G/C/W/721  
 
10 March 2016  
(16-1416)  Page: 1/5  
Council for Trade in Goods  Original: English  
 
 UNITED STATES - FORMER TRUST TE RRITORY OF THE PACIFIC ISLANDS 
REQUEST FOR EXTENS ION OF WAIVER 
The following communication, dated 2 March 2016, is being circulated at the request of the 
delegation of the United States. 
 
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 By the Decision of the CONTRACTING PART IES of the GATT 1947 of 8 September 1948 
(BISD II/9), the United States was granted a waiver of its obligations under paragraph 1 of 
Article 1 of the GATT 1947, for the provision of duty-free treatment to products of the Trust 
Territory of the Pacific Islands (TTPI) imported in to the customs territory of the United States. The 
waiver was granted for an indefinite period. Pursuant to paragraph 1(b)(iii) of the GATT 1994, the 
waiver was revised and incorporated in the GATT 1994 to impose ten-year expiration periods when 
the Marrakesh Agreement Establishing the World Trade Organization ("WTO Agreement") entered 
into force on 1 January 1995. That waiver was extended on 14 October 1996 (WT/L/183) and 
1 August 2007 (WT/L/694). As provided for by that Decision, the waiver extension expires on 
31 December 2016.  The United States requests Members to extend the waiver through 31 December 2026, to waive 
US obligations under paragraph 1 of Article I of the GATT 1994 to the extent necessary to permit 
the United States to provide preferential tariff trea tment to eligible products from the Republic of 
the Marshall Islands, the Federated States of Micronesia, the Commonwealth of the Northern 
Mariana Islands, and the Republic of Palau. 
 1  BACKGROUND 
On 18 July 1947, the United States undertook th e administration of the United Nations Trust 
Territory of the Pacific Islands which included the Marshall, Caroline, and Mariana Islands (except Guam). These islands were formerly held by Japan under mandate. During 1986, the Covenant establishing the Commonwealth of the Northern Mariana Islands ("Covenant"), an insular area of 
the United States, and Compacts of Free Association ("Compacts") with the United States for the 
Republic of the Marshall Islands, and the Federated States of Micronesia came into effect. In 1994, 
the Compact of Free Association with the United States for the Republic of Palau came into effect. 
With the entry into effect of the Compact with Palau and the agreement of the Trusteeship Council 
of the United Nations, the Trusteeship of the Pacific Islands was terminated on 1 October 1994.  
Article I:2 of the GATT 1947 permits certain historic al preferences in respect of duties and charges 
not in excess of the levels permitted under Article I:4. Article I:2 permits historical preferences "in force exclusively between two or more territories which on July 1, 1939, were connected by common sovereignty or relations of protection or suzerainty and which are listed in Annexes B, C, 
D." Under this provision, the United States provides  historical preferences to the US Virgin Islands, 
Guam and American Samoa, which were US possessions on 1 July 1939, and which are included in Annex D. 
 
However, upon becoming the Administering Authority for the former Trusteeship areas in 1947, the United States sought to accord TTPI states tariff preferences similar to those accorded to 
insular areas included in Annex D. The exports of the TTPI states were therefore made eligible for 
duty-free treatment in the customs territory of th e United States, upon which such exports were G/C/W/721 
 
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  substantially dependent. This treatment has been continued under the Covenant and Compacts 
that replaced the TTPI.  2  DESCRIPTION OF THE MEASURE 
Under General Note 3(a)(iv) and 10 of the Harmonized Tariff Schedules of the United States, 
duty-free treatment is accorded to all products of  the former TTPI states, with some exceptions. 
Watches and watch movements, and certain fishery products are subject to quantity limitations, 
and buttons, certain textile, apparel, footwear and luggage products are subject to duty in some or 
all of the former TTPI states. Duty-free treatment is only accorded to the in-quota quantity of 
agricultural products subject to a tariff-rate quota.  
3  SPECIFIC POLICY OBJE CTIVES OF THE MEASURE 
The United States established the system of prefer ential entry for the exports of these islands into 
the market of the United States as a means to en sure that the economies of the islands were not 
destabilized as a result of the change in administering authority from Japan to the United States. 
Over the longer term, the primary purpose of th e system has been to promote the expansion of 
trade and the economic development of the beneficiaries in a manner consistent with the 
objectives of the GATT and with the trade, fina ncial and development needs of the beneficiary 
countries. This purpose has become all the more important as each of the former Trusteeship areas have become self-governing entities.  
4  CIRCUMSTANCES JUSTIFYING THE WAIVER 
The former TTPI, a group of islands with long-standing historical connection to the United States, 
face critical development challenges that cannot be fully met through measures consistent with 
US obligations under the GATT as amended in 1994. Under a Trusteeship Agreement with the 
UN Security Council in 1947, the United States assumed the obligation to ensure the security and economic development of the former TTPI stat es. In addition, many of the approximately 
251,000 residents of the former TTPI states are US citizens. 
 Given these connections, the United States is committed to providing exceptional access to the US market, even though these small island states  are not within the US customs territory. Taken 
together, exports to the United States in 2014 fr om the Republic of the Marshall Islands, the 
Republic of Palau, the Federated States of Mi cronesia and the Commonwealth of the Northern 
Mariana Islands totalled about US$16 million. (See Annex 1.) This represents a marked decline of 
former TTPI state exports to the US that had exceeded US$1 billion as recently as 2000 and 
demonstrates the need for continued economic re form, diversification of the TTPI economies and 
development assistance by the US to former TTPI states. 
 
5  CONCLUSION 
The United States is seeking an extension of its waiver from paragraph 1 of Article I of GATT 1994 
in order to continue to accord historical preferences to the former Trust Territory of the Pacific 
Islands consistent with its international obligations. The preferential treatment covered by the 
waiver would have been covered by Article I:2 and Annex D but for the UN decision placing the islands under trusteeship having occurred subsequent to 1 July 1939, as specified by 
Article I:2(b). The waiver granted in 1948 under GATT 1947 and continued under the Decision of 
14 October 1996 is recognition of these exceptional circumstances, circumstances which continue to this day. 
 
The United States requests Members to give expeditious consideration to this request, and to decide to extend the waiver of the provisions of paragraph 1 of Article I of GATT 1994 for the 
period ending 31 December 2026. The United States is prepared to enter into consultations and to 
cooperate fully in providing additional information about the historical preferences granted to the 
former Trust Territory of the Pacific Islands and discussing the specific terms of the waiver.  G/C/W/721 
 
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  ANNEX 1 
U.S. IMPORTS FOR CONSUMPTION FROM THE FORMER TRUST TERRITORY OF THE PACIFIC 
ISLANDS, BY SOURCES, 2009-2014 
(Values in thousands of dollars) 
Source 2009 2010 2011 2012 2013 2014 
Republic of the 
Marshall Islands  13,650  11,820  14,939  18,947  16,966  14,457 
Federal States of 
Micronesia  2,918  4,218  1,602  904  1,787  403 
Republic of Palau  80  148  210  455  350  541 
Commonwealth 
of the Northern Mariana Islands  5,959  1,163  627  1,581  923  900 
TOTAL  22,607  17,349  17,378  21,887  20,025  16,301 
 
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 G/C/W/721 
 
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  UNITED STATES -- FORMER TRUST TE RRITORY OF THE PACIFIC ISLANDS 
DRAFT DECISION OF … 
The General Council, 
 
 Taking note  of the request of the Government of the United States for an extension of the 
waiver from its obligations under paragrap h 1 of Article I of the General Agreement1 which was 
granted by the CONTRACTING PARTIES of the GA TT 1947 on 8 September 1948 for provision of 
preferential treatment for eligible imports into th e United States from the Marshall, Caroline and 
Mariana Islands (other than Guam) and extended by the Decision of 14 October 1996 (WT/L/183).
2 
 
 Recognizing  that these islands were formerly held by Japan under mandate and by 
agreement with the Security Council of the United Nations approved on 2 April 1947, were placed under the trusteeship system of the United Nations with the United States as the Administering 
Authority;  
  Recognizing  further that, with the entry-into-force in 1986 of the Covenant establishing the 
Commonwealth of the Northern Mariana Islands, and the Compacts of Free Association with the 
United States for the Republic of the Marshall Islands, the Federated States of Micronesia, and in 1994 of the Compact of Free Association with the Un ited States for the Republic of Palau, the 
Trusteeship of the Pacific Islands was terminated; 
 
 Considering  further that, since the establishment of the trusteeship under the administration 
of the United States, and continuing under the Covenant and Compacts of Free Association, the 
exports of such islands have been entitled to pr eferential treatment in the market of the United 
States, upon which such exports are substantially dependent;  
 Considering  also that the preferential treatment provided to these islands is designed to 
promote the expansion of trade and economic development of the beneficiaries in a manner consistent with the objectives of the GATT 1994 and with the trade, financial and development needs of the beneficiaries, and not to raise barriers or to create difficulties for trade of other 
Members; 
  Considering  further that the system of preferential  entry into the market of the United 
States has not, in view of the nature and small vo lume of the production and trade involved and of 
the underlying economic factors affecting such production and trade, resulted in substantial injury to the trade of any of the Members and is not likely to do so in the future; 
 
 Noting , furthermore, the assurances given by the United States Government that it will, 
upon request, promptly enter into consultations with any interested Member with respect to any difficulty or matter that may arise as a result of  the implementation of preferential treatment for 
the beneficiaries; and 
  Having regard  to the Guiding Principles to be followed in considering applications for waivers 
adopted on 1 November 1956, the Understanding in Respect of Waivers of Obligations under the 
General Agreement on Tariffs and Trade 1994, an d paragraphs 3 and 4 of Article IX of the 
Marrakesh Agreement Establishing the World Trad e Organization (hereinafter "WTO Agreement"); 
 
 Members, acting pursuant to the provisions of paragraph 3 of Article IX of the WTO Agreement,  
 Decide  that: 
 
                                               
1 G/L/101. 
2 Adopted in accordance with the Decision-Makin g Procedures under Articles IX and XII of the 
WTO Agreement agreed by the General Council (WT/L/93). G/C/W/721 
 
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  1. Subject to the terms and conditions set out hereunder, the provisions of paragraph 1 of 
Article I of the GATT 1994 shall be waived until 31 December 2026, to the extent necessary to permit the United States Government to accord pr eferential treatment to eligible products of the 
Republic of the Marshall Islands, the Federate d States of Micronesia, the Commonwealth of the 
Northern Mariana Islands, and the Republic of Pa lau imported into the customs territory of the 
United States.  
2. Such preferential treatment shall be desi gned not to raise barriers or create undue 
difficulties for the trade of other Members.  3. The Government of the United States will submit to the General Council an annual report on 
the operation of these preferences with a view to facilitating the annual review provided for in 
paragraph 4 of Article IX of the WTO Agreement.  
4. The United States Government will, upon request, promptly enter into consultations with 
any interested Member with respect to any difficulty or matter that may arise as a result of the implementation of these preferences; where a Memb er considers that any benefit accruing to it 
under the GATT 1994 may be or is being impaired un duly as a result of such implementation, such 
consultation shall examine the possibility of action for a satisfactory adjustment of the matter. This 
Decision does not affect Members' rights as set forth in the Understanding in Respect of Waivers of Obligations under the GATT 1994. 
 
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