WORLD TRADE  
ORGANIZATION  WT/REG256/2 
3 March 2010 
 (10-1186) 
Committee on Regional Trade Agreements Original:   English 
  
 
FREE TRADE AGREEMENT BETWEEN THE EFTA STATES  
AND THE SACU STATES (GOODS) 
 
Questions and Replies
 
 
 
 The following communication, dated 25 February 2010, is being circulated at the request of 
the delegations of the EFTA States and the SACU States.   This document reproduces the questions addressed to the Parties and the responses submitted. 
 
Question from the Delegation of Brazil
 
 1. It appears that the agricultural sector plays  only a marginal role in the EFTA-SACU 
Agreement.  Sections I to IV ("live animals a nd animals products, vege tables products, animal 
or vegetables fats and oils, prepared foods") concentrate those lines that were not reduced and 
include the Parties´ tariff peaks.  As an exampl e, it is worth mentioning the case of Norway, 
where most of the 649 tariff lines not subject to tariff reductions correspond to products from 
those sections, where tariffs can be as hi gh as 479%.  In Switzerland, 10 out of the 
1,258 tariff lines not subjected to reduction are non-agricultural products.  As for SACU, 
preferential tariffs for agricultural products apply only to chapter 21 ("miscellaneous edible 
preparations").  Therefore, Brazil would like to know  to what extent this partial exclusion of the 
agricultural sector in the Agreement would be in  conformity with Article 24, and if there are 
plans for additional efforts towards furth er liberalization of the agricultural sector. 
 Agricultural products in the EFTA-SACU FTA ar e considered under two sets of provisions, 
the bilateral agricultural agreemen ts for basic agricultural products, and an Annex to the Main 
Agreement for processed agricultural products.  Both the Main Agreement and the bilateral 
agricultural agreements form the basis of the instruments establishi ng the free trade area between the 
Parties.  Certain agricultural products are cove red by the Annex on processed agricultural products 
also for Norway.  Therefore, it is not entirely corr ect that the agricultural sector plays only a marginal 
role in the trade agreements be tween SACU and the EFTA States. 
 
 In addition, Article 7 of Annex VII provides for a process for reviewing the agreement.  With 
respect to the bilateral agricultural agreements , Article 6 (Norway) and Articles 7 (Iceland and 
Switzerland) provides for further review in the scope  of these agreements.  The main objective of the 
reviews is to further improve the access conditions of products. The process of kick starting these 
reviews was initiated in 2009 with the aim to fu rther liberalize agricultural product scope and 
coverage, including basic agricultural products.  
  Furthermore, the criterion of 'Substantially a ll the trade' contained in GATT Article XXIV 
does not amount to all the trade.  The criterion re fers to overall trade and does not entail obligations 
relating to the coverage of specific sectors or products .  As such, it is the view of the Parties that the 
EFTA-SACU FTA does fulfil the 'substantially all trad e' requirement and definition of an FTA under 
GATT Article XXIV.  WT/REG256/2 
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  Questions from the Delegation of the United States
 
 2. Paragraph 13 of the Factual Presentation stat es that:  "Products categorized as List 6 
are not subject to duty elimination or reduction , but are to be reviewed (together with those 
products classified as list 5) no later than five  years after the date of entry into force of the 
Agreement.  While the overall objective of th e review would be to improve market access 
conditions for these products, individual produc ts where the liberalization schedule is not 
sustainable would also be addressed by the review (Article 7 of Annex VII)." 
 Please confirm that it is possible under Annex VII Article 7 for market access 
concessions to be rolled back.  Under what condit ions could this occur?  Has this occurred to 
date?  
 Article 7 of Annex VII provides that products categorized as list 5 and 6 shall be reviewed no 
later than five years after entry into force of the agreement.  The overall objective of this review will be to further improve the access conditions of products.  Instances where liberalization is not 
sustainable, as the case may be, would also be addr essed by the review.  Therefore, theoretically it is 
possible to roll back market access concessions.  Ho wever, no party to the agreement has as yet 
indicated a desire to roll back any concessions.  In the event that one party would like this to happen, 
the changes would have to be agreed upon by bo th parties in terms of the provisions of the 
Joint Committee established under th e terms of this agreement.  Any roll-back will be agreed upon by 
mutual consent and will be considered in line w ith the provisions of Article XXIV of GATT 1994. 
 3. Paragraph 16 notes that the SACU States offer no concessions to Norway on basic 
agricultural products.  Could the SACU States and Norway please explain how this does not 
amount to the exclusion of a sector from tariff elimination? 
 Agricultural products in the EFTA-SACU FTA ar e considered under two sets of provisions, 
the bilateral agricultural agreemen ts for basic agricultural products, and an Annex to the Main 
Agreement for processed agricultural products.  Both the Main Agreement and the bilateral 
agricultural agreements form part of the inst ruments establishing the free trade area between the 
Parties.  Certain agricultural products are cove red by the Annex on processed agricultural products 
also for Norway.  It cannot thus be said that the agricultural 'sector' has been excluded from the 
Agreement.  Moreover, a review process is fores een by the Agreement and has been initiated in 2009 
on further liberalization covering agricultural products, including basic agricultural products.  
 
 We also note that, according to Table AI.9, 16 out of 66 HS tariff lines making up 
Norway's top 25 exports to SACU remain dutia ble under the agreement.  Could the SACU 
States explain why these goods from Norway (which  are not basic agricultural products) have 
been excluded?   
 
 16 out of 66 HS tariff lines referred to, are pr oducts categorized as list 6 products.  Therefore 
according to the agreement, customs duties on impor ts into SACU on produc ts originating in an 
EFTA State listed in categorized as Lists 5 and 6 sha ll be reviewed no later than five years after the 
date of entry into force of the agreement.  The main objective of the review would be to further 
improve the access conditions for such products. 
 
4. Paragraph 17 notes that as of December 2009, Norway is still granting Lesotho, Namibia 
and Botswana GSP preferences.  Does Norway in tend to continue granting these preferences 
indefinitely; if not, on what date will they  expire?  How are the tariff lines on which Norway 
grants preferences to Lesotho, Namibi a and Botswana treated in the FTA?  WT/REG256/2 
 Page 3 
 
 
   Norway will grant Lesotho, Namibia and Botswa na GSP preferences as long as they are part 
of the Norwegian autonomous GSP system.  In the FTA the ordinary GSP-preferences for developing 
countries is bound for all the SACU States.  
5. It is unclear from the last sentence of paragraph 17 which EFTA countries grant 
Lesotho preferences as an LDC.  Could the Parties please clarify? 
 The last sentence of paragraph 17 refers to Switzerland, which continues to grant Lesotho 
preferences as an LDC.  Norway also  continues to grant such preferences. 
 
6. Could Switzerland please confirm that it no longer provides GSP preferences to its 
SACU partners? 
 Switzerland no longer grants unilateral GSP pr eferences to Botswana, Namibia, South Africa 
and Swaziland. Instead, they are granted contr actual preferences in accordance with the FTA. 
Lesotho, as an LDC, continues to benefit on a contractual basis from duty free quota free market 
access into Switzerland i.e. for agricultural produc ts in accordance with th e bilateral agricultural 
agreement.  The contractual preferences correspond to those granted to Least Developed Countries 
within the GSP.  
7. Paragraph 21 states that 83.5% of Norway's tariff lines were already duty-free on an 
MFN basis in 2008 corresponding to 95.5% of im ports from SACU for the period 2005-2007.  
Do these percentages include the preferen tial trade discussed in paragraph 17? 
 These percentages do not include GSP preferences granted to Lesotho, Namibia and 
Botswana but are calculations based on tariff lines that are duty-free on an MFN basis.  
 
8. According to Tables III.2 A-H and Annex 1 of the Factual Presentation, 
Table AI.1-AI.4:  
 Norway
 eliminates duties on 90.8% of all tariff lines covering 96% of imports from 
SACU under the agreement.  However, though  99.9% of industrial goods are duty-free, 
only 52% of agricultural lines are duty-free under the agreement. 
 Switzerland  eliminates tariffs on 84.4% of all tariff lines covering 98.5% of imports 
from SACU under the agreement.  However,  though 99.97% of industrial goods are 
duty-free, only 36.9% of agricultura l lines are duty-free under the agreement. 
 Iceland  eliminates duties on 76% of all tariff lines covering 94.5% of imports from 
SACU under the agreement.  However, though 100% of industrial goods tariffs are duty-free, only 77.2% of agricultural tariffs are duty-free under the agreement. 
 SACU
, as a whole, eliminates duties on only 77.1% of all tariff lines covering the 
following trade volumes:  
 -  Botswana  provides duty free treatment on 100% of imports from Iceland and 
Norway and 99% of imports from Switzerland. 
  - Lesotho
 provides duty free treatment on 100% of imports from Iceland and 
Norway and 74% of imports from Switzerland. 
 
 - Namibia  provides duty free treatment on 100% of imports from Iceland, 97% of 
 imports from Norway, and 46% of imports from Switzerland. WT/REG256/2 
Page 4  
 
   - South Africa
 provides duty free treatment on 99.1% of imports from Iceland, 
98.7% of imports from Norway, and 97.5% of imports from Switzerland. 
  - Swaziland
 provides duty free treatment on 5% of imports from Iceland, 100% of 
imports from Norway and Switzerland. 
 
 In total, though 80.9% of SACU's industria l goods tariffs are duty-free, only 54.3% of 
its agricultural tariffs are duty-free under the agreement. 
(a) Could Switzerland please explain why, on an overall percentage basis, it is eliminating 
duties on fewer agricultural tariffs than its developing country partners in SACU? 
 The trade liberalization undertaken in the Agre ement is the result of negotiations between the 
Parties with the aim to strike a balance between th eir specific interests and sensitivities.  Switzerland's 
bilateral agreement with SACU for basic agricultu ral products covers more tariff lines and includes 
more concessions than any of the agreement with  Third Countries implemented so far. Looking from 
a qualitative point of view, the bilateral agreement with SACU is comprehensive as it contains the 
vast majority of SACU's requests for improved market  access to Switzerland. In addition, the bilateral 
agreement includes a review clause th at enables Parties to review their concessions on a regular basis. 
 
(b) Could Swaziland please explain why, at the end of the transition period in 2015, 95% of 
imports for the reference period from Iceland will remain subject to duties?  
 Given that Swaziland is a member of the Southern African Customs Union, all imports are 
subjected to the same Common External Tariff as in other SACU countries.  At the end of the 
transition period all imports from Iceland will be ch arged the same customs duty in Swaziland like in 
all other SACU countries.  
 
(c) Given the poor percentages of agricultural tariff elimination in the EFTA countries and 
the low overall percentages of tariff eliminatio n by the SACU countries, in the view of 
the Parties, how does this FTA satisfy the "substantially all trade" requirement under 
Article XXIV?  
 'Substantially all the trade' does not amount to all the trade while more than some of the trade 
must be covered. The criterion refers to overall tr ade and does not entail obligations relating to the 
coverage of specific sectors or products. As such, it is the view of the Parties that the EFTA-SACU 
FTA does fulfil the 'substantially all trade'  requirement under GATT Article XXIV.  
 
9. What, if any, changes to the SACU Customs Union were required in order for it to be 
compatible with the SACU FTA?  
 There were no changes required on the 2002 SACU Agreement in order for it to be 
compatible with the SACU-EFTA FTA. 
 
10. According to Table IV.1, a number of RTAs by the individual SACU states have not 
been notified.  When do these Members plan to notify, per paragraphs 3 and 4 of the Transparency Mechanism? 
 Table IV.1 contains information on FTAs/PTAs and bilateral agreements that were in force 
by the time SACU notified to the WTO on the 25 J une 2007.  Most of the agreements pre-date both 
the 1969 Agreement as well as the new 2002 SA CU agreements.  The SACU-MERCOSUR PTA 
which is currently undergoing ratification is envisaged  to enter into force in 2010.  The decision to 
notify will be concluded once ratified by all parties to this agreement.  WT/REG256/2 
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   The SACU-US TIDCA Agreement does not includ e any tariff liberalization schedule and is 
merely a cooperation agreement in the areas of investment, trade and de velopment cooperation. 
  With respect to bilateral agreements betw een Botswana and Zimbabwe, the agreement has 
been undergoing review and was ame nded in 2009.  The amended agreement is still in the process of 
being signed after which the process of notification will commence. 
  The agreement between Botswana and Malawi is  a relic of an old agreement that was signed 
in 1956.In practice, trade between the two count ries is however governed by the SADC Trade 
Protocol and an assessment by the two parties on the need for the continuation of the agreement will 
be undertaken in the context of the existence of th e SADC Trade Protocol.  Botswana is currently in 
the process of engaging Malawi with a view to consider the relevance of this agreement. 
  Regarding the bilateral agreement between  Namibia and Zimbabwe, the two countries 
amended and signed the agreement in late 2009. Namibia plans to discuss the issue of notification 
with Zimbabwe for the two countries to jointly dete rmine when and how to no tify the agreement.  
  With respect to Agreements between South Africa and Mozambique, Zimbabwe and Malawi, respectively, these are old agreements and trade be tween South Africa and these countries is mainly 
governed by the SADC Trade Protocol, which has already been notified to the WTO.  
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