RESTRICTED  WORLD TRADE  
ORGANIZATION  TN/RL/M/30 
22 August 2005 
 
 (05-3706) 
Negotiating Group on Rules  
  
 
SUMMARY REPORT OF THE MEETING 
HELD ON 25 JULY 2005 
 
Note by the Secretariat
 
 
 
1. The Negotiating Group on Rules ("the Group") held a formal meeting on 25 July 2005. 
A. ADOPTION OF THE AGENDA  
2. The Group adopted the following agenda: 
A. ADOPTION OF THE AGENDA ............................................................................................1  
B. REGIONAL TRADE AGREEMENTS ...................................................................................1  
C. OTHER BUSINESS ..........................................................................................................10  
 
B. REGIONAL TRADE AGREEMENTS  
3. The Chairman proposed that the Group furthe r consider the submission made by the 
Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, circulated as TN/RL/W/182, 
which had been subject to preliminary discussions at  the previous meeting.  Following that, the Group 
could concentrate on the various issues raised in  the proposals made by Australia (TN/RL/W/173 - 
TN/RL/W/173/Rev.1 in its English version - an d TN/RL/W/180) and the European Communities 
(TN/RL/W/179).  After those discussions, the Group could turn to a proposal recently submitted.  The proponent of TN/RL/W/182 expressed appreciation fo r the comments made by some delegations at 
the Group's previous meeting, despite the belated s ubmission of the document.  It was his hope that 
Participants, after some time for reflection, could at that stage provide additional inputs.  To facilitate 
that day’s discussion, his delegation had prepared  a note that contained answers to some queries 
previously raised which was made available in the r oom and would later be circulated as an official 
WTO document.  To introduce that note, he woul d explain the mandatory nature of the proposal, 
which was its most crucial element, and also summari ze replies to the other issu es.  In response to the 
view that it was unrealistic to ask Regional Trade Agreements (RTAs) parties to bind themselves in 
advance to enter into negotiations with every co untry that requested accession, he clarified the 
intention of paragraph 19 of TN/RL/W/182 as follows:   open accession would be the principle, but the 
acceding country would have to satisfy the conditi ons set out by the RTA's parties before the 
negotiations could start.  The paper duly acknowle dged that many factors were involved in the 
decision-making process of RTA negotiations, without providing any specific ranking or weight for 
each factor;  the proposal accepted that deciding on the terms of accession was the autonomous right 
of the parties.  Despite the divergent views express ed regarding the desirability of a mandatory rule;  
he hoped that this would not make Participants overlook the obligation to minimize trade distortions 
arising from RTAs.  His delegation was open to bette r options to deal with the problem of trade 
discrimination, which was growing rapidly. 
4. Turning to the claim that even  if an agreement did not exp licitly provide for accession, its 
signatories could at any time suspend, amend or re negotiate it if they concluded that another party TN/RL/M/30 
Page 2  
 
should be added, he noted that if Members c ould appreciate the positive effects of open accession, 
that should become an explicit rule.  Also, as highlig hted in the paper, there was the problem of some 
RTAs that had become closed trading blocks, with  the parties simply shutting their door to accession 
requests;  his delegation had strong doubts that such  outright rejection fitted well with the view of 
RTAs aimed at promoting the liberalization and expa nsion of global trade.  He then noted that the 
proposal mainly focused on the "consultation" st age of the RTA negotiation process, not on the 
"negotiation" stage;  it suggested adding some pro cedural rules to the WTO so that non parties would 
have the possibility to notify their interest, and RTA parties would have to consider such request in 
good faith.  That did not mean that all requests would result in formal negotiations.  RTA parties 
might decide to reject or put off a request for accession, because it made no sense in economic terms, 
or it might add too much burden to their negotiation capacity, for example.  He stressed that the paper 
did not suggest any parameter to assess such a decisi on;  it simply required that the process and results 
of the consultations be transparent.  The proponent  also concurred with some Members' views that 
RTA negotiations were complex and involved a significant give-and-take process, and that a 
mandatory accession clause might not provide the appr opriate answer to the concerns raised.  He 
stressed that the proposal did not intend to over-simplify the difficulties of entering into 
RTA negotiations, but rather to tackle the real problems piece by piece.  To illustrate how the proposal might work out compared with other po ssible solutions, he put forward the hypothetical 
example of an RTA between countries A and B enteri ng into force on 1 January 2006, and of a small 
third country (C) which competed with country B in  country A's market and this market represented 
50 per cent of its total exports.  Options open to country C were to try to persuade Members to 
eliminate or significantly reduce their tariff and non- tariff barriers in the Doha Round (or even simply 
do so voluntarily), or to request negotiating an RTA with country A, or to request accession into the 
agreement between A and B.  In either case, country C risked being rejected without due 
consideration.  The proposed procedure would oblige country A at least to give sympathetic 
consideration to the request, and would offer an opportunity to offset the trade distortions caused by 
the RTA.  He reiterated that the option of accession to the RTA between A and B was preferable 
because it reduced the need for creating new RTAs, and avoided the problem of adding more complexity to the trading system. 
5. The proponent of TN/RL/W/182 continued by sayin g that his delegation did not agree that the 
proposal fell outside the Doha mandate, since th is encouraged Members to improve the current 
RTA-related disciplines and procedures.  That being said, his delegation would be happy to work with 
other Participants to improve the proposal and find mo re practical ways of solving the real problems.  
In response to concerns expressed that handling too many requests at the same time could be 
problematic, his delegation doubted that this would happen often;  neverthele ss, the proposal did not 
require all consultations to be held within a certain deadline, thus providing flexibility to RTA  parties 
to arrange their negotiation schedule according to their capacity.  With respect to the meaning of 
"respond sympathetically" and "accord in good faith ad equate opportunities", he noted that the term 
"sympathetic consideration" was used in Ar ticles IX, XXII and XXIII of the GATT 1994 and in 
paragraph 15 of the Understanding on the Interpretation of Article XXIV of the GATT 1994 ;  his 
delegation's proposal had correctly adopted the terms and the spirit of the WTO Agreements.  He also 
noted that dispute settlement panels had in some cases made reference to the term "good faith", and 
his delegation was not aware of any Member critic izing that such interpretation had encroached 
Members’ sovereignty.  However, if a Member  had any specific concern about the term, his 
delegation was willing to hear views and work  on a compromise language.  He reiterated his 
delegation's intentions, namely that RTA partie s do not reject an accession request without any 
explanation and show good will by entering into preliminary discussions about the feasibility of 
engaging in formal negotiations;  the terms for th e accession negotiations, or the decision not to enter 
into negotiations would be agreed upon during these consultations.  Finally, referring to the question 
of the treatment of customs unions, which had been ra ised in bilateral consultations, he noted that the 
proposal intended to apply to all kinds of RTAs th at had potential trade-distortion effects, either 
customs unions or free-trade areas, and to seek a balance between the discretion of RTA parties when 
deciding upon an accession request, and the rights of non parties that their request be considered in  TN/RL/M/30 
 Page 3 
 
 
good faith.  While his delegation had observed that at  the present time such intended balance might 
not be politically feasible, he urged Participants to take more bold action for dealing seriously with the 
emerging monsters of regional trade blocks, in add ition to their efforts on procedural rules.  He 
reiterated his delegation's appreci ation for the inputs received and its readiness to accommodate 
comments to improve the proposal;  it was his dele gation's hope that the proposal would help in 
directing Members’ attention to the serious prob lem posed by RTAs that needed to be fixed. 
6. Some Participants, while generally consid ering accession clauses as a good idea, remarked 
that many RTAs contained them and that, in their absence, it was always  possible to accede to an 
RTA when the conditions warranted.  Other Partic ipants said that it did not seem that RTAs had 
clauses preventing their expansion and that the ab sence of multilateral rules did not stop accessions.  
One Participant considered that developing a ru le for accession clauses appeared superfluous, and he 
argued that the Group should not devote resources to it.   The proponent replied that the proposal had 
been prepared from the point of view of non parti es that could not accede to an RTA;  it offered a 
positive remedy to counter the negative effects of RTAs without encroaching on the sovereignty of 
RTA parties, by simply requiring them to consid er a request for accession in good faith.  Adding that 
the possibility for non-parties to r eally negotiate their accession only ex isted in a few RTAs in force, 
he stressed his delegation's view that the incr easing number of bilateral RTAs was not a positive 
development for the Multilateral Trade System (MTS). 
7. Several Participants reiterated that negotiati ng an RTA was a complex and sensitive process; 
asking a country to bind itself in advance to enter in to negotiations or even consultations with every 
country that requested accession was impractical, and raised a number of problems (e.g., vis-à-vis  
resources).  The proponent concurred that the propos al, which had been drafted from the non-parties' 
perspective, would increase the burden for RTA parti es;  however, there was a need to find a balance 
between the rights and obligations of both parties and non-parties to RTAs. 
8. In the context of discussions on the propo sed mandatory accession clause, Participants 
advanced some alternative ideas to deal with the nega tive, trade-diversionary effects created by RTAs.  
One Participant said that, as noted in the Sutherla nd Report, the best response to the concerns about 
preferential agreements was a multilaterally-agreed reduction of MFN rates, through an ambitious 
market access outcome in the Doha Round, and great er discipline of RTAs within the WTO.  A few 
Participants indicated that the most effective appr oach would be to extend RTA gains either through a 
unilateral opening of RTAs to all WTO Members (within a period left to the discretion of the parties), 
or by examining how RTA trade liberalization could be bound in the WTO.  That approach, it was 
noted, would be more preferable than increasing memb ership in existing RTAs, as the risk existed of 
larger regional groups turning into "mini-WTOs ", thus reducing the level of commitment to 
multilateralism from parties to RTAs.  The propone nt indicated his delegation's support for the 
multilateral extension of preferential concessions af ter a given time period, and concurred with the 
view that a successful conclusion of the Doha Round would alleviate the concerns of RTA non-
parties.  He noted however that his delegation' s proposal had resulted from a reflection of all these 
alternatives, keeping in mind the need to find a compromise solution that would provide a balance 
between what was feasible by WTO Members and what was practical. 
9. Some Participants noted that RTAs that conformed with WTO rules were supportive of the 
MTS and disagreed with what appeared to be the proponent's point of view that RTAs were 
trade-distortive rather than trade-creative.  The pr oponent explained that the qualification of RTAs as 
"good" or "bad" had to be made in relation to a speci fic situation;  i.e. while "high level" RTAs might 
be good for expanding intra-trade among its parties, they might be bad for non parties, as illustrated 
by the example he had provided regarding countries A, B and C. 
10. Replying to questions on whether the proposal  was for the mandatory consideration of an 
application for accession, for the mandatory consideration of the terms of accession, or simply 
amounted to a "best endeavours" clause, the proponent  referred to the first poi nt of paragraph 19 of TN/RL/M/30 
Page 4  
 
TN/RL/W/182 as a mandatory negotiating process, while points 2 and 3 dealt with procedural issues.  
The proposal did not oblige RTA parties to start ne gotiations upon receipt of a request for accession, 
nor did it detract from the parties' right to reject such a request.  The proposed WTO rules would provide non-parties with the possibility of expressing interest in acceding to an RTA, and that the RTA parties should consider and explain the reaso ns of their decision through the WTO.  The 
imposition of such transparent procedural rules would put pressure on RTA parties to consider 
seriously and in good faith any request for accession.  As to the scope of the proposal, one Participant 
asked whether the aim was that such multilate ral accession clause be incorporated in all 
WTO provisions related to RTAs (i.e. Article XX IV of the GATT 1994, Article V of the GATS and 
the Enabling Clause) or only in some of them.  The proponent saw no reason for a different treatment 
in that respect, confirming that the proposal w ould also apply to RTAs concluded among developing 
countries under the auspices of the Enabling Clause.   
11. One Participant requested the proponent to gi ve some practical examples of the problems 
faced by non-parties to RTAs that would requi re the establishment of the proposed multilateral 
accession clause.  Nothing, he said, prevented countries from writing to various RTAs requesting 
accession.  As regards the real damage that could be caused by RTAs, he argued that it was precisely 
the object of the negotiations to counter the fact th at the MTS had not been fully capable of handling 
the surge in RTAs.  With respect to RTA coverage, the negotiations aimed at raising the standards so 
that RTA negotiations were engage d only when the countries involved we re serious about it;  as to the 
neutrality aspects, negotiations were aiming at ensuri ng that once RTA negotiations were engaged, the 
countries should make sure that they minimized dama ge to non parties.  It was also indicated that 
some of the concerns raised by the propo nent were addressed in the negotiations on 
"RTAs' Transparency".  Reacting to these points, the proponent said that given that a mandatory 
accession clause did not seem feasible, his delegation had proposed a mandatory procedural rule that 
would at least impose some pressure on RTA parties to  refrain from building up closed RTAs.  As to 
the negotiations on RTA rules, his delega tion fully supported efforts being made on 
"RTAs Transparency" as a means to ensuring that RTAs conformed to WTO principles.  He also 
emphasized his delegation's support for requiring RTAs to have the highest coverage possible, despite 
the effects that this might have on non parties.  He stressed however that the proposal was presented 
against a background of lagging discussions on "RTAs'  Neutrality", and of di fficult negotiations under 
Article XXIV:6, especially for developing country Members.  One Participant wondered whether it 
would not be better to evaluate this proposal in light of what would have been achieved in the 
negotiations regarding the covera ge and neutrality aspects of the relevant WTO provisions.  The 
proponent concluded by expressing appreciation for the comments made, acknowledging that the 
proposal had presented a purist approach.  He hope d that it would help the Group to focus on the 
concerns raised, which his delegation would like to see addressed in the negotiations. 
12. Following these discussions, the Chairman invited Participants to comment on issues raised in 
the proposals made by Australia, circulated as TN/RL/W/173 (TN/RL/W/173/Rev.1 in its English 
version) and TN/RL/W/180, and the European  Communities, circulated as TN/RL/W/179. 
13. One Participant indicated that his delegation ha d a number of comments to make.  First, the 
proposal to define "substantially all trade" (SAT ) through the tariff line approach, as contained in 
TN//RL/W/173/Rev.1 and TN/RL/W/180, appeared to be facing difficulties and might take a long 
time to gain all Members' support.  His delegation w ould be prepared to give further consideration to 
that proposal on the basis of the presentation of go od justifications.  The proponent's argument that 
the fluctuation of trade flows represented a reason for not taking the trade coverage approach could 
possibly be regarded as just an indication of the difficulty that a rigid numerical benchmark accurately reflected the variant and fast moving trade status .  While his delegation favoured a SAT definition 
based on the trade flows approach, it could also s upport a combined average threshold for trade and 
tariff lines, as proposed in TN/RL/W/179, as an alte rnative and compromise solution.  It would, 
however, not appear appropriate to base such a comb ined threshold on a simple average calculation of 
figures of trade coverage and tariff line, as that would amount to compare and mingle two sets of  TN/RL/M/30 
 Page 5 
 
 
statistical figures of quite different dimensions.  Second, he noted that a numerical benchmark could 
contribute to ensuring further transparency of  RTAs;  however, as regards consistency with 
WTO rules, a more comprehensive and qualitative assessment of the RTA was needed, including the 
examination of its contribution toward enhanced wo rld trade flows, its potential impact on non parties 
and its positive effects toward further development of developing country Members.  Third, further 
consideration was also needed on the scope or defi nition of "other regulations of commerce", which 
should proceed at the same pace as discussions on th e coverage benchmark.  Fourth, he questioned the 
view that RTAs which significantly reduced trade with non-parties should be treated in the same 
manner as those that had limited negative impact on non-parties;  the Group should rather consider 
providing for differentiated approaches.  In this c ontext, he proposed that case studies be initiated on 
the economic and welfare effects of various RTAs  upon non parties and the international community, 
so as to provide for an accurate evaluation of th eir qualitative aspects.  Fifth, the Group should also 
consider RTAs' contribution toward further advanc ement of the MTS;  in particular, WTO-plus 
elements in RTAs (e.g., bilateral agreements on i nvestment) should be legitimately evaluated when 
assessing its consistency with WTO rules.  Sixth, it  was important to re-examine and streamline the 
issues discussed so far in relation to transition pe riods.  His delegation had interpreted the argument 
that a ten-year transition period applied to interim agreements to mean that the period would apply to 
the RTA as a whole, but not for individual tariff lines.  If that understanding was correct, he noted, any flexibility afforded to the transition period of individual products might depend on the interpretation of SAT:  a deviation from the transiti on period could be determined just by allowing for 
an exception from the SAT rule.  In this sense, he asked the proponent of TN/RL/W/173/Rev.1 and 
TN/RL/W/180 whether, in light of the very strict thresholds proposed therein, it would be possible 
that any product be allowed a transition period exte nding beyond ten years.  Finally, he noted his 
delegation's openness to discuss the clarification of the transition period rule and deviations from it.  
Another Participant indicated that his delegation had a number of questions for the proponent of 
TN/RL/W/179, but that these would be provided at a later stage. 
14. Given the extensive and complex nature of the comments made and questions raised, the 
Chairman indicated that discussions would be deferred to the next Group's meeting.  The Chairman then suggested that the Group consider, in a prelimin ary manner due to its late arrival, the submission 
on RTAs made by China, circulated as TN/RL/W/185. 
15. The proponent of TN/RL/W/185 noted that the ne gotiation on RTA rules had been revived in 
2005 with a number of useful submissions focusi ng on SAT.  His delegation's recently tabled 
submission set out a few comments or proposals concerning some core systemic issues in RTA rules 
negotiations based on the Doha Manda te.  He observed that RTAs played an important role in the 
promotion of economic development, and enhancem ent of economic relations and integration among 
nations and regions.  However, it had long been the case that due to the ambiguity in GATT relevant 
provisions for RTAs, Members had differed in their in terpretation and/or application of these rules.  
Recent years had witnessed a new trend, with de veloping country Members paying increasingly more 
attention to the role of RTAs in their own de velopment process, and RTAs among them were also 
growing.  The fact that economic integration in th e form of RTAs had become a core part of the 
development strategy for many developing count ry Members was an important reason why the 
Doha Ministerial Declaration required that th e developmental aspects should be taken into 
consideration in RTA rules negotiations.  The propone nt then enumerated the main elements in the 
submission.  First, RTAs, which were deemed to be  supplementary to the MTS, played an important 
role in the promotion of world economic devel opment;  however, the multilateral rules needed 
clarification and improvement.  Second, the clar ification and improvement of RTA rules should 
support the development strategy of  developing countries through regi onal integration by providing a 
supportive multilateral framework, thus faithfully reflec ting the Doha Mandate.  As to the substantive 
requirements in RTA disciplines (e.g., SAT), speci al and differential (S&D) treatment should be 
granted to the developing country Members to allo w them to enjoy a lower threshold based upon the 
principle of less-than-full reciprocity.  Third, the ve ry nature of the Enabling Clause predetermined its 
difference with Article XXIV of the GATT 1994;  RTAs concluded according to the Enabling Clause TN/RL/M/30 
Page 6  
 
should be governed by that clause.  Fourth, the te n-year transition period was an advisable timeframe; 
only developing countries could take advantage of "exceptional circumstances" and have the right to 
go beyond ten years.  Fifth, any newly clarified RTA rules should be retroactive and applicable to all 
RTAs.  He stressed that his delegation would be very happy to further discuss its submission and 
other issues concerning the clarification and improve ment of RTA rules with other Members within 
the mandate of this Negotiating Group. 
16. Participants thanked the proponent for the proposal, and indicated that they could only 
provide preliminary comments due to the late circ ulation of the submission.  Some Participants 
welcomed the references made to proposals alread y tabled, and the additional direction provided 
vis-à-vis  some of the issues raised therein. 
17. Some Participants highlighted the importance of  differentiated benchmarks as provided for in 
paragraph 9 of the proposal and others noted  their openness in providing for appropriate 
S&D treatment.  To the view that this debate shoul d be left for a later stag e, once it became clearer 
which new disciplines were going to be agreed upon,  the proponent, supported by some Participants, 
replied that consideration of S&D issues could not be separated from discussions related to the 
clarification and improvement of Article XXIV disci plines;  they should be held in parallel.  
Participants concurred that the Doha Mandate directed the Group's  attention to the developmental 
aspects of RTAs, and that these had the potential to enhance development prospects.  The point was 
however made that RTAs also needed to operate within the rules-based system of the WTO, in 
particular when involving Members accounting for an  increasingly large part of international trade, 
and that the interests of third parties had to be  safeguarded so as to minimize the trade-distortive 
effects of RTAs.  One Participant wondered whet her the proponent could provide practical ways to 
ensure that the particular situation of countries,  especially those at varied levels of economic 
development, would be taken into accoun t when phasing in commitments on RTAs.  
18. Participants acknowledged the existence of so me differences in the rules contained in 
Article XXIV of the GATT 1994 and the Enabling Clau se.  While some Participants concurred with 
the statements provided in paragra ph 7 of the proposal, others noted that such differences should not 
be extended to all issues under negotiation, and they requested the proponent to clarify its position in 
that respect.  In particular, some Participants noted that transparency requirements should apply 
equally to RTAs notified under Ar ticle XXIV and the Enabling Clause;  attention was, however, 
brought to the fact that notification and review of  Enabling Clause RTAs would be in relation to the 
provisions of the latter, and not to those of GATT Article XXIV standards.  The proponent clarified 
that his delegation's position, as expressed in paragr aph 7 of the proposal, did refer to transparency 
aspects of RTA rules.  One Participant noted that no permanent two-tiered system should exist in the 
WTO, and that Article XXIV of the GATT 1994 a nd the Enabling Clause needed to be looked at 
together, particularly given that RTAs were becoming increasingly popular.  The system being designed within these negotiations, she argued, woul d take the WTO into the future and Members 
should ensure that the basic disciplines would be impl emented over time.  In this context, concerns 
were expressed regarding the possibility that S& D treatment resulted in the lowering of all 
WTO standards for RTAs.  A few Participants noted that differentiated benchm arks should not be too 
low so as to make them meaningless.  Reacting to these comments, the proponent noted that the 
proposal for different benchmarks did not amount to a two-tier system;  rather, he highlighted that it 
simply reflected the developmental aspects of RTAs, which were an integral part of the Doha 
mandate. 
19. The proponent was asked to explain how th e overall position regarding S&D treatment 
described in paragraphs 4 and 5 of the proposal woul d be translated in practice in the negotiations.  
Additional information was requested  regarding "sensitive sector", in particular on how to define it, 
and on the meaning of "endurance costs".  As to th e "adjustment costs", one Participant agreed that 
these might differ, in particular when RTA parties were at different stages of economic development; 
he remarked, however, that the costs should be handled through mechanisms such as phasing in  TN/RL/M/30 
 Page 7 
 
 
commitments over an appropriate period of time ra ther than through exclusion from liberalization, 
since the latter would not lead to reform and hen ce the economic benefits that could be accrued would 
not be realised.  Clarifications were also requested vis-à-vis  the proposed less-than-full-reciprocity, in 
particular the scope and type of substantive RTA disciplines it would encompass;  whether it would 
apply only to North-South RTAs or also to Sout h-South RTAs;  and whether that would not imply 
that, in the negotiation of North-South RTAs, de veloping countries would be inclined to offer 
significantly less market access concessions that thei r developed counterparts.  The proponent replied 
that less-than-full-reciprocity applied with respect  to different benchmarks , transition periods and 
review systems, and to both North-South and South-South RTAs. 
20. The proponent was asked whether his delegation had in mind any set values for the 
benchmarks and whether these were to be of equa l weight and were to sit side by side.  One 
Participant wondered whether the margin of 10 per cent proposed at the last meeting for 
differentiating between develope d and developing RTA parties vis-à-vis  SAT was still valid.  The 
proponent reaffirmed the 10 per cent margin proposal, while noting that precise figures should be further discussed on the basis of the study suggested in paragraph 10 of the submission.  Some 
Participants welcomed the proponent's support fo r a SAT definition encompassing both trade flows 
and tariff lines, while remarking that thereof the two sets of figures could be combined remained 
unclear.  The proponent confirmed his delegation's support for a SAT definition based on both trade 
flows and tariff lines, possibly supplemented by qu alitative benchmarks.  One Participant observed 
that the proposal would entail the coexistence of three sets of SAT rules, namely those applying to 
RTAs fully under Article XXIV of the GATT 1994, those applying to RTAs less than fully under 
Article XXIV, and those for Enabling Clause RTAs.  In  reply to his request to clarify when the second 
and third rules would apply, the proponent said that his delegation was of the view that at that time 
consensus could be reached on the two following prin ciples:  that developed country Members should 
be subject to stricter benchmarks, and that a margin should exist to reflect S&D treatment for 
developing country Members since a "one-fits-all" approach was not appropriate. 
21. Some Participants expressed support for the idea of the Secretariat making an analysis of 
trade volume and tariff line coverage in all notified RTAs, but a few cautioned that this might not be 
easy because of the difficulty of identifying the number of tariff lines covered in RTAs.  One 
Participant said that the Secretariat should mere ly collect the data and the analysis be done by 
Members;  he noted that it would be difficult for the Secretariat to analyse the reasons for 
RTA-specific coverage, given the secret nature of RTA negotiations.  The point was also made that 
the objectives of the Doha negotiations should not be to simply codify existing practice or take the 
lowest common denominator, but rather to strengt hen and clarify RTA disciplines.  In addition, 
recalling a similar study previously made by the Secret ariat, some Participants viewed an extension of 
that study to RTAs notified under the Enabling Clause as an interesting plus.  A representative of the 
Secretariat clarified that the study referred to had been distributed on 5 April 2002 as WT/REG/W/46 
(Coverage, Liberalization Process and Transitional Provisions in RTAs );  it had been one of the 
horizontal studies prepared by the Secretariat in th e context of the work on systemic issues carried out 
in the Committee on Regional Trade Agreements.  Noting that due to, in particular, the lack of data, 
that study had only partially encompassed all RTAs  in force by that time, she said that data 
availability might have improved since then and ar ound 50 new RTAs had been notified to the WTO.  
Reacting to the comments made, the proponent reaffirmed  that it would be useful to have that earlier 
study updated given the number of new agreements;  he acknowledged that while it might be difficult 
to collect relevant data, that was not an impossible task for the Secretariat. 
22. 
Various Participants supported the view that  ten years was an ideal phase-in period, 
expressing readiness to negotiate appropriate S&D treatment for developing country Members.  
One Participant reaffirmed its view that SAT should be achieved by the ten year period of time;  a 
longer transition period should only apply either to the percentage not covered by the SAT definition, 
or to developing country Members (depending on th e new disciplines that would be agreed upon).  A 
few Participants reaffirmed that longer phase- in periods might be necessary to achieve as TN/RL/M/30 
Page 8  
 
comprehensive a tariff line coverage as possible.  Additional information was requested on how the 
proponent would define "exceptiona l circumstances", in particular vis-à-vis  its relationship to the 
case-by-case analysis provided for in paragraph 3 of the Understanding on the Interpretation of 
Article XXIV of the GATT 1994 , and whether the definition should be based on a list of criteria which 
had to be met in full or in part.  One Participan t expressed his delegation's concern with the proposal 
that the Group work on defining parameters for su ch "exceptional circumstances", since that only 
benefited RTA parties.  Divergent views were expressed vis-à-vis  the proposal to restrict the right to 
invoke "exceptional circumstances" to developing countries only. 
23. Some Participants supported the proponent's  proposal regarding "retroactivity". One 
Participant noted her delegation's le gal interpretation that any new pr ovision applied to all RTAs in 
force by the date of enforcement of the provision.  The point was however made by a few Participants 
that these discussions should be left for later, once th e new rules had been defined.  Some Participants 
expressed concern with the proposal;  they noted in pa rticular that a number of RTAs already in force 
might have to be renegotiated and that this might be a heavy burden for certain countries. 
24. The proponent said that further replies to ques tions and comments made would be provided at 
the Group's next meeting. 
25. One Participant, speaking on behalf of the As ia-Pacific-Caribbean (ACP) Group of countries 
that had sponsored the proposal contained in TN/RL/W/155, noted that their countries were heartened by the renewed interest and debate on the substa ntive area of RTA negotiations concerning Article 
XXIV of GATT 1994.  The importance of reaching ag reement on the clarification and improvement 
of this Article, while also taking into account  the developmental aspects of RTAs, which truly 
reflected the intentions of all their Ministers at  Doha, was paramount.  Article XXIV as it stood did 
not accurately reflect or take into meaningful c onsideration the realities of the international economy 
as related to RTAs between deve loped and developing countries, with arrangements which in many 
respects had not even been factored in during  the initial development of the GATT.  These 
arrangements were a characteristic of the new global economy;  they had promoted and could 
continue to promote liberalization of a progressive nature for developing countries.  It was important 
that the debate took into account the position of the ACP Group.  That Group of 79 countries, while 
recognizing the benefits of trade liberalization and economic openness, was also aware of the need to 
ensure that liberalization took into account the sp ecificities and constraints which the majority of 
developing countries faced.  There were critics who stated that RTAs impeded the global trade and economic order, that is the stumbling block de bate, but for the economies of the ACP Group of 
countries - which touched on three distinct regions and included LDCs;  small, vulnerable economies; 
land-locked economies;  net-food importing economie s;  and preference dependent economies - RTAs 
could assist in the attainment of their devel opment objectives while also creating new economic 
opportunities at a managed pace commensurate with their capabilities.  Article XXIV as it stood at 
present had been interpreted in a myriad of ways .  From the beginning of these negotiations, the ACP 
had taken the position, as epitomized in TN/RL/W/155, that there was an urgent need to have 
certainty in the way the provisions were interpreted, and that this certainty had to be balanced with the 
need for flexibilities for developing countries.  This  could further massage these countries` integration 
in the global economy, which was the aim of th ese negotiations, while also ensuring that their 
economies were not made worse off by this integr ation and liberalization process.  The importance 
and virtues of real and meaningful S&D treatment and flexibilities in the agreements were well known 
and accepted, and Article XXIV provided a perfect oppor tunity for this theoretical recognition to be 
practically implemented and incorporated in the discussions.  Members would recall that at the Meeting of the African Union Conference of Trade Ministers, held on 7 June 2005, specific mention had been made to the issue of asymmetry and flexibi lities related to Article XXIV and to the need for 
the agreement to be "appropriately  amended to allow for necessary S&D, less than full reciprocity 
principles and explicit flexibilities that were cons istent with symmetry, to make RTAs involving 
developing countries pro-development".  This pos ition underpinned the central thesis of the ACP  
submission of April 2004 as well as the fundame ntal aim of the Group in these negotiations.  TN/RL/M/30 
 Page 9 
 
 
26. He then continued by saying that the reco mmendations contained in the ACP submission 
remained relevant, and enumerated the concerns of  the ACP Group, stressing that it was essential that 
the deliberations on Article XXIV of the GATT 1994 took those into consideration.  First, there was a 
need for reaching agreement for greater flexibility for developing countries in terms of transitional 
periods and the degree of liberalization.  Second, recalling that the key objective of the submission 
was to bring S&D treatment into Article XXIV and ensuring that it be incorporated and applied to 
RTAs formed between developed and developing countries, he said that the core pillar of the 
submission was the introduction of S&D into the SAT re quirement in respect of duties;  it specifically 
recommended that appropriate flexibility be prov ided to developing countries in meeting the 
SAT requirement in respect of trade and product coverage, through the application of a favourable 
methodology and/or lower and/or differentiated threshold levels.  Third, there was a need to 
incorporate real S&D treatment and notions of asymmetry (in whatever form or approach) when 
determining product coverage, bei ng it the hybrid approach encompassing both number of tariff lines 
and the combined value of trade, the use of qualita tive benchmarks, or tariff lines alone.  Fourth, the 
proposal to introduce new standards as regards "h ighly traded products", as well as conversely 
"products that Members currently do not, but could tr ade, if it were not for protectionist measures'" set 
out an extremely ambitious agenda, especially when this was examined in line with some of the very 
high figures suggested as benchmarks for the elimina tion of tariff lines.  Fifth, the significance of 
rules of origin had also to be recognized, as co mplex rules of origin could greatly diminish the 
substantive benefits to be derived from RTAs fo r developing countries, specifically those in the 
ACP Group.  Sixth, with regards to "other restri ctive regulations of commerce", the ACP countries 
continued to support the need to formalize the S&D el ements, to ensure the application of a flexible 
interpretation that allowed them to apply contin gency protection measures (including safeguards) on 
intra-regional trade.  Seventh, in line with what ha d already been stated in the ACP's submission;  it 
was their belief that a transition period longer th an the existing ten years should be mandatory for 
developing countries.  Eighth, there was a need to preserve both the intention and the integrity of the 
Enabling Clause in these negotiations.   The continued discussions, and anticipated agreement, on the 
changes that needed to be made  to Article XXIV to make it mo re responsive to the realities of 
North-South RTAs were of integral importance to ACP countries, from both a systemic point of view 
and in terms of ensuring that North-South RTAs truly attained the development goals which they 
intended to. Participants had an obligation to ensure that real, meaningful and workable 
S&D provisions were negotiated into such agreemen t and that the mandate given by Ministers was 
fulfilled. 
27. One Participant remarked that the statement ma de on behalf of the ACP Group appeared to be 
a summary of earlier submissions proposing to modify Article XXIV of the GATT 1994.  She noted that her country, as well as all developing countries, wished to receive, at the end of the negotiations, 
the developmental benefits that would be agreed upon at the Doha Development Round.  
Notwithstanding, she recalled that the preferen ces granted under all the agreements linking the 
ACP countries and the European Communities sinc e 1957 (the Treaty of Rome, the Yaoundé, and 
Lomé I-IV Conventions, and the Cotonou Agreemen t) would expire on 31 December 2007 and would 
be replaced by RTAs between the European Communiti es and the ACP countries.  An analysis of the 
Cotonou Agreement and its predecessors showed th at the objective being pursued by these countries 
was to include in the WTO the rules contained in  the aforementioned agreements, in the form of 
modifications to be made to Article XXIV of  the GATT 1994.  Observing that Article XXIV 
standards were not the best ones but were already low, she considered that the S&D treatment being 
sought by the ACP Group, though it might be legitimate, warranted close scrutiny by Members;  she 
remarked that other developing countries produced the same products as the ACP countries and also 
wanted to export those products to the European  Communities.  While understanding the particular 
situation faced by these countries, as well as the importance of S&D treatment and of providing 
opportunities to all Members, she underlined that S&D provisions should a pply to all developing 
countries.  Her delegation could not support the proposed modifications to Article XXIV.  She 
explained that her delega tion's position in that respect was based  on a national study, which would be 
presented to the relevant Negotiating Groups as a working document. TN/RL/M/30 
Page 10  
 
28. Responding to these comments, one of the sp onsors of the proposal contained in 
TN/RL/W/155 took a broader view on systemic issues.  He clarified that his Group's position was that 
Article XXIV of the GATT 1994 had to be further refined and defined, a nd that S&D treatment 
needed to be integrated into the new rules, irresp ective of the kind of RTAs the countries in the Group 
were parties to.  Another Participant referred to a number of RTAs in force that included 
S&D provisions in the form of asymmetries;  in that  context, he did not understand why reference had 
been made earlier to a particular agreement.  He noted that providing for a de facto flexibility was a 
practice in the negotiation of RTAs, either vis-à-vis  coverage, transition periods, or both.  It was his 
understanding that the proposal in TN/RL/W/155 aime d at providing for a recognition of the use of 
that de facto flexibility, and that negotiations should clarify to what extent this could be incorporated 
in the new rules and be properly reflected in Members' practices, while going beyond the lowest 
common denominator. 
29. The Chairman invited Participants to indicate wh ether their delegations were in the process of 
elaborating specific proposals on any systemic issu e, and when they foresaw that these would be 
made available to the Group.  That, he noted, would help the Group to have a clearer idea of the work 
ahead and to better programme it.  No Participant took the floor. 
30. The Group held an informal debate on the basi s of an informal checklist by the Chairman, 
entitled Notes on "Subsequent notification and reporting" .  At the end of the informal discussions, the 
Group reverted back to formal mode. 
C. O
THER BUSINESS  
31. The Chairman shared his views on how to adva nce RTA discussions for the remainder of the 
year.  As he had indicated in his recent report to  the Trade Negotiations Committee (TNC), it was his 
intention to start a relatively intensive informal  process after the summer break.  With respect to 
"RTAs' Transparency", he would distribute in th e near future a revised version of document 
JOB(05)/63, incorporating the results of informal discussions held in the previous and that day's 
meetings.  It was his hope that this draft would serve as an appropriate basis for refining various 
points and progress towards the drafting of a negotiate d text.  On systemic issues, the Group had not 
yet been able to precisely define the universe of issu es to be further explored, despite the fact that a 
number of proposals were on the table and some othe rs announced.  It was his opinion that the Group 
could arrive in Hong Kong with a clear idea on the scope and the main parame ters of the negotiations 
on these issues.  For that, it was important that w ithin the next months the Group identify, on an 
ongoing basis, those systemic issues requiring grea ter technical discussions, to be progressively 
incorporated into the informal proc ess.  From the discussions held that day, for example, the debate 
concerning various SAT-related criteria had already provided an indication of those issues that might 
require such an analysis. 
32. He then urged Participants wishing to ela borate concrete proposals on systemic issues to 
present them to the Group as soon as possible, in orde r to facilitate the work.  He recalled that only 
two formal meetings were foreseen up to December, the last one being scheduled for 1 November, 
though, he remarked, the possibility always existed for scheduling another meeting after that date, if 
necessary.  In sum, he proposed that by Septembe r the Group engage into an informal process on the 
basis of what he had just indicated, in parallel to the Group's formal meetings, and noted that a specific proposal on that would be distributed soon after that meeting by fax. 
33. One Participant thanked the Chairman for the report made to the TNC, which represented a 
very fair assessment of the Group's work.  He welcom ed the distribution of a new transparency text.  
With respect to systemic issues, he concurred th at time had come for a more informal work and 
requested further clarification on how this more deta iled analysis would be organized.  His delegation 
would be happy to provide further inputs into its or iginal proposal circulated in TN/RL/W/179;  that 
would however require a different format for discussi ons in the one being used at present.  Additional  TN/RL/M/30 
 Page 11 
 
 
inputs (e.g., on quantitative benchmar ks for SAT) could be provided so that fruitful, more technical 
discussions take place.   
34. The Chairman noted the very little time ahead be fore the Ministerial in December.  It was 
clear that Participants wanted to continue  consultations on the proposals circulated as 
TN/RL/W/173/Rev.1, TN/RL/W/179 and TN/RL/W/180.  He highlighted the need that the informal 
process starting immediately after the summer break be of a real interactive nature, so as to favour a 
more in-depth exchange of views on specific system ic issues and help building a consensus regarding 
the universe of issues for Hong Kong.  He further indicated that he was open to having bilateral 
consultations with any Participant that so wished. 
__________