./.WORLD TRADE
ORGANIZATIONWT/GC/W/214
22 June 1999
(99-2520)
General Council Original:  English
PREPARATIONS FOR THE 1999 MINISTERIAL CONFERENCE
Regional Integration
Communication from Japan
The following communication, dated 17 June 1999, has been received from the Permanent
Mission of Japan.
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Proposal
1. Japan shares the view expressed in the proposals submitted by other WTO Members that the
WTO Agreement should ensure in an affective manner the consistency of the regional trade
agreements with the principle of the multilateral trading system.  The lack of progress in the
examination of regional trade agreements should not, therefore, become a source of distrust for
maintaining the primacy of the multilateral trading system.   Japan thus proposes that the work to
clarify the meaning of the provisions of Article XXIV of the GATT and Article V of the GATS, as
well as that to strengthen the future examination procedures on regional trade agreements be included
in an appropriate manner in the next negotiations.
Background
2. The depth and extent of regional integration has far exceeded what was originally expected at
the time when Article XXIV of the GATT was formulated.  The "non-discriminatory principle",
which is one of the key principles of the WTO Agreement, must be properly maintained for thecredibility of the WTO system itself.  Moreover, the Singapore Ministerial Declaration clearly
reaffirms the primacy of the multilateral trading system .  It is, therefore, vital for the system to ensure
that regional trade agreements remain consistent with the WTO Agreement.
3. During the GATT period, the examination reports were written in a manner that did not
necessarily draw the conclusion as to whether individual regional trade agreements were consistentwith the GATT rules or not.  The on-going  examinations in the Committee on Regional Trade
Agreements  have also been delayed and not one si ngle examination report has been adopted since the
establishment of the WTO.    The Committee on Regional Trade Agreements admitted in its report to
the General Council last year that the delay in examination was "slowed, inter alia , by a lack of
consensus on the interpretation of certain elements of those rules relating to regional tradeagreements".WT/GC/W/214
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4. In addition, the current procedures do not provide for a re-examination of regional trade
agreements once their initial examination has been concluded.  An examination of  inconclusive parts
of the adopted examination report, in light of the eventual development on "systemic issues" is also an
important element for consideration.
5. Japan is of the view that a serious threat to the primacy of the multilateral trading system
could be presented, if the Members do not take any steps to rectify the current situation in which they
are faced with a lack of effective means and tools to conduct a meaningful examination of regional
trade agreements as to their WTO consistency.
6. In order to maintain the "primacy of the multila teral trading system", there is a strong need to
improve the examination process effectively in light of the slow progress on the CRTA examinations.
This can be addressed through work on the interpretation of certain elements of the provisions related
to regional trade agreements, by clarifying the meaning of the provisions related to the regional tradeagreements and by strengthening of the examination process from a systemic point of view in the
course of the next negotiations.
Indicative list of issues to be examined
7. In order to fulfill the above objectives, the following issues, among others, should be
examined during the next negotiations:
(a) Clarifications
(i) "Other regulations of commerce" of Article XXIV:5 of the GATT.
(ii) "Other restrictive regulations of commerce" of Article XXIV:8 of the GATT.
(iii) "Substantially all the trade" of Article XXIV:8 of the GATT.(iv) "Substantial sectoral coverage" of Article V:1 of the GATS.
(v) "Absence or elimination of substantially all discrimination" of Article V:1 of
the GATS.
(b) Strengthening the examination procedures
(i) Establishing a review process.(ii) Ensuring the enforcement of the results of the examination.(iii) Establishing the obligation for the notification of economic integration
liberalizing trade in services.
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