RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG126/M/1
20 June 2003
(03-3322)
Committee on Regional Trade Agreements
Thirty-Fourth Session
EXAMINATION OF THE FREE TRADE AGREEMENT
BETWEEN THE EFTA STATES AND MEXICO
Note on the Meeting of 3 April 2003
Chairman: Dr. J. Meetoo (Mauritius)
1. The meeting was convened in document WTO/AIR/2056/Rev.1.
2. Under Agenda Item C.II, the Committee on Regional Trade Agreements (CRTA or
Committee) took up the examination of the goods and services aspects of the Free Trade Agreement
(FTA) between the EFTA States and Mexico.  The following topics were discussed:
A. General Remarks
Goods Aspects
B. Section I – Background Information on the AgreementC. Section II – Provisions Affecting Trade in Goods
Services Aspects
D. Section I – Background Information on the Agreement
E. Section II – Provisions Affecting Trade in Services
3. The Chairman noted that the Committee would be carrying out the first round of examination
of the goods and services aspects of the Free Trade Agreement between the EFTA States and Mexico.
The Agreement had been signed on 27 November 2000 and had entered into force on 1 July 2001;  it
had been notified to the WTO on 22 August 2001, as document WT/REG126/N/1 - S/C/N/166 and
Corrigendum 1.  The text of the Agreement appe ared in document WT/REG126/1 and Addendum 1.
He proposed that general comments be provided on both the goods and services aspects of the
Agreement, after which the specifics of the goods and services aspects of the Agreement would beexamined, respectively, on the basis of the releva nt Standard Formats, documents WT/REG126/3 and
its Corrigendum and WT/REG126/4 and its Corrigendum, respectively.
A. G
ENERAL REMARKS
4. The representative of  Norway, speaking on behalf of the EFTA States and Mexico, noted that
the meeting provided the possibility to explain the functioning of this Agreement in more detail and to
reply to questions and comments by Members.  Th e Free Trade Agreement had been signed on 27
November 2000 in Mexico City and had entered into force on 1 July 2001.  It had been notified on 25
July 2001 to the Council for Trade in Goods and to the Council for Trade in Services in accordance
with Article XXIV:7(a) of GATT 1994 and Article V:7(a) of the GATS, respectively.  The Committee
had been provided with background information on the Agreement in line with the structure of theStandard Formats circulated in WT/REG/126/3 (g oods part) and WT/REG/126/4 (services part), and
there had also been a corrigendum to each of these.  The information provided gave Members a
comprehensive overview of the Agreement and would hopefully be useful in facilitating the task ofWT/REG126/M/1
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the Committee.  Parties to the Agreement were prepar ed to give further clarifications and replies to
any questions or comments the Committee might have at that meeting, or if need be, would provide
further replies in writing to written questions submitted by Members.  The main text of the Agreement
had been distributed to all Members, and together with all annexes and bilateral agricultural
agreements, was easily accessible on the EFTA web site at www.efta.int. The Spanish version couldbe found on the Mexican web site at www.economia.gob.mx.  As on earlier occasions comments had
been made in the Committee that agreements on the Internet were not as complete as expected, the
EFTA States had made an effort to improve their web site and thus to contribute to transparency in the
Committee's work.  He requested Members to inform them if they still found deficiencies therein, and
noted that if plans existed to establish a central we b site for regional trade agreements (RTAs) within
the framework of the WTO, a link could easily be established to the EFTA-Mexico Agreement on
both web sites.
5. The representative of Norway continued, saying that the Agreement with Mexico represented
a milestone for EFTA, as it was its first transatlantic Agreement and was also the most comprehensive
FTA that EFTA had concluded at that time. The trade regime provided by the EFTA-Mexico
Agreement went beyond the traditional model of an EFTA FTA;  in addition to free trade in industrial
products and fish and other marine products, it included substantive provisions in areas such asservices, investment and government procurement.  Trade in agricultural products was covered in
three bilateral agricultural Agreements between the respective EFTA States and Mexico, that had
been negotiated and signed in parallel with the main  Agreement. They formed part of the instruments
establishing the free trade area.   The Agreement and the bilateral agricultural Agreements under
examination established a free trade area in conformity with the definition set out in Article XXIV:8of GATT 1994 and Article V of the GATS.  While the Agreement did not contain a transitional period
for the EFTA States for the abolition of duties and other restrictions on trade, Mexico had been
granted a transitional period lasting a maximum of 10 years for certain products.  The objectives of
the Agreement were to establish the necessary conditions for the gradual and reciprocal liberalisation
of trade in goods (industrial products, fish and other marine products), the liberalisation of trade inservices, the progressive liberalisation of investment, the opening of government procurement
markets, a co-operation mechanism for competition, and adequate and effective protection of
intellectual property rights.  The bilateral agricultural Agreements introduced substantial liberalisation
of trade in agricultural products.  For the goods part, trade data, including trade flows and trade
coverage, could be found in the Annex to the Standard Format;  additional updated statistics for the
year 2002 had been circulated recently as document WT/REG126/3/Add.1.  The Parties were of the
view that the goods part of the Agreement was in compliance with the requirements and provisions ofArticle XXIV of GATT 1994 and the Understanding  on the Interpretation of Article XXIV of GATT
1994, and that the services part was in accordance with Article V of the GATS;  further, it had been
implemented in a WTO-consistent manner.  The Agreement had been in force for almost two years.
The first meeting of the Joint Committee had taken place in Mexico City in October 2002, in which
the rules of procedure for that body, technical adaptations to Annex I to the Agreement in order toinclude the 2002 amendments to the Harmonized Commodity Description and Coding System, rules
concerning the definition of originating products and methods of administrative cooperation, as well
as model rules for dispute settlement had been adopted.  The second meeting of the Joint Committee
was tentatively scheduled to take place in September 2003 in Geneva. He concluded by saying that
the Parties were prepared to contribute actively in  the examination process of RTAs in this Committee
and move the CRTA process towards a conclusion.
6. The Chairman complimented the Parties for the efforts made towards transparency, an issue
of importance both in this Committee and in the Negotiating Group on Rules.WT/REG126/M/1
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Goods Aspects
7. The Chairman recalled the terms of reference for this examination, which had been adopted
on 5 October 2001 by the Council for Trade in Goods, as contained in document WT/REG126/2.
B. SECTION I – B ACKGROUND INFORMATION ON THE AGREEMENT
8. Complimenting the Parties for the effort ma de towards improved transparency, the
representative of Japan noted that the Standard Formats gave a very comprehensive view of the
Agreement.  In particular, the trade statistics circulated, which included the ratio of imports underduty-free, reduced duty and MFN rates were most welcomed as this kind of information had generally
not been provided in the past.
9. Noting that liberalization of trade in agriculture was covered under separate bilateral
instruments, the representative of Australia asked the Parties to provide more detailed information on
the bilateral agreements, including the tariff lines affected.  Because of the importance of the
agricultural sector in trade generally, it would be impossible to determine whether "substantially all
trade" between the Parties had been liberalized without that information.  The representative of
Norway replied that the information provided indicated that the agricultural sector had not been
largely excluded from the Agreement.  It was well known that this discussion concerned the definitionof "substantially all trade", which was a systemic issue.  It was the understanding of the Parties thatthis term meant less than all trade;  further, the drafting background of Article XXIV suggested that
an individual member of a free-trade area should have a certain margin of manoeuvre in respect of
some products.  Article XXIV did not refer to trade in substantially all products, nor trade in
substantially all sectors;  hence, the obligation was not defined in terms of trade by sector nor by
product, but, rather as a whole.  Trade in agricultur e should be seen as part of the total coverage. An
Agreement as this one should not be seen in the cont ext of a sector-by-sector analysis, and in any case
the trade coverage of this Agreement was around 98 per cent of total trade.
10. The representative of the United States noted the unprecedented comprehensiveness of the
Agreement;  her delegation was happy to note that a country from the western hemisphere could
influence an European agreement.  She welcomed the Parties' efforts made towards transparency in
the provision of the trade data showing the coverage of the Agreement according to different duty
levels.  Her delegation had, however, three main concerns.  First, a large portion of agricultural goods
was not subject to elimination of barriers.  Second, some products would be subject to reduced duties
perpetually;  the GATT did not provide any basis for preferential duties falling short of elimination.
Third, the percentage of liberalization under an agreement did not always reflect the potential trade
that existed, given that some markets had been restricted for many years.  She supported the request
made for additional information on a tariff line basis;  noting that Parties to the NAFTA had providedthe percentage of tariff lines becoming duty-free by the end of the transition period, she requested that
this information be provided for this Agreement.  Commenting on that, the representative of  Norway
indicated that the agricultural policies of the EFTA States were well known.  The EFTA States wereparticipating actively in the work of the Negotiating Group on Rules with the aim of improving the
statistical information to be provided by Parties to RTAs;  in future, statistics might be provided atmore than a two-digit level.  He restated that th e liberalization of trade in agricultural products was
significant;  the share of agricultural trade at zero or reduced tariffs represented 78.4 per cent and
amounted to 21.6 per cent at MFN rates.
C. P
ROVISIONS AFFECTING TRADE IN GOODS
11. Commending the Parties for the information provided on the rules of origin, the
representative of the United States asked, for the sake of transparency, whether these rules were
different from those applied to trade carried out under MFN.  The representative of SwitzerlandWT/REG126/M/1
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replied that the rules of origin were those mostly used in the free trade agreements concluded by the
EFTA States, which were of a general nature and which differed from origin rules of an autonomous,
non-preferential character.
12. Noting that Article 14 of the Agreement referred to the question of bilateral safeguards, the
representative of Chile asked whether the Agreement foresaw the exclusion of the Parties from the
application of global safeguards.  The representative of Norway replied that the bilateral safeguards
under the Agreement provided that each Party might take appropriate measures when the increase inimports of a product of one Party led to serious injury to the domestic industry of like or directly
competitive products, or serious disturbances in any sector of the economy, or serious difficulties,
which could bring about serious deterioration in the economic situation of a region of the importing
Party.  As to the question concerning global safe guards, he indicated that a written reply would be
submitted later.
13. The representative of the United States asked which fish product was exempted from free
trade, as stated under Section I.8.2 of WT/REG126/3.  Noting that this was an exceptional case, and
that his delegation would like to see trade in fish products completely free, the representative of
Norway replied that the exception concerned fish meal.
14. The Chairman stated that the first round of examination of the goods aspects of the Free
Trade Agreement between the EFTA States and Mexico had allowed the Committee to clarify a
number of questions, but some others were pending.  He invited those delegations wishing to ask
questions to forward them in writing to the Secretar iat by the end of July and Parties to submit replies
in writing by the end October.
Services Aspects
15. The Chairman recalled that the decision to refer this Agreement for examination to the CRTA
had been taken on 4 October 2001 by the Council for Trade in Services, as contained in document
S/C/M/55.  Pursuant to paragraph 7(a) of Article V of the GATS, the CRTA should examine the
services aspects of the Free Trade Agreement between the EFTA States and Mexico and report to theCouncil for Trade in Services on its consistency.
D. S
ECTION I – B ACKGROUND INFORMATION ON THE AGREEMENT
16. Noting that in Section I.3 of WT/REG126/4 the Parties had stated that "the Agreement covers
in principle all services sectors with the exception of air transport", the representative of the United
States wondered whether the wording "in principl e" had any additional meaning from the ordinary
one.  She also asked the Parties to provide data on the value of trade involved by the Agreement.  The
representative of Norway replied that "in principle" had no particular meaning;  the Agreement
followed a GATS model, providing for the liberalization of all sectors in all  modes of supply.  As for
the trade data requested, this would be submitted later, but Members should take into account the
difficulties that existed on that area.
E. SECTION II - P ROVISIONS AFFECTING TRADE IN SERVICES
17. The representative of the United States remarked that her delegation had a list of questions for
the Parties that would be submitted in writing.  Noting that her delegation had not been able to consult
the Annexes to the Agreement through the Internet, she requested the precise Internet address where
information of that kind could be found.  Regarding  scope, her delegation wanted to know what had
been precisely excluded from the Agreement and what would continue to experience discrimination in
the sense of Article XVII.  Further, it remained  unclear whether the list of commitments referred to inArticles 24:3(a) and 34:3 had been drafted, and she requested that more information be provided onWT/REG126/M/1
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that.  Noting that this was the first Agreement cove ring trade in services signed by the EFTA States,
the representative of Norway stated that it had generated a significant amount of work for the Parties,
including a list of commitments to be the defined within three years following the entry into force of
the Agreement.  Discussions were proceeding on tha t;  at the first Joint Committee meeting, held in
October 2002 in Mexico City, the Parties had reached a preliminary understanding for the use of anegative list approach.  Further discussions would take place so that the deadline specified in the
Agreement would be met.
18. The representative of United States wondered whether that might pose an institutional issue to
the Committee.  Considering that the requirements of  Article V of the GATS applied to very precise
commitments, if the specific commitments under this Agreement would not be available until a few
years, hence she did not see how the Committee would be in a position to proceed and finalize the
examination of this Agreement.  The representative of Norway agreed that such a question merited
reflection;  this Agreement was of a dynamic nature and the previous question regarding the meaning
of "in principle" was also linked to that issue.  The representative of the  United States noted that
while it was helpful to have this kind of agreement notified, the examination could only progress oncethe list of commitments had been defined and discrimination vis-à-vis  third parties was in effect or at
least had been defined.  In light of that, she proposed that such agreements – including also theAgreement that had been examined by the Committ ee under the previous agenda item, namely the
EC-Mexico Agreement on trade in services – be put on hold until the specific commitments
negotiated in their context had been finalized.
19. Noting that the question raised was very pertinent, the Chairman proposed, and the
Committee agreed, to hold consultations on the issue raised by the representative of the United States
and to revert to this question at the next meeting.
20. The Chairman stated that the first round of examination of the services aspects of the Free
Trade Agreement between the EFTA States and Mexico had allowed the Committee to clarify a
number of questions, but had also given rise to an important systemic issue on which he would
consult with Members in order to move the examination forward.  He invited those delegationswishing to ask questions to forward them in writing to the Secretariat by end of July and Parties to
submit replies in writing by the end of October.
21. The Committee took note of the comments made.
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