WORLD TRADE  
ORGANIZATION  WT/COMTD/66/Add.3 
5 December 2008 
 
 (08-5981) 
Committee on Trade and Development Original:   English 
  
 
GULF COOPERATION COUNCIL CUSTOMS UNION -  
SAUDI ARABIA'S NOTIFICATION (WT/COMTD/N/25) 
 
Communication from Bahrain, the Unite d Arab Emirates, Saudi Arabia, 
 
Oman, Qatar and Kuwait  
 
Addendum  
   The following communication, dated 2 December 2008, is being circulated at the request of 
the member States of the Gulf Cooperation Counc il (Bahrain, the United Arab Emirates, Saudi 
Arabia, Oman, Qatar and Kuwait). 
 
_______________ 
 
 
1. The Member States of the Gulf Cooperati on Council (GCC) thank the delegations of the 
European Communities and the United States for having submitted in writing the comments they 
made at the 16 October 2008 meeting of the Co mmittee on Trade and Development (CTD) regarding 
the notification of the GCC Customs Union to the CTD under the Enabling Clause.  
2. The following is the response of the GCC to the points made in WT/COMTD/66/Adds. 1 
and 2.  We respond below to each communication.  
Communication from the European Communities 
3. In its statement, the EC "reiterates that  paragraph 2(c) of the Enabling Clause does not 
provide the appropriate legal basis for justifying th e formation of a customs union, which includes the 
elimination of non-tariff barriers".  
4. It notes that paragraph 2(c) covers only re gional or global arrangements entered into among 
developing countries "for the mutual reduction or  elimination of tariffs, and in accordance with 
criteria or conditions which may be prescribed by the Contracting Parties, for the mutual reduction or 
elimination of non-tariff measures".  According to th e EC, "[s]ince neither the Contracting Parties nor 
the Members of the WTO so far established the criteri a and conditions applicable to the elimination of 
non-tariff measures, the Enabling Clause cannot be invoke d to justify the reduction or elimination of 
non-tariff measures on a preferential basis".  It follows , according to the EC, that "paragraph 2(c) of 
the Enabling Clause can only be invoked to jus tify those arrangements which only envisage the 
elimination and reduction of tariffs ".  In support of this proposition,  it cites the GATT Panel Report in 
US – Non-Rubber Footwear from Brazil and the Legal Note by the WTO Secretariat of 13 May 2003 
on regional trade agreements (RTAs) under the Enabling Clause. 
 5. Neither of the two authorities cited suppor ts the EC position.  The Panel Report in US – Non-
Rubber Footwear from Brazil  dealt with the circumstances  under which developed countries
 could WT/COMTD/66/Add.3 
Page 2  
 
  grant preferential treatment to de veloping countries under paragraph 2(a)
 of the Enabling Clause.1  
The Panel expressed no views on customs unions or free trade agreements (FTAs) among developing 
countries under paragraph 2(c) of the Enabling Clause.   In the present context, this Panel Report is 
simply irrelevant. 
6. The Legal Note by the WTO Secretariat similarly does not support the EC position.  
Paragraph 53(b), cited by the EC, states that "WTO  Members have not to date adopted or prescribed 
any criteria or conditions for the reduction or e limination of non-tariff measures, foreseen in the 
Enabling Clause.  It is thus an open question whether such RTAs may introduce discrimination on 
non-tariff measures …".2   Thus, it is hard to see how this re ference to an "open question" supports 
the EC position.   
7. The GCC recalls that paragraph 2(c) of  the Enabling Clause expressly provides for the 
"mutual reduction or elimination of non-tariff measures".  The Enabling Clause does not require WTO Members to prescribe criteria or conditions for the re duction or elimination of non-tariff measures, but 
merely provides for the possibility that they might do so.  The fact that they have not found it necessary to do so does not eliminate such measures from the coverage of the Enabling Clause.  GCC 
does not accept that this important provision has been nullified by the choice of Members not to 
prescribe criteria or conditions for such mutual liberalization.   
Communication from the United States 
8. The United States asserts that the Enabling Cl ause "allows for action inconsistent with GATT 
Article I (MFN) only" and that "if GCC Members seek to apply tariffs beyond their bindings, the 
GCC Agreement would need to be an FTA or cu stoms union consistent w ith Article XXIV, and, 
accordingly, would need to be promptly notified in accordance with paragraph 7(a) of that Article".  
The EC made a similar point.  The GCC would offer two comments in response. 
9. First, Legal Note by the WTO Secretar iat, referred to by the EC, stated that: 
When invoked, the relevant provisions of the Enabling Clause could be viewed as 
lex specialis  within WTO law, with respect to  RTAs on goods between developing 
countries.  Hence, it could be argued th at, even if Article XXIV of GATT 1994 
(which authorizes customs unions and free-trade areas under certain conditions) is not expressly mentioned or set aside in the first paragraph of the Enabling Clause (whereas Article I explicitly is), compliance with the provisions of the Enabling 
Clause would suffice to authorize RTAs among developing countries (otherwise 
inconsistent with Article I), even if the requirements of Article XXIV are not totally 
satisfied .
3 
                                                      
1 The Panel stated as follows:   
"…the Panel noted that a Decision of 28 November 1979, entitled 'Differential and More Favourable 
Treatment, Reciprocity and Fuller Participation of the Developing Countries", otherwise known as the 
"Enabling Clause', permits, in paragraph 2(a)  thereof, 'preferential tariff treatment accorded by 
developed contracting parties to pr oducts originating in developing countries in accordance with the 
Generalized System of Preferences ... ', notwithstanding the provisions of Article I.  It was clear that 
the Enabling Clause expressly limits the preferential treatment accorded  by developed contracting 
parties in favour of developing contracting parties under the Generalized System of Preferences to 
tariff preferences only ." 
GATT Panel Report, United States – Denial of Most-Favoured-Nation Treatment as to Non-Rubber 
Footwear from Brazil,  DS18/R, adopted 19 June 1992, BISD 39S/128. 
2 WT/COMTD/W/114, paragraph 53(b). 
3 Id, paragraph 5.  Emphasis added.  WT/COMTD/66/Add.3 
 Page 3 
 
 
   
Thus, if the Enabling Clause is indeed lex specialis , the United States and the EC should avoid 
conclusory statements about what is, or is  not, covered by this important provision. 
 10. Second, and more importantly, the Article II issu e is simply irrelevant to the issue of where a 
customs union among developing countries should be notified.  WTO Members have already agreed 
that agreements entered into unde r Article 2(c) of the Enabling Clause can be notified to the CTD.  
The December 2006 Transparency Mechanism, adopte d by the General Council, states clearly that the 
Committee on Regional Trade Agreements ( CRTA) should examine RTAs falling under GATT 
Article XXIV, while the CTD "shall do so for RT As falling under paragraph 2(c) of the Enabling 
Clause".
4  The Transparency Mechanism defines RT As as "trade agreements of a mutually 
preferential nature,"5 which would clearly encompass customs unions as well as FTAs.  Thus, as a 
matter of principle, agreements entered into unde r Article 2(c) should be examined by the CTD.  
Nothing in the Transparency Mech anism suggests that customs unions were to be treated differently 
from other RTAs, and none of the Members participa ting in the consensus to  adopt the Mechanism, 
including the United States and the EC, made such a suggestion at the time it was adopted. 
11. It was made clear in an earlier communication on behalf of the GCC6 that the GCC 
Agreement could have been notified under either  the Enabling Clause or Article XXIV, since it 
qualifies under both provisions.  The fact that it has now been notified under the Enabling Clause does not imply that it is inconsistent with Article XXIV and is without prejudice to the issue of tariff 
bindings. 
12. The Panel in EC – Tariff Preferences  noted that "the Enabling Clause is one of the most 
important instruments in the GATT and the WTO providing special and more favourable treatment for the developing countries".
7  The Panel added that "it is important  to be particularly cautious in the 
interpretation of its provisions".8  This need for "particular caution" is appropriate not only in the 
context of dispute settlement, but in WTO Committees as well.   
13. The GCC look forward to cooperating with th e CTD in its review of this Agreement. 
 
 
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4 WT/L/671, paragraph 18. 
5 Id., third preambular paragraph. 
6 WT/COMTD/66. 
7Panel Report, European Communities – Conditions for th e Granting of Tariff Preferences to 
Developing Countries , WT/DS246/R, adopted 20 April 2004, as modified by Appellate Body Report, 
WT/DS/246/AB/R, DSR 2004:III, 1009, paragraph 7.31. 
8 Id.