. /.   WORLD TRADE  
ORGANIZATION  WT/COMTD/66/Add.2 
25 November 2008 
 
 (08-5792) 
Committee on Trade and Development Original:   English 
  
 
GULF COOPERATION COUNCIL CUSTOMS UNION -  
SAUDI ARABIA'S NOTIFICATION (WT/COMTD/N/25) 
 
Communication from the European Communities
 
 
Addendum  
   The following communication, dated 24 November 2008, is being circulated at the request of 
the Delegation of the European Communities. 
 
_______________ 
 
 
AS REQUESTED BY SAUDI ARABIA, THE EUROPEAN COMMUNITIES SUBMITS IN 
WRITING ITS ORAL COMMENTS RAISED AT THE MEETING OF 16 OCTOBER 2008 
 OF THE COMMITTEE ON TRADE AND DEVELOPMENT 
  1. The European Communities (EC) thanks Saudi Arabia for the comments provided, on behalf 
of the Gulf Cooperation Council (GCC) Member s, and set out in WT/COMTD/66, dated 
18 July 2008. 
2. In the light of these comments, the EC reiterate s its concerns regarding the proposed change 
of notification status of the GCC Customs Union, wh ich have already been raised in the meeting of 
the Committee on Regional Trade Agreements (CRTA)  of 21-22 April 2008, the Committee on Trade 
and Development (CTD) of 5 May 2008 and 15 July 2008, and the Trade Policy Review of Oman on 
25 June 2008.  
3. The EC would like to underline that the possi bility to notify an RTA under one particular 
provision, be it Article XXIV GATT 1994 or paragra ph 4(a) of the Enabling Clause, cannot be based 
merely on a Member's preference to do so, but requires a sound legal justification.  
4. In its July's communication, Saudi Arabia, on behalf of GCC Members, indicated that the 
GCC Customs Union qualifies under both Article XXIV GATT and the Enabling Cl ause.  At the same 
time, Saudi Arabia confirms that the GCC Cu stoms Union "establishes a customs union that 
eliminates all tariff and non-tariff barriers".  In re sponse to this statement,  the EC reiterates that 
paragraph 2(c) of the Enabling Clause does not prov ide the appropriate legal basis for justifying the 
formation of a customs union, which includes the elimination of non-tariff barriers. 
5. In the EC's view, paragraph 2(c) of the En abling Clause covers only regional or global 
arrangements entered into amongst less-developed contracting parti es "for the mutual reduction or 
elimination of tariffs, and in accordance with crit eria or conditions which may be prescribed by the 
Contracting Parties, for the mutual reduction or elim ination of non-tariff measures".  Since neither the 
Contracting Parties nor the Members of the WT O so far established the criteria and conditions WT/COMTD/66/Add.2 
Page 2  
 
  applicable to the elimination of non-tariff measure s, the Enabling Clause cannot be invoked to justify 
the reduction or elimination of non-tariff meas ures on a preferential basis.  Consequently, 
paragraph 2(c) of the Enabling Clause can only be  invoked to justify those arrangements which only 
envisage the elimination and reduction of tariffs.  In this context, Saudi Arabia may wish to refer to 
the GATT Panel Report in US – Rubber Footwear from Brazil
1 and the Legal Note by the WTO 
Secretariat of 13 May 2003 on Regional Trade Arrangements under the Enabling Clause.2  
6. In the event that the GCC Customs Union internally eliminates restrictions on importation or 
exportation that fall under Article XI:1 of the GA TT 1994, such a preferential liberalisation would 
depart from most-favoured-nation treatment not only in the sense of Article I:1, but also Article XIII:1 
of the GATT 1994.  The Enabling Clause, however, in accordance with its paragraph 1, is an 
exception3 from Article I:1 of the GATT 1994 only.   
7. Furthermore, the EC would like to stress that any Customs Union provides for the application 
of a common external tariff, as is the case also of the GCC Customs Union, and as is required under Article XXIV:8(a)(ii) of the GATT 1994.  If, as th e EC understands is also case of the GCC, the 
harmonization of external tariffs implies that the co mmon external tariff is set, for certain products, at 
a level above the tariff bindings of certain memb ers of the customs union,  those members would 
breach their WTO obligations under Article II: 1 of the GATT 1994. Article XXIV:6 of the 
GATT 1994 sets out specific provisions allowing the renegotiation of such bindings (by way of compensatory adjustments and with due account to be taken of the cumulative increase and decrease 
of tariffs by all Parties).  Without recourse to such adjustment, the above-mentioned WTO-breaches 
would persist.  
8. Based on the above, the EC believes that the En abling Clause does not provide an appropriate 
and sufficient legal basis for the formation of the GCC Customs Union.  Accordingly, this customs 
union should continue to be notified under Article XXIV, and the EC urges GCC members to reconsider the proposal of a change of notification. 
9. In any event, the EC considers that further discussions should take place in the CRTA, since 
that is the natural forum for discussing an agreement which has been originally notified under 
Article XXIV, and which can only be  justified under such provision. 
 
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1 Which noted that "[i]t was clear that the Enabling Clause expressly limits the preferential treatment 
accorded by developed contracting par ties in favour of developing contr acting parties under the Generalized 
System of Preferences to tariff prefer ences only" (Panel Report, para. 6.15). 
2 WT/COMTD/W/114, para. 53(b).  
3 See the Appellate Body Report, EC – Tariff Preferences , para. 90.