WORLD TRADE  
ORGANIZATION  WT/REG267/2 
21 September 2010 
 (10-4799) 
Committee on Regional Trade Agreements Original:   English 
  
 
 
FREE TRADE AGREEMENT BETW EEN NICARAGUA AND THE  
SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU,  
KINMEN AND MATSU  
 
Questions and Replies
 
   The following communication, dated 15 September 2010, is being circulated at the request of the delegations of Nicaragua and the Separate Customs Territory of Taiwan, Penghu, Kinmen and 
Matsu (hereinafter Chinese Taipei). 
  This document reproduces the questions addressed to the Parties and the responses submitted.  
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Questions from the Delegation of Japan
 
 1. Article 11.10 regulates mutual recognition of qualifications.  Annex 11.10 also indicates 
some examples on the elements for developm ent of standards and criteria for mutual 
recognition of qualifications.  Please provide your explanation on what specific professionals are 
practically implemented and have been negotia ted for the future implementation as mutual 
recognition of qualification through this agreement. 
 Currently, neither Party has made request to negotiate the mutual recognition.  However, 
when one Party raises a request on this, the other Pa rty shall respond so that both Parties can proceed 
with negotiations. 
 
2. Chapter 13 of this agreement includes "Information Service" in its scope.  In this 
regard, Japan would like to know the reason and background why the Party decide to include 
"Information Service" in this Chapter.  In addition, with regard to the definition of "Information Service" stipulated under Articl e 13.18, please indicate the origins for the 
definition.  If the definition is based on speci fic law(s) or agreement(s), please specify it (them) 
precisely. 
 Chapter 13-Telecommunication of this agreem ent is based on the Fourth Protocol Annex 
from the GATS-Telecommunication and the WTO Refere nce Paper.  Moreover, it contains additional 
elements for the interests of both Parties.  
 
 By reference to the Central American FTA (CAFTA), the term "information service" was 
included in the scope of Chapter 13 of this agreemen t.  The information service is lightly regulated so 
as to encourage market competition.  Thus, Article 13.05 stipulates conditions that neither party may enforce on suppliers of such services.  
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  Additional reply from Chinese Taipei
 
  With regard to the definition of the term "information service", the definition provided in Article 13.18 is consistent with articles of CAFTA  and does not originate from or refer to specific 
domestic laws. 
 
Additional reply from Nicaragua
 
  Besides, the footnote for Article 13.05 stipul ates that "for the purposes of applying this 
provision, each Party may, through its telecommunications regulatory body, classify which services in 
its territory are information services."  
Questions from the Delegation of the United States
 
 
3. According to Paragraph 56 on Page 21: 
 "In addition to disciplines on the administration of the quotas (Category Q), Annex 3.03 
of the Agreement also contains additional re quirement for Chinese Taipei's beef import under 
preferential treatment; essentially in relation with  information to be provided, in the form of a 
certificate, when Nicaragua 's beef products ar e exported to Chinese Taipei.  The Annex also 
contains a clarification on the classification of certain beans produced in Nicaragua." 
 
 What are the "additional requirements" fo r Chinese Taipei's beef imports under 
preferential treatment?  
 There are no additional requirements for Chinese Taipei's beef imports other than what is 
contained in paragraph 3 of A nnex 3.03 (Customs Tariff Elimination Schedule), which states:  
 
 In respect to the additional requirements for beef import under preferential treatment: 
  A certificate issued by the government of Nicaragua is required with the following information as provided in Article 3 of Annex 3.03 of the Agreement. 
 
(a) Serial number of cattle; 
(b) Farm in which cattle were born; 
(c) Feeding farm before slaughter;  and  
(d) Slaughterhouse. 
 
4. According to Table III.4, "Chinese Taipei : Tariff elimination under the Agreement, by 
HS section" on Page 21: 
 "The average final dutiable tariff for HS Section II Vegetable products (with 45 tariff 
lines remaining dutiable) is 254.4%.  The average final dutiable tariff for HS Section III Animal 
or vegetable fats and oils (with 2 tariff lines remaining dutiable) is 338.0 per cent." 
 
 Why are these average final dutiable ta riffs so high for these HS Sections? 
Reply from Chinese Taipei
 
  The reason why the average final dutiable tariffs  are so high for Section II and Section III is 
as follows:  
  WT/REG267/2 
 Page 3 
 
 
   The calculation of "the average final dutiable tariffs" only covers items which are subject to 
tariffs after the implementation period of the Agr eement.  These items are sensitive products and are 
therefore excluded from the Agreement.  This is why these average final tariffs are still as high as 
when the Agreement came into force.  
 For example, in Section II (from Chapter 7 to Ch apter 14) altogether there are 510 tariff lines.  
465 of these tariff lines will be duty free by 2022, and the remaining 45 tariff lines will still be dutiable.  Of these 45 lines, some are TRQ items, for which the out-quota rate is used for calculation.  
Some of the 45 lines are Specific Rate items, which must be calculated only as ad valorem  
equivalents (AVE).  After calculation, the averag e final dutiable tariff for these 45 items is 254.4%.  
The sensitive products under this Section include rice, peanuts, bananas, etc. 
  In respect to Section III (Chapter 15), the tota l lines are 76.  74 of these lines will be duty-free 
by 2022, and only 2 lines will still be dutiable.  Th ese 2 lines are TRQ items which will be calculated 
using the out-quota rate.  After calculation, the aver age final dutiable tariff for these 2 items is 338%.  
These 2 items are crude peanut oil and other peanut oil.  The in-quota rate under the Agreement for 
these 2 items is 0%.  Reply from Nicaragua
 
  For these HS sections, the remaining dutiable items are sensitive products and are excluded 
from the Agreement.  Therefore, the tariffs of these items will be the same in 2022 as when the 
Agreement came into force.  
5. According to the last sentence of Paragraph 2 on Page 65: 
 "At the end of the implementation period in 2022, Chinese Taipei's enterprises will face 
zero duties on 95.2% of their exports to Nicar agua; while 95.4% of nonagricultural exports 
will be duty free, 93.9% of tariffs on non- agricultural products will be eliminated." 
  It appears as though there is a typo in the la st clause as it should state: "93.9% of tariffs 
on agricultural products will be elim inated" according to the Table AI.3. 
 
 According to last sentence of Paragraph 6 on Page 67: 
  "At the end of the implementation period in 2022, Nicaraguan enterprises will face zero duties on 97.3% of their exports to Chinese Taip ei; however, while 99.2% of non-agricultural 
exports will be duty free, 87.8% of tariffs on no n-agricultural products will be eliminated." 
 
 It appears as though there is a typo in the last clause as it should state:  "87.8% of tariffs 
on agricultural products will be elim inated" according to the Table AI.3. 
 
 It indeed is a typo.  The Paragraph 2 and 6 in Annex I should read as follows: 
 
Paragraph 2 
  "At the end of the implementation period in 2022 , Chinese Taipei's enterprises will face zero 
duties on 95.2% of their exports to Nicaragua;  wh ile 95.4% of non-agricultural exports will be duty 
free, 93.9% of tariffs on agricultura l products will be eliminated." 
 
   WT/REG267/2 
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  Paragraph 6 
  "At the end of the implementation period in  2022, Nicaraguan enterprises will face zero 
duties on 97.3% of their exports to Chinese Taipei;  however, while 99.2% of non-agricultural exports 
will be duty free, 87.8% of tariffs on agri cultural products will be eliminated." 
 
6. Paragraph 125 of the Factual Presentation references Article 11.14 of the Agreement's 
Chapter on cross-border trade in services (Chapt er 11).  According to the text available on 
Chinese Taipei's official website, Article 11.14 provides that Parties shall establish procedures 
for a Party to "notify and include in its rele vant Schedule (i) amendments of measure referred 
to in Article 11.07(1) and (2); and (ii) qua ntitative restrictions in accordance with 
Article 11.05;" and procedures for "consultations  on reservations or quantitative restrictions 
for further liberalization, if any." 
 With respect to Article 11.14(a)(i), could th e Parties please describe how the obligation 
to "notify and include" amendments of non-co nforming measures and quantitative restrictions 
would work in practice?  Are the Parties req uired to amend or update their Schedules to 
Annex I and Annex II whenever they amend a meas ure that is scheduled in those annexes? 
 
 With respect to the procedures for notification and modification, Article 21.01, regarding "contact points", and Article 24.02, regard ing "amendments", should be followed. 
 
Additional reply from Chinese Taipei
 
  With respect to whether these amendments shoul d be scheduled in the Annexes, it depends on 
the nature of the amendments.  If the measure in issue is to be further non-conforming, it should be 
scheduled in the annexes.   
 
Additional reply from Nicaragua
 
  According to Chapter 21, the Parties will establish a Free Trade Commission to supervise the 
implementation of the Agreement.  Therefore,  in the event of amendments concerning non-
conforming measures and quantitative restricti ons, the Commission shall be responsible for 
establishing relevant procedures. 
 
7. With respect to Article 11.14(a)(ii), Articl e 11.05 contains a general prohibition on 
certain types of quantitative restrictions, but do es not require that these restrictions be listed. 
Rather, Article 11.07 allows that Parties may sch edule exceptions to the Article 11.05 obligation 
in their annexes of non-conforming measures.  Wh at, then, is the purpose of Article 11.14(a)(ii), 
given that Article 11.07 already permits Parties to  list measures inconsistent with Article 11.05? 
 Can the Parties please describe any procedures  for consultation on further liberalization 
that may have been established pursuant to Article 11.14(b)? 
 
Reply from Chinese Taipei
 
 
 Article 11.14(a) is related to procedures for fu rther restrictions.  Though Article 11.07 already 
permits Parties to list measures inconsistent with Article 11.05 in certain sectors, the existence of 
Article 11.04(a)(ii) is still necessary to include the s ituation when Article 11.05 is generally applied to 
all sectors instead of to certain sectors.  
 
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   The Article 11.14(b) is related to procedur es for further liberalization.  Consultation 
procedures regarding this Article should be  jointly established by the Parties. 
 Reply from Nicaragua
 
 
 Article 11.14 is a complementary regulation to  Articles 11.07 and 11.05.  In respect to the 
procedures for consultation mentioned in Article 11.14b,  it is subject to the mutual agreement of the 
Parties.  
Comment from the Delegation of the United States to the Secretariat
 
 
 "Secretariat staff appears to have made no attempt to analyze the level of Parties' 
liberalization commitments relative to spec ific commitments undertaken under the GATS. 
Notwithstanding challenges to comparing di rectly commitments made in a negative-list 
agreement to those contained in GATS schedules,  the Secretariat could at least provide a 
general analysis of differences in sectoral coverage and extent of market access, national 
treatment, and additional commitments, as it has done in past reports on agreements that 
contain services commitments based on a negative- list framework (see, for example, the Factual 
Presentation on the Free Trade Agreement be tween Mexico and the Northern Triangle, 
WT/REG212/2, WT/REG213/2, WT/REG214/2 (6  July 2009), paragraphs 127-154)." 
 
 The Secretariat takes note of the comment from the US in relation with the 
Factual Presentation on the Free Trade Agreem ent between Nicaragua and Chinese Taipei 
(WT/REG267/1).  As the United States has pointed  out, there are a number of challenges to 
comparing commitments made in a negative list of  services commitments to those contained in GATS 
Schedules;  it is also easier to conduct such an alyses for some agreements than for others.  
Nevertheless, the Secretariat recognizes  that it is useful to include such analysis in agreements with 
negative list services commitments and has been trying to do so in recent factual presentations.  It will 
continue to try and improve its analysis in factual presentations, especially in the area of services, and 
to take Members' comments into account in its work.  
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