RESTRICTED  WORLD TRADE  
ORGANIZATION  TN/RL/M/32 
9 December 2005 
 
 
 (05-5852) 
Negotiating Group on Rules  
  
SUMMARY REPORT OF THE MEETING 
HELD ON 4 OCTOBER 2005 
 
Note by the Secretariat
 
  
1. The Negotiating Group on Rules ("the Group") held a formal meeting on 4 October 2005. 
A. A
DOPTION OF THE AGENDA  
2. The Group adopted the following agenda: 
A. ADOPTION OF THE AGENDA ........................................................................................................1  
B. REGIONAL TRADE AGREEMENTS ................................................................................................1  
C. OTHER BUSINESS ......................................................................................................................11  
 
B. REGIONAL TRADE AGREEMENTS  
3. The Chairman proposed that the Group apprai se the use of the factual presentation by the 
Secretariat in the context of the Committee on Regional Trade Agreements (CRTA) and further consider the submission made by China, circul ated as TN/RL/W/185, which had been subject to 
preliminary discussions at the previous mee ting of the Group, and those submitted by the 
Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu,  and Chile and the Republic of 
Korea, circulated respectively as TN/RL/W/186 a nd TN/RL/W/187.  The Chairman welcomed the 
Chairman of the CRTA, Ambassador Ronald Saborío, who had been invited to this meeting to provide 
the Group with valuable feedback on the first examin ation of an RTA in the area of trade in goods 
conducted on the basis of a factual presentation by the Secretariat.  Before giving the floor to 
Ambassador Ronald Saborío, he said that the pur pose of the appraisal was to evaluate and, if 
necessary, discuss eventual chang es to the outline for the presentati on.  He welcomed the opportunity 
also to discuss how to advance the process related to  RTAs in the area of trade in services and invited 
Participants to make comments in that respect. 
4. Ambassador Ronald Saborío expressed his gratit ude for having the opportunity to address the 
Group.  In September last year, the CRTA had intr oduced the preparation of factual presentations on 
RTAs by the Secretariat as an option in the examin ation process.  The first "live" factual presentation 
of an RTA had been prepared by the Secretaria t for the goods aspects of the Free Trade Agreement 
between the Republic of Korea and Chile (KCFTA) whic h had been examined for the first time in the 
CRTA's 40th Session in July 2005.  He thus wanted  to provide the Group with his assessment of this 
experiment and to provide some ideas about how the process might be streamlined.  First, he said that 
the KCFTA factual presentation had been well re ceived by Participants who had expressed the 
opinion that it had been "highly useful, very coge nt, thorough and balanced".  The structure of the 
factual presentation together with the data in the Annex, which set out indicators of trade and tariff 
liberalization, had been much appreciated.  Partic ipants had been unanimous in assessing the factual 
presentation as significantly helping them in their review of the KCFTA and had welcomed it as a 
positive contribution to the process of transparency .  While many Participants had expressed their TN/RL/M/32 
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appreciation of the data in the Annex, others ha d thought it was too detailed and that the factual 
presentation could stand without it.  Some Partic ipants had highlighted the need to increase the 
digestibility of the document.  In his view, if Members wished to satisfy the Group's request for 
increased transparency on RTAs, then a certain amo unt of detail was mandatory.  With regard to the 
digestibility of the factual presentation, it was hi s understanding that the Secretariat had tried to 
address this issue by, for instance, providing a broad overview of trade liberalization provisions in the 
main text and the details in the Annex.  He said that  it would be helpful if Pa rticipants could share any 
concrete suggestions of how to increase the di gestibility of the factual presentation without 
diminishing its utility.  He added that some Partic ipants had expressed the ne ed for a fine-tuning of 
certain aspects, for instance includi ng in the main body of the factual presentation some of the 
information which appeared in the Annex.  Ot hers, in the course of this and subsequent 
RTA examinations in the last Session of the CRTA,  had highlighted the fact that the process of 
examination of RTAs would be aided if delegations  were to make their questions available to the 
parties to an RTA prior to the examination, thus enabling them to provide a more informed response 
in the course of the meeting.  He thought that this was an issue that Participants were going to raise in 
the context of the negotiations within the Group.  He noted that some questions had emerged in the 
analysis of the factual presentation, e.g., about the data used, how some of th e calculations had been 
made, and what methodology had been employed to handle trade statistics.  He thought that the 
Secretariat had been able to respond to most of th ese questions but any remaining issues in that regard 
could be clarified. 
5. In terms of resource implications, the Secretar iat had informed the CRTA that the preparation 
of the KCFTA factual presentation had taken roughly 20-25 working days, but stressed that this figure 
could vary depending on the complexity of the RTA and the availability of data.  It was also important 
to note that there was a learning curve and that th is figure might decline somewhat, though not much, 
given the benefit of experience.  According to the Secretariat, the co-operation of the Parties to the 
RTA was key as they had quickly satisfied requests for data and had been equally responsive in 
providing comments on the draft factual presentation.  He stressed in this context that while the 
factual presentation had been prepared on the sole responsibility of the Secretariat, it had been passed 
to the Parties for their comments prior to its circul ation to all Members.  In terms of the resource 
implications for the Parties to the KCFTA, the Pa rties had acknowledged that the factual presentation 
had resulted in time saving on their part as it had relieved the burden of the preparation of the 
Standard Format.  He invited the Parties to share with the Group other comments in this regard.  Thus, 
he thought that it was important to view the time taken to prepare the factual presentation in terms of 
the transfer in resource burden from Members to the Secretariat, not just in absolute terms for the 
Secretariat.  In summary, he said that the experime nt had worked very well on that first occasion.   
The factual presentation provided a standardized view of RTAs which would make the review of RTAs more efficient.  The Committee had dedicated  almost an entire afternoon to discussion of the 
KCFTA, which compared with the hour or so that was generally dedicated to the rather perfunctory 
first examination round of an RTA when based on the Standard Format.  One Participant had 
commented that the examination had been the most  interesting she had attended in three years of 
following the CRTA.  In his view, Participants ha d posed more insightful questions and had learned 
much more about the KCFTA than was typically  the case in a first-round examination, which 
reflected the fact that the factual presentation had s timulated more interest on the part of Participants, 
but also demonstrated perhaps that some fine-tuni ng remained to be done.  He concluded by thanking 
the Republic of Korea and Chile for volunteering for th at exercise and he congratulated the Parties for 
their role in advancing the process of transparency .  He sincerely hoped that other delegations would 
follow their example, thus actively contributing to  increasing the transparency of RTAs within the 
WTO.   
6. 
The Chairman thanked Ambassador Ronald Saborío for the comprehensive information 
provided and expressed his pleasure to learn that the first application of the factual presentation in the 
context of the CRTA had been successful and that th e scope of this evaluation appeared to be limited TN/RL/M/32 
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to a possible fine-tuning of the outline rather than changes to its substance.  He then invited the 
Participants to provide their views on any of the points that had been raised.   
7. One Party to the KCFTA pointed out that the discussion on the examination of the Agreement 
had been of a higher quality and more in-depth th an usual.  In terms of workload, the factual 
presentation had represented much less of a burden for her capital than providing the Standard 
Format.  In this sense the Secretariat had done we ll because whenever there were doubts, or additional 
information was necessary, it had left space available fo r the Parties to respond.  She considered that it 
had been a satisfactory experiment which she hoped c ould be replicated with ot her agreements.  In her 
view, the factual presentation not only contributed to improving the quality of the examination and 
transparency but also would make it easier for the public to understand the contents of the KCFTA.  
The other party to the KCFTA clarified the role of the Parties in the preparation of the factual 
presentation.  In his view, one was providing raw da ta to the Secretariat, and the other was giving 
feedback on the almost final draft.  With regard to the first, he believed that it had not been as 
burdensome as preparing the Standard Format.  Ther e had been some technical difficulties, like the 
ones arising from differences and changes in HS cod es, but these had been easily solved in close 
consultation with the Secretariat.  The second role was key in the process.  As for a TPR Report, it 
involved the final fact checking and accuracy of th e data without undermining the objectiveness of the 
factual presentation.  So, in terms of burden to the Parties, he believed that this process was not more 
burdensome than the preparation of the Standard Fo rmat.  However, he remained concerned about the 
resource problem of the Secretariat.   
8. One Participant attached great importance to  the transparency exercise of RTAs and 
expressed concerns about whether the new tran sparency disciplines ou tlined in document 
JOB(05)/171 would make the process less burdensom e.  According to the Annex of JOB(05)/171, 
RTA parties were expected to provide trade data  on the basis of tariff lines for the three years 
preceding the notification of the RTA;  he wondere d whether KCFTA parties had provided such data 
to the Secretariat.  One Party to the Agreemen t answered that the information on tariff lines and 
preferences provided had been used for negotiations;  so it had been no trouble for them to provide it.  
She supposed that this had been the case for the ot her Party to the Agreement, who said that his 
delegation had provided tariff levels and schedules line  by line.  This had been done on the basis of 
HS ten-digits because that was the level at which his country had conducted ne gotiations.  He was not 
sure if his delegation had provided trade statistics be cause it had already provided them periodically to 
the WTO.   
9. One Participant asked if the Parties had pr ovided schedules for each of the years of the 
transition period or if they had provided the schedule with a list of the products or chapters subject to 
a transition period.  In other words, had they provi ded ten different documents with the schedule, one 
for each year of the transition period?  One Party to the KCFTA confirmed that her delegation had at 
first only provided data containing the initial and the final duties during the transition period but had 
then subsequently provided the duty levels in each  of the transition periods, from 2004 to 2014.  This 
had been provided in a single document with the produc ts in rows and the years in columns.  In his 
opinion, the Secretariat could have produced this it self using the tariff liberalization schedules;  some 
developing countries might face difficulties in providing this level of detail.  A representative of the 
Secretariat confirmed that it had received detailed trade liberalization data, which had made it easier 
to perform calculations.  If the Secretariat had to use raw data, it would certainly lengthen the work in 
the case of complex tariff liberalization schedules.  In addition, the more the data was manipulated, 
the higher the possibility of making mistakes.   
10. One Participant expressed the opinion that the discussion on the KCFTA had been much less 
adversarial than was the case for other examinations  which he sensed was due to a genuine exercise of 
understanding and getting further information rather  than making comments or striking points at the 
expense of each other.  It seemed to him that once there was a lot of information on the table, TN/RL/M/32 
Page 4  
 
provided by the Secretariat, Members had moved into  a less adversarial discussion.  The Chairman of  
the CRTA shared that view about the nature of the discussion.   
11. The Chairman suggested moving on to the next point on the Agenda, the submission by 
China, circulated as TN/RL/W/185, which had been s ubject to preliminary discussions at the previous 
meeting of Group.   
12. The proponent of TN/RL/W/185 announced that  he would pick up on the questions and 
comments regarding his delegation's submission from th e last formal meeting of this Group.  Some 
Participants had made the point that RTAs needed to operate within the rules-based system of the 
WTO, and that the interests of third parties had to be safeguarded so as to minimize the 
trade-distorting effects of RTAs.  While he agreed w ith the thrust of this point, he did not think that 
Special and Differential (S&D) treatment implied that RTAs to which developing Members were 
parties would operate outside the purview of the WTO.   In fact, S&D provisions were an integral part 
of the WTO Agreements.  If the Group was to take into account the developmental aspects of RTAs, 
which was its mandate in the Doha Ministerial Declaration, RTAs should contain specific S&D provisions for developing Members.  Other Par ticipants had welcomed the paper for introducing 
the negotiations on S&D and justifying S&D treatme nt for RTAs notified under Article XXIV.  One 
Participant had stressed the importance of specific S&D provisions under clarified rules to balance the developmental dimension so Members could preserve the integrity of the multilateral trading system 
in the face of the current enormous growth in  RTAs.  Another Participant had agreed that 
development was an intrinsic part of the WTO Agre ement but, in the context of RTAs, his delegation 
had seen differences in the way in which the excep tion to the non-discrimination principle had been 
applied;  he had then expressed his intention of  further looking at how development aspects could 
play a positive role in RTA disciplines.   
13. The proponent shared the view that the interests of third parties had to be safeguarded so as to 
minimize the trade-distorting effects of RTAs.  Despite the disadvantages of RTAs, many countries participated in them in order to enjoy preferential market access.  As an incremental approach to trade 
liberalization, RTAs could be a catalyst for stru ctural reforms in an economy and in this way 
conducive to the expansion of trade and the world economy in the long run.  But in the short run, 
trade distortions occurred and the world's resources were  not used in an optimal way.  It was then not 
clear how to accommodate the conflict between long te rm benefits and short term costs.  Questions 
had been raised on how to define "sensitive sector s" in paragraph 5 of TN/RL/W/185 and the meaning 
of "endurance costs" in paragraph 4.  Without prejudice to his delegation's position on the issue of 
"major sector", he said the term "sensitive sectors" did not refer to any particular sector, since each 
Member had its own sensitive sectors where it would be difficult to provide duty-free or quota-free treatment for market acce ss.  As regards "endurance costs", th ere appeared to have been some 
misunderstanding.  This referred not to endurance, but  to the capacity of a developing country to meet 
the substantial requirements of RTA rules.  One Participant found it particularly important to keep in 
mind that sensitive sectors in developing country Me mbers often affected the livelihood of a large and 
poor population, which could make it difficult to liberalize such sectors. 
14. The proponent welcomed the recent effort in itiated by the Chairman to hold dedicated 
sessions to further clarify the benchmarks for "substa ntially all the trade" (SAT) while recognizing the 
technical complexities involved in defining such be nchmarks.  The paper suggested concentrating on 
the quantitative aspects, in particular the two essential  benchmarks, i.e. coverage of trade and tariff 
lines, without prejudice to his delegation's final pos ition on how to combine both benchmarks, or use 
them separately.  He acknowledged the pros and cons of each benchmark and the particular 
difficulties in deciding the methodology for calculating them and suggested exploring different options for benchmarks with Partic ipants during the negotiations, perhaps using a simulation exercise.  
It would be useful for Members to provide necessary information so that the Secretariat could make a 
factual summary of the trade and tariff line coverage  of RTAs in force at present.  As far as the 
qualitative aspects were concerned, he looked forwar d to more information from Participants, on TN/RL/M/32 
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issues such as other restrictive regulations of commerce (ORRCs).  One Participant stressed the 
importance of the two essential quantitative benchmar ks that the proponent had pointed out.  He 
agreed that there were some problems both with the methodological aspects of the benchmarks and 
with the need for further information on qualitativ e aspects.  He supported the view expressed in 
TN/RL/W/185, as it was not overly prescriptive but pointed to areas of potential convergence.  One 
Participant expressed his preference for clarifying th e term "substantially all the trade" primarily in 
terms of coverage of trade volum e, and have S&D treatment on be nchmarks for such coverage.  
Several Participants agreed with the idea of havi ng some benchmarks diffe rentiated for developing 
countries, in the case of the definition of SAT, as wa s pointed out in paragraph 9 of the paper.  One 
Participant considered that there should not be a one-size-fits-all approach and another Participant 
considered that in view of the impact that liber alization of some sectors could have on developing 
country Members' economies, establishing diffe rentiated benchmarks would allow developing 
countries to accede to Article XXIV agreements. 
15. One Participant noted that paragraph 5 of the paper suggested a low threshold on the 
substantive requirements of RTAs' disciplines that  should apply to developing countries.  Also, 
several Participants before him had put emphasi s on the different benchm arks which should be 
available to developing countries in the case of Artic le XXIV agreements.  This kind of flexibility was 
already provided for in the Enab ling Clause.  In the case of North- South RTAs, while he considered 
the importance of their development aspects, a departure from MFN could have a negative effect on other non-party developing countries which might be competing for th e same market.  While reducing 
the threshold might facilitate the conclusion of Artic le XXIV RTAs, there was a risk that this would 
lead to a partial GSP scheme.  He considered that giving preference to a developing country for 
meeting its development needs c ould be done in several ways and he was not sure that the 
discriminatory nature of RTAs w ould benefit developing countries, especially when most of them 
would not be in one particular agreement.  Thus, ra ther than proposing a different threshold, why not 
place more emphasis on GSP schemes, which would provi de an equal playing field for all developing 
countries?  One Participant was concerned about the po ssible implications for the rest of the world of 
S&D treatment in bilateral negotiations.  He w ondered whether the principle of less-than-full 
reciprocity – that is, a lower level of liberaliza tion – would be beneficial  for developing countries 
when joining a bilateral RTA with a developed country .  Another Participant c oncurred with that view 
adding that she believed that differentiated benchmar ks were not necessary in Article XXIV;  rather, 
the concerns could be dealt with within a bilate ral agreement between the two parties.  In the 
agreements her country had with developing countries, greater c overage contributed to economic 
growth more than partial agreements.  In this respect, she wondered whether the Secretariat could do 
some research on the economic literature on growth rates for developing countries with comprehensive versus partial RTAs.   
16. One Participant suggested that the principle of S&D treatment should apply, not only to 
Article XXIV RTAs formed between developed and developing countri es, but also to RTAs formed 
between developing countries themselves.  One Par ticipant noted that according to paragraph 5 of 
document TN/RL/W/185 there would be two cat egories of RTAs, one among developing and 
developed countries and the other among developing countries themsel ves.  In the latter category, 
there was no need to define or indicate any depth, co verage or size because they were all in the same 
category, so they could discuss among themselves what and how much needed to be covered in an 
RTA.  However, in the case of an RTA formed by  developed and developing countries, there needed 
to be a differentiation between the extent of th e commitments for these two classifications of 
countries.   
17. The proponent of TN/RL/W/185 pointed out that on S&D treatment, the majority of 
developing country Participants had showed thei r support whereas other Participants had expressed 
concerns.  In this respect he confirmed that ther e should be different benchmarks, not just for North-
South RTAs, but also for South-South RTAs.  On the issue of GSP, he said that GSP was a unilateral 
preferential scheme, while RTAs were bilateral.  So, they had a somewhat different impact on third TN/RL/M/32 
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parties.  As to the margin of S&D treatment, he wa s of the view that this should be discussed further 
at some later stage in the negotiations, although he recalled that his delegation had made the point at 
previous interventions that at least a ten per cent margin should be provided to developing Members.   
18. On the transition period, the proponent said that  it was natural, given the development focus 
of the paper,  to establish a linkage between "ex ceptional circumstances" and the development aspect.  
The special concerns of developing country Members should be taken into account in the definition of 
"exceptional circumstances".  He  agreed that in some cases long implementation periods were 
necessary to encourage RTAs to go beyond SAT.   One Participant supported the proposal in 
paragraph 11 of the paper that a transition peri od of more than ten years under the clause of 
"exceptional circumstances" should be primarily available to developing countries.  Several 
Participants considered that developing countries should have more flexible time-frames in certain 
cases.  Other Participants were disposed to grant longer transition pe riods depending on the 
difficulties developing countries faced in opening thei r markets.  One Participant noted that ten years 
was the general understanding that derived from the text of Article XXIV but in practice, not all 
agreements had a transition period of ten years – most had less and some had a period between three 
and eight years – so ten years seemed reasonabl e.  Beyond ten years, there was a need for 
"exceptional circumstances" which would be decided amongst the negotiating RTA members 
themselves.  Other Members should then honour their judgement as to what were "exceptional 
circumstances".  In this regard, one Participant requested further elaboration from the proponent as to 
the need to define or  attach conditions to th e term "exceptional circum stances" as normally such 
clauses were negotiated between RTA partners themselves.  One Participant noted that the proposal 
suggested that developing countries should have lo nger transition periods so she wondered if there 
was a link between transition periods and greater liber alization.  If developing countries were to have 
lower benchmarks and longer periods of trans ition, was the proponent in favour of developing 
countries assuming longer transition periods for greater liberalization, thus recognizing the link between both? Another Participant considered that the priority was to achieve greater liberalization 
and for this purpose longer trans ition periods could be necessary.  The proponent agreed that there 
was some link between transition periods and the degr ee of liberalization but he also considered that 
transition periods should not be abused. 
19. One Participant supported the proposal in para graph 10 of the paper that the Secretariat 
compile a table showing the situation of trade and ta riff line coverage of notified RTAs still in force.  
He recognized that the WTO Secretariat had prepared a useful survey in its document 
WT/REG/W/46, but this study seemed to be at a macro level, and dealt with broad issues like 
determinacy of RTA market openings and with the tr eatment of different products in RTAs.  A more 
focused study on coverage of trade volume and tariff lines could be a useful complement.  One Participant had reservations about the factual summ ary suggested in paragraph 10 since it could be 
risky to include such a table with the coverage of RTAs.  In her view, Participants might tend to reach 
a minimum common denominator in establishing rul es, which would include all agreements.  In 
addition, it might be difficult for the Secretariat to analyze in the factual summary the reasons behind 
the coverage of RTAs.  Another Participant expr essed reservations about the need for a Secretariat 
factual summary, though acknowledging that it could provide useful information on other aspects.  
For example, there had been no equivalent factual summary by the Secretariat on the coverage of the 
Enabling Clause agreements.  The Standard Fo rmat reports, submitted to the CRTA from 2002 to 
2004, provided easily accessible, digestible informati on on trade and tariff lines.  Thus, he asked the 
proponent to identify his information needs on certa in types of agreements.  One Participant was 
puzzled with the suggestion that the only way to complement the Secretariat's study was to look at 
tariff lines and trade coverage under the Enabling Cl ause.  He recalled that the Enabling Clause 
disciplines were not under discussion.  At this poi nt in time, the Group was trying to understand how 
to determine the coverage of tariff line and trad e volume under the expression, "substantially all the 
trade" and no such expression existed in the Enab ling Clause, so he wondered what was the purpose 
of adding this additional element.  As he unde rstood it, the purpose was to see how Members had 
operationalized paragraph 3(a) of the Enabling Clau se which dealt with the general principle that TN/RL/M/32 
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RTAs should be designed to facilitate and promote the trade of developing countries and not to raise 
barriers to the trade of other contracting parties.  That was a general principle which was parallel to 
paragraph 4 of GATT Article XXIV, and document  TN/RL/W/ 185 had been submitted not in 
connection with paragraph 4 of Article XXIV, but  paragraph 8 of Article XXIV where there was 
specific reference to SAT.  He supported the idea expressed in paragraph 7 of the paper that the 
Enabling Clause was a tailor-made instrument for de veloping country Members, and any clarification 
or improvement of GATT Article XXIV should not be detrimental to  developing country 
Members' rights under the Enabling Clause.  One Participant had the impression from what that previous Participant had said about the Enabling Cl ause that he was actually changing its substantive 
terms so he requested a clarification.  He emph asized that paragraph 3(a) of the Enabling Clause 
necessitated the facilitation and promotion of trade of developing countries and not to raise barriers.  
However, at the same time the obligation of the RTA parties under the Enabling Clause was to notify 
the agreement under paragraph 4( a).  Paragraph 4(b) provided for a mechanism for prompt 
consultation if any interested Member sought clar ifications.  He failed to see any reference in 
TN/RL/W/185 and in the Chairman's roadmap to agreements under the Enabling Clause, so he 
wondered why and how the Enabling Clause got in to the discussion while considering RTAs under 
Article XXIV of the GATT.  He believed those were separate entities altogether and the Enabling 
Clause need not be referred to in the discussion at a ll.  He agreed with the proponent's contention to 
have other factors in the factual summary by the S ecretariat because the current paper did not provide 
a true picture of what the actual needs of developing countries were and did not indicate what the actual gap was between various Members in reaching mutually beneficial trade agreements.  Hence 
his delegation supported the idea of having a paper by the Secretariat with a special focus on 
providing these decision making indicators.  One Pa rticipant considered it important to extend the 
summary to the Enabling Clause ag reements because he recalled that the Chairman had given 
Participants a list of six issues that they had discussed  at the last meeting and in point five – coherence 
with WTO rules – he had indicated the applicati on of trade defence instruments, the degree of 
flexibility for South-South RTAs versus North-S outh RTAs, and the relationship between various 
rules for RTAs, including the Enabling Clause.  While  his delegation wanted to work on the basis of 
all six points on the agenda, it lacked information for point five, and it was his intention to try to fill that lack of understanding or knowledge of the Partic ipants.  He clarified that he had not suggested 
that GATT Article XXIV provisions, however imprecise they could be, be applied to any review of Enabling Clause agreements.  The study would be without prejudice to the legal provisions of the 
Enabling Clause.  However, he thought that ther e was a need to know wh at was in the Enabling 
Clause agreements in order to understand how their existing users had approached their obligations 
under paragraph 3(a).  In addition, he did not ag ree with the description of paragraph 3(a) as a 
generalized principle like paragraph 4 of Article XX IV which had been interpreted by a panel in the 
Appellate Body as to give a general framework fo r analyzing later provisions because, as they all 
knew, the Enabling Clause lacked the later provisi ons.  The proponent shared the views of some 
developing country Members that the factual summary was very important in order to analyze the real 
situation faced by Members and of great systemic concern to the WTO since more and more Members were involved in RTA negotiations.  For the sake of  transparency, which was one of the important 
aspects of the work of the Group, it was n ecessary to have such information.   
20. Several Participants supported the proposal in  paragraph 12 that any newly clarified rules 
should be retroactive and applicable to all RTAs.  One Participant considered that most RTAs had 
been concluded and implemented after the failure of the Cancun Ministerial, as a sort of alternative to 
the multilateral forum;  there was now a need to ge t RTAs back on track and into the mainstream of 
multilateralism.  A way of achieving that would be through the retroactivity of RTAs.  One 
Participant agreed with the retr oactivity proposal under paragraph 12, but wondered if any flexibility 
would apply.  Another Participant was of the view that some flexibility might be needed, for example, 
in the case of application of the transparency regi mes.  The proponent clarified that on the issue of 
retroactivity, the term might not be very clear or  accurate from a legal perspective, so it might be 
interpreted as the applicability of new disciplines on RTAs.  He noted that this issue could not be 
settled at this stage, and that it could be further discussed at a later stage of the negotiations.  He TN/RL/M/32 
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confirmed his view that these new disciplines should be applied to all RTAs because the situation was 
now different from when the GATT 1947 was initially negotiated. 
21. The Chairman suggested that the Group cons ider the second submission by Chinese Taipei, 
circulated under as TN/RL/W/186.  The submission provided answers to questions raised by Participants in relation to discussions held at prev ious meetings of the Group on the earlier submission 
by Chinese Taipei distributed in document TN/RL/W/ 182.  It also further elaborated on the main 
ideas contained in that submission.  Since the Group had already had the opportunity to discuss many of these ideas earlier, he invited the propone nt to provide new comments on this issue. 
22. The proponent thanked Participants for the comments made on his delegation's earlier 
submission.  He explained that the reason his delegation had prepared document TN/RL/W/186 was 
for clarification purposes to see if Participants we re willing to include the topic of strengthening the 
multilateral trading system via open regionalism in thei r future discussions.  Also, he wanted to ensure 
that the RTA disciplines were as non-discriminator y as possible, so that all WTO Members could 
really benefit from RTAs.  In his view, the submission was quite timely because the next document in this meeting's Agenda, Best Practice for RTAs/FTA s in APEC, included this issue among the topics 
to be presented.  As APEC was a forum which di scussed best practices, the WTO could benefit from 
selecting those items that improved the multilateral trading system.   
23. One Participant appreciated the underlying con cern of the proponent which had prompted the 
original submission TN/RL/W/182, namely to discipline an ever proliferating mass of RTAs.  He appreciated the detailed response given in TN/RL/ W/186 to the questions and observations of the 
Participants on the original proposal.  He informed  the Group that his delegation shared several of the 
concerns raised by other Participants on this propo sal.  As he viewed it, the decision by a Participant 
to form an RTA with another was governed by a mi x of motivating factors.  These could be political, 
economic, security based and others, so it was likel y that the same set of motivations might not be 
universally shared by all potential applicants w ho sought cooperation as additional parties to an 
existing RTA.  Thus, after looking at the answers given by the proponent, he still had concerns in 
having a minimum, mandatory accession provision in each Article XXIV and GATS Article V 
agreement, which would be then subject to dis pute settlement.  According to the proposal and the 
explanations provided, any application for accession to an existing RTA needed to be responded to 
"sympathetically" and accorded "goo d faith" opportunities.  As it was rightly expected, there should 
be no blank rejection of an accession application.  In his view, it followed that each application would 
need an investment in negotiating time by RTA pa rties and given that such resources were already 
quite scarce in developing countries, such a requi rement would stretch them even more.  If the 
assessment of the proponent was that not many applications would result under such an accession 
clause, he wondered what was the merit in having such a provision.  He also pointed out that an RTA was a delicately balanced outcome of keen and of ten protracted negotiations;  it might thus be 
difficult for RTA partners to re-open the agreement in order to arrive at the fresh balance between 
new and original partners.  This would be particularly difficult in terms of product coverage, and the 
associated rules of origin, because domestic sens itivities often varied;  re-opening these issues to 
accommodate a third party would be an extremely difficult exercise.  It would perhaps be more cost-effective and efficient for an interested non-pa rty to an RTA to negotiate a new RTA with the 
concerned parties.  His delegation was unable to appreciate the logic of the comment in the concluding section which said " ... allowing third pa rties to negotiate possible accession could have 
the effect of reducing the need for creating new RTAs, thus reversing the trends towards 
regionalization of the trading system".  As mentione d by the proponent, if likely applicants were few, 
then this hypothesis could not be true.  If more applicants succeeded in joining existing RTAs, it 
would continue to add to the proliferation of RT As, in as much as more and more trade would be 
channelled through RTAs.  Again, it would only mean that the physical number of RTAs would not 
grow as much.  Concurring with what the previous Participant had said, one Participant deemed that 
although her country had signed the Best Practices  document in the context of APEC, where the 
option of accession was kept open for third parties, sh e was concerned about the possible implications TN/RL/M/32 
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of such a clause at the WTO level, in particular with regards to the effects it could have on dispute 
settlement.   
24. The Chairman thanked the proponent for the subm ission of this paper and Participants for 
presenting comments to it.  He suggested the Group consider document TN/RL/W/187, a joint communication by the Republic of Korea and Chile, describing the Best Practice for RTAs/FTAs in 
APEC.   
25. One proponent explained that the reason the two delegations had submitted the paper was that 
both countries had hosted the two meetings where B est Practices in APEC had been discussed.  She 
clarified that these were not compulsory Best Prac tices for APEC, much less for WTO.  Nonetheless, 
these were guidelines which APEC countries took into account when negotiating RTAs because they 
believed they reinforced several of the underlying principles of RTA negotiations at the WTO.  The 
second proponent considered that it was now the WTO' s task to build on these principles and to move 
to the next step.  He explained that the reason for having submitted them at this point in time was, in 
addition to the fact that they were approaching the Hong Kong Ministerial that APEC Members believed that this was one of the possible ar eas that could be agreed upon at the Hong Kong 
Ministerial. 
26. Several Participants welcomed the submission,  which they considered a good starting point 
for upgrading WTO disciplines.  One Participant c onsidered that these Best Practices covered a wide 
range of aspects of RTAs, such as comprehensiv eness, transparency, sustainable development and 
others, and informed the Group that APEC member s were now at the stage of discussing how to 
utilize these Best Practices in their own RTA negotia tions.  He considered that the Group could learn 
much from APEC's work in how to clarify and improve WTO disciplines.  In this respect, he 
suggested that APEC explained to the Group its work  on these Best Practices so as to contribute to the 
understanding of the meaning of what were high qua lity RTAs.  One Participant considered that these 
Best Practices embodied some important principl es such as comprehensiveness of agreements and 
transparency, as had been discussed in this Group and encouraged all Participants, whether or not 
APEC members, to live up to these commitments.  Tw o Participants highlighted the fact that these 
Best Practices were supported by APEC's 21 diverse member economies including developed 
countries, developing countries and emerging economie s.  Another Participant believed that these 
Best Practices for RTAs clearly showed that APEC members generally shared the objective of 
concluding and promoting high level RTAs which w ould promote liberalization worldwide.  This 
Participant encouraged APEC memb ers to continue working closely among themselves and with other 
WTO Members to pursue the objective of multilateral liberalization.   
27. One Participant, who took the proposal in th e spirit of a guideline, shared his thoughts on 
some of the elements which had been mentioned as Best Practices for RTAs.  In his assessment, the 
elements enumerated were useful to improve th e value of an RTA as a building block to the 
multilateral trading system but he believed that it might be difficult to accept some of the principles 
enumerated therein.  For instance, he pointed out that taking into account domestic sensitivities, it 
might not always be possible to have a comprehe nsive RTA providing for full liberalization in all 
sectors.  Also, it might not always be possible to ha ve consistent rules of origin across all RTAs, and 
that could be both on account of domestic sensitiv ities and because of different requirements of 
different RTA partners.  With respect to the accessi on clause, he had already expressed his concerns.  
In addition, he was unable to share the view that  RTAs that involved developing economies to whom 
the Enabling Clause applied should, whenever possibl e, conclude agreements which were consistent 
with GATT Article XXIV.  If developing countries c hose to have an ambitious RTA, they could in 
any case take the cover of GATT Article XXIV, but at the same time, if they wanted to have a limited opening of their economy through partial scope agreem ents, they were free to do so under the cover of 
the Enabling Clause.  Another Pa rticipant asked whether there w as any track record of APEC 
members' fulfilment on this issue.  One proponent  answered that there was no track record on these 
initiatives but at an individual level, Chile, as well as Mexico, were trying to upgrade their agreements TN/RL/M/32 
Page 10  
 
to high levels and make them compatible with Ar ticle XXIV.  She reiterated that the logic was that 
each country individually made the effort, and in such a case, tracking was not so relevant. 
28. One Participant had a question under the headi ng "Trade facilitation".  Given that border 
procedures were normally uniform for imports fr om all Members, he asked in what manner 
APEC members extended selective and more-facilitative procedures to their RTA partners and 
whether those procedures were tailored differently for different RTAs.  One proponent explained that 
all the questions had to be looked at using APEC's logic, which was very different from the WTO's.  
In APEC, countries defined certain guidelines or principles and then it was up to each country to 
commit to them, coming forward with their plans of  action, their schedules and their ideas.  There 
were no control systems or dispute settlement procedur es.  It was within that logic that she answered 
the questions raised.  On trade facilitation, she e xplained that what made this issue different from 
others was that once they started implementing trade facilitation measures at the border for one 
country, it was quite easy to implement them for all countries, especially for g oods, since there was no 
different treatment for goods coming from different countries.  In addition, APEC had included the 
issue of trade facilitation not only for goods but also  for services, movement of persons, etc., in which 
APEC had been strong at facilitating trade.  The second proponent added that whether the element of 
trade facilitation applied only to RTA partners or  not depended on whether customs procedures were 
considered as "other regulations of commerce" in the sense of GATT Article XXIV.  If they were, it 
was then possible for RTA partners to provide an  express line to their partners.  However, he 
emphasized that the key issue was to facilitate trad e because in view of all the RTAs that were in 
place, countries were forced to apply different tari ff rates to each imported product depending on their 
origin.   
29. One Participant told the Group that he had seen the Best Practices on APEC webpages and 
had been intrigued by them and considered them a go od starting point.  He was struck by some of the 
comments made on the diversity of APEC members.  However, he had some questions on the second 
part of consistency with WTO – developing countries whenever possible should make their 
agreements consistent with Artic le XXIV of GATT and Article V of GATS – bearing in mind that 
there was no Enabling Clause for services.  In partic ular, he requested information on the discussions 
on that basic principle or on whether there was any track record of APEC members fulfilment of this 
principle.   
30. One Participant noted that open regionalism had been one of the core principles of APEC 
when it was launched but he believed it now seemed to have taken a secondary place.  In this respect, 
he asked whether there were any discussions in APEC on the difference between preferential and 
MFN rates, as well as what was APEC members' po licy with respect to trying to make those rates 
converge.  As he recalled, open regionalism m eant that APEC members would multilateralize their 
commitments made under RTAs, and he wondered whether there had been any progress in this 
respect.  One proponent answered that open regiona lism was still a driving force of APEC but she was 
not fully aware of the latest developments in term s of bringing together preferential and MFN rates.  
The other proponent added that the purpose of narro wing the gap between preferential and MFN rates 
was really an ideal.  Since preferential rates fo r most products was zero, narrowing the gap could 
mean complete liberalization.  APEC had an Indi vidual Action Plan (IAP) that was unilateral and 
voluntary.  Finally, he highlighted that APEC members were strongly committed to trade liberalization and were actively working on un ilateral and voluntary trade liberalization. 
31. Another Participant asked whether the guidelin es dealt with the elimination of non-tariff 
barriers, since there was a reference to compre hensiveness in the Best Practices.  One of the 
proponents replied that the elimination of non- tariff barriers was included in the Chapter on 
comprehensiveness.  One Participant expressed concer ns on the third last bullet of the document that 
referred to Sustainable Development.  The guide lines reflected the inter-dependence and mutually 
supportive linkages between the three pillars of su stainable development – economic development, 
social development and environmental protection.  He wondered what criteria and what benchmarks TN/RL/M/32 
 Page 11 
 
 
APEC countries used to make an assessment of these  three areas of development needs of the member 
states, and how they set a certain weight to th ese concerns while negotiating RTAs.  One proponent 
explained that this again was a general principle and if countries felt they could incorporate such 
measures in their agreements, they would do so on an  individual basis.  The other proponent informed 
the Participant that they would refer this  question to capital and answer promptly. 
C. OTHER BUSINESS  
32. The Chairman informed the Group that the meetings scheduled up to the Ministerial 
Conference in Hong Kong would take place on 14, 21, 31 October and 11 and 18 November, for the 
informal meetings and that the last formal m eeting would take place on 1 November.  He said he 
would send the agenda of the next informal meeting to the Group by fax.  Finally, he reiterated that 
Members had very little time ahead of them, so he urged Participants contemplating further 
submissions to submit them in the shortest possible delay.  One Participant pointed out that while his 
delegation shared the urgency to work towards a concrete and ambitious outcome for Hong Kong, 
meetings which were held at close intervals pl aced a great burden upon delegations with limited 
manpower.  Thus, he requested the Chairman to sc hedule meetings at longer intervals which did not 
clash with other meetings.  The Chairman replied that  he would stay in touch with delegations to see 
what was the best possible way of keeping the agenda to what was really essential so as to cut, if 
possible, the number of meetings without jeopardiz ing the objective of making as much headway as 
possible by the Hong Kong Ministerial Conference.   
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