WORLD TRADE  
ORGANIZATION  WT/REG212/4 
WT/REG213/4 
WT/REG214/4 
26 November 2009 
 
 (09-5945) 
Committee on Regional Trade Agreements Original:   English/ 
 Spanish 
 
  
FREE TRADE TREATY BETWEEN MEXICO AND THE NORTHERN 
TRIANGLE – EL SALVADOR, GUATEMALA AND HONDURAS 
(GOODS AND SERVICES) 
 
Questions and Replies
 
   The following communication, dated 9 November 2009, is being circulated at the request of 
the delegations of Mexico and the Northern Triangle, El Salvador, Guatemala and Honduras. 
  This document reproduces the follow-up
 questions addressed to the Parties following the 
54th Session of the CRTA and the responses submitted. 
 
_______________ 
 
 
Questions from the Delegation of the United States  
 
Goods  
 
1. On page 22 of the Factual Presentation, in Box III.1, it is unclear where the category of 
goods  with rates below MFN but higher than zero are noted.  We understand this as the 
15th category.  Is this category covered by the "other" in Table III.1? 
 Regarding this relatively technical question, the Secretariat explained that the category of 
"rates below MFN but higher than zero" was an in dependent category.  The total number of lines 
includes all of the categories, i.e. 1/, A-C12, A* and B*, EXCL and PROH, and Others.  
2. On page 23, paragraph 41 says that the base rates upon which reductions are made are 
specified in the country's tariff elimination anne x;  for Guatemala, Honduras and Mexico, the 
base rates correspond to the MFN tariff for 1998, a nd for El Salvador the MNF tariff of 1996.  
Could the Parties each confirm whether these ba se rates were different than the MFN rates in 
effect when the agreement was signed? 
 The MFN tariff applied by Mexico in 1998 was different from the MFN tariff applied the year 
the agreement was signed.  From 1999 to 2001, a nu mber of changes were made to the MFN tariffs 
applied by Mexico. 
 
 See also the reply to question 1.  WT/REG212/4 
WT/REG213/4 WT/REG214/4 
Page 2 
  
  3. On page 24, Table III.1A, for Mexico, the numbers of dutiable lines for 
El Salvador (279), Guatemala (285) and Honduras (275) do not correspond with the sums of excluded and "other" lines noted in Table III.1 on page 22.  Please explain the difference.  
 Regarding this relatively technical question, th e Secretariat explained that the difference was 
chiefly due to the fact that Table III.1 did not take account of the MFN rate, and the categories were determined solely on the basis of the applied ta riff following the negotiations, while Tables III.1A and 
III.1D took account of the lines that were already free of duty on an MFN basis in 2001.  4. On page 24, Table III.1B for El Salvador no tes that 224 lines remain dutiable.  However, 
Table III.1 on page 22 notes that 203 lines re main dutiable.  Please explain the difference.  
 See the reply to question 3. 
 
5. On page 25, Table III.1C for Guatemala no tes that 250 lines remain dutiable.  However, 
in Table III.1 on page 22, Guatemala notes 231 excluded lines and 22 "others" for a total of 
253 lines.  Please explain the difference.  
 See the reply to question 3. 
 
6. On page 26, Table III.1D for Honduras not es that 436 lines remain dutiable.  However, 
in Table III.1, Honduras notes 408 excluded lines a nd 10 "others" for a total of 418 lines.  Please 
explain the difference.  
 See the reply to question 3. 
 
7. On page 26, paragraph 46 says that, for Mexico, imports under 17 tariff lines are 
prohibited.  However, Table III.1 on page 22 notes 13 prohibited items.  Could Mexico please 
explain?  Is Mexico allowing trade in fo ur of the 17 products?  If so, which ones?  
 Mexico's tariff (MFN) provides for the prohibition  of imports of 17 tariff items (see annex).  
Thus, the reference to 13 items is incorrect.   See also Table I in annex to document WT/REG212/3-WT/REG213/3-WT/REG214/3 containing replies. 
 
Services
 
 
Scope and Definitions  
 
8. On page 53 of the Factual Presentation, pa ragraph 106 notes that, pursuant to the terms 
of the Treaty, Parties were to negotiate commit ments and reservations with respect to financial 
services by June 2003;  yet as of February 2009 agreement on these elements had not been 
reached.  
 Have Parties established a new timeline for the completion of negotiations on financial 
services commitments and reservations?  Has any progress in this area been achieved since 
February 2009?  
 
 The Parties are currently engaged in negotiati ons on financial services reservations, and no 
deadline has been establishe d for their completion.  WT/REG212/4 
 WT/REG213/4 
 WT/REG214/4 
 Page 3 
  
   
Denial of Benefits
 
 
9. On page 54 of the Factual Presentation, pa ragraph 108 notes that Parties may deny the 
benefits of the Treaty to service suppliers that have no substantial business activities in the 
territory of another Party, and that are owne d or controlled by persons of a non-Party, 
"in accordance/conformity with national legislation of that Party ". 
 Could Parties describe the intended purpose of this qualification ("in accordance with 
national legislation")?  What areas of "national legislation" does this qualification refer to?  To 
which part of the analysis would this legislatio n be relevant – analysis of the ownership/control 
of an enterprise, or analysis of substantial business activity?  
 
 The phrase "in accordance with national legislati on" establishes the manner in which it will be 
determined whether a service supplier is owned or c ontrolled by persons of a non-Party.  It is this 
legislation that also regulates participation of foreign capital in an economic sector or sub-sector within the respective jurisdictions of the Parties.  
10. Also on page 54 of the Factual Presenta tion, paragraph 109 notes that the Parties may 
deny the benefits of Chapter XI to a financia l institution or financial services supplier of 
another Party if it finds that the supplier is not engaged in "important" business activity in the 
territory of a Party, or
 the supplier owned or controlled by persons of a non-Party. 
(a) Could Parties describe what they understand as "important" business activities?  
How do Parties intend this term to be  different from "substantive" business 
activities (as provided for in Art. V.6. of the GATS) or "substantial" business 
activities, as provided for elsewhere in their Treaty (e.g., Art. 10-13). 
 
 For the purposes of the Treaty, the term "im portant business activities" and "substantive" or 
"substantial business activities" are equivalent to each  other in their respective spheres of application. 
 
(b) The Secretariat's Report suggests that , under Art. 11-16 of the Treaty, Parties 
may deny the benefits of Chapter XI if either of two conditions is met:  
(1) a supplier is found to not be engaged in "important" business activities in the territory of a Party, or (2) a supplier is owned or controlled by persons of a non-Party.  Can Parties confirm that this is an accurate representation? 
  What the Secretariat's Report says is co rrect, provided notification is provided and 
consultations held in conformity with  Articles 11-10 and 11-12 of the Treaty. 
 
Market Access
 
 
11. On page 54 of the Factual Presentation, paragraph 113 notes that Parties committed 
themselves, within six months from entry into  force of the Treaty, to listing in an Annex 
(Annex V) any restrictive measures maintained by ea ch Party at the federal and/or state level.  
It further notes that Parties have since exchanged their lists of restrictive measures.  
 The Factual Presentation does not reproduce or describe the contents of Parties' 
Annex V restrictive measures.  Could Parties confirm whether this Annex had been made 
publicly available?  
 WT/REG212/4 
WT/REG213/4 WT/REG214/4 
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  As Annex V on non-discriminatory quantitative restri ctions is being negotiated by the Parties, 
it is not yet available to Members.  Liberalization Commitments
 
 
12. The Factual Presentation notes several in stances in which the Treaty commitments of 
Guatemala fall below its commitments in the GA TS, or where its sectoral restrictions exceed 
those included in its GATS schedule (e.g., paras. 141,  143).  The Report also notes that, with one 
exception, Guatemala has not committed to phasi ng out any of its Annex I reservations, and has 
scheduled a broad Annex II reservation that allows it to carve all professional services out from 
three core Treaty obligations.  
 Can Guatemala discuss the reasons for these br oad exclusions, including in areas where 
it has already undertaken GATS commitments?  
 
 Guatemala's reservations in Annex I of the Treaty pertain to different situations. 
  Four of the Annex I reservations refer to the purchase of real estate in reserved areas or on State-owned land.  These reservations essentially con cern the purchase of real estate, and have not yet 
been bound under the GATS. 
 
 Another Annex I reservation refers to the pos ting of a bond by companies legally established 
in Guatemala, in conformity with foreign laws .  This bond is only required if the company is 
established as a company incorporated abroad;  it is not required for commercial presence under other 
forms of business enterprise. 
 
 Guatemala has included in Annex I the reserva tions that apply to professional services, which 
have not been bound under the GATS.   As regards Guatemala's Anne x II reservation, it excludes professional services from national 
treatment, most favoured nation, and local presence obligations in the case of professional services 
supplied by companies incorporated abroad.  This  reservation applies to modes 2 and 3.  These 
measures have not been bound under the GATS.   As mentioned in the question, there is no timetable for phasing out these commitments, which 
remain in force under Guatemalan law. 
 
13. On page 68 of the Factual Presentation, paragraph 149 notes that Honduras has 
scheduled an Annex I reservation with respect to the Treaty's commercial presence obligations 
(Art. 10-05), for any foreign company wishing to supply services cross-border to Honduras.  
 Can Parties confirm that this Annex I re servation effectively excludes Honduras from 
the obligations of Art. 10-05 entirely? 
 
 The paragraph in question says the following:  "A local presence requirement exists for 
foreign companies wishing to supply services cross-border to Honduras … ".   This does not mean that Honduras is excluded from the local presence obligation except as 
indicated in each one of its services and investment reservations in Annex I. 
  WT/REG212/4 
 WT/REG213/4 
 WT/REG214/4 
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   This local presence obligation, mentioned in Annex I of Honduras's schedule, stems from the 
requirement that the law imposes on foreign companies whereby they must have a representative with broad powers in order to be able to do business on Honduran territory. 
 
Telecommunication Services
 
 
14. On page 73 of the Factual Presentation, pa ragraph 160 notes that, under Art. 12-03(3) of 
the Treaty, Parties are prohibited from (a) re quiring a services supplier of another Party "to 
establish, construct, acquire, lease, operate, or supply telecommunications transport networks 
or services," and (c) preventing "a privat e supplier of the other Party from using 
telecommunications networks to offer a public service." 
 Article 12-03(3) reads as follows: 
 
"3. Nothing in this Chapter shall be construed: 
  (a) To require a Party to authorize a person of the other Party to establish, construct, 
acquire, lease, operate or provide tel ecommunications networks or services; 
  (b) to require a Party, or require a Party to  compel any person, to establish, construct, 
acquire, lease, operate or provide tel ecommunications transport networks or 
telecommunications transport services not offered to the public generally; 
  (c) prevent a Party from prohibiting person s operating private networks from using their 
networks to provide public telecommunications transport networks or services to third 
persons;  or 
  (d) require a Party to compel any person enga ged in the cable or broadcast distribution of 
radio or television pr ogramming to make available its cable or broadcast facilities as a 
public telecommunications network. 
 
 A reading of the above provisions in Spanish in  no way suggests that what is meant is that 
"the parties are prohibited" , but rather, that no provision shall be construed as requiring  any party 
to …  
(a) With respect to (a) above, don't interco nnection obligations in all three Northern 
Triangle countries require all service s uppliers to interconnect their networks, 
and thus provide the service of completing calls or leasing capacity?  
 
 Owing to the above-mentioned discrepancy in  the texts, this cannot be affirmed. 
 
(b) With respect to (c) above, does this  obligation include Voice over Internet 
Protocol (VOIP)?  Would an attempt by operators to block use of their networks 
for VOIP services be inconsistent with obligations under the Treaty? 
 
Owing to the above-mentioned discrepancy in  the texts, this cannot be affirmed. WT/REG212/4 
WT/REG213/4 WT/REG214/4 
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  15. On page 74 of the Factual Presentation, paragraph 165 notes that Art. 12-09 of the 
Treaty requires Parties to ensure that all relevan t information on conditions affecting access to 
and use of public telecommunications transp ort networks and services is made publicly 
available.  
 Could Parties confirm whether the Art. 12-09 obligation includes information on 
interconnection rates, including th ose offered by mobile operators?  
 
 The obligation concerns all measures rela ting to access to public telecommunications 
networks or services taken by the re gulatory authorities of the Parties. 
  Interconnection rates are negotiated on a privat e basis by the operators, so that the Treaty 
does not clearly stipulate that the Parties are under an  obligation to publish information in that respect. 
  WT/REG212/4 
 WT/REG213/4 
 WT/REG214/4 
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  ANNEX 
 
Mexico's Tariff Elimination Programme
 
Prohibited imports  
 
 
Heading 1 Description 
03019901 Predators, in young, youth and adult states 
12119002 Marijuana (Cannabis Indica) 
13021102 Prepared for smoking 
13021902 Of marijuana (Cannabis Indica) 
28332903 Thallium sulphate 
29035903 1,2,3,4,10,10-Hexachloro-1,4,4a,5,8,8a-hexahydro-endo-endo-1,4:5,8-dimethanonaphthalene 
29035905 1,4,5,6,7,8,8-Heptachloro-3a,4,7,7a, tetrahydro-4,7-methanoindene 
29109001 1,2,3,4,10,10-Hexachloro-6,7-epoxy-1,4,4a,5,6,7,8,8a-octahydro-endo,endo-1,4:5,8- 
dimethanonaphthalene 
29251901 N-Phthalyl glutamic acid imide 
29310005 O-(2,5-dichloro-4-bromophenyl) o-methyl phenyl thiophosphonate 
29391002 Diacetylmorphine 
30034001 Preparations of Cannabis Indica  
30034002 Preparations of acetyl morp hine or its salts and derivatives 
30044001 Preparations of acetyl morp hine or its salts and derivatives 
30044002 Preparations of Cannabis Indica 
49089005 Printed in colour or black and white, put up for sale in envelopes or packages, whether or not 
containing chewing gum, candies or any other type  of article, featuring figures or illustrations 
which depict childhood in a degrading or ridiculous manner, in states that may incite violent, self-destructive or any other form of anti-social behaviour, for example "Garbage Pail Kids", 
and marked as having been printed in the USA or in any other country by "Topps Chewing Gum 
Incorporated" or by any other trading enterprise 
49119105 Printed in colour or black and white, put up for sale in envelopes or packages, whether or not 
containing chewing gum, candies or any other type  of article, featuring figures or illustrations 
which depict childhood in a degrading or ridiculous manner, in states that may incite violent, 
self-destructive or any other form of anti-social behaviour, for example "Garbage Pail Kids", 
and marked as having been printed in the USA or in any other country by "Topps Chewing Gum Incorporated" or by any other trading enterprise 
 
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