R 061635Z NOV 08
FM USMISSION GENEVA
TO SECSTATE WASHDC 7393
INFO WORLD TRADE ORGANIZATION COLLECTIVE
DEPT OF AGRICULTURE WASHINGTON DC
USDOC WASHDC

UNCLAS GENEVA 000932 
 
 
PASS USTR FOR VERONEAU, ROHDE, SHACKLEFORD 
EEB/TPP/MTAA FOR CRAFT 
USDA/FAS/ITP, MTND 
USDOC FOR ITA 
 
E.O. 12958: N/A 
TAGS: ETRD WTRO USTR
SUBJECT:  MEETING OF THE WTO COMMITTEE ON TRADE AND DEVELOPMENT, 
OCTOBER 16, 2008 
 
¶1.  SUMMARY: WTO Members held a meeting of the Committee on Trade 
and Development (CTD) on October 16, 2008, followed immediately by a 
Dedicated Session of the CTD on Regional Trade Agreements (RTAs). 
During the regular CTD meeting, the EC and Norway were again 
questioned on the implementation of their respective GSP programs by 
Brazil, India and Pakistan.  A presentation was provided by UNCTAD 
concerning the focus of its work on commodities.  Discussion of a 
proposed transparency mechanism for preferential trade agreements 
was reviewed in light of the recent circulation of the proposal by 
the proponents as a JOB document.  The notification of the Gulf 
Cooperation Council Customs Union as an Enabling Clause Agreement 
was discussed, with the United States and the EC pressing for this 
agreement to be notified under Article XXIV of GATT 1994.  In a 
dedicated session of the CTD, the United States and the EC posed 
follow-up questions to Egypt and Turkey on their Free Trade 
Agreement notified under the RTA Transparency Mechanism.  END 
SUMMARY. 
 
EC GENERALIZED SYSTEM OF PREFERENCES 
 
¶2.  Pakistan, Brazil and India repeated their concerns that the EC 
has still not adequately answered their questions, and noted 
disappointment that new questions posed at the July CTD were yet to 
be answered by the EC.  Brazil noted that they were still waiting to 
review the EC's 2007 data, and once received, they would review the 
data to formulate a bilateral request.  The EC responded that they 
had entered the last quarter of the current 3 year GSP scheme, and 
thought that all follow-up concerns had been resolved.  The EC 
distributed a new fact sheet as a room document at the meeting which 
provided internet links to information on its GSP scheme.  The EC 
added a new element related to good governance to their "GSP Plus 
Arrangement", and noted that interested countries needed to apply 
for this new scheme.  The Chair noted that he would continue 
informal consultations and that the issue will stay on the agenda 
for the next meeting. 
 
NORWAY GENERALIZED SYSTEM OF PREFERENCES 
 
¶3.  Brazil again questioned Norway's new criteria for designating 
beneficiary countries for its GSP program, noting that 
differentiation should be carefully considered in light of the 
Enabling Clause.  India noted that there are possible systemic 
issues with Norway's GSP scheme, and that they want to see a process 
that is objective and does not lead to differentiation.  Pakistan 
also noted systemic concerns, and asked for further clarification on 
why the UN population criterion is a necessary criterion for 
beneficiary eligibility.  Norway provided additional responses to 
Brazil's follow-on questions in a room document (later circulated in 
WT/COMTD/65/Add.3).  Brazil and India noted that they would review 
the new replies and engage with Norway bilaterally and may also want 
to review the issue further at the next meeting. 
 
COMMODITIES - PRESENTATION BY UNCTAD 
 
¶4.  Samuel Gayi of UNCTAD's Special Unit on Commodities provided a 
presentation on UNCATD's work program on commodities (in accordance 
with the Accra Accord).  His presentation noted that UNCTAD's 
commodities work would be carried out under three pillars: Research 
and Analysis, Intergovernmental Process, and Technical Cooperation 
(and in coordination with other international and regional actors, 
and relevant international commodity bodies).  In these three areas, 
UNCTAD would continue to play a key role in addressing the trade and 
development problems associated with the commodity economy in all 
commodity sectors - agriculture, forestry, fisheries, metals and 
minerals and oil and gas. UNCTAD would also monitor developments and 
challenges in commodity markets and address links between 
international commodity trade and national development, particularly 
with regard to poverty reduction.  UNCTAD would also enhance its 
efforts to help commodity-dependent developing countries to harness 
development gains from the current commodity boom; deal with trade 
and development problems related to commodity dependence.  He also 
noted the establishment of a new Special Unit on Commodities (SUC) 
(i.e., former Commodities Branch of the Division on Trade in Goods 
and Services), and that the SUC is under the direct responsibility 
of the Secretary General. 
 
TRANSPARENCY IN PREFERENTIAL TRADE ARRANGEMENTS (PTAs) 
 
¶5.  The Chair noted his continued consultations on transparency in 
PTAs with the proponents and interested Members and that the current 
text of the proposal was circulated (on 10/15/08) in document 
JOB(08)/103.  He recommended an open-ended informal dedicated CTD 
meeting on the draft proposal.  Brazil made a brief intervention 
explaining the history of the proposal and the proponent's support 
for transparency.  Supporting remarks were made by the United 
States, India and China as proponents of the current proposal. 
 
¶6.  The EC, Japan and Canada have participated in informal 
consultations with the proponents.  At the CTD meeting, the EC noted 
its support for transparency in both PTAs and RTAs and that this new 
mechanism would be a good compliment to the existing RTA 
Transparency Mechanism (TM).  She noted the need to discuss the form 
of the decision that will implement the PTA TM. [Note: the EC has 
noted strong opposition to the PTA TM being implemented on a 
permanent basis as long as the RTA TM is still operating on a 
provisional basis. End Note.]  The EC also expressed interest in 
reviewing a mock-up of the factual presentation that will be 
prepared by the WTO Secretariat under the PTA TM.  Japan noted the 
importance of transparency in PTAs and that it looked forward to 
continued discussions under the Chair's guidance.  Canada thanked 
the proponents for the informal consultations, and noted its support 
for the proposal. 
 
¶7.  Other countries making interventions included Barbados, Chile, 
Costa Rica, El Salvador, Mexico, Nigeria and Pakistan.  Barbados 
(possibly on the urging of the EC) noted interest in the PTA TM 
being implemented only on a provisional basis.  El Salvador noted 
interest in the scope of the proposal discussed in Section A of the 
JOB document, and an interest in seeing a mock-up of the proposed 
factual presentation.  Others noted general support for the informal 
discussions the Chair proposed. 
 
¶8.  Brazil made additional remarks noting appreciation for Member 
expressions of support.  He noted that a mock-up of the Factual 
Presentation was under development and urged Members to concentrate 
on technical aspects in future discussions. He recalled that the 
General Council decision did not foresee provisional implementation 
of the current proposal, and noted the different nature of PTAs and 
RTAs and that the proponents are taking into account the limited 
experience of the RTA TM with respect to timeframes, for example. 
The EC also made additional remarks to note that the mandate from 
the General Council does not mention a mechanism, it only foresees 
transparency.  Arrangements for implementation are currently 
contained in the JOB document, and that needs to be further 
considered in future discussions. 
 
¶9.  The Chair encouraged Members to differentiate between technical 
aspects and political aspects of the proposal as discussions moved 
forward.  He closed by noting that he needs to report to the General 
Council by December and would like to report success by that time. 
It was agreed that the proposal will be discussed again at the next 
CTD. 
 
DUTY FREE QUOTA FREE (DFQF) MARKET ACCESS 
 
¶10.  This is a standing agenda item.  Lesotho intervened on behalf 
of the LDC Group asking those developing countries which have 
implemented DFQF programs to provide information on those programs 
in a transparent manner.  He noted the LDC's hope that rules of 
origin will be simple and transparent.  He also encouraged developed 
countries to fully implement their Hong Kong obligations on DFQF. 
 
NOTIFICATION OF THE GULF COOPERATION COUNCIL (GCC) AGREEMENT 
 
¶11.  The EC and the United States reiterated their concern that the 
GCC Agreement, which is a customs union, be notified under Article 
XXIV of GATT 1994 vice the Enabling Clause.  The EC noted that there 
is a sound legal justification that should drive a Member's decision 
on how to notify an RTA and that this decision is not a simple 
preference.  She noted that Paragraph 2(c) of the Enabling Clause 
does not authorize the development of customs unions, as customs 
unions cover non-tariff barriers (NTBs).  As Members have not 
designated any NTBs under Paragraph 2(c), the Enabling Clause is not 
the appropriate mechanism for notification of a customs union.  She 
reiterated that the GCC countries should notify this agreement under 
Article XXIV of GATT 1994 and that this issue should continue to be 
discussed in the Committee on Regional Trade Agreements (CRTA).  The 
United States highlighted that it appeared that some GCC Members may 
be exceeding their WTO tariff bindings by applying the GCC common 
external tariff.  This would be inconsistent with a Member's 
obligations under GATT Article II, unless otherwise permitted under 
the GATT 1994.  It would appear, therefore, that if GCC Members seek 
to apply tariffs beyond their bindings, the GCC Agreement would need 
to be an FTA or customs union consistent with Article XXIV, and, 
accordingly, would need to be promptly notified in accordance with 
paragraph 7(a) of that Article.  The United States requested that 
the issue be added to the CRTA agenda for its November meeting. 
 
¶12.  The representative of Saudi Arabia noted that they would need 
to review the comments made but that it still believed that the GCC 
has the right to notify under the Enabling Clause, and that the 
issue should not be addressed at the CRTA meeting.  Kuwait supported 
the intervention by Saudi Arabia and noted that the issue should be 
closed.  Brazil noted that the issue raises systemic concerns, and 
that the issue should be addressed further in writing.  Brazil also 
noted past precedence for customs unions being notified under the 
Enabling Clause. 
 
¶13.  The Chair concluded that the CRTA will decide if the issue is 
discussed at its November meeting, and that the CTD will need to 
revert back to the issue at the next CTD meeting. 
 
DEDICATED SESSION ON REGIONAL TRADE AGREEMENTS:  EGYPT - TURKEY FREE 
TRADE AGREEMENT 
 
¶14.  This meeting was the first dedicated session of the CTD to 
examine an RTA under the RTA Transparency Mechanism (document 
WT/L/671).  Turkey and Egypt gave introductory remarks, noting their 
appreciation for the Secretariat preparing the Factual Presentation 
of their FTA and thanking the Members for their questions.  They 
also made general statements in support of the multilateral trading 
system and that FTAs complement the multilateral process and can 
facilitate further liberalization particularly among developing 
countries.  They provided general details on the agreement itself 
(as outlined in the Factual Presentation) and noted that the FTA has 
stimulated investment and created opportunities for local resources 
to remain competitive.  The United States and the EC posed follow-up 
questions on this FTA. 
 
¶15.  The United States requested additional information be provided 
on Turkey and Egypt's written reply to question 13 in 
WT/COMTD/RTA/1/2.  The United States asked that given Article 1.5 of 
the TBT Agreement specifically excludes from the scope of the TBT 
Agreement provisions any "SPS measure" as defined in Annex A of the 
SPS Agreement, how are Parties expected to ensure, under Article 11 
of the RTA, that their SPS measures are consistent with the rules 
and procedures of the TBT Agreement?  Egypt and Turkey replied that 
the SPS Agreement is not sufficient in scope, thus believe they also 
need to include reference to the TBT Agreement applying under this 
article of the RTA. 
 
¶16.  The United States requested additional information be provided 
on Turkey and Egypt's written reply to question 16 in 
WT/COMTD/RTA/1/2.  The United States requested further elaboration 
on how this agreement covers substantially all trade without 
agriculture being covered and how the use of diagonal cumulation 
meets Article XXIV requirements?  Egypt and Turkey replied that the 
Parties don't believe there is any threshold for "substantially all 
trade", and thus believe that the overall percentage of trade 
liberalization covered by the agreement, even with limited 
agriculture coverage, is not very low.  Also, article 10.3 of the 
RTA foresees further bilateral liberalization taking place in the 
future.  Diagonal cumulation is allowed for under the RTA and is 
compatible with the EU model, meaning the protocol of rules of 
origin is compatible with the EU system.  [Note: Egypt and Turkey 
explained after the meeting that all of the countries in the 
Euro-Med region that have FTAs among themselves and which also have 
FTAs with the EU use this form of diagonal cumulation.  Egypt and 
Turkey are not the only countries engaged in this practice in the 
Mediterranean region.  End Note.] 
 
¶17.  The EC noted that on several accounts, the coverage of this RTA 
goes beyond the simple reduction of tariffs and includes the 
coverage of NTBs.  As such, it appears this agreement would have 
warranted a notification under Article XXIV.  Egypt and Turkey 
replied that the "development dimension" of this RTA was taken into 
account when deciding how to notify it.  Nothing in Article XXIV 
prohibits notification under the Enabling Clause.  The Parties 
believe it is a privilege provided to developing countries to notify 
their RTAs under the Enabling Clause. 
 
¶18.  The Chair requested that Members provide any additional written 
questions by 23 October 2008 [Note:  The United States submitted 
written questions. End Note.]  Replies from Egypt and Turkey were to 
be submitted by 6 November 2008. 
 
 
ALLGEIER