WORLD TRADE  
ORGANIZATION  WT/REG267/M/1 
19 October 2010 
 (10-5409) 
Committee on Regional Trade Agreements 
Fifty-eighth Session  
 
 
 
CONSIDERATION OF THE FREE TRAD E AGREEMENT BETWEEN NICARAGUA  
AND THE SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU,  
KINMEN AND MATSU, GOODS AND SERVICES 
 
Note on the Meeting of 27-28 September 2010  
 
Chairman:  Mr A. Suescum (Panama) 
 
 
1. The meeting was convened in document WT O/AIR/3598/Rev.1, dated 17 September 2010. 
2. Under Agenda Item C.VI of its 58th Session, the Committee on Regional Trade Agreements 
(hereinafter CRTA or the Committee) considered the Free Trade Agreement between Nicaragua and 
the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (hereinafter "Chinese Taipei") 
(hereinafter the 'Agreement'), goods and services.  
3. The Chairman  said that the Agreement had entered in to force on 1 January 2008 and had been 
notified by the Parties to the WTO on 9 July 2009 under Article XXIV:7(a) of the GATT 1994 and 
the Understanding on the Interpretation of Article XXIV of GATT 1994 as an Agreement establishing 
a free trade area (document WT/REG267/N/1) an d under GATS Article V:7(a) as an Agreement 
providing for the liberalization of trade in services  within the meaning of GATS Article V (document 
S/C/N/500).  The text of the Agreement was availabl e, together with its Annexes, on the Parties' 
official websites.  The Factual Presentation on the goods and services aspects (document 
WT/REG267/1, dated 16 July 2010) had been prepared  by the Secretariat on its own responsibility in 
full consultation with the Parties, in accordance w ith paragraph 7(b) of the Transparency Mechanism 
(TM) for Regional Trade Agreements (document WT/L/671).  In addition, written questions and 
replies on the Agreement had been recently distributed in document WT/REG267/2, dated 
21 September 2010.  He proposed to organize the c onsideration of the Agreement by first asking the 
Parties and then other Members for general comm ents.  The Committee would then turn to the 
specifics of the Agreement using the Factual Presen tation to guide the debate.  He proposed to go 
through the Factual Presentation section by section,  and then look at the questions and replies 
document.  
4. The representative of Chinese Taipei  thanked the Secretariat for the Factual Presentation, 
Nicaragua for its collaboration in the preparation for the meeting and the United States and Japan for 
their written questions to which the Parties had duly responded.  He said that the Parties had enjoyed 
close and growing bilateral trade relations for several  years before they had started to consider an 
agreement.  Beginning in September 2004, there had b een four rounds of negotiations;  the Parties had 
finally signed the Agreement on 16 June 2006 and it had officially come into effect on 1 January 
2008.  As a reciprocal and mutually beneficial Ag reement, it proposed to eliminate or reduce tariffs 
and other restrictive trade barriers with respect to s ubstantially all trade between the Parties.  It also 
aimed to make full and complementary use of both economies and to strengthen trade, investment and 
technological cooperation so as to enhance busines s opportunities for the Parties, thereby creating 
more employment and improving people's welfare.   At the same time, the Agreement helped WT/REG267/M/1 
Page 2  
 
  strengthen the international competitiveness of the Parties, so as to respond to the challenges of 
globalization and liberalization more effectively.  The Agreement consisted of  24 chapters covering:  
trade in goods;  technical barriers to trade;  inve stment;  trade in servic es;  competition policy;  
intellectual property rights;  labour and the environm ent;  dispute settlement;  transparency;  and other 
institutional issues.  As indicated in its preamble , the Agreement built upon the rights and obligations 
of the Marrakesh Agreement establishing the WTO.  Its purposes were, among others, to:  create 
greater business opportunities for goods and services;   provide the foundation for promoting 
investment;  enhance competitiveness;  promote in tellectual property rights on trade in goods and 
services;  strengthen bilateral cooperation in labour  affairs and environmental issues;  and promote 
sustainable development.  In terms of liberaliza tion of trade in goods, immediately upon entry into 
force of the Agreement, Nicaragua had enjoyed zero tariffs on 5,797 items (accounting for 65.6% of 
Chinese Taipei's total lines), and had applied zero tariffs on 3,374 items (a ccounting for 51.1% of 
Nicaragua's total lines).  At the end of the impl ementation period, Nicara gua would enjoy duty-free 
access for 97.3% of its products and Chinese Taipei fo r 95.1%.  This demonstrated the extremely high 
commitment by the Parties to liberalize trade in good s.  In terms of liberalization of trade in services, 
the Agreement adopted a “negative-list” approach, whereby only the few service sectors listed by the 
Parties in the “negative list” had no or conditiona l access, while the Parties' respective markets were 
open to all other service sectors.  This was a further demonstration of the Parties' high commitment to 
trade liberalization.  As far as the effectiveness of the Agreement was concerned, its positive effect on 
bilateral trade had become clear as early as 2008.   Despite the fact that the first year of 
implementation had coincided with the height of  the severe global economic  and financial crisis, 
according to Chinese Taipei's customs statistics, bilateral trade reached US$53.5 million in 2008, 
representing growth of 2.8% over the previous y ear.  The global economic downturn in 2009 meant 
that the total value of bilateral trade had dropped that year by 26.5%;  however, in January-August 
2010, it had rebounded by a massive 107.3% compar ed to the same period in 2009, reaching 
US$44.9 million.  Within these figures, imports from Nicaragua had accounted for US$21.7 million, 
up by 128% in the same period the preceding year, and Chinese Taipei exports to Nicaragua were 
US$23.2 million, up by 91.1%.  He was confident th at, with time and a relatively more stable global 
financial and trading environment,  the Agreement would develop to  its full potential and make a 
substantial contribution to bila teral as well as to global trade. 
5. The representative of Nicaragua
 joined other delegations in e xpressing gratitude for the status 
report on the Committee's work.  He attached great  importance to the transparency of RTAs, their 
contents and effects on the multilateral trading syst em.  The consideration of several RTAs by the 
Committee under the Transparency M echanism had contributed to a better understanding of the scope 
and repercussions of such agreements.  He also thanked the Secretariat for the Factual Presentation 
and Members for their questions and hoped that the answers had clarified any pending doubts on the 
Agreement.  The Agreement formed part of Nicara gua's trade policy which, since the beginning of the 
1990's, was directed towards open and fairer mark ets and Nicaragua's integration into the global 
economy.  Trade relations between the Parties had st arted with an agreement signed in 1967, followed 
by the Partial Scope Agreement of September 1997.  At  that time, the Parties' objective was to expand 
cooperation in areas such as trade and investment and to elaborate an action plan for negotiations for a 
free trade agreement.  Negotiations on the Agreemen t, which had started in September 2004 in a spirit 
of full collaboration, expressed the political willingness of both countries to achieve progressive 
liberalization of bilateral trade, to provide more lega l certainty for their investors and to establish rules 
and procedures that, aligned with the WTO princi ples, would promote trade.  The Agreement had 
been signed on 16 June 2006 and had entered into force on 1 January 2008.  It had been notified to the 
WTO on 9 July 2009 under Article XXIV.7(a) of GA TT 1994, for goods, and under Article V.7(a) of 
the GATS, for services.  Moreover, on 22 May 2008, the Parties had signed a Protocol modifying the 
Chapter on Investment, which formed an integral part  of the Agreement, and had entered into force on 
6 May 2009.  The tariff elimination programme, whic h had applied since the entry into force of the 
Agreement, would be completed over a transition period of 15 years.  As a result, 97.3% of 
Nicaragua's tariff lines would be duty-free for im ports from Chinese Taipei, which corresponded to  WT/REG267/M/1 
 Page 3 
 
 
  95.3% of the value of imports from Chinese Taipei in 2005-2007.  Only 321 lines would be excluded 
from liberalization, which represented 4.7% of imports from Chinese Taipei in 2005-2007.  For 
Nicaragua, the Agreement also provided benefits in the form of tariff rate quotas for certain products, 
such as sugar and groundnuts, which were importa nt as its export structure was mainly based on 
agricultural products.   
6. Besides trade in goods, the Agreement included provisions on technical barriers to trade;  
investment;  services;  competition policy;  and intell ectual property.  It also  provided for chapters on 
environmental protection and labour issues, whic h were based on a cooperative approach.  The 
chapters on investment and services were based on the principles of non-discrimination, local presence, mutual recognition and domestic regulation,  and established clear a nd expedited procedures 
for expropriation and compensation, performance requirements and transfer, among others.  In 
particular, the chapter on investment contemplated  an investor-State dis pute settlement mechanism 
which would make it possible to solve disputes re lated to the implementation of the chapter's 
provisions.  Both investment and cross-border trad e in services were subject to the "negative-list" 
approach, whereby the majority of sectors rema ined open except for those sectors subject to 
reservations.  In his view, this permitted an important  level of liberalization of all services sectors.  
Moreover, the Agreement had a chapter on financial services which, like the chapters on services and 
investment, was based on a non-discrimination prin ciple and provided for specific provisions on new 
financial services, treatment of certain information,  and specific commitments on cross-border trade.  
It also included an Annex listing non-conforming m easures, in accordance wi th the "negative-list" 
approach, thus achieving a high level of liberaliz ation in financial services.  He said that the 
Agreement had enabled the Parties to achieve an im portant level of liberalization of trade in services 
and investment well beyond their commitments at mu ltilateral level.  Furthermore, it would enable the 
Parties to promote trade on a solid institutional b asis, with clear and transparent rules for the 
promotion of trade and investment.  Although two years had passed since the Agreement's implementation and its positive effects had not always been felt, he trusted that they would become 
more present as bilateral trade rela tions broadened, and the Agreemen t was an excellent platform to 
achieve that goal.  
7. The representative of the United States
 recognized the work of the Secretariat and the Parties 
on the Factual Presentation.  She welcomed and commended the relatively high level of tariff 
liberalization by the Parties.  However, she pointed  out that a number of Nicaragua's top 25 exports 
would, even after full implementation of the Agre ement, still face prohibitively high tariffs into 
Chinese Taipei.  Conversely, all of Chinese Taipei's  top exports did or would enjoy duty-free access 
into Nicaragua.  She asked the Parties, with r espect to Table IV.7 on page 64 of the Factual 
Presentation, to update the Committee on when th ey intended to notify the RTAs listed as "not 
notified" in the Table. 
8. The representative of the European Union  asked the Parties to indicate whether the 
Agreement contained provisions to include produc ts excluded from liberalization, as listed in Tables 
A2.1 and A2.2 of Annex II of the Factual Presentati on.  With respect to the Questions and Replies 
document, she stressed the importance of providing join t replies by the Parties, unless questions were 
addressed to an individual party, since this was of systemic importance in terms of the process and of 
the good functioning of the Transparency Mechanism. 
9. The representative of Chinese Taipei , in response to the EU's question, said that according to 
Article 3.13 of the Agreement, the Committee on Trade in Goods would be established to, among 
other functions, provide a framework for consulta tions between the Parties on accelerating tariffs 
reduction under the Agreement.  The same procedure would be used by the Parties to consider the 
possibility of further liberalization of those pro ducts that were excluded from the Agreement.  
Regarding the questions raised by the United States, he pointed out that, based on Table A1.4 of the 
Factual Presentation on market access opportunity in  Chinese Taipei for Nicaragua's top 25 exports, WT/REG267/M/1 
Page 4  
 
  out of 57 tariff lines only eight would remain dutiable under the Agreement and from his point of 
view this percentage of liberalization was relativel y high.  With respect to non-notified RTAs, he said 
that Chinese Taipei was consulting with Guatemala to  prepare a joint notification and this RTA would 
be notified to the WTO as soon as all the preparation work was done. 
10. The representative of Nicaragua
 said that they were currently in the process of notifying their 
RTAs.  In this regard, the RTA with Panama was a very recent agreement that had entered into force 
on 21 November 2009.  
11. The Chairman  said that the consideration of the goods and services aspects of the Free Trade 
Agreement between Nicaragua and the Separate Cu stoms Territory of Taiwan, Penghu, Kinmen and 
Matsu had allowed the Committee to clarify a number of questions and oral discussion of the 
Agreement could be concluded in accordance with pa ragraph 11 of the Transparency Mechanism.  If 
any delegations wished to ask follow-up questions they were invited to forward submissions in 
writing to the Secretariat by 5 October 2010  and the Parties were asked to submit replies  in writing by 
no later than 19 October 2010.  In accordance with paragraph 13 of the Transparency Mechanism all 
written submissions, as well as minutes of this m eeting would be circulated promptly, in all 
WTO official languages, and would be  made available on the WTO website. 
12. The Committee took note  of the comments made. 
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