RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG11/M/2*
WT/REG33/M/2*
WT/REG41/M/2*
WT/REG42/M/2*
19 March 1998
(98-1109)
Committee on Regional Trade Agreements
Sixteenth Session
EXAMINATION OF THE CENTRAL EUROPEAN FREE TRADE AGREEMENT
(THE CZECH REPUBLIC, HUNGARY, POLAND, ROMANIA, THE SLOVAK REPUBLIC
AND SLOVENIA) AND THE FREE TRADE AGREEMENTS BETWEEN THE
CZECH REPUBLIC AND BULGARIA, THE SLOVAK REPUBLIC AND BULGARIA,
AND SLOVENIA AND BULGARIA
Note on the Meeting of 17 February 1998
Chairman:  Mr. Jean-Marie Noirfalisse (Belgium)
1. The Committee on Regional Trade Agreements (CRTA) took up items D.I-IV of the Agenda
for its  Sixteenth Session, as found in Airgram WT O/AIR/769.  Discussions were  organized as follows:
A. Examination of the Central European Free Trade Agreement (Czech Republic,
Hungary, Poland, Romania, Slovak Republic and Slovenia):
- Scope and Product Coverage;
- Trade Provisions;
- General/Other Provisions.
B. Examination of the Free Trade Agreements Between the Czech Republic and Bulgaria,
the Slovak Republic and Bulgaria, and Slovenia and Bulgaria
A. Examination of the Central European Free Trade Agreement (Czech Republic, Hungary,
Poland, Romania, Slovak Republic and Slovenia)
2. The Chairman proposed that the Committee first examine the Central European Free Trade
Agreement (CEFTA) on its own and then move on to the three bilateral Agreements signed by
Bulgaria.  He recalled that the Committee had held a preliminary discussion of the CEFTA Agreement
at its fourteenth session in November 1997;  summar y records from this meeting had been distributed as
document WT/REG11/M/1.  At that time the Committ ee had noted that essential information for the
examination was either missing or had arrived late.  Since then the CEFTA Parties had provided a
number of documents:  the notification and text of the Amendment made to the CEFTA (documents
WT/REG11/N/1 and WT/REG/11/3);  the notification and texts of the Agreements on the Accessions of
Slovenia and Romania to the CEFTA (documents T/REG11/N/2-3 and WT/REG 11/4-5 plus an English
corrigendum to WT/REG11/5);  and the text of  additional Protocols to the CEFTA (document
WT/REG11/6).  The Parties had also submitted replies to the written questions, recently distributed as
document WT/REG11/9.  The day’s meeting was a fu rther opportunity for the examination of the
                                                     
* This document cancels and replaces WT/REG11/M/ 2 issued on 19 March 1998 in English only.WT/REG11/M/2, WT/REG33/M/2,
WT/REG41/M/2, WT/REG42/M/2
Page 2
CEFTA Agreement and would enable the Parties to provide additional information and answer
questions from delegations.  He drew the Committee’s attention to the fact that on 4 February 1998, the
Council for Trade in Goods had adopted separate terms of reference for the examination of the
accessions of Romania and Slovenia to the CEFTA.  For obvious practical reasons, the Committee was
invited to examine the CEFTA as it stood to date, that was taking into account the two accessions.  TheChairman then opened the floor to any delegation wishing to make any general remark about the
CEFTA Agreement.
3. The representative of the Czech Republic, speaking on behalf of the CEFTA Parties, said he
welcomed the opportunity to continue the examination of the CEFTA Agreement and declared the
Parties’ readiness to respond to the questions and remarks raised by the Committee.  If the Parties were
unable to provide an immediate response, they would reply later in writing to written questions
submitted by Members.  The CEFTA Parties were of the view that the Agreement was in conformitywith Article XXIV of the GATT 1994 and he hoped that the examination would proceed swiftly.
- Scope and Product Coverage
4. The Chairman proposed that the Committee use the Standard Format of the CEFTA
Agreement, document WT/REG11/2, to guide the debate.  In reference to Section 1.4 Scope and
Product Coverage, he drew the Committee's attention to the replies submitted by the Parties indocument WT/REG11/9.
5. The representative of Japan thanked the Parties for the additional information, including the
statistics.  His delegation was interested in the trade creation effects for third countries since the
establishment of the Agreement, together with the most current trend.
6. The representative of Canada asked for further clarification of Section I.4 of document
WT/REG11/9, with respect to the exact coverage of the Agreement, in terms of total trade.  He was
unsure whether the figures represented total imports, or whether they referred to total imports covered
by the Agreement.  His delegation was interested in  total trade, total trade covered by the Agreement,
and a percentage (or rough estimate) of the number of tariff lines covered by, or excluded from, the
Agreement.  This information would complement the replies submitted by the CEFTA Parties.
7. The representative of the United States said her delegation was a firm supporter of integration
efforts in Europe, especially of countries which sought to facilitate and increase their trade, bolster their
economies, and make their populations better off.  At the same time, as an active participant in this
Committee, her delegation took very seriously the task of assessing agreements to determine conformity
with WTO rules.  Like the delegation of Canada, her delegation was interested in what percentage oftrade and number of tariff lines were actually covered by the Agreement.  She acknowledged that there
might be a difference of views as to what constituted coverage.  GATT Article XXIV required the
elimination of tariffs and other regulations of commerce on substantially all the trade.  In this
Agreement it appeared that there was elimination of so me tariffs, but less than elimination of others.
She was of the opinion that the CEFTA Parties considered that products which were short of full tariff
elimination, but were subject to better than MFN tr eatment, were covered by the Agreement.  This was
not a position that could be supported by GATT Article XXIV, which did not allow for preferenceswhich were greater than zero, but less than the MFN rate.  She would welcome an indication of how
much trade was subject to full elimination of duties, including the number of tariff lines out of the total,
and what percentage was subject to better than MFN treatment, but less than full elimination of duties.
8. The representative of the Czech Republic, speaking on behalf of the CEFTA Parties, replied
that the CEFTA Parties had provided detailed trade statistics on the percentage of trade between theWT/REG11/M/2, WT/REG33/M/2,
WT/REG41/M/2, WT/REG42/M/2
Page 3
Parties, in full accordance with the request made by the Australian delegation.  Moreover, the Parties
had provided data on a Harmonized System (HS) Chapter basis so that CRTA Members could, on their
own initiative, make their own assessments.  They were convinced that further information in this
respect was unnecessary, given that the provision of such statistics did not constitute an obligatory
element of the conformity test.  The Parties were of the opinion that the Agreement had had a tradecreating effect - this was obvious from the figures presented - and it was unnecessary for the Parties to
go into further details.
9. The representative of Canada appreciated the efforts made by the CEFTA Parties to provide
information, but said that his request might have been misunderstood.  The Committee was engaged in
an examination to determine compliance of the Ag reement with GATT Article XXIV.  According to
Article XXIV:8, an Agreement must cover “substantially all the trade”.  The CEFTA Parties had
provided the total trade statistics of each of the Parties, but had not indicated whether this trade was
covered by the Agreement, and whether the Agreement covered substantially all the trade.  This was astandard question which was asked in all examinations .  It would be impossible to make an assessment
in terms of Article XXIV:8, if the Parties did not provide the actual amount of trade covered by the
Agreement, both in terms of total coverage and tariff coverage.
10. The representative of the United States echoed the concerns of the Canadian delegation.  It
would be impossible to adequately assess the compliance of the CEFTA Parties with the substantially
all the trade provision of Article XXIV:8 in the absence of data to indicate what proportion of trade was
subject to full liberalization, and what percentage was subject to other preferences.  As she had
mentioned previously, Article XXIV did not support preferences which were better than the MFN ratebut less than fully liberalized;  such preferences raised  barriers to third Parties and were contrary to the
spirit and letter of Article XXIV.  How did the CEFTA Parties justify such preferences under
Article XXIV?
11. The representative of Australia supported the requests made by the delegations of Canada and
the United States for information on the trade covered by the Agreement and estimates of tariff
coverage.  This would facilitate examination of the Agreement in terms of Article XXIV:8.
12. The representative of Japan had a similar request to other delegations.  He asked for
information on the share of trade of items whose tariff had not been eliminated, both at the present time
and at the projected completion of the free-trade area.
13. The representative of the Czech Republic, speaking on behalf of the CEFTA Parties, replied
that the issue of substantially all the trade was part of the systemic debate and should be examined in
that context.  The CEFTA Parties were convinced that substantially all the trade was covered by this
Agreement: if the entire Agreement and the timetabl es for elimination were examined, this was self-
explanatory.  Moreover, the figures provided evidenced that liberalization was advanced.  In response
to the question by the Japanese delegation, he emphasized that the interim nature of the Agreementmade no difference in this case, it was not a customs union, but a free-trade area.  He reiterated the view
of the CEFTA Parties that the statistics presented were sufficient to determine the Agreement’s
conformity with respect to the subs tantially all the trade requirement.
14. The representative of the European Communitie s wanted to record two points in relation to
what the representative of the Czech Republic had rightly identified as the systemic issue being raised.
Firstly, his delegation did not share the view that preferences below the MFN rate and above zero were
not covered by the obligations of Article XXIV:8.  Secondly, the argument that the offering of
preferences within the context of a free-trade area which were above zero but below the MFN rate
amounted to raising barriers seemed not to be right, not least because the obligation not to raise barriersWT/REG11/M/2, WT/REG33/M/2,
WT/REG41/M/2, WT/REG42/M/2
Page 4
(as discussed separately in the Committee), fell under Article XXIV:5(b), and was distinct from the
obligation under Article XXIV:8(b).
15. The representative of the United States asked whether the representative of CEFTA was
declining to provide additional statistics to the Committee.  The representative of the Czech Republic,
speaking on behalf of the CEFTA Parties, replied that  this was an issue of interpretation.  The CEFTA
Parties had provided statistics which were sufficient to assess whether substantially all the trade was
covered.  Members should bear in mind that this was a systemic issue and a problem of interpretation.
16. The representative of Japan said that the request for statistics was separate from the systemic
debate.  The Committee did not yet have a definition of substantially all the trade, of whether, for
example, it should cover a certain percentage trade or whether it should be calculated on an HS or trade
volume basis.  It was not apparent from the statistics provided by the Parties whether the trade listed by
HS Chapter was covered by the Agreement or not.  Such information was necessary.
17. The representative of Canada echoed the comments made by the representative of Japan that
there was a distinct difference between a systemic debate and an examination.  The Agreement was
being examined to determine compliance with Articl e XXIV.  In order to illustrate the difficulty
Members were having in conducting the examination, he noted that the Standard Format provided by
the CEFTA Parties stated that there were a few agricultural products which were excluded frompreferential treatment; the text of the CEFTA Agreement stated that there was not complete
liberalization of trade in agriculture and processed pr oducts, and exceptions were listed in protocols and
annexes.  Yet, in the replies the Parties had stat ed that there was nothing in the Agreement which
excluded any product a priori .  Without the necessary information on coverage of the Agreement, it
would be very difficult to assess its conformity with Article XXIV.
18. The representative of the Czech Republic, speaking on behalf of the CEFTA Parties, asked the
Committee to refer to Articles 2 and 11 of the Agreement and argued that if it was taken into account
that all industrial products were covered, and their share of trade was 85-90 per cent, and that a
significant proportion of agricultural products was also covered, then all trade was currently liberalized
at around 90 per cent or above.  The Parties were of the opinion that what they had provided was solidevidence that trade was at least liberalized to 90 per cent.
19. The representative of the United States replied that all Parties to the CEFTA were Parties to
other Agreements, e.g. with the European Communities and the States of the European Free Trade
Association (EFTA).  She recalled that the Standard Format provided by the EFTA Parties was
considered a model and had helpful trade data and statistics.  She wondered why the CEFTA Partiescould not produce similar data for this examination.  With reference to the comment by the CEFTA
Parties that the issue of substantially all the trade fell under the systemic debate, she reminded them that
the Committee's purpose was to examine the CEFTA Agreement;  the practice in the Committee thus
far had been that the Parties to an Agreement under examination reply to questions, in order to allow
Members to make an educated judgment.  In the absence of additional statistics, her delegation would
have to make a judgment without all the facts.  Given the preferences in the CEFTA Agreement, her
delegation would have to judge that the Agreement was not consistent with the requirement thatsubstantially all the trade be covered, and moreover, that third Parties might be subject to new barriers.
She would prefer to make a judgment with more facts and she hoped that the CEFTA Parties would
reconsider their position and provide additional statistics.
20. The representative of the Czech Republic, speaking on behalf of the CEFTA Parties, replied
that they had responded to the Australian delegation's question about the percentage of trade between
the CEFTA Parties which was accounted for by products falling within Chapters 1-24 and 25-97 of theWT/REG11/M/2, WT/REG33/M/2,
WT/REG41/M/2, WT/REG42/M/2
Page 5
HS System.  He added that the Parties had responded bona fide to the question on trade coverage.  If
Members did not think that the CEFTA Agreement was in conformity with Article XXIV, he asked
them to submit detailed questions to this effect, in order to give the CEFTA Parties the opportunity to
respond.
21. The Chairman noted that this seemed a reasonable approach and would simplify the drafting of
conclusions.  Delegations with questions on this issue should submit them in writing.
- Trade Provisions
22. The representative of Japan asked if the Agreement was consistent with Article XXIV:5(b),
which stated that Parties should not raise duties and other regulations of commerce, compared to the
level prior to the formation of the RTA.  Could the Parties confirm that they had not raised duties
towards third Parties?  The representative of the Czech Republic, speaking on behalf of the CEFTA
Parties, replied that duties had not been raised towards third Parties.
23. The representative of the United States said  the Agreement referred to the elimination of
quantitative restrictions (QRs) by the Parties and that additional information on this subject had been
provided in the response to question 1.1.  Quantitative restrictions were, in general, prohibited under the
WTO, but she had noted the presence of QRs on the import of automobiles into Poland, and others on
scrap paper and paperboard, and she wondered how such QRs were justified and whether they wereapplied on an MFN basis.  A second question concerned the annual ceilings which were open for a
number of products originating in Poland, the Czech  Republic, the Slovak Republic and Romania: what
were these ceilings applied to and how were they justified?
24. The representative of the Czech Republic replied that restrictions on textiles had been notified
under the WTO's Agreement on Textiles and Clothing and were no longer in effect in the Czech and
Slovak Republics.  Restrictions had been applied on an MFN basis.
25. The representative of Poland said that his government was guided by GATT/WTO principles in
its maintenance of export and import restrictions.  He confirmed that the restrictions on automobiles
mentioned by the United States representative had been applied on an MFN basis and had been
introduced in full consistency with the relevant GATT/WTO provisions.
26. The representative of the United States said that the representative of the Czech Republic had
stated that the annual ceilings referred to textiles products.  Did such restrictions also apply to textiles in
Poland and Romania?  The representative of Poland confirmed that restrictions had been notified to the
WTO under the relevant provisions and that they had been abolished vis-à-vis  all WTO Members.  The
representative of Romania said that his country had not imposed QRs on the import of textile products.
He referred the Committee to the answer to question 1.1, where it was stated that Romania did not
apply QRs to either imports or exports.
27. The representative of Japan noted that the Standard Format provided by the CEFTA Parties
gave only a six-line description of rules of origin.  His delegation would appreciate additional
information regarding the restrictiveness of  rules of origin towards third Parties.
28. The representative of the Czech Republic, speaking on behalf of the CEFTA Parties, replied
that the Parties were of the view that the rules of origin did not create new restrictions on trade
opportunities for third Parties and did not affect policy instruments which applied to the import of
goods from such Parties.  The purpose of the rules of origin was solely to determine whether products
were eligible to benefit from preferential treatmen t under the Agreement.  Moreover, he informed theWT/REG11/M/2, WT/REG33/M/2,
WT/REG41/M/2, WT/REG42/M/2
Page 6
Committee that a joint notification would soon be made to the GATT/WTO, specifically to the CRTA,
and in more detail to the Committee on Rules of Origin, on the system of pan-European cumulation of
origin.  This arose from the fact that there were a number of free trade agreements within Europe and
the framework of these agreements required certain common-denominator principles or solutions.  This
system had been in force since the beginning of 1997.
29. The representative of the United States said her delegation was interested in more details on the
system of pan-European diagonal cumulation of or igin and she looked forward to receiving this
documentation both in this Committee and in the Committee on Rules of Origin.  She had noted the
statement made by the CEFTA Parties - which her delegation had made in this Committee on other
occasions - that rules of origin were intended only  to grant access to preferential rates and were not
intended to deprive third Parties of their MFN rights.
30. The representative of Norway confirmed the statement made by the CEFTA Parties that the
system of pan-European cumulation of origin would be  notified soon to the CRTA and, in detail, to the
Committee on Rules of Origin.  He added that, from his delegation's point of view, other restrictive
regulations of commerce, as defined in Article XXIV:8, did not cover rules of origin.  This issue was
part of the Committee's ongoing systemic debate.
31. The representative of the United States asked if the Parties would explain the safeguard
provision on structural adjustment and indicate whether it had ever been used.  The representative of
Poland replied that his government had made use of the structural adjustment safeguard provision with
respect to telecommunications equipment, but that the protection had since been lifted.  There wasongoing action on steel products and fuels under the structural adjustment provision.
32. The representative of the United States enquired as to the nature of the measures on steel
products and fuels.  The answer to question 4.4 on specific safeguards indicated that "in the selection of
such measures, priority shall be given to those measures which least disturb the functioning of the
CEFTA". What were the measures which would least disturb the functioning of the CEFTA?
33. The representative of Poland referred the United States representative to Article 28 of the
CEFTA Agreement which explained the nature of the measures to be taken.  As stated in the text,
"exceptional measures of limited duration ... may be taken by any of the Parties in the form of increased
customs duties.  These measures may only concern infant industries or certain sectors undergoing
restructuring or facing serious difficulties, particularly where these difficulties produce important social
problems".  Subsequent paragraphs of this Article explained other parameters under which such
measures could be applied.  This instrument was introduced in the CEFTA Agreement, and an identicalinstrument was foreseen in other free trade agreements to which Poland was Party.  The provision was
intended as a temporary instrument to counteract problems resulting from the exposure of certain
industries to increased competition and had no implication for third Parties, as it referred exclusively to
intra-CEFTA trade and operated at an MFN level.
34. The representative of the United States asked if this meant that if the action was invoked on a
product which had been already liberalized, the product would be subject to customs duties which were
below the MFN treatment rate but above full liberalization.  The representative of Poland replied that
the instrument operated below the MFN level.  If protection was increased beyond the MFN level the
Parties would follow the relevant procedures.
35. In response to a question by the representative of Japan, the representative of the Czech
Republic, speaking on behalf of the CEFTA Parties, said that safeguards would not be applied more
restrictively against third Parties.WT/REG11/M/2, WT/REG33/M/2,
WT/REG41/M/2, WT/REG42/M/2
Page 7
36. The representative of the United States asked if the Parties would confirm that the balance of
payments measures applied by one of the CEFTA Parties were applied to all the CEFTA Parties.  The
representative of the Slovak Republic replied the balance of payments safeguards applied by his country
were in strict accordance with Article XII of GATT 1994 and were applied on an MFN basis.  Therepresentative of Bulgaria said that his country had a balance of payments measure which was applied
on an MFN basis to all CEFTA Parties.
37. The representative of Japan asked whether anti-dumping duties applied by one Party to the
Agreement against a third Party would be extended automatically by other Parties to the Agreement.
The representative of the Czech Republic, speaking on behalf of the CEFTA Parties, replied that the
Parties respected the views of others, but this was an issue subject to the continuing debate on systemicissues.
38. The representative of the United States said that the paragraph on subsidies and state aid in the
Standard Format stated that the provisions of Ar ticle 23 did not apply to agricultural products.  She
wondered if similar provisions applied to agricultural products, and if not, why had agriculture been
excluded?  Reacting to the reply by the representative of the Czech Republic, speaking on behalf of the
CEFTA Parties, that agricultural products were not excluded, the representative of the United States
reiterated that the information provided in the Standa rd Format said that the provisions did not apply to
agricultural products and she requested further clarification.  The representative of the Czech Republic,
speaking on behalf of the CEFTA Parties, replied that Article 23.2 stated that the provisions onsubsidies and state aid did not apply to agricultural products.  But the CEFTA Agreement had been
signed prior to the conclusion of the Uruguay Round and, in certain respects, reflected the prevailing
historical situation.  This may have created uncertainty about this particular Article.  Article 23 alsostated that if a Party considered that a particular practice, including in the area of agriculture, was
incompatible with the terms of the Agreement, it could take appropriate measures.  Thus, agriculture
was mentioned in general terms.
39. The representative of the United States asked for clarification on the status of Bulgaria's
accession to the CEFTA.  The representative of Bulgaria replied that the accession negotiations were
quite advanced, but not yet complete.
- General/Other Provisions
40. The representative of the United States said she had several questions about other provisions.
With respect to Article 20, state monopolies of a commercial character, which monopolies were
covered?  With respect to Article 24 covering government procurement, the Agreement stated thatliberalization of government procurement markets was an objective: did the Parties have any intention
of joining the Agreement on Government Procurement?  Article 25 mentioned a transition period of
five years for the improvement of the protection of intellectual property: did this mean compliance with
the WTO rules, or was it something more than that?  The evolutionary clause in Article 33 provided the
basis for a further deepening and extension of the Agreement: given that the CEFTA Parties had stated
that almost everything was covered under the Agreement, was the intention to liberalize existing
preferences, and was there a schedule for doing so?
41. The representative of Norway asked for clarification of Article 11, which dealt with the
coverage of agricultural products: did the general provisions under Chapter III apply to both industrial
and agricultural products?  The representative of the Czech Republic, speaking on behalf of the CEFTA
Parties, responded in the affirmative.WT/REG11/M/2, WT/REG33/M/2,
WT/REG41/M/2, WT/REG42/M/2
Page 8
42. The representative of the Czech Republic, speaking on behalf of the CEFTA Parties, added that
all steps taken in relation to Article 20 were and would be GATT-consistent.  He affirmed that the
government procurement procedures of all CEFTA Parties were GATT-consistent.  The Czech
Republic intended, in the long term, to become a signatory to the Agreement on Government
Procurement, but he did not consider it necessary to go into further detail here.  On the question of theconsistency of intellectual property with WTO rules, he replied that the Parties had adhered to
GATT/WTO standards.  As for Article 33, the evolutionary clause, there was an intention to liberalize
further trade in agricultural products to arrive at totally free trade.
43. The representative of Canada had a follow-up question on state monopolies.  Article 20
indicated that by 1 July 1999 there would be no discrimination regarding the conditions under which
goods were procured and marketed between nationals of the Parties.  Did this mean that discrimination
would still be permitted with nationals of non-Parties?  The representative of the Czech Republic
replied that there was no discrimination of this kind.
44. The Chairman said that the Committee had had a good discussion.  He noted that there were a
number of outstanding questions which Members had agreed to provide in writing, in particular with
regard to the scope of the Agreement and the statistics.  He asked if Members were of the opinion that
the factual part of the examination had been completed, or whether the Committee should hold a furtherround of examination.
45. The representative of the United States said that, given that her delegation still required
substantial statistical information which she considered key to the assessment of the Agreement, and
that it needed more time for an in-depth study of  the trade statistics provided by the Parties, she
considered it premature at this point to complete the factual part of the examination or to begin draftingthe report.  Her delegation would provide a list of written questions, analyze the statistics to be
submitted by the Parties, and then re-visit the issue.  She wanted to make a general point here, which
did not apply to this particular Agreement, but to the examination process in general;  she had noted
that Parties in an examination frequently side-stepped questions saying that they fell under the debate
on systemic issues, but at the same time Members were nervous about having their agreement singledout in the systemic debate.  She agreed that it was appropriate to discuss issues generically in the
systemic debate and not to single out specific agreements, but in the legal examination of an individual
agreement it was not satisfactory to avoid issues which might be deemed systemic in nature.  Her
delegation would continue to ask questions which might or might not be systemic in nature and she
hoped that parties under review would respond to such questions.
46. The representative of Japan added that before drafting the conclusions, the Committee should
first have the opportunity to review the information re quested in the day's meeting.  He reiterated his
delegation's request for information on the trade creation effects of the Agreement on third Parties.  His
delegation's view was that systemic issues could be discussed in individual examinations.
47. The representative of the United States added that it would also be helpful to have the
information on rules of origin.  She would endeavour to submit her delegation's written questions
quickly.  The Committee's work was more efficient if Members were provided with the documentationin advance of the meetings.
48. The representative of the Czech Republic, speaking on behalf of the CEFTA Parties, said they
were still of the opinion that sufficient information had been provided to demonstrate that the
Agreement was in conformity with the principle of substantially all the trade.  At least 90 per cent of the
trade between the Parties had been liberalized.  If Members had specific comments in this regard, heasked them to submit them, and any additional questions, as soon as possible.  He added that, while heWT/REG11/M/2, WT/REG33/M/2,
WT/REG41/M/2, WT/REG42/M/2
Page 9
recognized that systemic issues were to a great extent interlinked, they should be kept separate from
individual examinations.  He expressed the hope of the CEFTA Parties that the Agreement would be
examined again in the near future.  Finally, he expressed thanks to the Committee for the constructive
approach taken by Members.
49. The Chairman noted that the CEFTA Parties would respond to written questions and  requested
Members to submit questions promptly, in the following week or so, in order to give the Parties time to
respond well in advance of the Committee's next meeting in early May.  In particular, there were
questions on the scope of the Agreement, rules of origin, and trade creation effects.  The Agreement
would be examined again in the Committee's next meeting in May and after that he would ask the
Secretariat to draft the conclusions.
50. The representative of the Czech Republic, speaking on behalf of the CEFTA Parties, asked that
Members submit their questions by the deadline.  Members would, of course, retain the right to raise
further issues after this date, if necessary.  He reiterated that the CEFTA Parties were convinced that the
Agreement was in conformity with Article XXIV.
51. The representative of the United States agreed to the deadline assuming that the replies were
distributed three weeks in advance of the May meeting.B. Examination of the Free Trade Agreements Between the Czech Republic and Bulgaria, the
Slovak Republic and Bulgaria, and Slovenia and Bulgaria
52. The Chairman then turned the Committee's attention to the examination of the free trade
agreements between Bulgaria and Slovenia, Bulgaria and the Czech Republic, and Bulgaria and the
Slovak Republic and recalled that the Committee had held a preliminary discussion of these
Agreements at its fourteenth session in November 1997.  Summary records had been distributed asdocuments WT/REG33/M/1, WT/REG41/M/1 and WT /REG42/M/1 respectively.  Questions and
replies concerning the Bulgaria-Slovenia Agreement had been distributed as document WT/REG33/4,
and those for the Bulgaria-Czech Republic and Bulgaria-Slovak Republic as document WT/REG41/4.
In line with past practice, he proposed that the Committee proceed with the examination of the
Agreements together as they were of a similar nature.  This would have no effect on the examinationper se , as each Agreement would be judged on its own merits and would have its own report with its
own conclusions.  He referred the Committee to the Standard Formats submitted by the Parties,
documents WT/REG33/2, WT/REG41/2 and WT/REG42/3, which would be used to guide the debate.
He asked that delegations indicate whether their intervention related to a specific Agreement or all three
and opened the floor to delegations wishing to make general remarks about these three Agreements.
53. The representative of Bulgaria gave his support to the proposed procedure.  Given that the three
Agreements were almost identical, both with each other and with the CEFTA Agreement, this would
make the task of Bulgaria, Slovenia and the Czech and Slovak Republics easier.  Members had asked
questions which were substantively the same as those asked in relation to the CEFTA Agreement and it
should come as no surprise that the Parties' answers were almost identical to those submitted by the
CEFTA Parties.  Much of what had been said in the day's meeting, thus far, applied similarly to
Bulgaria's three bilateral Agreements.
54. The representative of the United States asked if Slovenia had ratified its Agreement with
Bulgaria and if there had been any significant changes to the Agreement since it entered provisionally
into force on 1 January 1997.  The Parties had indicated that intra-trade had increased markedly under
the Agreement, but he wondered to what extent trade with third Parties had increased.  Could theWT/REG11/M/2, WT/REG33/M/2,
WT/REG41/M/2, WT/REG42/M/2
Page 10
growth of intra-trade be evidence of trade diversion?  He added that his delegation would appreciate
additional trade statistics from the Parties.
55. The representative of Slovenia replied that Slovenia had not yet ratified its Agreement with
Bulgaria, but it was in the process of ratification.  There had been no changes to the Agreement since its
provisional entry into force.  He added that the extent of his country's trade with Bulgaria was evident
from the statistics provided.  At present this trade was insignificant, but the hope was that it would
expand as a result of the Agreement.  At present there were no effects on trade with other partners.
56. The representative of Japan asked whether trade with third Parties had increased since the
formation of the three free-trade areas.  The represen tative of Slovenia replied that since the entry into
force of the Agreement, trade with third countries had increased substantially.  The representative of the
Czech Republic replied that trade with third Parties had increased.  The representative of the
Slovak Republic confirmed that trade with third c ountries had increased much faster than trade with
Bulgaria, which was currently at a marginal level in ab solute terms.  The representative of Bulgaria said
that the statistics provided by his delegation showed a growth in trade with third Parties in some years
and then a decline, which could in no way be attributed to these Agreements.  Other factors had
influenced this development.  The Agreements had not had a negative effect on Bulgaria's trade with
third Parties.
57. The representative of Canada said his delegation had essentially the same question as put to the
CEFTA Parties.  He had noted that there were some differences in the description of paragraph 3, scope
and product coverage, in the Standard Formats submitted by the Parties.  The Slovenia - Bulgaria
Agreement listed some exceptions, but the Agreements between the Czech and Slovak Republics and
Bulgaria listed none.  The Parties had indicated that the Agreements followed the same structure as theCEFTA Agreement and he would appreciate more detail on the nature of the coverage.  There were
some statistics on coverage given in the Standard Format submitted by Slovenia and Bulgaria, but not
in those submitted for the other two Agreements.  He requested information on the percentage of trade
covered by the Agreements;  the percentage of trade covered by preferences, but not full tariff
elimination;  and an estimate of the number of HS Chapter tariff lines covered.
58. The representative of the United States supported the Canadian delegation's request.  In
addition, his delegation requested information on the relationship of Bulgaria's bilateral Agreements
with the Czech and Slovak Republics' custom union.  The representative of Bulgaria replied that the
Agreements were separate, but identical.  The representative of the Czech Republic confirmed that the
Agreements were identical;  this was why the Parties had submitted the questions and replies in a singledocument.
59. The representative of the United States said that she had a number of questions about these
three Agreements which were similar to those she had asked in relation to the CEFTA Agreement.  Was
there an alternative to repeating these questions and how could this be handled procedurally? Thefactual record of the examination was important and the questions should be reflected therein.
60. The Chairman replied that the factual record of the examination would record her intervention.
He asked delegations to follow the same written procedures for questions which applied to the
CEFTA Agreement.
61. The representative of the United States asked if this meant that the points raised in the
examination of the CEFTA Agreement would be transferred into the summary records of this meeting.
62. The representative of the Secretariat explained that the United States representative's statement
would be reflected in the summary records of the meeting so as to consider her questions during theWT/REG11/M/2, WT/REG33/M/2,
WT/REG41/M/2, WT/REG42/M/2
Page 11
CEFTA examination as applying mutatis mutandis  to the case of Bulgaria's three bilateral Agreements.
Any additional written questions, together with the replies, would form part of the body of
documentation of the examination.  The representative of the United States added, for the record, that
all the questions she had asked in the course of the day's examination of the CEFTA Agreement alsoapplied to Bulgaria's three bilateral Agreements.  The representative of Bulgaria said that, if the
approach just taken by the United States representative was adopted, his delegation would like to state
that their answers would be substantively the same as those made by the CEFTA Parties during the
examination of the CEFTA Agreement.
63. The representative of Japan said that written questions, although recorded in the summary
records, were not always reflected in the conclusi ons.  He asked that CRTA Members consider ways in
which questions might best be reflected in the conclusions.  It was his delegation's view that written
questions and answers should be clearly reflected, not just in the conclusions, but also in the descriptivepart of the report.  The representative of the Czech Republic said that his delegation was of the view
that the questions and replies constituted an official document of the WTO and that there was no needfor a new approach.  The Chairman noted that the examination report would contain the appropriate
reference to the questions and replies.
64. The representative of Norway sought clarification on an issue: the Committee had just
conducted an examination of the CEFTA Agreement and was now in the process of examining three
separate Agreements, with substantively the same  provisions as the CEFTA Agreement, which had
entered into force provisionally after the CEFTA Agreement.  Did Bulgaria intend at a later stage to
supplant these three Agreements with accession to the CEFTA, or did it intend the expand the coverage
of free-trade areas to the other three CEFTA Parties?  In other words, did Bulgaria plan to accede to theCEFTA?  The representative of Bulgaria replied that negotiations were currently underway and that the
three bilateral Agreements would be superseded by the CEFTA Agreement after Bulgaria's accession tothe CEFTA.
65. The representative of the United States said that the Parties had stated that these Agreements
were "substantively" the same, but "substantively" generally connotated "not exactly", and she asked
the Parties to summarize any major differences.  Were any major changes planned for Bulgaria's
accession to the CEFTA?  The representative of Bulgaria replied that, to his knowledge, there were no
major differences between the three Agreements under examination and the CEFTA Agreement itself.They were practically identical;  the only differences were in the annexes on product coverage.
Moreover, his delegation was unaware of any major changes contemplated as a consequence ofBulgaria's accession to the CEFTA.
66. The Chairman requested the Secretariat to produce the summary record of the day's meeting
and confirmed the deadlines for the written questions and replies.  He hoped that the examination of
these Agreements could be completed in the Committee's next meeting.
67. The Committee took note of the comments made.
__________