RESTRICTED
WORLD TRADE WT/REG3/M/1
23April 1997
ORGANIZATION(97-1771)
Committee onRegional Trade Agreements
Third Session
EXAMINATION OFTHE ENLARGEMENT OFTHE EUROPEAN UNION:
ACCESSION OFAUSTRIA, FINLAND AND SWEDEN
Note ontheMeeting of29July19961
Chairman: H.E. Mr.JohnWeekes (Canada)
1. TheCommittee onRegional Trade Agreements tookuptheexamination oftheTreaty of
AccessionofAustria,FinlandandSwedentotheEuropeanCommunities(ECEnlargement)underagenda
itemB.IofitsThird Session. Themeeting wastofocus onthegoods aspects oftheAgreement and
covered thefollowing topics:
A. General Remarks
B. General Provisions oftheAgreement
C. Trade inGoods
- Market Access
- Agriculture
- Textiles
D. Other Questions
A. General Remarks
2. Therepresentative oftheEuropean Communities saidthatthepurpose oftheexamination by
theCommittee wastotesttheconsistency oftheenlarged customs union withtheprovisions ofGATT
Article XXIV (Article XXIV) andtheUnderstanding ontheInterpretation ofArticle XXIV of
GATT 1994(theUnderstanding). Hecompared thisECEnlargement withprevious ones(1973, 1981
and1986) andstated itsparticular features. TheAccession Treaty, which wassigned on30June1994,
hadentered intoforce on1January 1995. Most ofitstrade provisions hadbecome effective asof
thatdate,without anyperiod oftransition. Itwasnoteworthy thattheWTO hadcome intoexistence
onthatsame date. Indeed, thefirsttariff reductions onindustrial andfishery products foreseen in
theUruguay Round Schedules hadbeenimplemented onthatdate. Thetaskofcomparing levels of
protection prior toandafter Enlargement wascomplicated bythefactthatdutyrates applied on
1January 1995would result inlower ratesoversucceeding years, asaconsequence ofUruguay Round
tariff commitments. Duty ratecomparisons foragricultural products faced similar problems, asthe
implementation ofcommitments hadbegun on1July1995; thewidespread conversion ofagricultural
non-tariff measures intoagreed-upon newlevels ofprotection further added complexity tothe
comparisons. With theEnlargement, thenon-tariff commitments inagriculture relating todomestic
support andexport subsidies hadneeded tobeincorporated intoanewunified Schedule fortheEC-15.
1Themeeting wasconvened inWTO/AIR/390.WT/REG3/M/1
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3. Therepresentative oftheEuropean Communities saidthatArticle XXIV:6 tariff negotiations
withmore thantwenty WTO Members werenearing completion. Anumber ofanti-dumping duties
currently inforce intheEChadbeenextended tothenewMember States. Notdoing sowould have
encouraged thecircumvention ofthemeasures. While anti-dumping duties weremeasures attheborder,
itremained unclear iftheywereincluded inthescope ofArticle XXIV:5(a); however, itwastheview
ofhisdelegation thattheydidnotfallunder Article XXIV:6. Thediscussions withWTO Members
hadfocused onallegations thattheEChadnotrespected procedural andother requirements under the
Anti-Dumping Agreement. Regarding theglobal impact oftheEnlargement, itwastheviewofhis
delegation thatitwould contribute totheexpansion ofworld tradeandgenerate benefits forthirdparties.
Ontariffs, hesaidthatover70percentofthedutyrates inthenewMember States were either
unchanged ordecreased. Calculations bytheECshowed anetdutylossinofapproximately 260million
ECU, onthebasis ofdutyratesasof1January 1995; asimilar figure wasobtained onthebasis of
ratesattheendoftheUruguay Round process. These totals included large positive gains (i.e.lower
dutycollections) forthird parties intrade withAustria andFinland, butaloss(i.e., higher duty
payments) inthecaseofSweden. Headded that,asaresult ofArticle XXIV:6 negotiations, theEC
hadsignificantly reduced dutyratesbeyond itsUruguay Round commitments intheelectronics sector
andhadincreased thelevelofitsbindings. Ithadaccelerated theimplementation ofUruguay Round
tariff reductions overall andforspecific items. Inthewider areaofquantifying non-tariff barriers,
difficulties hadbeenencountered. Preliminary results indicated thatthere would bebothbenefits and
losses. During theUruguay Round, forexample, Sweden hadinsome instances liberalized further
thantheEC-12, butthistended tobeoffset bythelessopenregimes ofAustria andFinland.
4. Therepresentative oftheEuropean Communities emphasized thattheAgreement wasconsistent
withtheterms ofArticle XXIV andtheUnderstanding. Thegeneral incidence oftariffs andother
regulations ofcommerce hadcome down, thuscreating opportunities forthirdparties. Hestressed
thatthegeneral incidence testwasimportant inassessing whether anagreement would leadtotrade
diversion ortradecreation. Hequestioned theneedtogobeyond asummary overall assessment, since
theEChadcompensated anumber oftrading partners within thecontext ofArticle XXIV:6 negotiations.
Headded thatthe"before andafter Enlargement test" would bedifficult, asthedrafters ofthe
Understanding hadnottaken intoaccount suchasituation. Hisdelegation requested guidance from
theChairman inthisrespect. Anyassessment should takeintoaccount thetariff adjustments already
made under Article XXIV:6, asArticle XXIV:5(a) entailed abroad assessment ofalltariff changes,
while paragraph 6onlydealtwithchanges inbound rates. Henoted that,inthecaseoftheEC,the
difference between theapplied andbound duties wassosmall astobenegligible, whereas thetrade
interests ofitsmajor partners were soextensive thatmost tariffs were inevitably covered inan
Article XXIV:6 exercise. Headded thatMembers hadalready agreed toestablish anewandacceptable
levelofreciprocal concessions, asenvisaged inArticle XXVIII:2.
5. Referring todocument G/L/65/Rev. 1,therepresentative ofArgentina saidthat,outofthe
fivequestions hisdelegation hadsubmitted totheECdelegation, onlyonehadbeenanswered. He
saidthatother delegations hadsimilar concerns. Hesought clarification ofthescope ofthetransitional
provisions, particularly those applicable toSweden.
6. Therepresentative ofKorea stressed theneedofMembers tohaveaclear understanding of
themainfeatures oftheAgreement soastofacilitate theexamination process. Document WT/REG3/2,
which contained questions andreplies, wasnotcomprehensive. Itsimply highlighted parts ofthe
Agreement which wereofinterest todelegations. Hehoped thattheexamination would throw useful
lightonthemechanics oftheAgreement andassist theCommittee todetermine whether theEnlargement
complied withtherelevant provisions ofArticle XXIV andtheUnderstanding. Thecomparison of
thegeneral incidence oftheduties applicable before andaftertheformation ofaregional tradeagreement
(RTA) wasimportant inassessing compatibility. Herequested theSecretariat toprovide aninitialWT/REG3/M/1
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assessment. TheChairman wondered whether, fromatechnical pointofview, therewould beproblems
inpreparing suchadocument.
7. Therepresentative ofAustralia saidhisdelegation supported theEnlargement andwelcomed
thebilateralsettlementthathademergedfromArticleXXIV:6negotiationsbetweenAustraliaandtheEC.
Whereas thearrangements relating toagricultural export subsidies anddomestic support commitments
werepositive, itwasnecessary forthese arrangements tobeendorsed bytheWTO. Theissue ofthe
legalmodalities forschedules covering export subsidies anddomestic support commitments hadstill
notbeensettled inthenegotiations ofAustralia andother countries withtheEC.Noreference was
made inArticles XXIV orXXVIII tothecommitments made bytheEConexport subsidies anddomestic
support. Thisissue wasofsystemic importance andshould beclarified.
8. Therepresentative oftheUnited States welcomed theconclusion ofArticle XXIV:6 negotiations
withtheEC.However, theTreaty ofRome andother Enlargement Agreements hadnotbeenapproved
bytheGATT asbeing consistent withthemultilateral rules. Hestressed theimportance ofthis
Agreement 'scomplying withtherelevant multilateral rules, andtheneedfortransparency onthepart
oftheEC. Theexamination would benefit from theimprovements made intheUnderstanding, as
pastexaminations hadbeenweighted down bypersistent disagreements overtheinterpretation ofthe
provisions ofArticle XXIV. With respect toArticle XXIV:5, henoted thattheUnderstanding gave
partial guidance, andherecommended thattheCommittee develop further procedures todealwith
situations notpresently covered intheArticle. Inthepast,Working Parties hadnotbeenabletoagree
ontherelationshipbetweenArticleXXIV:4andArticleXXIV:5-8,oronthescopeofthesecondsentence
ofArticle XXIV:4, which provided thatacustoms union should notraisebarriers totrade withthird
parties. Heemphasized thelanguage inparagraph 1oftheUnderstanding, which provided that"...to
beconsistent withArticle XXIV, [anagreement] mustsatisfy, interalia,theprovisions ofparagraphs 5,
6,7and8ofthatArticle". Thisindicated that,foranagreement tobeconsistent withArticle XXIV,
itneeded tosatisfy notonlytheconditions listed inparagraphs 5-8,butalsothose inparagraph 4.
Hethensaidhisdelegation wasstillawaiting theresponses tothequestions ithadsubmitted andasked
ifthenewServices Schedule would beready before theOctober examination.
9. Therepresentative ofCanada saidthatthecurrent examination needed tobeascomprehensive
aspossible, soastoenable theCommittee todetermine whether theEnlargement complied with
Article XXIV. TheCommittee hadthemandate toexamine thegeneral incidence andrestrictiveness
ofallduties andregulations ofcommerce, inparticular those governed bytheprovisions oftheWTO
Agreements contained inGATT Annex 1A.Hestated thatCanada hadcompleted itsArticle XXIV:6
negotiations withtheECandsaidthatstrict adherence tothestandards setbyArticle XXIV hadbeen
instrumental. Thelatenotification ofthisEnlargement made itmore difficult toassess theAgreement 's
compatibility withmultilateral rules. Heconcurred withtherepresentative oftheUnited States that
issues oftransparency needed tobeaddressed.
10. Therepresentative ofJapan saidthatnotwithstanding thecoming intoforce oftheAgreement
among theMember States on1January 1995, itwasstillnecessary todetermine whether theAgreement
complied withtheprovisions ofArticle XXIV. Thiswasneeded toprotect theinterests ofthirdparties.
11. Therepresentative ofMexico saidhisdelegation shared theopinions ofother delegations on
questions oftiming andtheneedfortransparency. Hesaidthatreplies oftheECdelegation tosome
ofthequestions were notentirely satisfactory.
12. Therepresentative ofEcuador saidthatitwasimportant fortheECtoadhere strictly tothe
provisions ofArticle XXIV, particularly paragraph 4.Hisdelegation wasstillawaiting responses to
questions ithadposed. Therepresentative ofHong Kong stressed theimportance ofcomplying with
themultilateral rulesandsaidthathisdelegation attached greatimportance totheexamination exercise.WT/REG3/M/1
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13. Therepresentative ofArgentina saidhiscountry hadnotfinished itsnegotiations withtheEC
andsowould notbeinaposition togoalong withanyconsensus ontheEC'sSchedule. TheChairman
saidthatthegeneral practice wasthattheSecretariat didnotcirculate settlements reached inthecontext
ofArticle XXIV:6 negotiations, astheywere notmeant tobeinthepublic domain. Interim results
andchanges made totheECSchedule asaresult ofArticle XXIV:6 negotiations hadbeennotified
indocument G/L/65/Rev.1, dated 19March 1996.
14. Therepresentative ofArgentina referred tocommunications totheDirector General onthe
subject. Hequoted asection from onewhich hadbeensubmitted bytheUnited States delegation on
28May1996: "[The] United States requests thatcertification ofSchedule CXL bewithheld untilwe
withdraw theabove objections." Hethenquoted theCanadian communication: "Fortheabove reason
Canada ishereby requesting thatcertification ofSchedule CXLoftheEuropean Community bewithheld
untilCanada waives itsobjection," andsaidbothmade thesame point. HethenreadtheAustralian
communication andnoted thatthere hadalsobeenastatement from thedelegation ofNewZealand.
Thus itappeared evident thatthere hadbeenmultilateral communications.
15. TheChairman replied thathehadmisunderstood which communications therepresentative
ofArgentina wasreferring toinhisearlier intervention. Hethought thereference wastotheresults
ofArticle XXIV:6 negotiations, rather thantothecommunications referring tothenotification bythe
ECofthechanges theyhadmade intheirSchedule asaresult ofthose negotiations. TheChairman
didnotwishtocomment onthelatter untilhehadhadtheopportunity todiscuss withtheSecretariat
thenormal practice inthismatter.
16. TherepresentativeoftheEuropeanCommunitiesrepliedthattheissueraisedbytherepresentative
ofArgentina waspremature, asitwasnottheintention oftheECdelegation topushthrough itsSchedule
atthismeeting. Inanycase, theissue borenorelation totheterms ofArticle XXIV:5(a) andwas
onlyremotely connected totheexamination process. Hesaidthatreservations bydelegations, whether
theyhadbeenpublicly circulated ornot,were notatanyrisk,andhecontended thathisstatements
about theconclusion ofArticle XXIV:6 negotiations were true,whether ornottheSchedule wasto
beapproved. Therelationship between theconclusion oftariff negotiations andtheArticle XXIV:5
process should notbeaffected bytheSchedule. Hesaidanagreement between theECandArgentina
wastobeexpected soon. Therepresentative ofArgentina thanked theECfortheinformation, and
proposed thatinformal consultations beheldwiththeEC,asthiswasaverycomplicated issue. He
stressed theimportance oftransparency andsaidhiscomments were meant toclarify certain issues.
17. TheChairman asked theSecretariat forafactual account ofthestateofplayinitscalculations
related tothegeneral incidence ofduties prior toandaftertheformation oftheECcustoms union.
Therepresentative oftheSecretariat saidthat,inaccordance withparagraph 2oftheUnderstanding,
theSecretariat wasrequired tomake calculations toassist theMembers intheirevaluation ofthe"general
incidence oftheduties andother regulations ofcommerce applicable before andaftertheformation
ofacustoms union." TheUnderstanding defined thetaskasfollows: "Assessment shallbebased
onimport statistics foraprevious representative period tobesupplied bythecustoms union, onatariff-
linebasisandinvalues andquantities, broken down byWTO country oforigin. TheSecretariat shall
compute theweighted average tariff rates andcustoms duties collected inaccordance with the
methodology usedintheassessment oftariff offers intheUruguay Round ofMultilateral Trade
Negotiations. Forthispurpose, theduties andcharges tobetaken intoconsideration shallbetheapplied
ratesofduty." Shesaidthatduring 1995theEChadmade available totheSecretariat datanecessary
forcalculating twosetsofcomparable average tariff ratesweighted by1991-1993 imports. Oneset
corresponded totheSchedules oftheEC-12 andofthethree acceding countries combined on
1January 1995 andattheendoftheimplementation period oftheUruguay Round tariff cuts. The
second setcomprised theSchedule oftheEC-15 forthose same dates. TheSecretariat wasnowin
aposition toundertake acomparison ofthetwosets. During 1996, theSecretariat received newtariffWT/REG3/M/1
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filesspecifying bothbound dutyrates asof1January 1996 andfinalUruguay Round concessions
including theresults ofArticle XXIV:6 negotiations andthetransposition tothe1996 Harmonized
System (HS). However, theSecretariat wasnotinaposition toproceed toanykindofcomparative
calculations, astheinformation wasincomplete. ThenewSchedule supplied bytheECreferred to
1January 1996 andnotto1January 1995. Since theissue wasquite technical, therepresentative of
theSecretariat asked theChairman andtheCommittee forguidance onhowtoproceed.
18. TheChairman wondered whether ageneral debate intheCommittee ontherequired
documentation would beuseful. Hesuggested thatconsultations beheldtopursue thismatter with
interested delegations before thenextmeeting oftheCommittee. Heasked delegations toindicate
theirinterest andnoted thatitwasunlikely thatsuchconsultations would commence before September.
19. TheChairmansuggestedtheuseofthetableofcontentsofdocumentWT/REG3/2asaninformal
agenda fortherestofthemeeting. Heproposed thattheCommittee begin bytaking upthefirstthirty-six
questions under theheading "General."
20. Therepresentative oftheEuropean Communities acknowledged thestatements made byseveral
delegations totheeffect thatsome replies werenotcomprehensive orwereincomplete. Hesaidthat
some questions were notrelevant totheexamination process; hegavetheexample ofquestion 111,
which asked theECforatime-table forfuture enlargements. Hesaidthatmany ofthequestions raised
systemic issues, which theCommittee might needtoconsider inabroader context. Itwould bedifficult
fortheCommittee toreach ageneral conclusion, astheprovisions ofArticle XXIV lacked clarity and
hadnotbeenauthoritatively interpreted.
B. General Provisions oftheAgreement
21. TherepresentativeofAustraliasaidthatthecompensatorymarketaccesswhichhadbeenprovided
bytheECthrough itsbilateral settlement fulfilled animportant obligation toAustralia under
Article XXIV. Henoted that,although WTO Members wereunder nolegalobligation toundertake
studies onthetrade creation andtrade diversion effects oftheiragreements, suchaneffort would be
appreciated, asitwould facilitate theexamination process. According totheUnderstanding, the
formation orenlargement ofanRTA should, tothegreatest possible extent, avoid creating adverse
effects onthetradeofother Members. TheUnderstanding carried theimplication thatMembers whose
arrangementsinvariablyresultedintradediversionshoulddomorethanjustmeettheminimumstandards.
Headded thatthesupport fortheformation andenlargement ofpreferential trading arrangements implied
inArticle XXIV andintheUnderstanding wasconditioned uponthecontribution ofsucharrangements
toglobal trade liberalization tothegreatest possible extent.
22. Therepresentative oftheUnited States emphasized theimportance oftrade dataforthe
examination process. Without accurate data,itwould bedifficult todetermine theimpact ofanRTA
onworld trade. Information wasdifficult toobtain, despite thefactthatMembers hadalegalobligation
toprovide current trade andtariff datatotheMarket Access Committee. Many delegations didnot
abide bythisobligation. Hethenreferred toquestion 5,which asked foranindication ofpreferential
tradebypartner, andexpressed reservations about thegeneral answer provided bytheEC.Hestressed
theneedfortransparency, andrequested theECtoprovide recent trade data.
23. Therepresentative ofHong Kong alsorequested recent tradedatafromtheECand,specifically,
information onthevalue ofexports foreachpreferential partner andtrends inimports sincetheaccession
ofthethree newMember States. Regarding theanswers toquestions 6and7,hewondered whether
theECcould provide empirical evidence tosupport itsclaim thattheAgreement would create trade.
Therepresentative ofCanada agreed withthestatement bytherepresentative ofHong Kong; hesaidWT/REG3/M/1
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available information indicated theopposite withrespect toCanada 'sagricultural trade. Herequested
more information onthetransitional aspects oftheAgreement.
24. Therepresentative oftheEuropean Communities replied thatsome ofthese questions were
verygeneral andsystemic innature andwerelikely toberaised again during theNAFTA examination
thefollowing day.Hesaidthatquestion 5wasonlymarginally relevant toArticle XXIV:5(a). There
appeared tobeawidespread perception thattheproliferation ofpreferential arrangements hadnegative
implications forthemultilateral trading system. Hisdelegation wished tostress that70percentof
ECimports came from MFN sources. Theimports andexports foreachpreferential partner could
befound inthedataprovided, buthisdelegation wasunable topredict howtrade would change in
thefuture. Inpreparing thereplies toquestions 6and7,hisdelegation hadinmind afree-trade area
oracustoms union. After forty years ofexistence, theECwasverydifferent from most trade
agreements, inthatitwasgeared towards economic andmonetary union andother cooperative activity
going beyond therequirements oftheWTO. Asaresult, assessing theimpact oftheAccession Treaty
solely interms ofitstrade creation andtrade diversion effects would betoonarrow. Another
representative oftheEuropean Communities saidthatnosuchstudies hadbeencommissioned, but
theimport figures andfuture datawould reveal theimpact oftheEnlargement onthirdparties.
25. Therepresentative ofArgentina saidthathewasaware thattheECwasunusual. Herequested
theECdelegation tofurnish relevant information revealing trade patterns afterECEnlargement. He
added thattheEChadalegal obligation toprovide therequested information soastofacilitate the
examination process.
26. Therepresentative oftheUnited States saidthatitwould bemuch easier fortheECtocompile
thelatest trends initstrade thanitwould beforitstrading partners todoso.TheArticle XXIV:6
datarepresented average tradeforasetperiod andperhaps didnotinclude allthepartners. Herequested
thattheECprovidethisinformationaccordingtoitspreferentialpartners,andnotedthatsuchinformation
hadtypically been requested andprovided willingly inexaminations inwhich hehadparticipated
previously.
27. Therepresentative ofHong Kong saidthatitwasimportant toestablish whether anagreement
createdordivertedtrade.AnagreementwouldusuallybeconsistentwiththeprovisionsofArticleXXIV
ifitcreated trade; ifitdiverted trade, itmight notbeconsistent withthemultilateral rules. Anobjective
assessment might notbepossible iftheagreement hadnotbeeninforce forareasonable period of
time. Thebiennial reporting requirement could beuseful inthatregard.
28. Therepresentative oftheEuropean Communities saidthediscussion reflected thegreatdifficulty
ofassessing trade creation andtrade diversion before information onthematerial factswasavailable.
Hepointed outthatnomention wasmade ofsuchtrade effects inArticle XXIV ortheUnderstanding;
suchterms were labels attached toparagraphs 4and5ofArticle XXIV. Theonlytestwhich the
Committee should concern itself withwastheonesetoutinparagraph 2oftheUnderstanding. The
Committee needed tomaintain itsfocus andnotoverburden itself withimmaterial information. The
ECdelegation wasready toengage intheanalysis thatwasrequired, although thereremained anumber
oftechnical problems. TheChairman reminded theECofthequestion posed bytherepresentative
ofCanada regarding theissue oftransition.
29. Therepresentative oftheEuropean Communities acknowledged thatthere were transitional
provisions butsaidtheydidnotseem tobeofrelevance totheexamination process. Some covered
theincorporation ofEClegislation intodomestic law. There wereafewcases where themovement
fromanational tariffdutyratetotheEClevelwasspread oversome time, butoverall thesewereminor
inrelation tothebreadth oftheagreement.WT/REG3/M/1
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30. Therepresentative ofAustralia saidhewasaware thatanumber ofdelegations hadquestioned
theadequacy ofArticle XXIV fortoday'scommercial needs. Hewassurprised bytheanswer toquestion
8,which claimed thattherehadnotbeenanyimpact onthirdparties. Theresponse oftheECappeared
tocontradict theanswers given toquestions 6and7,which stated thatthisEnlargement wasindeed
expected tohavesome impact onthirdparties. Theeffects oftheEnlargement would befeltbysmall
economies suchasAustralia 's.
31. Therepresentative oftheEuropean Communities saidthattheresponse toquestion 8indicated
thatthere were noeffects because there already wasafreetrade agreement between theECandthe
EFTA countries. Thetrading relations between Sweden andNorway were hardly changed byEC
Enlargement. Henoted thatthere certainly were changes inother aspects ofEClegislation, but
contended that,interms ofborder measures, there hadbeennochange.
32. Therepresentative ofKorea raised afollow-up query toquestion 18.Hestated that,because
ofdifferent graduation periods andother factors, some developing countries could nolonger enjoy
GSPbenefits incertain product categories fromthethree newMember States. Hesaidherecognized
theunilateral andautonomous nature oftheGSPsystem; fromtheperspective ofrecipient countries,
thismight mean anincrease intariff ratesonproducts ofexport interest tothemwhich wereexported
tothenewMemberStates.HewonderedwhethertheECcouldaddressthissituation.Therepresentative
ofThailand saidhisdelegation shared thisconcern.
33. Therepresentative oftheEuropean Communities saidtheissue ofGSPwasunrelated tothe
question ofthegeneral incidence oftariffs andother regulations ofcommerce under Article XXIV:5(a),
given thattheGSPsystem wasaunilateral actgranting deeper preferences totherecipient countries.
34. Therepresentative oftheUnited States saidhedidnotfindtheresponses toquestions 8and9
tobesatisfactory. Instead ofreplying "none" toquestion 8,anindication suchas"free trade already
existed between theECandEFTA, andthusthere wasnochange" would have been preferable.
Question 9wascorrect insaying thattheCommittee andWTO Members hadalegitimate interest in
understanding howthetrade regime oftheEC-12 hadbeenaffected bytheEnlargement. Atthe
minimum, thisunderstanding wasimportant fortransparency reasons. Henoted thattheEuropean
Economic Area(EEA) hadnever beenexamined, although information about ithadbeensupplied to
theGATT when ithadentered intoforce. HesaidthatifMembers hadcomplied withthebiennial
reporting requirement, there would havebeensome opportunity toconsider theprovisions ofthat
Agreement. Turning toquestion 10,heasked whether thethreeAssociation Agreements withSlovenia,
Morocco andTunisia were inforce, andwhether theywere affected bytheEnlargement. Hesaid
thatquestion 13raised anissue relevant inthecontext oftheNAFTA. Thenewobligations assumed
bythethree newMember States under theAgreement might cause some problems, assome ofthe
trade agreements towhich theywere signatories hadnotbeentreated intheexamination process.
After referring toquestion 15andthebracketed response, hesaidthat,foranagreement tobeconsistent
withtheprovisions ofArticle XXIV, nomajor sector ofeconomic activity should beexcluded.
35. Inresponse, therepresentative oftheEuropean Communities referred tothereplytoquestion 10
provided byhisdelegation. Preferential trade wasnottobetaken intoconsideration when assessing
thegeneral incidence ofduties under Article XXIV:5(a); rather, itwastheMFN rateswhich hadto
beconsidered. Hesaidthattheresponse toquestion 12(a) would likely beintheaffirmative. The
answer toquestion 12(b) was"no," asthere were nopreferential tariff reduction provisions inthe
Accession Treaty.
36. Therepresentative ofAustralia wondered whether tradeinagricultural products between EFTA
countries wasfree. Therepresentative oftheEuropean Communities saidthatwhatwasimportant
inassessing thegeneral incidence ofduties under Article XXIV:5(a) wasMFN rates, asopposed toWT/REG3/M/1
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preferential rates. What wasbeing examined wastheAgreement between theECandthethree new
Member States, notpreferential agreements which thelatterbelonged to.Hestressed thattheCommittee
should onlyexamine relevant questions andnotgobeyond itsauthority.
37. Therepresentative ofAustralia saidhewasstillnotsatisfied withtheanswer "none" to
question 8.Therepresentative oftheEuropean Communities inquired from theChairman whether
heshould address theissueinbroad terms oronatariff-by-tariff linebasis. Ifheweretodothelatter,
itwasreasonable toassume thatthere would besome changes. Inbroad terms, however, there was
nochange, astheEFTA States didnothavecomplete freetrade inagricultural products. Thesame
wastrueinthecaseoftheECandtheEFTA States. Consequently, theimpact was"none," asstipulated
intheanswer provided bythem.
38. Therepresentative oftheUnited States saidthat,intesting theconsistency ofanagreement
withthemultilateral rules, itwasnotonlyArticle XXIV:5(a) ofGATT 1994 which hadtobetaken
intoaccount, butalsoother paragraphs ofArticle XXIV, including paragraphs 4,6,7and8.
39. TheChairmansaidthediscussionhadrevealedthedissatisfactionofdelegationswiththeanswers
provided bytheECdelegation. Much ofthediscussion hadbeenabout whether more datacould be
provided tofacilitate theexamination, andwhether theAgreement created ordiverted trade. Delegations
hadalsoraised questions onsome aspects oftheAgreement which theythought merited further study.
Hesaidthatitwould beadvisable forMembers wishing toenter intoRTAs toconsider these issues
beforehand. Given thesystemic nature oftheissue, itcould bediscussed bydelegations when
considering other aspects oftheCommittee 'smandate.
40. Therepresentative oftheUnited States questioned thestatement bytherepresentative ofthe
ECthattheenlarged customs union would result intradecreation andgenerate benefits forthirdparties.
There wasthelikelihood thatthirdparties would facebarriers totheirexports, particularly non-tariff
measures, asthenewMember States adopted themore restrictive policies oftheEC.TheEnlargement
oftheECwould beatacosttonon-parties. Tobuttress hispoint, hecitedtheWorking Party history
oftheaccession ofSpain andPortugal. Thecreation oftheEEA alsohadresulted insome costs to
theUnited States, astheEEAcountries adopted ECpolicies which hadbeenmore restrictive thanthose
previously maintained bythem. TheHormone Directive hampered UStrade inbeefwiththenew
Member States. Therepresentative oftheEuropean Communities stressed thattherewasnoprovision
inArticle XXIV which prohibited parties toanRTA from imposing orincreasing atrade barrier.
What wasnecessary under theArticle wasthatthegeneral incidence ofduties andother regulations
ofcommerce notbehigher thanpre-customs union orfree-trade arealevels.
41. Therepresentative ofHong Kong wasnotsatisfied withtheECresponse toquestion 21.He
acknowledged thatthere were practical difficulties which could delay theprompt notification of
agreements, butadded thatlatenotification wasundermining thesystem. Notonlydiditdisregard
theexpress words ofArticle XXIV:7(a), butitalsoundermined thecardinal principle oftransparency.
Operational difficulties could ensue from latenotification andobstruct theexamination process. He
stressed theneed forMembers tocomply withtheir notification obligations promptly, andsaid
alternatives suchasnon-official channels ofinformation could notberelied onassubstitutes. The
lackofnotification discipline deserved more thorough consideration bytheCommittee.
42. Therepresentative ofJapan shared some oftheviews expressed bytherepresentatives from
theUnited States andHong Kong. TheECshould have notified theAgreement prior toits
implementation. Hehoped thattheECwould takeitsnotification obligations seriously andallow ample
timeforthirdparties toexamine theeffects ofRTAs ontheirtrading interests. Herequested relevant
information onthenewandoldtariff ratesandimport statistics.WT/REG3/M/1
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43. Therepresentative oftheEuropean Communities responded thatanydelegation wishing to
propose changes totherules, sothatanagreement could beimplemented onlyafterthere hadbeen
anexamination bytheWTO, waswelcome todoso.Itwould beextremely difficult toreach agreement
onsuchamatter. TheECdelay wasnotunreasonable; ithadproceeded toconduct Article XXIV:6
negotiations withinterested parties shortly afternotifying theAgreement totheWTO.
44. Therepresentative ofKorea referred toquestion 21andsaidthatArticle XXIV:7(a) seemed
tooblige Members entering intoRTAs tonotify theiragreements wellinadvance, priortotheirentry
intoforce, soastogivetheWTO theopportunity toexamine theAgreement andmake recommendations
asappropriate. Headded thatpastpractices ofdelayed notifications andsubsequent expostexaminations
ofRTAs could notbeusedasanexcuse. Heasked Committee Members toexpress views onthelegal
interpretation oftheparagraph inquestion, which, henoted, might needtobeclarified andstrengthened.
45. Therepresentative ofHong Kong saidthathesupported aquick response system thatwould
enhance thenotification discipline. Hecontended thattheword "promptly" needed tobeinterpreted
inthecontext ofArticle XXIV:7(a). Prompt notification would enable Members thoroughly toexamine
theagreement andexpress theiropinions, which could thenbetaken intoaccount bytheparties to
theagreement. Referring toquestion 22concerning therelationship between Article XXIV:4 and
paragraphs 5-8,hesaidthatthepoint made bytheECinthefirstparagraph ofitsreply wasafair
point deserving careful reflection. Henoted thatthescope ofArticle XXIV:4 hadlongbeenasource
ofcontroversy, andheexpressed doubts astowhether acommon understanding would bereached
atthismeeting. Hesuggested thatthescope ofthisprovision beconsidered laterintheCommittee 's
systemic debate.
46. Therepresentative ofJapan saidthattheterms ofArticle XXVIII:1 required Members wishing
tobreak theirtariff bindings tonegotiate withinterested parties beforehand.
47. TherepresentativeoftheUnitedStatesstressedtheneedtomakeimprovementstotheprocedural
rules governing theexamination ofRTAs.
48. Therepresentative oftheEuropean Communities suggested that,given thevarying opinions
onthescope ofArticle XXVIII, itwould bebetter fortheCommittee totakeuptheissue under its
systemic discussion. Therepresentative ofAustralia sought clarification oftheECpolicy towards
"interim market access arrangements." Hewondered whether inthefuture theECwould grant such
access ifarequest were made byaninterested WTO Member. Therepresentative oftheEuropean
Communities saidthatthere wasnolegalrequirement forparties toanRTA tohave"interim market
access arrangements." Astherewasnotransition period, theEnlargement benefited thirdparties almost
immediately. TheEChadsought todealwiththenegative effects oftheEnlargement byconcluding
"interim market access arrangements" withsome countries which hadmade requests forcompensation.
Thesteps taken bytheECshould notberegarded asaprecedent tobefollowed inthefuture.
49. Therepresentative ofAustralia agreed thatthere wereextraordinary circumstances justifying
theresponse oftheECrepresentative. TheWTO hadcome intoexistence on1January 1995, and
theEnlargement hadbecome effective onthatsamedate. There hadnotbeenample timefornegotiations
tobecarriedout.CountrieswhichnegotiatedwiththeEC,eitherformallyorinformally,sought"interim
marketaccessarrangements."However,hedisagreedwiththeviewthatthebenefitsaccruedimmediatelyWT/REG3/M/1
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tothirdparties. ForAustralia, thebenefits werenotrealised untilayearaftertheEnlargement had
taken place.
50. Therepresentative ofCanada agreed withtherepresentative oftheECthatitwasnota
precondition ofArticle XXIV thattariff negotiations becompleted before changes weremade tothe
tariff structure. What wasnecessary under theArticle wasthecommencement ofnegotiations. Itwas
hisunderstanding thatmost ofthenegotiations under Article XXIV:6 hadtaken place after the
implementation ofthetariff changes. Heagreed withtherepresentative ofAustralia that,contrary
totheview oftheECrepresentative, theperceived benefits oftheEnlargement didnotaccrue
immediately. Canada hadhadtowaiteighteen months tocomplete itsArticle XXIV:6 negotiations
withtheEC.
51. Therepresentative ofJapan agreed withthestatement made bytherepresentative ofCanada
andexpressed doubts astothevalidity oftheEC'scomputational method.
52. Therepresentative oftheUnited States saidthattheUnderstanding hadsettled some difficult
issues. Parties toanRTA could nolonger claim theywere entitled toreverse compensation, and
compensation could onlyhappen onatariff-line basis. There wasnowaclear methodology for
determining theranking ofinterested parties. Herequested theECdelegation toprovide documentation
onhowitsallocations werecalculated. Thechanges intheclassification practices ofthenewMember
States hadseveral ramifications. They hadthepotential ofnullifying tariffconcessions andsubjecting
MFN exporters topotentially large dutyincreases.
53. Therepresentative oftheEuropean Communities saidthatmembers ofacustoms union were
obliged under theterms ofArticle XXIV toapply aCETintheirtrade withthirdparties. When the
ECwasenlarged, thenewMember States hadtoadjust theirtariffs tothose oftheECinorder for
theAgreement tobeconsistent withtheterms ofArticle XXIV:8. Negotiations withthirdparties under
Article XXVIII might bedrawn out,soifparties toanRTAweretowaitbefore applying aCET, they
risked violating Article XXIV. Thedrafting history ofArticle XXVIII revealed thatitwasoriginally
designed formore limited negotiations. AMember would typically resort toArticle XXVIII when
itwanted tobreak itstariff bindings toprotect adomestic industry from foreign competition. The
situation wasentirely different fromtheformation orenlargement ofacustoms union, where parties
hadnochoice under Article XXIV buttoapply uniform tariffrates. Whereas atypical Article XXVIII
negotiation would notinvolve many tarifflines, Article XXIV expected parties toaligntheirtariffrates
across theboard; there wasnopicking andchoosing. Thisissuecould betaken upbytheCommittee
initssystemic debate.
54. Therepresentative ofCanada saidthere wasnoapparent conflict between thesubstantive
requirements ofArticle XXIV regarding acommon external tariff (CET) andtheprocedures tobe
followed inArticle XXVIII ofGATT 1994, which theECdelegation claimed were designed for
negotiations onamore limited range oftariffs. There wasnothing intherelevant provisions toindicate
thatenforcement oftheCEThadtoprecede negotiations withinterested parties. Hedisagreed with
theviewthattheprocedures ofArticle XXVIII werenotwellsuited totheenlargement ofacustoms
union.
55. Therepresentative oftheEuropean Communities saidthattherelevant words ofthe
Understanding were"...the procedures ofArticle XXVIII should becommenced." Itwould beamistake
tosubstitute theword "negotiations" for"procedures." Therepresentative ofCanada wondered what
thecommencement oftheprocedures ofArticle XXVIII meant. Inanyevent, theEC'stariffSchedule
hadnotbeenmade available toMembers oftheWTO untilaftertheEnlargement hadtaken effect.WT/REG3/M/1
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56. Therepresentative ofHong Kong saidthattheprovisions ofArticle XXIV andtheprocedures
listedinArticleXXVIIIwerenotnecessarilyinconflict,butrathersimplylackedharmony.Hesuggested
thattheCommittee further explore thematter initssystemic debate. Therepresentative ofArgentina
requested thatanswers bestraightforward, astransparency wasoneofthefundamental principles of
theWTO.
57. Inresponse tothequestion fromtherepresentative ofCanada, therepresentative oftheEuropean
Communities saidthatArticle XXVIII required parties initially tonotify which tariff lineswould be
affected, andthentocommence negotiations withinterested parties. Theparties werealsorequired
toprovide relevant dataintheinitial phase. TheEChaddischarged thatobligation, asithadmade
available alltherelevant datawithin sixweeks aftertheAgreement 'sentry intoforce. Theissue of
tradeallocation wasperhaps toocomplex fortheCommittee toaddress; theEChadbyandlargeresolved
thisissuewithitstrading partners through negotiations. Theissueofreclassification wasbeing handled
atthebilateral levelwithtrading partners. Hisdelegation wasoftheviewthatithadnotviolated its
WTO obligations. Itwasuptodelegations holding adifferent viewtoprove otherwise.
58. Therepresentative ofHong Kong saidthattheUnderstanding made itclearthat,inevaluating
thegeneral incidence ofduties, therelevant duties tobetaken intoconsideration weretheapplied rates.
TheEC'suseofthebound ratesasthebenchmark initsnegotiations under Article XXIV:6 appeared
tobeinconsistent withtheprovisions oftheUnderstanding. Therepresentative oftheEuropean
Communities saidthatheagreed thatitwastheapplied rateswhich hadtobetaken intoaccount under
Article XXIV:5. Henoted, however, thatstrict adherence tothisrulecould produce absurd results
incertain situations. Therelevant period totakeintoaccount inthecaseofECEnlargement wasnot
onlybetween 31December 1994 and1January 1995, butalsotheperiod afterwards, when duties on
industrial goods were projected tofallbyasmuch as36percent. Itwasclear thatthedrafters did
nothaveinmind thesituation where theenlargement ofacustoms union would coincide withthetariff
reductions ofamajor multilateral negotiating round. Therelevant datashowed thatthere werevery
fewdifferences between theapplied ratesandbound rates ofduties intheEC. Therepresentative
ofAustralia saidhefound theexplanation bytherepresentative oftheECsatisfactory, buthestressed
thatinthefuture suchcoincidences should beavoided, astheyinjured theinterests ofsome countries.
C. Trade inGoods
- Market Access
59. Therepresentative ofArgentina requested theECdelegation toprovide information onhow
itsfruitandvegetable regime would beapplied tothethree newly acceded countries, aswellas
information onstepsbeing taken topreserve market access intheseareas. Itwould havebeenpreferable
iftheECdelegation hadprovided answers toallthequestions posed. Therepresentative oftheUnited
States sought clarification ofthewaytheECcustoms system operated. Hewondered whether there
wasacentral ECauthority from whom exporters andimporters could seekabinding determination
ontariffclassifications, orwhether theauthority tomake suchdeterminations resided withtheindividual
Member States. Wasittruethatincertain situations thecustoms administrations oftheindividual
Member States wereauthorized toactindependently ontariffclassification matters? Therepresentative
oftheEuropean Communities requested theUnited States delegation toputitsquestions inwriting,
sothattheECdelegation might better respond tothem.
60. TherepresentativeofCanadaagreedwiththeviewsexpressedbytherepresentativeoftheUnited
States regarding tariff classification. Transparency wasnecessary inthisparticular case, given the
potential ramifications ofthisissue. Therepresentative oftheEuropean Communities saidthequestionWT/REG3/M/1
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wasnotaproper onetoberaised intheCommittee. Theimportant pointwasthatArticle XXIV required
members ofacustoms union toapply thesame duties.
61. Therepresentative ofArgentina asked whether thenewMember States would adopt theEC's
fruitandvegetableregime.TherepresentativeoftheEuropeanCommunitiesansweredintheaffirmative.
Under Article XXIV:6, thepreservation ofmarket access inthissector wasthesubject ofnegotiations
between theECanditstrading partners. Theresults ofthese negotiations could befound inthenew
EU-15 Schedule. TheECdidnotdeem itnecessary torespond toquestions 41-47, astheyhadbeen
dealtwithinthecontext ofthenegotiations under Article XXIV:6. Therepresentative ofArgentina
saidthatthepicture painted bytherepresentative oftheECwasperhaps toofavourable. Fivecountries
hadobjected tothecommunication circulated bytheECon14March 1996(document G/L/65). The
communication itself hadadmitted thatnegotiations hadnotbeencompleted. Thatbeing thecase,
Members should beentitled toraisetheirconcerns atthisformal meeting oftheCommittee, asthe
issues under discussion concerned thecommitments undertaken during theUruguay Round. Thefact
thatcertain issues hadbeendiscussed inaninformal setting should notprevent Members fromraising
them again.
62. Therepresentative oftheEuropean Communities agreed thattheCommittee could reconsider
issues related toArticle XXIV:6. What wasoutstanding wassimply aquestion oflegalmodalities,
andthatwaswhere obligations appeared toconflict. Under theterms ofArticle XXIV:8, parties to
acustoms union needed tohaveaCETandasingle schedule, which bytheUruguay Round included
commitmentsmadeintheareasofdomesticsupportandexportsubsidies.TheAgreementonAgriculture
didnotcontain provisions ontherenegotiation ofcommitments inthese areas. Notwithstanding the
lackofguidance, theEChadbalanced itsobligation tohaveacommon schedule withtheinterests
ofthird parties. Ithadnegotiated withtheinterested parties andprovided them withadequate
compensation.
63. Therepresentative oftheEuropean Communities saidthatvariable levies hadbeeneliminated
during theUruguay Round. During afour-year transition period, thethree newMember States were
allowed withrespect tosome agricultural products toenforce environmental andhealth standards that
exceeded thecurrent ECstandards. Thebanana regime applied tothewhole oftheEC,including
theterritories ofthethreenewMember States. Theregime didnotcontemplate theadoption ofnon-tariff
barriers. ThenewMember States alsoapplied theECrulesontheuseofbovine somatotropin (BST).
Therules didnotprohibit theimports ofdairy products from countries thathadauthorized theuse
ofBST. TheEClegislation onthebanofhormone useinlivestock production alsoapplied tothe
newMember States. Generally, meat wastobefreefrom hormone additives. Thisshould notbe
construed asanimport ban,asmeatcould beexported totheECiftheprescribed conditions were
met.Withrespect totradeincigarettes inAustria, theexclusive import rights oftheAustrian monopoly
would beabolished afterthreeyears (January 1998). Thequotas mentioned inAnnex 4oftheAccession
Treaty could notproperly bedescribed astariffquotas, butrather wereimport quotas. Discrimination
among distributors wasprohibited, andproducts imported intoAustria under those quotas could not
besubject toanexclusive marketing right atthewholesale trade level. Theretail saleofproducts
imported under quotas wastobecarried outinanon-discriminatory manner.
64. TherepresentativeofArgentinawantedtoknowif,afterthethree-yeartransitionperiod,Sweden
would jointheother twonewMember States inadopting theECrulesonsanitary andphytosanitary
measures.
65. Therepresentative ofKorea saidthattheapproach oftheECdelegation concerning certain
subjects wasinconsistent. Whereas itextended anti-dumping duties inplace intheECtothenew
Member States immediately aftertheAgreement wentintoforce, itallowed these Member States the
flexibility tomaintain theirownenvironmental andhealth standards foracertain period before bringingWT/REG3/M/1
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them inlinewiththose oftheEC.Theincreasing useofenvironmental standards asinstruments of
trade protectionism wasofparticular concern tohisdelegation.
66. Therepresentative oftheUnited States saidthathisdelegation hadanumber ofconcerns
regarding non-tariff measures (NTMs). Theadoption ofsome NTMs bythenewMember States had
thepotential severely todisrupt trade patterns. Therecent litigation intwoareas -bananas and
hormones -wasindicative ofthepotential trade impact ofsome oftheNTMs. Turning tothewine
sector, hewondered when therestrictive marketing arrangements inAustria would belifted, ashad
beendoneintheother twoMember States. Therepresentative ofEcuador saidhisdelegation had
similar concerns withregard totheNTMs.
67. Therepresentative ofCanada sought information onhowtheEC'sregulatory harmonization
initiative would bephased inbythethree newMember States. Therepresentative ofKorea wondered
whatwould happen aftertheendofthetransition period. Inresponse therepresentative oftheEuropean
Communities saidthat, after theexpiration ofthetransition period, theECrules would apply
automatically tothethreenewMember States. Hereiterated thattheconcerns ofanumber ofcountries
hadbeendealtwithinnegotiations within theframework ofArticle XXIV:6.
68. Therepresentative ofCanada wondered whether theECbanonimports offurfromcountries
inwhich theso-called "leg-hold trap" wasusedwould beextended tothenewMember States. The
representative oftheEuropean Communities saidthatthere wasnobancurrently inplace, butthat
theECwascontemplating banning suchimports.
69. Therepresentative ofArgentina sought more information ontheEC'scitrus fruitregime,
particularlythemarketaccessarrangements.Inresponse,therepresentativeoftheEuropeanCommunities
saidthatmore information would bemade available later.
70. Therepresentative ofKorea saidthattheautomatic extension ofanti-dumping measures to
thethree newMember States wasasource ofconcern tohisdelegation. Thereasons offered bythe
ECseemed weak andunjustifiable under WTO rules. Theautomatic extension ofthemeasures with
thesame dumping margin breached theestablished rules, failing totakeintoaccount theexport price
ofgoods soldintothose threecountries. Itwould bedifficult toestablish correctly thedumping margin,
ifreference were notmade totheexport prices. Theargument bytheECthatithadnotadopted
measures inrespect ofthethree newMember States, butthatitrather applied existing measures to
theenlarged territory oftheEC,wasalsoweak. Themeaning of"domestic industry" within thecontext
ofArticle VIandtheAnti-Dumping Agreement changed aftertheEnlargement, necessitating fresh
investigations. Contrary towhattheECdelegation claimed, theconcerns ofexporters could hardly
bemetbyareview process. TheECargument thatexporters should demonstrate theneedforareview
didnotseem convincing. Article 11:2oftheAnti-Dumping Agreement gavetheECtheresponsibility
ofinitiating thereview, asthiswasaclassic caseofchanged circumstances. Theautomatic extension
oftheanti-dumping measures hadobviously ledtoamore restrictive incidence ofduties inthe
enlarged EC.Therepresentative ofHong Kong agreed withthecomments made bytherepresentative
ofKorea. Headded thattheEChadtwochoices: either toconduct fresh investigations ifitwanted
tomaintain themeasures, ortorevoke themeasures which hadbeen extended tothethree new
Member States. Therepresentative ofJapan saidhisdelegation supported thecomments made bythe
representatives ofKorea andHong Kong. Thecorrect procedure would havebeenfortheECtoconduct
freshinvestigations toestablish injury tothedomestic industry and,depending ontheresults, toextend
themeasures tothethree newMember States. Theautomatic extension ofthemeasures breached
accepted norms.
71. Therepresentative oftheEuropean Communities saidthathehadtaken careful noteofthe
concerns ofMembers about theautomatic extension ofanti-dumping measures inplace intheECtoWT/REG3/M/1
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thethree newMembers States. Legally, theECMember States hadanobligation tomaintain
substantially thesameduties andother regulations ofcommerce. Ifthemeasures hadnotbeenextended
tothenewacceding countries, itwould havebeendifficult toensure thatthemeasures werenotbeing
circumvented byexporters fromtheaffected countries. Theexporters could notgiveanundertaking
thattheywould notselltheirproducts inthethreenewMember States. Theextension ofthemeasures
could therefore bejustified onlegalandpractical grounds. Anti-dumping duties could notberegarded
asbound duties soastoberaised inthecontext ofArticle XXIV:6 negotiations, norcould theybe
considered asfalling under thedefinition of"general incidence ofduties," asusedinArticle XXIV:5.
Hesuggested thatitmight bebetter topursue thematter intheCommittee onAnti-Dumping Practices.
72. Therepresentative ofCanada saidthat,inprinciple, itwould notbeproper foranti-dumping
measures tobeimposed without thecarrying outofinvestigations todetermine injury tothedomestic
industry. Hewelcomed thewillingness oftheECtoconduct reviews, buthedisagreed withthecondition
thattheapplicant forreview hadtodemonstrate thatthefindings andthemeasures adopted would have
beendifferent hadtheybeenbased oninformation including conditions inthenewMember States.
Therepresentative ofHong Kong suggested thattheCommittee examine thesystemic implications
oftheautomatic extension ofanti-dumping measures byconstituent parties ofcustoms unions orfree-
trade areas.
- Agriculture
73. Therepresentative oftheEuropean Communities saidthathisdelegation wasnowinaposition
tocirculate theanswers tothequestions posed ontheagricultural policy oftheenlarged EC.Some
oftheanswers reflected thesettlements which hadbeen reached withtrading partners inthecontext
ofArticle XXIV:6 negotiations. TheSchedules oftheECreflected thecommitments made bythe
enlarged EC. Therepresentative ofAustralia requested acopyoftheSchedules.
74. Therepresentative oftheUnited States saidthattheunderstandings which werereached between
theECanditstrading partners inthecontext ofArticle XXIV:6 negotiations needed tobeseenas
legally binding intheWTO. Therepresentative ofCanada agreed andsaidthattheappropriate WTO
bodytooversee theverification/certification process appeared tobetheGeneral Council. Hesuggested,
however, thatforthesakeoftransparency, thereport oftheCommittee should detail themethodologies
which were used.
75. Therepresentative ofAustralia wondered whether export subsidies forlivehorses would be
discontinued. Thepossibility ofmodifying domestic support andexport subsidy commitments had
notbeenconsidered bytheNegotiating Group onAgriculture, which hadbeenpreoccupied withtariff
concessions. Commitments made inthefieldofdomestic support andexport subsidies werenotsubject
toArticle XXVIII modification procedures. TheAgreement onAgriculture reflected thisconcern and
didnotcontain anygeneral provision which authorised Members towithdraw commitments asand
when theydeemed fit.Commitments listed under partsIandIIofaschedule could generally notbe
modified, whereas those listed under partIIIcould bemodified. Thedistinction wasimportant because
ofthedifferent legalobligations. Heindicated thattheAustralian Government waspursuing thematter
bilaterally withtheECauthorities. Therepresentative oftheEuropean Communities saidhisdelegation
hadestablished asingle Schedule foralltheMember States, including thethreenewones. Thedetails
ofthecommitments could bechecked intheSchedules. Some commitments hadbeenaggregated in
theSchedules. Therepresentative ofJapan suggested thatdiscussion onthelegalmodalities should
proceed assoonaspossible. Therepresentative ofArgentina stressed thattheintegrity ofcommitments
should berespected.
76. Therepresentative ofAustralia reiterated thatdistinctions hadtobedrawn among thevarious
partsofaschedule, astheyhaddifferent legalramifications. Herequested thattheissue beclarifiedWT/REG3/M/1
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inthisCommittee orintheCommittee onAgriculture. Therepresentative oftheEuropean Communities
saidthathewasaware thatthere wasadistinction between thevarious parts ofaschedule, andthat
eachdidnotnecessarily havethesame legalimplications.
- Textiles
77. Turning totextiles, therepresentative oftheEuropean Communities saidthathisdelegation
faced adilemma, inthatArticle XXIV:8 obliged ittohaveacommon traderegime inthissector, while
Article XXIV:5 prohibited itfromintroducing restrictive measures. Thiswasasystemic issuewhich
needed tobeconsidered bytheCommittee. TheEChadincreased itsquota levels withtheaimof
satisfying theconcerns oftextile-exporting countries.
78. Therepresentative ofHong Kong saidthatArticle XXIV didnotpermit theextension of
quantitative restrictions tonewmembers ofacustoms union. TheECwastherefore inbreach ofits
WTO obligations inextending therestrictive measures tothenewcountries. Therepresentative of
Thailand agreed withthisstatement.
D. Other Questions
79. Therepresentative oftheEuropean Communities saidthatthenewMember States would adopt
ECdirectives imposing areciprocity testoninvestment. Heconfirmed thattheEC'sVAT regime
would beapplicable intheAland Islands. Turning toaddress theissue oftransitional measures, he
saidthatthemeasures inplace would bephased outassoonaspossible. Thetimeinterval wasintended
toallow thenewMember States tobring theirstandards intoconformity withtheEC's.
80. Therepresentative oftheUnited States wondered towhatextent thediscriminatory elements
oftheEC'sUtilities Directive would affect theinterests ofthirdparties. Healsoasked when theEC's
Services Schedule would bemade available todelegations. Therepresentative oftheEuropean
Communities saidhecould notgiveanytime-frame forsupplying theunified Services Schedule; his
delegation wasnotcontemplating anymajor changes, butitwasfeasible thatitmight consolidate,
aggregate ornet-out thecommitments oftheindividual Member States.
81. TherepresentativeofArgentinawonderedwhetherquestionscouldbeaskedonissuesconcerning
which there werenomultilateral disciplines. Hewasoftheviewthatquestions should berestricted
onlytoissues which were within thejurisdiction oftheWTO.
82. Therepresentative ofAustralia expressed disappointment atthewaytheexamination had
proceeded. Hehadhoped thattheECwould havebeenmore forthcoming initsresponses, soasto
haveenabled theCommittee todetermine theimpact oftheAgreement onthirdparties. Itwasdifficult
tosaywhether theAgreement would create ordivert trade.
83. Therepresentative ofArgentina wondered when theCommittee would beabletomake
recommendations totheCouncil forTrade inGoods. TheChairman responded bysaying thatthe
Committee wasnotinaposition tomake recommendations atthisstage oftheexamination process.
Thediscussion hadrevealed thatdelegations hadvarying views onanumber ofissues, butitwashis
hopethatthedifferences could benarrowed atsubsequent meetings.
84. Therepresentative oftheEuropean Communities saidthattheday'smeeting hadrevealed that
tariff issues were complex andthatpainstaking reflection were required tosortthem out. Itwas
necessary foradecision tobemade onwhether allissues relating toregionalism would behandled
bytheCommittee. While theTrade Policy Review Body could handle some aspects, theECdelegationWT/REG3/M/1
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wasinfavour oftheCommittee having responsibility forevery issue connected withregionalism.
Duplication offunctions should beavoided asmuch aspossible.
85. TheChairman saidthemeeting hadbeenproductive, asithadhighlighted theweaknesses and
strengths oftheSystem. Itwashishope thattheCommittee would follow upontheinteresting
suggestions thathadbeenmade withtheview ofimproving theprocedural andsubstantive aspects
ofitswork.
86. TheCommittee tooknoteofthecomments made.