Proposal for a Council Decision on a Community Position concerning the decision by the WTO General Council to apply provisionally the Transparency Mechanism for Regional Trade Agreements
Date: 2006-10-31
Institutions: European Commission
Subjects: World Trade Organisation, developing countries, international negotiations, regional aid, the EU's international role, trade agreement

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 31.10.2006 
COM(2006) 644 final 

2006/0212 (ACC) 

Proposal for a 

COUNCIL DECISION 

On a Community Position concerning the decision by the WTO General Council to 
apply provisionally the Transparency Mechanism for Regional Trade Agreements 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

As  part  of  the  Doha  Development  Agenda  (DDA),  negotiations  are  underway  aimed  at 
clarifying and improving current WTO rules for Regional Trade Agreements (RTAs). These 
rules-RTA  negotiations,  in  which  the  Community  has  taken  an  active  role,  consist  of  two 
pillars: substantive disciplines and transparency procedures. 

With  respect  to  RTA  transparency,  our  objectives  and  position  reflect  the  importance  we 
attach  to  inter  alia:  (1)  being  aware  of  key  RTA  developments  around  the  globe;  (2)  being 
able  to  predict  and  assess  the  ways  other  members’  RTAs  may  influence  our  exports  and 
investment; and (3) ensuring better functioning of WTO in the oversight and review of RTAs, 
especially poor quality RTAs among developing countries. The current WTO procedures for 
RTAs have, to date, failed on all these accounts and especially in the case of RTAs between 
developing countries. 

The  negotiations  on  RTA  transparency  are  relatively  uncontroversial  and,  hence,  recorded 
good progress for the last two years. Reflecting this, the Sixth WTO Ministerial Conference, 
(Hong Kong, December 2005) instructed the Negotiating Group on Rules-RTAs to work for a 
provisional decision on the Transparency Mechanism for Regional Trade Agreements by 30 
April 2006. On 29 June 2006 negotiators were indeed able to reach consensus on a draft text 
for a RTA Transparency Mechanism, which was subsequently formally agreed at the meeting 
of the Negotiating Group on Rules on 10 July 2006. The EC strongly supported the final text 
of the Mechanism. The 133 Committee has been regularly consulted during the negotiations 
and all Member States have expressed support for the text referred to above. 

The RTA Transparency Mechanism implies the establishment of one uniform procedure for 
notifications and reviews, based on factual reports by the WTO Secretariat, of all RTAs. As 
before,  the  Committee  on  Regional  Trade  Agreements  will  conduct  the  review  of  RTAs 
falling under Article XXIV of General Agreement on Tariffs and Trade (GATT) and Article 
V  of  the  General  Agreement  on  Trade  in  Services  (GATS).  The  Committee  on  Trade  and 
Development will continue to conduct the review of RTAs falling under the Enabling Clause 
(trade  arrangements  between  developing  countries)  but,  with  a  view  to  ensuring  uniform 
methods and treatment, this  will be carried out by a dedicated session of the Committee on 
Trade  and  Development  to  be  serviced  by  the  section  in  the  WTO  Secretariat  in  charge  of 
RTAs. The draft text also envisages the provision by the WTO Secretariat of technical support 
to  developing  country  Members,  and  especially 
the 
implementation of the Transparency Mechanism. 

least-developed  countries, 

in 

Thereby,  the  final  deal  largely  fulfils  long-standing  EC  priorities  and  objectives  on  RTA 
transparency.  It  addresses  most,  if  not  all,  current  ambiguities  and  loopholes  in  the  system, 
while  limiting  the  administrative  burden  for  WTO  Members.  It  reinforces  the  capacity  and 
role  of  the  WTO  to  oversee  RTA  developments  worldwide.  The  draft  Transparency 
Mechanism is a major step forward in clarity and transparency of RTAs between developing 
countries, which have been subject to a rather exclusive and opaque procedural treatment for 
the last 30 years under the Enabling Clause.  

The  Mechanism  deals  exclusively  with  the  ways  RTAs  are  inter  alia  notified  and  factually 
examined in the WTO. It has no implications on the substantive WTO disciplines for RTAs, 
nor on WTO Members' RTAs.  

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It  is  now  expected  that  the  Transparency  Mechanism  will  be  formally  adopted,  on  a 
provisional  basis,  by  the  General  Council  of  the  WTO  on  [10  October  2006].  The 
Transparency  Mechanism  is  to  be  applied  immediately  on  a  “test  basis”.  Members  are  to 
review,  and  if  necessary  modify,  this  provisional  decision,  and  replace  it  by  a  permanent 
mechanism adopted as part of the overall results of the Doha Round.  

In view of the current suspension of the DDA, adoption by the General Council of a decision 
on  the  RTA  Transparency  Mechanism  would  send  a  strong,  positive  signal  on  WTO 
Members' continuous commitment to the multilateral trading system. 

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2006/0212 (ACC) 

Proposal for a 

COUNCIL DECISION 

On a Community Position concerning the decision by the WTO General Council to 
apply provisionally the Transparency Mechanism for Regional Trade Agreements 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, and in particular Article 
133 in conjunction with the second subparagraph of Article 300 (2) thereof, 

Having regard to the proposal from the Commission1, 

Whereas: 

(1)  WTO Members agreed at the Fourth WTO Ministerial Conference (Doha, November 
2001) to conduct negotiations aimed, inter alia, at clarifying and improving disciplines 
and procedures applying to Regional Trade Agreements, 

(2) 

(3) 

(4) 

(5) 

Regional  Trade  Agreements  have  greatly  increased  in  number  and  have  become  an 
important element in WTO Members' trade policies and developmental strategies, 

Enhancing transparency on Regional Trade Agreements and their effects is of systemic 
interest and will be of benefit to all WTO Members, 

The Sixth WTO Ministerial Conference (Hong Kong, December 2005) instructed the 
WTO  Negotiating  Group  on  Rules  to  work  for  a  provisional  decision  on  the 
Transparency Mechanism for Regional Trade Agreements by 30 April 2006, 

In  the  negotiations  pursued  under  the  terms  of  the  Doha  Ministerial  Declaration,  in 
accordance  with  paragraph  47  of  that  Declaration,  agreements  reached  at  an  early 
stage may be implemented on a provisional basis, 

HAS ADOPTED THIS DECISION: 

Article 1 

The  position  of  the  European  Community  in  the  General  Council  of  the  World  Trade 
Organisation  with  regard  to  the  Transparency  Mechanism  for  Regional  Trade  Agreements 
attached  to  this  decision  is  to  approve  its  provisional  application.  This  position  shall  be 
expressed by the Commission. 

1 

OJ C […], […], p. […]. 

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Article 2 

This Decision is addressed to the Member States. 

Done at Brussels, […] 

For the Council 
The President 
[…] 

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TRANSPARENCY MECHANISM FOR REGIONAL TRADE AGREEMENTS 

The General Council, 

Having  regard  to  paragraph  1  of  Article  IX  of  the  Marrakesh  Agreement 

Establishing the World Trade Organization ("WTO Agreement"); 

Conducting  the  functions  of  the  Ministerial  Conference  in  the  interval  between 

meetings pursuant to paragraph 2 of Article IV of the WTO Agreement; 

Noting  that  trade  agreements  of  a  mutually  preferential  nature  ("regional  trade 
agreements"  or  "RTAs")  have  greatly  increased  in  number  and  have  become  an  important 
element in Members' trade policies and developmental strategies; 

Convinced  that  enhancing  transparency  in,  and  understanding  of,  RTAs  and  their 

effects is of systemic interest and will be of benefit to all Members; 

Having  regard  also  to  the  transparency  provisions  of  Article  XXIV  of  GATT  1994, 
the  Understanding  on  the  Interpretation  of  Article  XXIV  of  GATT  1994  ("GATT 
Understanding"),  Article  V  of  GATS  and  the  1979  Decision  on  Differential  and  More 
Favourable  Treatment,  Reciprocity  and  Fuller  Participation  of  Developing  Countries 
("Enabling Clause"); 

Recognizing the resource and technical constraints of developing country Members; 

Recalling  that  in  the  negotiations  pursued  under  the  terms  of  the  Doha  Ministerial 
Declaration2, in accordance with paragraph 47 of that Declaration, agreements reached at an 
early stage may be implemented on a provisional basis; 

Decides: 

A. Early Announcement 

1. 

Without  prejudging  the  substance  and  the  timing  of  the  notification  required  under 
Article XXIV of the GATT 1994, Article V of the GATS or the Enabling Clause, nor 
affecting Members' rights and obligations under the WTO agreements in any way: 

(a)  Members participating in new negotiations aimed at the conclusion of an RTA 

shall endeavour to so inform the WTO. 

(b)  Members parties to a newly signed RTA shall convey to the WTO, in so far as 
and when it is publicly available, information on the RTA, including its official 
name,  scope  and  date  of  signature,  any  foreseen  timetable  for  its  entry  into 
force  or  provisional  application,  relevant  contact  points  and/or  website 
addresses, and any other relevant unrestricted information. 

2. 

The  information  referred  to  in  paragraph  1  above  is  to  be  forwarded  to  the  WTO 
Secretariat,  which  will  post  it  on  the  WTO  website  and  will  periodically  provide 
Members with a synopsis of the communications received. 

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WT/MIN(01)/DEC/1 

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3. 

4. 

5. 

6. 

B. Notification 

The required notification of an RTA by Members that are party to it shall take place 
as  early  as  possible.  As  a  rule,  it  will  occur  no  later  than  directly  following  the 
parties' ratification of the RTA or any party's decision on application of the relevant 
parts  of  an  agreement,  and  before  the  application  of  preferential  treatment  between 
the parties. 

In  notifying  their  RTA,  the  parties  shall  specify  under  which  provision(s)  of  the 
WTO agreements it is notified. They will also provide the full text of the RTA (or 
those  parts  they  have  decided  to  apply)  and  any  related  schedules,  annexes  and 
protocols,  in  one  of  the  WTO  official  languages;  if  available,  these  shall  also  be 
submitted  in  an  electronically  exploitable  format.  Reference  to  related  official 
Internet links shall also be supplied. 

C. Procedures to Enhance Transparency 

Upon notification, and without affecting Members'  rights  and  obligations  under  the 
WTO agreements under which it has been notified, the RTA shall be considered by 
Members under the procedures established in paragraphs 6 to 13 below. 

The consideration by Members of a notified RTA shall be normally concluded in a 
period not exceeding one year after the date of notification. A precise timetable for 
the consideration of the RTA shall be drawn by the WTO Secretariat in consultation 
with the parties at the time of the notification. 

7. 

To assist Members in their consideration of a notified RTA: 

(a) 

(b) 

the parties shall make available to the WTO Secretariat data as specified in the 
Annex, if possible in an electronically exploitable format; and 

the WTO Secretariat, on its own responsibility and in full consultation with the 
parties, shall prepare a factual presentation of the RTA. 

The  data  referred  to  in  paragraph  7(a)  shall  be  made  available  as  soon  as  possible. 
Normally,  the  timing  of  the  data  submission  shall  not  exceed  ten  weeks  –  or  20 
weeks  in  the  case  of  RTAs  involving  only  developing  countries  –  after  the  date  of 
notification of the agreement. 

The factual presentation provided for in paragraph 7(b) shall be primarily based on 
the information provided by the parties; if necessary, the WTO Secretariat may also 
use data available from other sources, taking into account the views of the parties in 
furtherance  of  factual  accuracy.  In  preparing  the  factual  presentation,  the  WTO 
Secretariat shall refrain from any value judgement. 

The  WTO  Secretariat's  factual  presentation  shall  not  be  used  as  a  basis  for  dispute 
settlement procedures or to create new rights and obligations for Members. 

As  a  rule,  a  single  formal  meeting  will  be  devoted  to  consider  each  notified  RTA; 
any additional exchange of information should take place in written form. 

8. 

9. 

10. 

11. 

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12. 

13. 

14. 

15. 

16. 

17. 

18. 

The  WTO  Secretariat's  factual  presentation,  as  well  as  any  additional  information 
submitted  by  the  parties,  shall  be  circulated  in  all  WTO  official  languages  not  less 
than eight weeks in advance of the meeting devoted to the consideration of the RTA. 
Members'  written  questions  or  comments  on  the  RTA  under  consideration  shall  be 
transmitted to the parties through the WTO Secretariat at least four weeks before the 
corresponding  meeting;  they  shall  be  distributed,  together  with  replies,  to  all 
Members at least three working days before the corresponding meeting. 

All written material submitted, as well as the minutes of the meeting devoted to the 
consideration of a notified agreement will be promptly circulated in all WTO official 
languages and made available on the WTO website. 

D. Subsequent Notification and Reporting 

The required notification of changes affecting the implementation of an RTA, or the 
operation of an already implemented RTA, shall take place as soon as possible after 
the  changes  occur.  Changes  to  be  notified  include,  inter  alia,  modifications  to  the 
preferential  treatment  between  the  parties  and  to  the  RTA's  disciplines. The  parties 
shall provide a summary of the changes made, as well as any related texts, schedules, 
annexes  and  protocols,  in  one  of  the  WTO  official  languages  and,  if  available,  in 
electronically exploitable format.3  

At the end of the RTA's implementation period, the parties shall submit to the WTO 
a short written report on the realization of the liberalization commitments in the RTA 
as originally notified. 

Upon request, the relevant WTO body shall provide an adequate opportunity for an 
exchange of views on the communications submitted under paragraphs 14 and 15. 

The communications submitted under paragraphs 14 and 15 will be promptly made 
available on the WTO website and a synopsis will be periodically circulated by the 
WTO Secretariat to Members. 

E. Bodies Entrusted with the Implementation of the Mechanism 

The  Committee  on  Regional  Trade  Agreements  ("CRTA")  and  the  Committee  on 
Trade  and  Development  ("CTD")  are  instructed  to  implement  this  Transparency 
Mechanism.4 The CRTA shall do so for RTAs falling under Article XXIV of GATT 
1994  and  Article  V  of  GATS,  while  the  CTD  shall  do  so  for  RTAs  falling  under 
paragraph  2(c)  of  the  Enabling  Clause.  For  purposes  of  performing  the  functions 
established under this Mechanism, the CTD shall convene in dedicated session. 

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4 

In  their  notification,  Members  may  refer  to  official  Internet  links  related  to  the  agreement  where  the 
relevant information can be consulted in full, in one of the WTO official languages. 
The Director-General is invited to ensure consistency in the preparation of the WTO Secretariat factual 
presentations  for  the  different  types  of  RTAs,  taking  into  account  the  variations  in  data  provided  by 
different Members. 

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19. 

20. 

21. 

F. Technical Support for Developing Countries 

Upon  request,  the  WTO  Secretariat  shall  provide  technical  support  to  developing 
country Members, and especially least-developed countries, in the implementation of 
this Transparency Mechanism, in particular – but not limited to - with respect to the 
preparation of RTA-related data and other information to be submitted to the WTO 
Secretariat. 

G. Other Provisions 

Any  Member  may,  at  any  time,  bring  to  the  attention  of  the  relevant  WTO  body 
information on any RTA that it considers ought to have been submitted to Members 
in the framework of this Transparency Mechanism. 

The WTO Secretariat shall establish and maintain an updated electronic database on 
individual  RTAs.  This  database  shall  include  relevant  tariff  and  trade-related 
information, and give access to all written material related to announced or notified 
RTAs  available  at  the  WTO.  The  RTA  database  should  be  structured  so  as  to  be 
easily accessible to the public. 

H. Provisional Application of the Transparency Mechanism 

22. 

This Decision shall apply, on a provisional basis, to all RTAs. With respect to RTAs 
already  notified  under  the  relevant  WTO  transparency  provisions  and  in  force,  this 
Decision shall apply as follows: 

(a)  RTAs  for  which  a  working  party  report  has  been  adopted  by  the  GATT 
Council and those RTAs notified to the GATT under the Enabling Clause will 
be subject to the procedures under Sections D to G above. 

(b)  RTAs  for  which  the  CRTA  has  concluded  the  "factual  examination"  prior  to 
the  adoption  of  this  Decision  and  those  for  which  the  "factual  examination" 
will  have  been  concluded  by  31  December  2006,  and  RTAs  notified  to  the 
WTO  under  the  Enabling  Clause  will  be  subject  to  the  procedures  under 
Sections  D  to  G  above.  In  addition,  for  each  of  these  RTAs,  the  WTO 
Secretariat  shall  prepare  a  factual  abstract  presenting  the  features  of  the 
agreement. 

(c)  Any RTA notified prior to the adoption of this Decision and not referred to in 
subparagraphs (a) or (b) will be subject to the procedures under Sections C to 
G above. 

I. Reappraisal of the Mechanism 

23. 

Members  will  review,  and  if  necessary  modify,  this  Decision,  in  light  of  the 
experience  gained  from  its  provisional  operation,  and  replace  it  by  a  permanent 
mechanism  adopted  as  part  of  the  overall  results  of  the  Round,  in  accordance  with 
paragraph  47  of  the  Doha  Declaration.  Members  will  also  review  the  legal 
relationship between this Mechanism and relevant WTO provisions related to RTAs. 

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ANNEX  

Submission of Data by RTA Parties 

1. 

2. 

RTA parties shall not be expected to make available the information required below 
if  the  corresponding  data  has  already  been  submitted  to  the  Integrated  Data  Base 
(IDB),5 or has otherwise been provided to the Secretariat in an adequate format.6 

For  the  goods  aspects  in  RTAs,  the  parties  shall  submit  the  following  data,  at  the 
tariff-line level:7  

(a)  Tariff concessions under the agreement: 

(i) 

a full listing of each party's preferential duties applied in the year of entry 
into force of the agreement; and 

(ii)  when the agreement is to be implemented by stages, a full listing of each 

party's preferential duties to be applied over the transition period. 

(b)  MFN duty rates: 

(i) 

a full tariff listing of each RTA party's MFN duties applied on the year of 
entry into force of the agreement8; and 

(ii) 

a full tariff listing of each RTA party's MFN duties applied on the year 
preceding the entry into force of the agreement. 

(c)  Where  applicable,  other  data  (e.g.,  preferential  margins,  tariff-rate  quotas, 
seasonal  restrictions,  special  safeguards  and,  if  available,  ad  valorem 
equivalents for non-ad valorem duties). 

(d)  Product-specific preferential rules of origin as defined in the agreement. 

(e) 

Import statistics, for the most recent three years preceding the notification for 
which they are available: 

(i) 

each party's imports from each of the other parties, in value; and 

(ii) 

each party's imports from the rest of the world, broken down by country 
of origin, in value. 

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6 

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8 

Trade and tariff data submissions in the context of an RTA notification can subsequently be included in 
the IDB, provided that their key features are appropriate. In this respect, see document G/MA/IDB/W/6 
(dated 15 June 2000) for the Guidelines for Supplying PC IDB Submissions and documents G/MA/115 
(dated  17  June  2002)  and  G/MA/115/Add.5  (dated  13  January  2005)  for  WTO  Policy  regarding  the 
dissemination of IDB data. 
Data  submissions  can  be  furnished  in  PC  database  formats,  spreadsheet  formats,  or  text-delimited 
formats; the use of word-processing formats should be avoided, if possible. 
References  to  "tariff-line  level"  shall  be  understood  to  mean  the  detailed  breakdown  of  the  national 
customs  nomenclature  (HS  codes  with,  for  example,  8,  10  or  more  digits).  It  is  crucial  that  all  data 
elements  supplied  use  the  same  national  customs  nomenclature  or  are  associated  with  corresponding 
conversion tables. 
In the case of a customs union, the MFN applied common external tariff. 

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3. 

4. 

For  the  services  aspects  in  RTAs,  the  parties  shall  submit  the  following  data,  if 
available, for the three most recent years preceding the notification: trade or balance 
of  payments  statistics  (by  services  sector/subsector  and  partner),  gross  domestic 
product  data  or  production  statistics  (by  services  sector/subsector),  and  relevant 
statistics  on  foreign  direct  investment  and  on  movement  of  natural  persons  (by 
country and, if possible, by services sector/subsector). 

For  RTAs  involving  only  developing  countries,  in  particular  when  these  comprise 
least-developed  countries,  the  data  requirements  specified  above  will  take  into 
account the technical constraints of the parties to the agreement. 

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