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ORGANIZATION 29May1997
(97-2245)
Committee onRegional Trade Agreements
Eighth Session
EXAMINATION OFTHE FREE TRADE AGREEMENTS BETWEEN
THE FAROE ISLANDS (GOVERNMENT OFDENMARK) AND
ICELAND, SWITZERLAND AND NORWAY
Note ontheMeeting of21February 19971
Chairman: H.E. Mr.Jaona Ravaloson (Madagascar)
1. Under Agenda Item2B(vi)-(viii) ofitsEighth Session, theCommittee onRegional Trade
agreements tookuptheexamination ofthefreetrade agreements concluded separately withtheFaroe
Islands bythethreeEFTA countries, namely Iceland, Norway andSwitzerland. Theexamination was
conducted onthebasis oftheStandard Format forInformation onRegional Trade agreements and
accordingly followed itslayout.
A. General Statements
B. Section I -Background Information ontheAgreement
I:3 -Scope
C. Section II -Trade Provisions
II:1.1 -Duties andcharges
II:5 -Safeguards
II:6 -Anti-dumping andcountervailing measures
A. General Statements
2. TheChairman proposed thatthethree agreements beexamined jointly given thesimilarity in
theirprovisions. However, theexamination ofeachagreement should beseenasadistinct legalexercise,
andareport would beprepared inrespect ofeachoftheagreements.
3. Therepresentative ofNorway, speaking onbehalf oftheother EFTA countries andthe
Faroe Islands, welcomed theopportunity toexplain themechanics oftheagreements. Hesaidthat
theParties totheagreements hadalonghistory offreetradeandtheagreements symbolised andcarried
further thetraderelations between them. They followed thepattern ofagreements concluded between
EFTA countries andthirdcountries. Theneedtoconclude afree-trade agreement withtheFaroe Islands
waspartlyduetoitsconclusionofawide-rangingtradeagreementwiththeEuropeanCommunities(EC).
Under thatAgreement, thecommon external tariff oftheECwasextended totheFaroe Islands. He
saidthatthere-negotiation ofthetrade agreement between theECandtheFaroe Islands would not
haveanyimpact ontheagreements currently being examined bytheCommittee. TheParties were
committed totransparency andhadsupplied information totheCommittee onthebasisoftheStandard
1Themeeting wasconvened inWTO/AIR/518.WT/REG23/M/1
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Format fortheProvision ofInformation onRegional Trade agreements, aswellasother documents
andstatistics which theyhoped would facilitate theexamination process.
4. TohelpMembers understand themechanics oftheAgreement, hegaveabriefdescription of
thetrade oftheFaroe Islands. HesaidthattheFaroe Islands werepartoftheKingdom ofDenmark
andhadahighdegree autonomy under theHome RuleAct.TheywereanEFTA member from1967-72,
butunlike Denmark didnotjointheEuropean Economic Community in1973. Given theoverwhelming
dependence oftheFaroe Islands onthefisheries sector, itwasthought thatthecommon fisheries policy
oftheECwould beinimical totheirinterests. TheFaroes consisted of18islands withatotalarea
of1,400 square kilometres, andhadapopulation of40,000 people. They imported mostoftheirneeds
fromabroad, particularly Denmark andNorway. Other EFTA countries andtheECwerealsoimportant
trading partners. Asexemplified bythepreambles totheagreements, theParties hadcommitted
themselves "toeliminate progressively theobstacles tosubstantially alltheirtrade" inaccordance with
ArticleXXIV,andtoachieveafree-tradeareawithintheshortestpossibletime.Theagreementscovered
products falling within Chapters 25through to97oftheHarmonized System. Agricultural andfisheries
products werelinked totheagreements either through annexes orbyseparate protocols. Theagreements
were flexible inthattheyprovided thepossibility forexpanded product coverage, ifcircumstances
warranted. TheAgreement between Norway andtheFaroe Islands wasverybroad andcovered almost
every sector. Product coverage wasabove 99percent. Theotheragreements alsocovered substantially
alltrade between theParties. Heconcluded bysaying thattheagreements were consistent withthe
provisionsofArticleXXIV,andthattheywouldcontributetotheexpansioninworldtradeandstrengthen
themultilateral trading system.
5. Therepresentative ofDenmark apologised forthedelay insubmitting thedocuments, butsaid
thatthetextsoftheAgreements hadbeencirculated totheParties some months before thismeeting.
Theinformation recently submitted inaccordance withtheStandard Format wasmeant tofacilitate
theexaminationprocessbythrowingusefullightonthemechanicsoftheagreements.Therepresentative
ofNorwayassociatedhisdelegationwiththecommentsmadebyDenmarkandsaidthattheUnitedStates
should show flexibility andallow theexamination toproceed. Thecomments made byDenmark and
Norway were supported bytherepresentatives ofSwitzerland andIceland.
6. TheChairman suggested thattheexamination continue, andthatdelegations whohadfurther
questions could putthem inwriting totheParties. Therepresentative oftheEuropean Communities
supported theChairman 'sproposal, andwondered whether itwould notbepossible fortheChairman
tocirculate anoutline ofthefinalreport together withthefurther questions andanswers toMembers
oftheCommittee. Therepresentative oftheUnited States welcomed theChairman 'ssuggestion, but
saiditwould beadvisable tocirculate thedocument containing thequestions andanswers before moving
ontothesecond phase ofdrafting thefinalreport. TheChairman thanked therepresentative ofthe
United States forhisconstructive suggestion, andsaidthathewould takeitintoaccount. The
representative ofAustralia welcomed thesuggestion putforward bytheUnited States. Shesaidher
delegation hadquestions which itwanted toputinwriting totheParties. Therepresentative ofJapan
expressed support forthetwo-prong approach advanced bytheUnited States.
B. Background Information ontheAgreement
Section I:3-Scope
7. Therepresentative ofAustralia saidthatthescope oftheagreements wasnotcomprehensive
enough. They allexcluded agriculture from theircoverage, anditwasdoubtful iftheParties hadWT/REG23/M/1
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complied withtheobligation tosubstantially liberalise alltrade between themselves. Herdelegation
hadtaken noteofthefactthatagriculture wasthesubject ofbilateral agreements between theParties.
Itremained tobeseenhowthese agreements would foster freetrade inagricultural products.
8. Therepresentative ofDenmark saidthattheagreements were consistent withtheprovisions
ofArticle XXIV. Therequirement thatparties toaregional tradeagreement should abolish restrictions
substantially ontrade hadbeencomplied. Inanyevent, themeaning ofthephrase "substantially all
thetrade" wasthesubject ofcontroversy between Members. Itwasasystemic issue which hadto
betaken upbytheCommittee atanother time. Hesaidthatagriculture wasnotasignificant industry
around thearctic circle, andasked whether Members were familiar withtheconcept ofsub-Arctic
agriculture. HesaidthatinthecaseoftheFaroe Islands, theonlyproducts ofsignificance werefish
andfishproducts. Itwasnoteworthy thatthere wasfreetrade inthese product categories between
Iceland, Norway andtheFaroe Islands. TheFaroe Islands wereoverwhelmingly dependent ontrade,
astheyhadtoimportalmosteverythingthattheyneededfromabroad.TherepresentativeofSwitzerland
saidthatProtocol 2oftheirAgreement covered agriculture, andassuchitwould beinaccurate toassert
thatagriculture wasexcluded fromitscoverage. Therepresentatives ofNorway andIceland supported
thestatement made therepresentative ofSwitzerland, andsaidthattheir agreements with the
Faroe Islands alsocovered agriculture through separate protocols.
C. Trade Provisions
Section II:1.1 -Duties andcharges
9. Therepresentative ofJapan asked whether theParties hadincreased tariffs prior toandafter
theformation ofthefree-trade area? Therepresentative ofDenmark saidthattheParties hadnot
increased anytariffs.
Section II:5-Safeguards
10. Therepresentative ofJapan asked whether theParties would beobliged toadopt safeguard
measuresimplementedbyoneofthemagainstathirdcountry.TherepresentativeofDenmarkresponded
inthenegative.
Section II:5-Anti-dumping andcountervailing measures
11. Therepresentative ofJapan asked whether theParties would beobliged toadopt anti-dumping
measuresimplementedbyoneofthemagainstathirdcountry.TherepresentativeofDenmarkresponded
inthenegative. Hesaidthattoallay such fears, theAgreement between Switzerland andthe
Faroe Islands contained aspecific provision tothateffect.
12. TheChairman recalled thatithadbeenagreed thatdelegations having further questions could
putthem inwriting totheParties through theSecretariat. Heconfirmed thatthequestions together
withthereplies would becirculated todelegations thereafter.
13. Therepresentative oftheUnited States expressed satisfaction withthereplies thathadbeen
provided bytheParties totheagreements tothequestions posed bydelegations. Ithadtosome extent
obviated theneedforthem torequire answers tosome questions inwriting. Therepresentative of
Denmark suggested thatinthelightofthecomments oftherepresentative oftheUnited States, theWT/REG23/M/1
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Committee should setitselfadeadline ofthirty daysfrom12February 1997, bywhich datethequestions
andanswers procedure should havebeencompleted.
14. TheChairman accepted thesuggestion, andintheabsence ofanyfurther questions, adjourned
themeeting.