RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG112/M/1
19 March 2002
(02-1429)
Committee on Regional Trade Agreements
Thirty-First Session
EXAMINATION OF THE FREE TRADE AGREEMENT
BETWEEN THE EUROPEAN COMMUNITIES AND MOROCCO
Note on the Meeting of 19 February 2002
Chairman:   Mr. A.J. Dumont (Argentina)
1. The meeting was convened in document WTO/AIR/1714.
2. Under Agenda Item C.VI of its Thirty-First Session, the Committee on Regional Trade
Agreements (CRTA) took up the examination of the Euro-Mediterranean Agreement (Agreement)
between the European Communities (EC) and Morocco.  The following topics were discussed:
A. General Remarks
B. Section II – Trade Provisions
3. The Chairman noted that this was the first round of examination of the Euro-Mediterranean
Agreement between the EC and Morocco.  The notification of the Agreement had been distributed in
document WT/REG112/N/1, and its text in document WT/REG112/1.  He proposed to organize the
examination by first asking the Parties and other Members for general comments and then to turn to
the specifics of the Agreement, using the Standard  Format (WT/REG112/3) to guide the debate.  He
recalled the terms of reference for the examination, adopted on 15 November 2000 by the Council for
Trade in Goods as contained in document WT/REG 112/2:  "to examine, in light of the relevant
provisions of the GATT 1994, the Euro-Mediterranean Agreement between the European
Communities and Morocco and to submit a report to the Council for Trade in Goods."  These terms of
reference applied in conjunction with the following Understanding:  "It is understood that the
Understanding read out by the Chairman of the Council for Trade in Goods under item 7 of the
Agenda of the meeting of the Council for Trade in Goods on 20 February 1995, as contained indocument WT/REG3/1, will apply mutatis mutandis to the examination of the agreements.  It was also
understood that, during the examination, due account would be taken of the intrinsic differences
between customs unions and free-trade areas."
A. G
ENERAL REMARKS
4. The representative of Morocco, speaking on behalf of both his and the EC delegations,
conveyed the importance attached to the review of the Agreement within the CRTA.  Both Parties had
always considered that the mechanism for reviewing regional agreements would have to continue, in a
more effective and operational manner, in its role of assessing the impact of agreements on the
multilateral trading system.  To this end, the Parties wished to stress the importance of striking the
right balance between regionalism and multilateralism, in the belief that those two processes couldindeed go hand in hand and that regional agreements, as emphasized in the Doha Ministerial
Declaration, could play a major role in promoting trade liberalization and expansion and in fostering
development.  The Agreement, which had entered into force on 1 March 2000, had been signed by theWT/REG112/M/1
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Parties on 26 February 1996.  The Parties recognized the importance of economic integration for
ensuring an effective presence on the world economic scene and were convinced of the proven
benefits of trade liberalization on growth, development and the well-being of their populations, and
were motivated by the legitimate desire and sustained efforts to make the Mediterranean region one of
shared prosperity.  The Agreement, which followed a long tradition of cooperation between the ECand Morocco dating back to well before 1976, the year in which the Cooperation Agreement had been
signed, marked the beginning of a new era in the Parties' bilateral relations.  It established a true
partnership which took the developments in their economies, and changes recorded at both regional
and global level, into consideration.  The Agreement comprised four main sections:  political
dialogue; progressive liberalization of trade;  financial cooperation;  and economic, social and cultural
cooperation.  He stressed that the Agreement was comprehensive, and hinged on a single underlying
element, namely the establishment of a free-trade area in 2012, which would enable the system ofunilateral trade concessions granted by the European Communities to Morocco to become a system of
preferences based on the principle of reciprocity.  Such a step revealed the degree of maturity which
their bilateral relations had reached as a result of making the transition from a classic cooperation
framework to a true partnership.  With a view to th e creation of the free-trade area, the two Parties had
agreed upon two basic principles with regard to the establishment of a regime governing bilateral
trade.  Firstly, in recognition of the asymmetr y between their respective economies, a gradual and
progressive approach to trade liberalization had been adopted.  This was reflected in the application of
a transitional period lasting a maximum of 12 years, justified by the concern of ensuring that
Moroccan firms had sufficient time to bring themse lves up to standard in order to enhance their
competitiveness and competitive position in relation to EC firms;  and the adoption of tariff-dismantling rates and schedules tailored to the sensitivity of industrial products and their origin.
Thus, industrial products originating in Morocco would be imported into the EC free of customs
duties, while customs duties and charges having equi valent effect applicable on industrial products
originating in the EC would be progressively abolished in accordance with the following timetable:
the elimination, as from the entry into force of the Agreement, of tariffs on non-sensitive products,such as capital goods, which were not produced locally;  the gradual elimination of customs duties
over a three-year period, at a rate of 25 per cent per year, as from the entry into force of the
Agreement, for finished products which were not produced locally (raw materials, spare parts);  and
the gradual elimination of customs duties and charge s with equivalent effect over a nine-year period,
at a rate of 10 per cent per year, as from the fourth year following the entry into force of the
Agreement, for locally produced sensitive products.  For agricultural products, the Parties would
gradually implement greater liberalization of their reciprocal trade (Article 16).  Products originatingin Morocco were eligible for a range of concessi ons according to their sensitivity, while the export
regime for products originating in the EC provided for preferential tariff rates.  The Agreement
provided for an assessment of the situation with a view to determining the liberalization measures to
be applied with effect from 1 January 2001 (Article 18), but the timetable had been deferred to 2002
owing to scheduling difficulties.
5. The representative of Morocco continued, stating that the second principle was the need to
ensure sufficiently extensive coverage of the fields open to free trade.  He remarked that both Parties
were of the opinion that a true partnership could not, under any circumstances, be restricted to trade in
goods alone and had, therefore, to be extended to cover trade in services, a field which represented a
major potential with regard to furthering the development of trade and investment relations.  He addedthat one of the virtues of the Agreement was precisely the fact that it had adopted such an approach
and that it considered trade in services a mainstay of the process to establishing the free-trade area.
The provisions of the Agreement relating to services  revealed that trade liberalization in that field
would be implemented gradually.  Both Parties woul d begin by reviewing their current position of the
service sectors with a view to examining the means of, and requirements for, moving towards aneconomic integration agreement within the meaning of Article V of the GATS.  In the interim period,
which, in principle, would last five years, both Parties would be bound to respect their respective
commitments under the GATS.WT/REG112/M/1
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6. Finally, the representative of Morocco stated that the Agreement comprised a range of
provisions regulating the rules and disciplines govern ing the trade regime just described.  With regard
to non-tariff measures, the Agreement stated that quantitative restrictions on imports and measures
having equivalent effect in trade between Morocc o and the EC would be abolished upon the entry into
force of the Agreement.  It also provided that bo th Parties would apply to the other's exports neither
quantitative restrictions or measures of equivalent effect, nor customs duties or charges having
equivalent effect.  As far as standardization was concerned, the Agreement provided that the Parties
would take appropriate steps to promote the use by Morocco of EC technical rules and European
standards for industrial and agri-food products, and ce rtification procedures.  As regards safeguards,
exceptional measures of limited duration which derogated from tariff dismantling could be taken by
Morocco;  such measures could only concern infant industries or certain sectors undergoing
restructuring or facing serious difficulties (Artic le 14).  Moreover, the EC and Morocco might take
appropriate measures where any product was imported in such increased quantities as to cause, or
threaten to cause, serious injury to domestic producers or serious disturbances in any sector of the
economy (Article 25).  As a general rule, the Agreement had no provisions which affected or
detracted from the rights of third country WTO Members, as provided for in the WTO Agreement on
Safeguards.  Furthermore, in the event of  serious balance-of-payments difficulties, the EC or Morocco
might, in accordance with the conditions established under the GATT and Articles VIII and XIV of
the Articles of Agreement of the International Monetary Fund, adopt restrictions of limited duration
on current transactions.  In addition, if one of the Parties found that dumping was taking place in trade
with the other Party, it could take appropriate measures against this practice in accordance with
Article VI of the GATT 1994 and the conditions and procedures laid down in this Agreement.  Withregard to subsidies and state aid, he said the Agreement clearly stipulated that the EC Member States
and Morocco would progressively adjust, without affecting commitments made under the GATT, any
state monopolies of a commercial character so as to ensure that, by the end of the fifth year following
the entry into force of the Agreement, no discrimination regarding the conditions under which goods
were procured and marketed existed between nationals of the EC and of Morocco.  As far asprotection of intellectual property was concerned, the Agreement reaffirmed the commitments made
by both Parties at the international level.  To th is end, it distinguished between two categories of
multilateral conventions:  those of which both Parties were members, as from the entry into force of
the Agreement (the Paris Convention for the Protection of Industrial Property, the Madrid Agreement
Concerning the International Registration of Marks and the Berne Convention for the Protection of
Literary and Artistic Works);  and those to which Morocco would accede by the end of the fourth year
after the entry into force of the Agreement (the International Convention for the Protection ofPerformers, Producers of Phonograms and Broadcas ting Organizations, the Budapest Treaty on the
International Recognition of the Deposit of Micro-Organisms for the Purposes of Patent Procedures,
the Patent Cooperation Treaty and the International Convention for the Protection of New Varieties of
Plants).  Finally, with regard to instituti onal arrangements, the Agreement provided for the
establishment of an Association Council which would meet at ministerial level once a year and whencircumstances required, on the initiative of its Chairman.  It would examine any major issues arising
within the framework of the Agreement and any other bilateral or international issues of mutual
interest.  To date, the Council had held two sessions, in Luxembourg, in October 2000 and 2001.  The
Agreement also provided for the establishment of an Association Committee responsible for the
implementation of the Agreement, subject to the powers of the Council.  The Committee hadconvened once, in February 2001 in Rabat;  a second session would be held shortly.  He reiterated that
for both the EC and Morocco, the Agreement was part  of a long tradition of cooperation, a leg of a
journey on which they had often made great headway and at times had come to a complete standstill,
but which had always been in keeping with the sy nergy of ever greater cooperation.  Both Parties
intended to maintain that generative force and give it momentum in order to adapt it to currentrealities and developments;  they intended to do so in full compliance with WTO rules.WT/REG112/M/1
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B. SECTION II - T RADE PROVISIONS
7. The representative of Canada stated that, while products originating in Morocco were
imported into the EC duty-free as of the date of en try into force of the Agreement, the elimination of
customs duties and charges having equivalent effect applicable on imports into Morocco of products
originating in the EC was subject to various timetables.  With regard to the latter, she asked therepresentative of Morocco to give an indication of which products had been granted duty-free access
as of entry into force of the Agreement, as she had noticed that Annexes 3 and 4 of the Agreement
provided for phase-out periods of three and twelve years respectively.  She also wondered what was
the type of products listed in Annex 6, not subject to the progressive elimination of duties.  In this
respect, she enquired about the re-examination schedule for these products, and the reason for the
exclusion from tariff dismantling of products falling under HS Chapter 63.  Lastly, she requested trade
statistics for industrial products, both in terms of value of trade and on a percentage basis, at duty-free, less-than-MFN, and MFN rates.
8. The representative of Morocco replied that a number of  different regimes of tariff reduction
could be distinguished with respect to imports into  Morocco of industrial products originating in the
EC, based on the sensitivity of the product:  complete exoneration of customs duties and charges
having equivalent effect for non-sensitive products, such as capital goods, which were not producedlocally;  progressive elimination, at a rate of 25 per cent per year, over a period of three years from
entry into force of the agreement for finished produ cts which were not produced locally, such as raw
materials and spare parts;  and the progressive elimination, at a rate of 10 per cent per year, over a
period beginning three years after entry into force of the Agreement and concluding twelve years after
entry into force of the Agreement for sensitive products manufactured locally.  He asked the Canadianrepresentative to submit her other questions in writing, given their technical nature.
9. The representative of the European Communities supported the introductory statement made
by the Moroccan representative.  In response to the Canadian representative's question on
HS Chapter 63, he replied that the line code was 630900, which bore the description "worn clothing
and other worn textile articles".  He drew the Committee's attention to a typing mistake in the firstparagraph of the Standard Format:  the entry into force of the Agreement should read March 2000, not
March 2001.
10. With respect to safeguard provisions mentioned in the second paragraph of Section II.5 of the
Standard Format, the representative of Canada wondered whether products listed in Annex 6 of the
Agreement would be similarly covered by these prov isions, should they beco me subject in the future
to trade liberalization and tariff elimination.  The representative of Morocco said he would reply in
writing.
11. The representative of Korea, referring to the second paragraph of Section II:6 of the Standard
Format dealing with anti-dumping and countervailing measures, asked whether the provision allowed
for different treatment of Parties to the Agreement from non-member countries.  The representative of
the European Communities sought clarification of the question, since anti-dumping and
countervailing measures in RTAs were not usually applied on an MFN basis.  He invited the Korean
representative to submit the question in writing.
12. Speaking on behalf of both her own and the Australian delegations, the representative of New
Zealand stated that with regards to sector specific provisions, Article 18 of the Agreement provided
for an assessment in the year 2000 to determine further liberalization in the agricultural sector
commencing in 2001.  She appreciated from the introductory statement made by representative ofMorocco that that process had been delayed, but she expressed her desire to receive information on
the results of that assessment once it had taken place.WT/REG112/M/1
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13. The representative of Canada reiterated her request of trade statistics for agricultural products,
both in terms of value of trade and on a percentage  basis, at duty-free, less-than-MFN, and MFN rates.
From the information provided, it appeared that a large portion of agricultural and fisheries products
was not covered by the Agreement and she wondered how this fitted in with the provision of
Article XXIV relating to coverage of substantially all the trade.  She also wondered whether thesentence in Section II:8.2(a) of the Standard Format stating that "if account is also taken of EC
customs duties liberalised on an erga omnes basis, 96 per cent of current EU imports from Morocco
are liberalized" meant that those products were not covered by the Agreement.  If they were not
covered by the Agreement, but yet benefited from duty-free entry, this meant to her that the duty-free
entry was not bound on an MFN basis, which was why the Parties had decided not to include them
within the Agreement in the first place.
14. The representative of Morocco took note of the questions and requests by the representatives
of New Zealand and Canada and agreed to provide all available statistics.
15. The Chairman noted that the first round of examination of the Euro-Mediterranean
Agreement between the EC and Morocco had allowed the Committee to clarify a number of
questions, although others remained pending.  He in vited those delegations wishing to ask additional
questions to forward them in writing to the Secret ariat by 15 March, and the Parties to submit their
replies in writing no later than 30 April.
16. The Committee took note of the comments made.
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