattheyhadapproved common regulations
torestrict imports thatwerethesubject ofdumping orsubsidies bynon-Parties, yettheyhadalsostated
thattheywould apply onlydomestic legislation torestrict imports resulting fromunfair tradepractices.
WasittheParties 'intent toharmonize theadministration oftheirdomestic legislation ortoadminister
acommon law? Finally, sheasked iftheParties envisioned aunified approach toregulating unfair
trade, perhaps through asingle institution, andwhether dumped orsubsidized imports within
MERCOSUR would betreated differently thanimports from thirdparties.
65. Therepresentative ofUruguay saidhehadalready referred tonon-tariff measures thatwere
incompatible withArticle 50oftheTreaty ofMontevideo andArticles XXandXXIoftheGATT,
andnoted thatthisinformation hadpartially addressed questions referring totheelimination ofillicit
non-tariff measures. Theprocess ofharmonization wasbeing carried outbytherespective technical
committees oftheTrade Commission andincluded sanitary andphytosanitary regulations aswellas
technical standards. Technical committee procedures included consultation andnotification assetout
inMERCOSUR decisions, which werebased onmultilateral rules. Thetechnical committees were
intheirinitial phases andhadnospecific timetables. AllWTO requirements fortheharmonization
ofstandards would betaken intoconsideration.
66. Therepresentative oftheEuropean Communities sought clarification onwhether thesametype
ofharmonization process applied toanti-dumping andcircumvention legislation.
67. Therepresentative ofUruguay saidthat,regarding legislation onunfair trade practices, the
work being doneintherelevant technical committee hadadvanced. Thepurpose ofthisregulation
wasnottoinhibit imports, butrather toensure compensation asaresult ofpossible dumping situations.WT/COMTD/1/Add.9
Page18
68. TherepresentativeofCanadasaidhisdelegationhadsubmittedmanydetailedquestionsinrelation
totrade remedies, asfound indocument WT/COMTD/1/Add.2. Hehoped thathisdelegation would
receive more detailed answers tothese technical issues.
69. Therepresentative oftheUnited States requested specific replies toeachofthepoints raised
inthesetofquestions herdelegation hadsubmitted. Therepresentative ofUruguay replied thathis
delegation would reply inwritten form.
National Treatment
70. Therepresentative oftheUnited States asked whyArticle 7oftheMERCOSUR Agreement
wasnecessary, sincetheWTO already hadprovisions against discriminatory treatment. Herdelegation
wasinterested inthesignificance andapplication oftheArticle. Therepresentative ofUruguay replied
thatnational treatment wasevident inacustoms union; while itappeared tobeunnecessary, itwas
included forconvenience.
Commitments Under theLAIA
71. Therepresentative oftheUnited States noted thatArticle 8oftheMERCOSUR Agreement
protected theinterests ofmembers oftheLAIA. Shewondered whysimilar provisions protecting the
interests ofother WTO Members were notmentioned. Therepresentative ofUruguay replied that
therights ofotherWTO Members wereensured through thenumerous MERCOSUR decisions referring
toWTO rules.
Accession
72. TherepresentativeofAustraliarequestedanupdatedreportbytheMERCOSURPartiesregarding
Chile'spotential membership. Therepresentative ofUruguay replied thatsuchanissuewentbeyond
theterms ofreference ofthisWorking Party. TheChairman asked therepresentative ofAustralia
totakeuptheissueatasomewhat laterstagetoallow theopportunity forthespokesman ofMERCOSUR
toconsult withthedelegation from Chile.
73. Therepresentative oftheUnited States asked about theexisting arrangements MERCOSUR
hadwithother countries anditsfuture accession intentions. Therepresentative ofUruguay replied
thatMERCOSUR wasintheprocess ofnegotiating withother members oftheLAIA andthat
MERCOSUR already hadpreferential arrangements withthem through bilateral agreements signed
inthecontext oftheTreaty ofMontevideo. These agreements weresubject toreview bytheWTO
onvarious occasions.
Dispute Settlement
74. Therepresentative oftheUnited States asked whether international arbitration wasthenext
stepinthedispute settlement process ifproblems could notbesolved byconsensus, orwhether
MERCOSUR hadconsidered having apanel process similar tothatoftheWTO. Sheasked foran
explanation ofthedispute settlement process andforanother copy oftheBrasilia Protocol which
established thismechanism.WT/COMTD/1/Add.9
Page19
75. TherepresentativeofCanadaaskedwhatwouldhappenifadisputewerenotsettledbyconsensus.
Would adecision bebinding ontheParties, andwould therebeanypossibility ofretaliatory measures
ifapanel'sdecision werenotimplemented? Could amatter ruled bydomestic courts alsobebrought
before apanel proceeding, andwould there beanelection process toprevent thesame matter from
being judged bythetwodifferent institutions? Herequested more detail onalltheprocedures involved
inthedispute settlement process, andasked whether private parties could participate inthisprocess.
76. Therepresentative ofUruguay registered hissurprise thatdelegations hadnotinthisregard
madereferencetodocumentWT/COMTD/1/Add.1,whichreprintedannexestotheOuroPretoProtocol.
Although hispredecessor hadalready provided theSecretariat withtheBrasilia Protocol onDispute
Settlement, hewould submit anadditional copy. Henoted thatinternational experts fromoutside of
MERCOSUR hadcommended itsdispute settlement instruments, which allowed fordirect negotiations
andprovided forspeedy procedures thatwerebinding innature. Within a30-day period, there would
bethepossibilityofcompensatorymeasures.Inaddition,privatepartieswouldhaveaccesstoarbitration,
orthepossibilitytolodgecomplaints.Thedisputesettlementprocessinvolveddetailedproceduralaspects
withtimetables fortheconstitution ofaforum, theappointment ofarbitrators, etc.TheAdministrative
Secretariat ofMERCOSUR inMontevideo conducted courses onthese procedures. Itwould accept
requests foranyfurther documentation andinformation.
Trade Data
77. Therepresentative oftheUnited States reiterated herdelegation 'srequest fortrade data.
Trade Creation andTrade Diversion
78. Therepresentative ofJapan saiditwasimportant toreview howregional arrangements
contributed totheexpansion ofglobal tradeandhowresources would beoptimally utilized. Hereferred
toparagraph 11oftheUnderstanding, regarding theperiodic reporting requirements ofcustoms unions
andFTAs, andasked MERCOSUR tocarry outthisrequirement without delay.
79. Therepresentative oftheEuropean Communities saidthatsince thecustoms union hadonly
recently come intoeffect, perhaps preliminary dataontradecreation anddiversion could bepresented
atthenextmeeting oftheWorking Party.
80. Therepresentative ofUruguay saidtheissueoftrade diversion orcreation wasatheoretical
exercise tosome extent. Perhaps theexamination wasnottheappropriate forum forsuchadiscussion.
Since theCETwasimplemented on1January 1995, heonlyhadarelative ideaoftradeeffects. With
theresources offourdeveloping countries, MERCOSUR already hadastatistical method which enabled
ittomonitor thesituation. TheParties planned toshare suchdataatthenextmeeting.
81. Therepresentative ofAustralia wasofviewthatananalysis oftradecreation andtradediversion
waspertinent totheanalysis ofconformity withArticle XXIV, which itself wasaderogation from
MFN treatment. Anydiscussion inrelation toArticle XXIV should ensure thatthirdparties were
notcommercially disadvantaged bythecreation ofthese customs unions orFTAs. However, hewas
ofviewthattheresults ofArticle XXIV examinations wereusually notveryconclusive, asthedisciplines
oftherules governing Article XXIV remained weak.WT/COMTD/1/Add.9
Page20
MERCOSUR andIntegration Efforts intheWestern Hemisphere
82. TheChairman saidthere wasacorrection withregard toparagraph 12.1inCorrigendum 1.
Services
83. Therepresentative oftheUnited States noted thatArticle 1oftheMERCOSUR Agreement
stated thatitsgoalwastopromote thefreemovement ofgoods, services andfactors ofproduction.
However, theAgreement didnotaddress liberalization oftrade inservices. Sheasked howthe
MERCOSUR Parties planned toaddress thisarea.
84. TheRepresentative ofUruguay noted thatthisparticular question wentbeyond themandate
ofthisWorking Party andshould possibly beconsidered inanother body. HesaidthatMERCOSUR
would comply strictly withtheGATS, andwasnotadopting anymeasures which would berestrictive
inthisarea.
85. Therepresentative oftheUnited States asked whether MERCOSUR would notify itsservices
provisions under Article VoftheGATS. Therepresentative ofUruguay replied thatMERCOSUR
would fullycomply withalltheprovisions ofGATS, inparticular withArticle V.
Intellectual Property Rights
86. TheChairman noted acorrection withregard toparagraph 14.1.
87. Therepresentative oftheEuropean Communities asked foranoverview ofMERCOSUR
competence intheareaofintellectual property rights.
88. Therepresentative oftheUnited States noted thattheCommon Market Group recently adopted
twointellectual property rights protocols regarding copyrights andtrademarks. Sheasked whatthe
legaleffects ofthese protocols were. Shewondered ifMERCOSUR hadanyintention toissuefurther
protocols affecting other areas ofintellectual property, suchaspatents. Were MERCOSUR policies
different from theminimum disciplines established bytheTRIPS Agreement?
89. Therepresentative ofUruguay saidMERCOSUR hadaworking party todealwithtrademarks.
Ithadreached apreliminary agreement which would become partofthenational legislation ofthe
fourcountries. TheTRIPS issue wasnotapartofthemandate ofWorking Party.
90. TherepresentativeofPerunotedthatMERCOSURhadconcludedanagreementforthepromotion
andprotection ofinvestment fromoutside itsarea.Heasked whatthelegalstatus would beforabilateral
agreement signed byathird party withaMERCOSUR member prior totheentry intoforce ofthe
MERCOSUR Agreement.
91. Therepresentative ofUruguay saidMERCOSUR haddecisions onthepromotion andprotection
ofinvestment from outside theregion. Itwould present copies ofthese decisions totheSecretariat
fordistribution. Hesaidthatnational jurisdictions werefullyrespected withregard tothetreatment
offoreign investment from outside theregion. Moreover, allbilateral agreements which pre-dated
theMERCOSUR Agreement would befullyrespected.
92. Therepresentative oftheUnited States saidshewasaware thattwoMERCOSUR Parties had
investment arrangements thatwerenotified totheCommittee onTRIMs astransitional arrangementsWT/COMTD/1/Add.9
Page21
which inthiscasewerefiveyears. However, thetwoother MERCOSUR Parties didnothavesuch
arrangements. Therefore, shewondered howMERCOSUR intended todealwiththissituation. She
asked whether theParties thathadnotified these measures would phase them outmore quickly than
wasallowed, andwhether there wereother similar situations. Therepresentative ofUruguay replied
thathisdelegation would respond tothequestion inwriting.
Transparency inImplementing theAgreement
93. TherepresentativeoftheUnitedStatesnotedthatMERCOSURgeneratedanumberofdecisions
andprotocols whenever itsgoverning bodies met. Shewondered ifthedocuments existed inEnglish
andifthesedecisions generally required authorization bytherespective legislators ofthefourcountries.
Shethenasked whattypes ofdecisions could beimplemented without legislative approval, andwhat
mechanisms existed toenforce theirfullimplementation. What other central institutions existed to
handle theday-to-day operations ofMERCOSUR? Finally, sheasked iftheSecretariat maintained
aWebSite.
94. Therepresentative ofUruguay saidthatofficial documents were issued inthelanguages of
Parties. Henoted thatalldecisions were tobemade public. TheAdministrative Secretariat was
considering having anofficial bulletin byelectronic computer media tobroaden direct access to
MERCOSUR official documentation.
95. Therepresentative oftheUnited States hoped thattheSecretariat would receive thenecessary
datafarinadvance,toallowproperpreparationforthenextmeetingandtofacilitatebilateraldiscussions.
96. Therepresentative ofUruguay thanked theparticipants oftheWorking Party andstressed that
theMERCOSUR countries werecomplying notonlywithArticle XXIV, butalsowithArticle XXVIII.
Heextended theofferforbilateral consultations withother Members toallow forthegreatest possible
transparency.