WT/COMTD/ RTA11 /2 
 
6 March 2020  
(20-1796) Page: 1/3 
Committee on Trade and Development  
Dedicated Session on Regional Trade Agreements  
 Original: English /Spanish  
 
 
PREFERENTIAL TRADE A GREEMENT BETWEEN THE SOUTHERN COMMON MARK ET 
(MERCOSUR) AND THE S OUTHERN AFRICAN CUST OMS UNION (SACU)  
(GOODS)  
 
QUESTIONS AND REPLIE S 
 The following communication, received on 3 March 2020, is being circulated at the request 
of the Parties to  the Preferential Trade Agreement between the Southern Common Market 
(MERCOSUR) and the Southern African Customs Union (SACU) . 
 
 The document reproduces the questions addressed to the Parties and the replies submitted.  
 
 
__________ _____  
 
 
Questions from the delegation of Ecuador  
 
Question 1  
 
Page 24, paragraph 3.25  
(a) What policy objective is being pursued with the development of a common approach 
to the treatment of products manufactured or produced in free zones, through, for 
example, the analysis of the rules, operations and overall procedures of free zones in 
MERCOSUR and SACU?  
Reply : The objective of a common approach to the treatment of products manufactured or 
produced in free zones is for those products to benefit from preferences under the Agreement 
between MERCOSUR and SACU.  
Article 31 of the Preferential Trade Agreement MERCOSUR -SACU (PTA) establishes that treatment 
to be afforded to goods from Free Zones will be subject to a decision to be reached as foreseen in 
the Understanding on Free Zones (Appendix IV to Annex III).  
(b) Has consideration been given to the approval of rules and procedures with the aim 
of boosting trade among the free zones of the Parties?  
Reply : At the first meeting of the Joint Administrative Committee, in May  2017, MERCOSUR made 
a presentation on the different types of free zones in the region and SACU informed  the Parties 
that its Member States were in the process of establishing free zones. So far, the Parties have 
agreed to exclude products originating in free zones.  
To date, no progress has been made in this area.  
Nevertheless, Decision No.  33/15 of the MERC OSUR Common Market Council, approved in 2015, 
states the following:  WT/COMTD/RTA 11/2 
 
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 "… goods originating in a State party, or in a third country that has the same rules of origin 
for all States parties in accordance with trade agreements signed by MERCOSUR, shall not 
lose their originating status if, during their transport and/or storage, they use a special 
customs area, an export processing zone or a free zone, provided that the aforementioned 
zones are under the customs control of the corresponding State party, and may o nly be 
subjected to operations aimed at ensuring the marketing, preservation or splitting into 
batches thereof, or other operations, provided that such operations do not alter their tariff 
classification or the originating status shown on the original cert ificate of origin with which 
they entered the zone or area. " 
Furthermore, according to the website of the Latin American Integration Association 
(http://www2.aladi.org/nsfaladi/textacdos.nsf/f7a2d493807d9e8c032574e100640526/aafaa67b21
55c78b0325791900495b8b?OpenDocument ), the 85th Additional Protocol to Economic 
Complementarity Agreement (ECA) No.  18, which incorporates Common Market Council Decision 
No. 55/08 on the "certification system for goods originating in SACU and stored in customs 
warehouses in MERCOSUR States parties ", entered into force on 17  November  2019.  
Question 2 
 
Page 26, paragraphs 3.32 and 3.33  
 
(a) For the application of preferential safeguard measures on a customs union -wide 
basis, what would the requirements be if, for the determination of serious injury or 
threat of serious injury, they are based on the conditions prevailing in MERCOSUR or 
SACU? What aspects would be analysed, considering that the same type of variables is 
used for this evaluation?  
 
Reply : Annex  IV of the Preferential Trade Agreement between MERCOSUR and SACU governs the 
implementation of safeguard measures for imported product s that are the object of the tariff 
preferences under the Agreement. Articles 3 to 10 underline the conditions for the application of 
preferential safeguard measures within the PTA.  
 
As stated in Article 3 of Annex IV, a preferential safeguard measure can be applied when 
preferential imports have increased in such quantities, absolute or relative to domestic production 
of the importing Party and such imports cause or threaten to cause serious injury to the domestic 
industry of the importer. Safeguard measur es shall only be applied following an investigation 
under procedures laid down in Annex IV (Article 3 of Annex IV). Preferential safeguard measures 
shall not be applied in the first year after the tariff preferences negotiated under the Agreement 
come into  force (Article 4 of Annex IV).  
 
(b) In this context, what would happen if the analysis showed that the increase in 
preferential imports applied only to one country and not to the entire customs union?  
Reply : In cases where the analysis would show the incr ease in preferential imports only applying 
to one country and not the entire Customs, the analysis will be covered by the definition of a 
‘domestic industry’ in Article 2 of Annex IV.  “Domestic industry” shall be understood to mean the 
producers as a whol e of the like or directly competitive products, operating in the territory of the 
Party or the Signatory Party, as the case may be, or when it is not possible, those whose collective 
output of the like or directly competitive products constitutes a major p roportion of the total 
production of such products.  
 
(c) What procedure would be adopted?  
Reply : Under  Article 5 of Annex IV to the MERCOSUR -SACU Agreement, both MERCOSUR and 
SACU  may apply preferential safeguard measures either on a customs union -wide basis or on 
behalf of one of its Member States. In either case, the Article requires there to be a parallel 
between the area that benefits from any preferential safeguard measure and  the area for which it 
is established whether serious injury or threat thereof exists. Therefore, if MERCOSUR or SACU 
decides to apply preferential safeguard measures on a customs union -wide basis, it must 
demonstrate the existence of serious injury or the  threat thereof caused by the increase in 
preferential imports, taking the entire customs union territory into account.  WT/COMTD/RTA 11/2 
 
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   Article 9 of Annex IV to the MERCOSUR -SACU Agreement establishes the criteria for determining 
whether there is serious injury or a threa t thereof, namely, "all relevant factors of an objective and 
quantifiable nature having a bearing on the situation of the domestic industry affected, particularly 
the amount and rate of the increase in preferential imports of the product concerned, in abso lute 
and relative terms; the relationship between the preferential and non -preferential imports, as well 
as between the increase of one and the other; the share of the domestic market taken by these 
imports; changes in the level of sales; prices; productio n; productivity; capacity utilization; profits 
and losses; employment; and other factors that, although not related to the evolution of 
preferential imports, have a causal relationship with the injury or the threat of injury to the 
domestic industry in que stion”. When factors other than increased preferential imports are causing 
injury to the domestic industry at the same time, such injury shall not be attributed to the 
increased imports.  
The total period of application of a preferential safeguard measure i ncluding the period of 
application of any provisional measure shall not exceed two (2) years.   
 
 
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