Trade between the EU and Egypt has risen by more than 5% in the last

five years. With an average annual €10 billion of EU-Egypt bilateral trade since
2000 - and a record score of €11.5 billion in 2004 - the EU represents some 40% of
Egypt’s total trade, followed by the US (14%). Egypt ranks as the EU's 33th
largest trading partner.

BILATERAL TRADE RELATIONS

The EU is Egypt’s first trading partner, currently accounting for 42% of Egyptian
imports and 37% of Egyptian exports, with the balance of trade still in the EU's
favour. However, the EU witnessed a decreasing trend in the bilateral trade
surplus with Egypt over the last five years, due both to increasing imports (€4.1
billion in 2004) and to decreasing exports to Egypt (€7.4 billions).
Trade in goods
Egypt’s main exports to the EU in 2004 are energy (39%), textiles and clothing
(15%), agricultural products (9%), and chemicals (5%). Major imports from the EU
are power generating machinery (21%), chemicals (16%), transport equipment (16%),
and food and agricultural products (10%).
Trade in services
Services accounted for 49.8% of Egyptian GDP in 2003. Egypt exported to the EU-25
mainly travel (57.9%) and transportation (32.9%, 2003) services. It imported from
the EU notably business services (35.7%).
Foreign direct investment (FDI)
With FDI inflows to Egypt from the world stagnating over the last couple of years
at around €400 million annually - and the EU-25 accounting for 20% of Egypt’s
world inward stock in 2003 - a FDI surge was recorded in 2005 as a result of
privatisation and the new economic reforms, whereby overall FDI inflows neared €2
billions since the start of the reforms in late 2004. EU-25 direct investments to
Egypt amounted for €1 billion out of the total inward stock of €5.3 billion.
BILATERAL AGREEMENT
The European Union's policy towards the Mediterranean region as a whole is
governed by the Euro-Mediterranean Partnership, launched at the 1995 Barcelona
conference between the European Union and its 10 Mediterranean partners. The
Barcelona Process involves extending free trade across the Mediterranean region
through a network of bilateral agreements between the EU and individual
Mediterranean partners, together with free trade agreements between the partners
themselves. Besides working to foster greater overall stability in the region,
Association Agreements represent a key step in advancing bilaterally toward the
eventual goal of establishing a Euro-Mediterranean Free Trade Area by 2010.
The Association Agreement
The EU-Egypt Association Agreement was signed in Luxembourg on 25 June 2001.
Following its ratification by the Parliaments of the 15 EU Member States, the
European Parliament and the Egyptian Parliament, it came into force on 1 June
2004, replacing the 1977 Co-operation Agreement. The trade and trade-related
provisions of the Association Agreement entered into force on a provisional basis
on 1 January 2004 through an Interim Agreement in the form of an exchange of
letters.
Under the Agreement’s tariff dismantling provisions (tariff dismantling started on
1 January 2004), half of the EU industrial exports to Egypt will soon be fully
liberalised, while bilateral preferences on agriculture have significantly boosted
market access.
Mediterranean partners, including Egypt, have been invited to open negotiations on
deepening liberalization of trade in agriculture, including processed agricultural
and fisheries products. Egypt expressed its interest to be a member of the first
group of countries to start negotiations.
The Association Agreement foresees a widening of its scope to cover the right of
establishment and the liberalization of services. Services and establishment
negotiations will be launched with a first wave of interested Mediterranean
countries in early 2006. Egypt is likely to take part into such negotiations.
Institutional framework
Each Association Agreement is overseen by regular ministerial (Association
Council) and senior official (Association Committee) level meetings. The first EU-
Egypt Association Council took place in Luxembourg in June 2004. In the trade
domain, cooperation will be enhanced once a sub-committee for Industry, Trade and
Services is established (as well as other committees, in the following areas:
internal market; transport, environment and energy; research and innovation;
agriculture and BILATERAL TRADE RELATIONS
The EU is Egypt’s first trading partner, currently accounting for 42% of Egyptian
imports and 37% of Egyptian exports, with the balance of trade still in the EU's
favor. However, the EU witnessed a decreasing trend in the bilateral trade surplus
with Egypt over the last five years, due both to increasing imports (€4.1 billion
in 2004) and to decreasing exports to Egypt (€7.4 billions).

The MEDA program

Financial assistance is being restructured in light of the Association Agreement
and mainly channeled through the EU's Mediterranean program MEDA. Egypt has been
one of the largest recipients of the MEDA program, with a total funding of €1
billion since 1995. Under the MEDA II program (2000-2006), a total of €193.7
million was committed to Egypt, with the following strategic priorities:
Promoting the EU-Egypt Association Agreement/Support to the preparation of the
Neighborhood Policy
Support to the process of economic transition
Support to sustainable socio-economic development.

The new ENP framework

EU-Egypt co-operation is also pursued within the context of the new European
Neighborhood Policy. This policy aims to complement and support the commitments
taken in the Association Agreement and in the Euro med regional context. The EU
Country report on Egypt was finalized in March 2005. Following the Commission’s
Communication of March 2005, formal discussions are under way to agree an Action
Plan with Egypt defining joint priority actions in all domains, including in
trade-related areas. An agreement on the Action Plan is expected in spring.
A new financial instrument common for both the EU’s southern and eastern neighbors
will enter into force in early 2007, replacing the MEDA, TACIS and CARDS programs.
The European Neighborhood Policy Instrument - ENPI - will be endowed with €14.9
billion for 2007-2013.

SOUTH-SOUTH INTEGRATION
On 25 February 2004, Egypt signed a free trade agreement with Jordan, Morocco and
Tunisia. The Agadir Agreement, as it is known, commits the parties to removing
substantially all tariffs on trade between them and to intensifying economic
cooperation, notably in the field of harmonizing their legislation with regard to
standards and customs procedures. It will soon enter into force, once the
ratification process is completed. Egypt has also signed a free trade agreement
with Turkey in December 2005.
Egypt has signaled its intention to swiftly implement the new Pan-Euro-
Mediterranean system of comulation of origin. When applied, the system will
generate new opportunities for economic operators to intensify the flow of trade
in certain goods and to benefit from further regional integration.
WTO
As a GATT contracting party since 1970, Egypt is a founding WTO member since 30
June 1995.
Egypt is an active participant in the multilateral trading system and it is fully
engaged in the current Doha Development Agenda negotiations. In the WTO framework,
it has bound over 98% of its tariff lines. The currently applied MFN tariff
structure was implemented in September 2004, when the authorities cut
significantly tariffs and reduced the number of tariff bands.
In the GATS framework, Egypt undertook commitments in 4 services sectors, i.e.
construction and related engineering services, financial services, tourism,
transport and telecoms

GATT
"General Agreement on Tariffs and Trade"

Introduction
The General Agreement on Tariffs and Trade (typically abbreviated GATT) was
originally created by the Bretton Woods Conference as part of a larger plan for
economic recovery after World War II. The GATT's main purpose was to reduce
barriers to international trade. This was achieved through the reduction of tariff
barriers, quantitative restrictions and subsidies on trade through a series of
different agreements. The GATT was an agreement, not an organization. Originally,
the GATT was supposed to become a full international organization like the World
Bank or IMF called the International Trade Organization. However, the agreement
was not ratified, so the GATT remained simply an agreement. The functions of the
GATT have been replaced by the World Trade Organization which was established
through the final round of negotiations in the early 1990s.

Agricultural trade

While the volume of world agricultural exports has substantially increased over
recent decades, its rate of growth has lagged behind that of manufactures,
resulting in a steady decline in agriculture's share in world merchandise trade.
In 1996, agricultural trade accounted for 111/2 per cent of total merchandise
trade - when trade in services is taken into account, agriculture's share in
global exports drops to 9 per cent. However, with respect to world trade
agriculture is still ahead of sectors such as mining products, automotive
products, chemicals, textiles and clothing or iron and steel. Among the
agricultural goods traded internationally, food products make up almost 80 per
cent of the total. The other main category of agricultural products is raw
materials. Since the mid-1980s, trade in processed and other high value
agricultural products has been expanding much faster than trade in the basic
primary products such as cereals.

Agricultural trade remains in many countries an important part of overall economic

activity and continues to play a major role in domestic agricultural production
and employment. The trading system plays also a fundamentally important role in
global food security, for example by ensuring that temporary or protracted food
deficits arising from adverse climatic and other conditions can be met from world
markets.

Trade policies prior to the WTO

Although agriculture has always been covered by the GATT, prior to the WTO there
were several important differences with respect to the rules that applied to
agricultural primary products as opposed to industrial products. The GATT 1947
allowed all countries to use export subsidies on agricultural primary products
whereas export subsidies on industrial products were prohibited. The only
condition was that agricultural export subsidies should not be used to capture
more than an "equitable share" of world exports of the product concerned (Article
XVI:3 of GATT). The GATT rules also allowed countries to resort to, or use import
restrictions (e.g. import quotas) under certain conditions, notably when these
restrictions were necessary to enforce measures to effectively limit domestic
production (Article XI:2(c) of GATT). This exception was also conditional on the
maintenance of a minimum proportion of imports relative to domestic production.
However, in practice many non-tariff border restrictions were applied to imports
without any effective counterpart limitations on domestic production and without
maintaining minimum import access. In some cases this was achieved through the use
of measures not specifically provided for under Article XI (such as variable
levies). In other cases it reflected exceptions and country-specific derogations
such as grandfather clauses, waivers and protocols of accession. In still other
cases non-tariff import restrictions were maintained without any apparent
justification.

The result of all this was a proliferation of impediments to agricultural trade,

including by means of import bans, quotas setting the maximum level of imports,
variable import levies, minimum import prices and non-tariff measures maintained
by state trading enterprises. Major agricultural products such as cereals, meat,
dairy products, sugar and a range of fruits and vegetables have faced barriers to
trade on a scale uncommon in other merchandise sectors.

In part, this insulation of domestic markets was the result of measures originally
introduced following the collapse of commodity prices in the 1930s Depression.
Furthermore, in the aftermath of the Second World War many governments were
concerned primarily with increasing domestic agricultural production so as to feed
their growing populations. While on the one hand this objective was paramount, on
the other rising industrial wages in the immediate post-war years tended to draw
away farm workers from rural areas, thereby undermining the policies aimed at
increasing domestic agricultural production. Maintaining a certain balance in the
evolution of rural and urban incomes thus became a related objective. With these
objectives in mind many governments, particularly in the developed world, resorted
to market price support. Administratively set farm prices were raised
progressively. Rising import access barriers ensured that domestic production
could continue to be sold. In response to these measures and as a result of
productivity gains, self-sufficiency rates rapidly increased. In a number of
cases, expanding domestic production of certain agricultural products not only
replaced imports completely but resulted in structural surpluses. Export subsidies
were increasingly used to dump surpluses onto the world market, thus depressing
world market prices. The situation was exacerbated in several developing countries
where the effects of overvalued exchange rates, low food price policies in favour
of urban consumers and certain other domestic measures reduced the incentive for
farmers to adapt and increase their agricultural product.

Uruguay Round agricultural negotiations

In the lead-up to the Uruguay Round negotiations, it became increasingly evident

that the causes of disarray in world agriculture went beyond import access
problems which had been the traditional focus of GATT negotiations. To get to the
roots of the problems, disciplines with regard to all measures affecting trade in
agriculture, including domestic agricultural policies and the subsidization of
agricultural exports, were considered to be essential. Clearer rules for sanitary
and phytosanitary measures were also considered to be required, both in their own
right and to prevent circumvention of stricter rules on import access through
protectionist use of food safety as well as animal and plant health measures.
The agricultural negotiations in the Uruguay Round were by no means easy - the
broad scope of the negotiations and their political sensitivity necessarily
required much time in order to reach an agreement on the new rules, and much
technical work was required in order to establish sound means to formalize
commitments in policy areas beyond the scope of prior GATT practice. The Agreement
on Agriculture and the Agreement on the Application of Sanitary and Phytosanitary
Measures were negotiated in parallel, and a Decision on Measures Concerning the
Possible Negative Effects of the Reform Program on Least-developed and Net Food-
importing Developing Countries also formed part of the overall outcome.

The conceptual framework

The agricultural package of the Uruguay Round has fundamentally changed the way
domestic support in favor of agricultural producers was treated under the GATT
1947. The main objective has been to discipline and reduce domestic support while
at the same time leaving great scope for governments to design domestic
agricultural policies in the face of, and in response to, the wide variety of the
specific circumstances in individual countries and individual agricultural
sectors. The approach agreed upon is also aimed at helping ensure that the
specific binding commitments in the areas of market access and export competition
are not undermined through domestic support measures.

The main conceptual consideration is that there are basically two categories of
domestic support -support with no, or minimal, distortive effect on trade on the
one hand (often referred to as "Green Box" measures) and trade-distorting support
on the other hand (often referred to as "Amber Box" measures). For example,
government provided agricultural research or training is considered to be of the
former type, while government buying-in at a guaranteed price ("market price
support") falls into the latter category. Under the Agreement on Agriculture, all
domestic support in favor of agricultural producers is subject to rules. In
addition, the aggregate monetary value of Amber Box measures is, with certain
exceptions, subject to reduction commitments as specified in the schedule of each
WTO Member providing such support.

The Green Box

The Agreement on Agriculture sets out a number of general and measure-specific

criteria which, when met, allow measures to be placed in the Green Box (Annex 2).
These measures are exempt from reduction commitments and, indeed, can even be
increased without any financial limitation under the WTO. The Green Box applies to
both developed and developing country Members but in the case of developing
countries special treatment is provided in respect of governmental stockholding
programs for food security purposes and subsidized food prices for urban and rural
poor. The general criteria are that the measures must have no, or at most minimal,
trade-distorting effects or effects on production. They must be provided through a
publicly-funded government program (including government revenue foregone) not
involving transfers from consumers and must not have the effect of providing price
support to producers.

Government service programs

The Green Box covers many government service programs including general services
provided by governments, public stockholding programs for food security purposes
and domestic food aid -as long as the general criteria and some other measure-
specific criteria are met by each measure concerned. The Green Box thus provides
for the continuation (and enhancement) of programs such as research, including
general research, research in connection with environmental programs, and research
programs relating to particular products; pest and disease control programs,
including general and product-specific pest and disease control measures;
agricultural training services and extension and advisory services; inspection
services, including general inspection services and the inspection of particular
products for health, safety, grading or standardization purposes; marketing and
promotion services; infrastructural services, including electricity reticulation,
roads and other means of transport, market and port facilities, water supply
facilities, etc; expenditures in relation to the accumulation and holding of
public stocks for food security purposes; and expenditures in relation to the
provision of domestic food aid to sections of the population in need. Most of the
regular programs of governments, particularly those in developing countries, are
thus given the "green light" to continue.

Direct payments to producers

The Green Box also provides for the use of direct payments to producers which are
not linked to production decisions, i.e. although the farmer receives a payment
from the government, this payment does not influence the type or volume of
agricultural production ("decoupling"). The conditions preclude any linkage
between the amount of such payments, on the one hand, and production, prices or
factors of production in any year after a fixed base period. In addition, no
production shall be required in order to receive such payments. Additional
criteria to be met depend on the type of measure concerned which may include:
decoupled income support measures; income insurance and safety-net programs;
natural disaster relief; a range of structural adjustment assistance programs; and
certain payments under environmental programs and under regional assistance
programs.

Other exempt measures

In addition to measures covered by the Green Box, two other categories of domestic
support measures are exempt from reduction commitments under the Agreement on
Agriculture (Article 6). These are certain developmental measures in developing
countries and certain direct payments under production-limiting programs.
Furthermore, so-called de minims levels of support are exempted from reduction.

Developmental measures

The special and differential treatment under the Green Box aside, the type of
support that fits into the developmental category are measures of assistance,
whether direct or indirect, designed to encourage agricultural and rural
development and that are an integral part of the development programs of
developing countries. They include investment subsidies which are generally
available to agriculture in developing country Members, agricultural input
subsidies generally available to low-income or resource-poor producers in
developing country Members, and domestic support to producers in developing
country Members to encourage diversification from growing illicit narcotic crops.

Blue Box

Direct payments under production limiting programs (often referred to as "Blue

Box" measures) are exempt from commitments if such payments are made on fixed
areas and yield or a fixed number of livestock. Such payments also fit into this
category if they are made on 85 per cent or less of production in a defined base
period. While the Green Box covers decoupled payments, Blue Box measures can be
considered to be partially-decoupled - production is still required in order to
receive the payments, but the actual payments do not relate directly to the
current quantity of that production.

De minims

All domestic support measures in favor of agricultural producers that do not fit
into any of the above exempt categories are subject to reduction commitments. This
domestic support category captures policies, such as market price support
measures, which are widely considered to be the most trade-distorting forms of
domestic support. However, under the de minims provisions of the Agreement there
is no requirement to reduce such trade-distorting domestic support in any year in
which the aggregate value of the product-specific support does not exceed 5 per
cent of the total value of production of the agricultural product in question. In
addition, non-product specific support which is less than 5 per cent of the value
of total agricultural production is also exempt from reduction. The 5 per cent
threshold applies to developed countries whereas in the case of developing
countries the de minims ceiling is 10 per cent.

Aggregate Measurement of Support

Price support measures have been the most important type of policy measure within
the non-exempt category. Price support can be provided either through administered
prices (involving transfers from consumers) or through certain types of direct
payments from governments. For the purpose of Current Total AMS calculations,
price support is generally measured by multiplying the gap between the applied
administered price and a specified fixed external reference price ("world market
price") by the quantity of production eligible to receive the administered price.
Calculation details are specified in Annexes 3 and 4 of the Agreement on
Agriculture and also incorporated into Members' schedules by way of references to
Supporting Material. For each product, the implicit subsidy of price support
measures is added to other product-specific subsidies - a product-specific
fertilizer subsidy, for example -to arrive at a product-specific AMS which is then
evaluated against the applicable de minims threshold. Non-product-specific
subsidies are calculated separately and, as in the former case, are included in
the Current Total AMS only if they exceed the relevant de minims level.

Reduction commitments

Twenty-eight Members (counting the EC as one) had non-exempt domestic support

during the base period and hence reduction commitments specified in their
schedules. The reduction commitments are expressed in terms of a "Total Aggregate
Measurement of Support" (Total AMS) which includes all product-specific support
and non-product-specific support in one single figure. Members with a Total AMS
have to reduce base period support by 20 per cent over 6 years (developed country
Members) or 13 per cent over 10 years (developing country Members). In any year of
the implementation period, the Current Total AMS value of non-exempt measures must
not exceed the scheduled Total AMS limit as specified in the schedule for that
year. In other words, the maximum levels of such support are bound in the WTO.

In the case of Members with no scheduled reduction commitments, any domestic

support not covered by one or another of the exception categories outlined above,
must be maintained within the relevant "product-specific" and "non-product-
specific" de minims levels (Article 7 of the Agreement on Agriculture).

Equivalent Measurement of Support

Where it is not practicable to calculate a product-specific AMS as set out in the

Agreement, provisions are made of an "Equivalent Measurement of Support" (EMS).
The EMS is generally calculated on the basis of budgetary outlays - the money
spent by governments to support a product, for example, rather than market price
support calculated with respect to a fixed external reference price. Like the AMS,
the EMS is compared to the de minims level and, if above that level, included in
the Current Total AMS.

Notification obligations

All Members must notify the Committee on Agriculture the extent of their domestic
support measures. This requires a listing of all measures that fit into the exempt
categories: the Green Box, developmental measures, direct payments under
production limiting programs (Blue Box) and de minims levels of support. In
addition, where the existence of measures requires it, AMS calculations must be
undertaken by Members that have scheduled domestic support reduction commitments
and the Current Total AMS must be notified. Where a Member without such scheduled
commitments has support measures which are not covered by one or other of the
exempt categories, a notification must be made showing that such non-exempt
support is within the relevant de minims levels. Special formats have been
developed by the Committee on Agriculture in order to facilitate compliance with
the notification obligations.

The requirement to notify is annual, except in the case of least-developed country

Members which are only required to notify every other year. Developing country
Members can also request the Committee to set aside the annual notification
requirement for measures other than those falling into the Green Box or the
developmental or Blue Box categories.

In addition to the annual notification obligations, all Members must notify any
modifications of existing or any introduction of new measures in the exempt
categories. These notifications too are examined by the Committee on Agriculture
on a regular basis.

As most Members do not have domestic support measures other than those falling
into the exempt categories, the annual notification requirements are in many cases
not particularly burdensome. However, they are effective in providing a basis for
policy discussions within the Committee on Agriculture and they also serve a
useful purpose domestically in enabling governments to maintain an annual overview
of support to their agricultural sectors.

The conceptual framework

The virtual explosion of export subsidies in the years leading to the Uruguay
Round was one of the key issues addressed in the agricultural negotiations. While
under the GATT 1947 a widely accepted prohibition on export subsidies for
industrial products has been effective since 1956, in the case of agricultural
primary products such subsidies were only subject to limited disciplines (Article
XVI of GATT) which moreover did not prove to be operational. As a result, in the
1970s and 1980s, success in international markets for agricultural products became
increasingly determined by the financial power and largesse of national treasuries
rather than the efficiency and marketing skills of agricultural producers and
exporters. Export subsidies also became a major factor in depressing, or
destabilizing, world market prices for many agricultural products. The Uruguay
Round resulted in a radical departure from the former ineffective GATT disciplines
in this area.

Article 3.3 of the Agreement on Agriculture establishes the basic new rule in the
area of agricultural export subsidies. Such subsidies are now prohibited except
for four cases: (i) export subsidies subject to product-specific reduction
commitments within the limits specified in the schedule of the WTO Member
concerned; (ii) any excess of budgetary outlays for export subsidies or subsidized
export volume over the limits specified in the schedule which is covered by the
"downstream flexibility" provision of Article 9.2(b) of the Agreement on
Agriculture; (iii) export subsidies consistent with the special and differential
treatment provision for developing country Members (Article 9.4 of the Agreement);
and (iv) export subsidies other than those subject to reduction commitments,
provided that they are in conformity with the anti-circumvention disciplines of
Article 10 of the Agreement on Agriculture.

Reduction commitments
Definition of measures

Under the Agreement on Agriculture, export subsidies are defined as referring to

"subsidies contingent on export performance, including the export subsidies listed
in detail in Article 9 of [the] Agreement". As specified in more detail in Article
9.1 of the Agreement, this list covers most of the export subsidy practices which
are prevalent in the agricultural sector, notably:

- direct export subsidies contingent on export performance;

- sales of non-commercial stocks of agricultural products for export at prices

lower than comparable prices for such goods on the domestic market;

- producer-financed subsidies such as government programs which require a levy on

all production which is then used to subsidize the export of a certain portion of
that production;

- cost reduction measures such as subsidies to reduce the cost of marketing goods
for export: this can include for example, upgrading and handling costs and the
costs of international freight;

- internal transport subsidies applying only to exports, such as those designed to

bring exportable produce to one central point for shipping; and

- subsidies on incorporated products, i.e. subsidies on agricultural products such

as wheat contingent on their incorporation in export products such as biscuits.

All such export subsidies are subject to reduction commitments, expressed in terms
of both the volume of subsidized exports and the budgetary outlays for these
subsidies.

Product categories

The reduction commitments are shown in the schedules of WTO Members on a product-
specific basis. For this purpose, the universe of agricultural products was
divided into 22 products or product groups, such as wheat, coarse grains, sugar,
beef, butter, cheese and oilseeds. The reduction commitments on "incorporated
products" (the last item in the Article 9 list) are expressed in terms of
budgetary outlays only. The volume and budgetary outlay commitments for each
product or group of products specified in a Member's schedule are individually
binding. The ceilings specified in the schedules must be respected in each year of
the implementation period although limited "over-shooting" in the second to fifth
year of implementation is permitted ("downstream flexibility"). By the last year
of the implementation period, all Members must be within their final export
subsidy ceilings.

Rates of cut

Developed country Members are required to reduce, in equal annual steps over a
period of 6 years, the base-period volume of subsidized exports by 21 per cent and
the corresponding budgetary outlays for export subsidies by 36 per cent. In the
case of developing country Members, the required cuts are 14 per cent over 10
years with respect to volumes, and 24 per cent over the same period with respect
to budgetary outlays.

Developing countries may, during the implementation period, make use of a special
and differential treatment provision of the Agreement (Article 9.4) which allows
them to grant marketing cost subsidies and internal transport subsidies, provided
that these are not applied in a manner that would circumvent export subsidy
reduction commitments.

All in all, 25 Members (counting the members of the European Community as one)
have export subsidy reduction commitments specified in their schedules, with a
total of 428 individual reduction commitments.

Products with no specific reduction commitment

The Agreement on Agriculture prohibits the use of Article 9.1 export subsidies on
any agricultural product which is not subject to a reduction commitment as
specified in the relevant part of the Member's schedule (with the exception during
the implementation period of those benefiting from special and differential
treatment).

Anti-circumvention

In addition to the provisions directly related to the reduction commitments, the

Agreement on Agriculture contains provisions in Article 10 which are designed to
prevent the use of export subsidies that are not specifically listed in Article 9
in such a way as to circumvent reduction on other export subsidy commitments. The
anti-circumvention provisions include a definition of food aid in order that
transactions claimed to be food aid, but not meeting the criteria in the
Agreement, cannot be used to undermine commitments. Food aid that meets the
specified criteria is not considered to be subsidized export, and hence is not
limited by the Agreement on Agriculture. The Agreement also calls for the
development of internationally-agreed disciplines on export credits and similar
measures, in recognition that such measures could also be used to circumvent
commitments. Any Member which claims that any quantity exported in excess of a
reduction commitment level is not subsidized must establish that no export
subsidy, whether listed in Article 9 or not, has been granted in respect of the
quantity of exports in question.

Notification obligations

All Members must notify the Committee on Agriculture annually with respect to
export subsidies. For the vast majority of Members - those without reduction
commitments - this involves only a statement to the effect that export subsidies
on agricultural products have not been used (or a listing of those measures that
may be used by developing country Members if this has been the case). For Members
with reduction commitments in their schedules, the annual notification must
contain the annual use of subsidies in terms of both volume and budgetary outlays.

In addition, as part of the anti-circumvention provisions, Members must notify the

use of food aid on an annual basis if such aid is granted. Likewise, total exports
of agricultural products must be notified by Members with reduction commitments,
as well as by a number of other "significant exporters" as defined by the
Committee.

As in other areas, the export subsidy notifications form part of the basis for
reviewing the progress in the implementation of the commitments by the Committee
on Agriculture.

AG: Market access

The conceptual framework

On the market access side, the Uruguay Round resulted in a key systemic change:
the switch from a situation where a myriad of non-tariff measures impeded
agricultural trade flows to a regime of bound tariff-only protection and reduction
commitments. The main objectives of this fundamental change have been to stimulate
investment, production and trade in agriculture by (i) making agricultural market
access conditions more transparent, predictable and competitive, (ii) establishing
or strengthening the link between national and international agricultural markets,
and thus (iii) relying more prominently on the market for guiding scarce resources
into their most productive uses both within the agricultural sector and economy-
wide.

In many cases, tariffs were the only form of protection for agricultural products
before the Uruguay Round. The Round led to the "binding" in the WTO of a maximum
level for these tariffs. For many other products, however, market access
restrictions involved non-tariff barriers. This was particularly, though not only,
the case for many temperate zone agricultural products. The Uruguay Round
negotiations aimed to remove such barriers. For this purpose, a "tariffication"
package was agreed which, among other things, provided for the replacement of
agriculture-specific non-tariff measures with a tariff which afforded an
equivalent level of protection. The tariffs resulting from the tariffication
process account, on average of the developed country Members, for around one fifth
of the total number of agricultural tariff lines. For the developing country
Members, this share is considerably smaller. Following the entry into force of the
Agreement on Agriculture, there is now a prohibition on agriculture-specific non-
tariff measures, and the tariffs on virtually all agricultural products traded
internationally are bound in the WTO.

Schedule of tariff concessions

Each WTO Member has a "schedule" of tariff concessions covering all agricultural
products. These concessions are an integral part of the results of the Uruguay
Round, are formally annexed to the Marrakech Protocol and have become an integral
part of the GATT 1994. The schedule sets out for each individual agricultural
product or, in some cases, agricultural products defined more generally, the
maximum tariff that can be applied on imports into the territory of the Member
concerned. The tariffs in the schedules include those that resulted from the
tariffication process. In many cases, there are considerably higher than
industrial tariffs, reflecting the incidence of agriculture-specific non-tariff
measures prior to the WTO. Many developing countries have bound their previously
unbound tariffs at "ceiling" levels, i.e. at levels higher than the applied rates
prior to the WTO.

Developed country Members have agreed that, over a six-year period beginning in
1995, they will reduce their tariffs on agricultural products by 36 per cent on
average, with a minimum cut of 15 per cent for any product. For developing
countries, the cuts are 24 and 10 per cent, respectively, to be implemented over
ten years. Those developing country Members which bound tariffs at ceiling levels
did not, in many cases, undertake reduction commitments. Least-developed country
Members were required to bind all agricultural tariffs, but not to undertake
tariff reductions.

Tariff quota commitments

As part of the tariffication package, WTO Members were required to maintain, for
tariffied products, current import access opportunities at levels corresponding to
those existing during the 1986-88 base period. Where such "current" access had
been less than 5 per cent of domestic consumption of the product in question in
the base period, an (additional) minimum access opportunity had to be opened on a
most-favored-nation basis. This was to ensure that in 1995, current and minimum
access opportunities combined represented at least 3 per cent of base-period
consumption and that they are progressively expanded to reach 5 per cent of that
consumption in the year 2000 (developed country Members) or 2004 (developing
country Members), respectively.

The current and minimum access opportunities are generally implemented in the form
of tariff quotas. In case of minimum access, the applicable duty was required to
be low or minimal: that is, low either in absolute terms or, at least, in relation
to the "normal" ordinary customs duty that applies to any imports outside the
tariff quota. These tariff quotas, including the applicable tariff rates and any
other conditions related to the tariff quotas, are specified in the schedules of
the WTO Members concerned.

While the vast majority of tariff quotas in agriculture have their origin in the
Uruguay Round negotiations, a number of such commitments were the result of
accessions to the WTO (Bulgaria, Ecuador, Panama). As of January 1998, thirty-six
Members had tariff quotas specified in their schedules. In total, there were 1370
individual tariff quotas, with Australia, Brazil and Indonesia (two tariff quotas
each) and Norway (232 tariff quotas) marking the extremes. These tariff quotas
constitute binding commitments, unlike autonomous tariff quotas which Members may
establish at any time, for example, in order to stabilize the domestic price after
a poor harvest.

The prohibition of non-tariff border measures

Article 4.2 of the Agreement on Agriculture prohibits the use of agriculture-

specific non-tariff measures. Such measures include quantitative import
restrictions, variable import levies, minimum import prices, discretionary import
licensing procedures, voluntary export restraint agreements and non-tariff
measures maintained through state-trading enterprises. All similar border measures
other than "normal customs duties" are also no longer permitted. Although Article
XI:2(c) of the GATT 1994 continues to permit non-tariff import restrictions on
fisheries products, it is now inoperative as regards agricultural products because
it is superseded by the Agreement on Agriculture.

However, Article 4.2 of the Agreement does not prevent the use of non-tariff
import restrictions consistently with the provisions of the GATT or other WTO
agreements which are applicable to traded goods generally (industrial or
agricultural). Such measures include those maintained under balance-of-payments
provisions (Articles XII and XVIII of GATT), general safeguard provisions (Article
XIX of GATT and the related WTO agreement), general exceptions (Article XX of
GATT), the Agreement on the Application of Sanitary and Phytosanitary Measures,
the Agreement on Technical Barriers to Trade or other general, non-agriculture-
specific WTO provisions.

Special treatment

The Agreement on Agriculture contains a "special treatment" clause (Annex 5),

under which four countries were permitted, subject to strictly circumscribed
conditions, to maintain non-tariff border measures on certain products during the
period of tariff reductions (with the possibility of extending the special
treatment, subject to further negotiations). As one of the conditions, market
access in the form of progressively increasing import quotas has to be provided
for the products concerned. The products and countries concerned are rice in the
case of Japan, Korea and the Philippines and cheese and sheep meat in the case of
Israel.

The special safeguard provisions

As a third element of the tariffication package, Members have the right to invoke
for tariffied products the special safeguard provisions of the Agreement on
Agriculture (Article 5), provided that a reservation to this effect ("SSG")
appears beside the products concerned in the relevant Member's schedule. The right
to make use of the special safeguard provisions has been reserved by 36 Members,
and for a limited number of products in each case.

The special safeguard provisions allow the imposition of an additional tariff

where certain criteria are met. The criteria involve either a specified rapid
surge in imports (volume trigger), or, on a shipment by shipment basis, a fall of
the import price below a specified reference price (price trigger). In case of the
volume trigger, the higher duties only apply until the end of the year in
question. In case of the price trigger, any additional duty can only be imposed on
the shipment concerned. The additional duties cannot be applied to imports taking
place within tariff quotas.

Notification obligations

There is no requirement for Members to notify their tariffs to the Committee on

Agriculture. Applied tariffs are, however, to be submitted to other bodies of the
WTO, including the Committee on Market Access and in the context of the Trade
Policy Review mechanism.

Members with tariff quotas and the right to use the special safeguard provisions
are required to make both ad hoc and annual notifications to the Committee on
Agriculture. These notifications form a useful source of information concerning
the market access measures taken by the Members concerned. At the beginning of the
implementation period, an "up-front" notification was due, setting out how each
tariff quota is to be administered. Such notifications disclose, for example, if
imports are permitted on a "first-come-first-served" basis or if import licenses
are used - and in the latter case, an indication of who is able to obtain a
license and how they are allocated. An ad hoc notification is required if the
method of allocation under any tariff quota changes. At the end of each year, a
notification of the quantity of imports entering under each tariff quota is
required (tariff quota fill).

Members with the right to use the special safeguard provisions must notify the
first use of this right in order to allow trading partners to establish exactly
the parameters of the special safeguard action, such as the volume or price used
to trigger the special safeguard action. In the case of the price trigger, an
upfront notification of the relevant reference prices has also been possible. In
addition, an annual summary notification of the use of the special safeguard is
required.
AG: Net food-importing developing countries
Ministerial Decision on Measures concerning the Possible Negative Effects of the
Reform Program on Least-Developed and Net Food-Importing Developing Countries

The Decision was adopted as part of the outcome of the Uruguay Round negotiations
on agriculture. The Decision recognizes that while the progressive implementation
of the results of the Uruguay Round as a whole will generate increasing
opportunities for trade expansion and economic growth to the benefit of all
Members, during the reform program least-developed and net food-importing
developing countries may experience negative effects in terms of the availability
of adequate supplies of basic foodstuffs from external sources on reasonable terms
and conditions, including short-term difficulties in financing normal levels of
commercial imports of basic foodstuffs.
Ministers agreed to a number of mechanisms to ensure that the implementation of
the results of the Uruguay Round does not adversely affect the availability of
food aid at a level sufficient to continue to provide assistance in meeting the
food needs of developing countries. These mechanisms include a review of the level
of food aid established periodically by the Committee on Food Aid under the Food
Aid Convention and the initiation of negotiations to establish a level of food aid
commitments sufficient to meet the legitimate needs of developing countries during
the reform program; the adoption of guidelines to ensure that an increasing
proportion of basic foodstuffs is provided in fully grant form; and agreement by
the developed country Members to give full consideration in the context of their
aid programs to requests for the provision of technical and financial assistance
to least-developed and net food-importing developing countries to improve their
agricultural productivity and infrastructure.

Ministers also agreed to ensure that any agreement relating to agricultural export
credits makes appropriate provision for differential treatment in favor of least-
developed and net food-importing developing countries. The Decision recognizes
that in case of short-term difficulties in financing normal levels of commercial
imports, net food-importing developing countries may be eligible to draw on the
resources of international financial institutions under existing facilities, or
such facilities as may be established, in the context of adjustment programs, in
order to address such financing difficulties.

The Decision is regularly reviewed by the Ministerial Conference and, in the

interim, its implementation is monitored by the Committee on Agriculture. As part
of a series of steps to make the Decision operational, the Committee established a
WTO list of least-developed and net food-importing countries since the Decision
describes but does not list the countries that are to be covered by the Decision.
Total membership on that list stands at 18 developing country Members (Barbados,
Botswana, Côte d'Ivoire, Dominican Republic, Egypt, Honduras, Jamaica, Kenya,
Mauritius, Morocco, Pakistan, Peru, Saint Lucia, Senegal, Sri Lanka, Trinidad and
Tobago, Tunisia and Venezuela) plus all least-developed countries.

Singapore Ministerial Conference

At the Singapore Ministerial Conference in December 1996, Ministers agreed that

action be initiated in 1997 within the framework of the Food Aid Convention to
develop recommendations with a view to establishing a level of food aid
commitments sufficient to meet the legitimate needs of developing countries during
the reform program. They also agreed that these recommendations should include
guidelines to ensure that an increasing proportion of food aid is provided to
least-developed and net food-importing developing countries in fully grant form.
In addition, Ministers reiterated their commitment to the provision of technical
and financial assistance to least-developed and net food-importing developing
countries to improve their agricultural productivity and infrastructure, and
reaffirmed the commitment regarding export credits. Finally, WTO Members agreed,
in their individual capacity as members of the financial institutions concerned,
to take appropriate steps to encourage the international financial institutions to
further consider the scope for establishing new facilities or enhancing existing
facilities for developing countries experiencing Uruguay Round-related
difficulties in financing food imports.

The members of the London-based Food Aid Committee of the Food Aid Convention, all
of whom are WTO Members, subsequently have begun to explore with a large number of
countries the possibility of becoming food aid donors under a future Food Aid
Convention, not only of cereals but also of other products, such as dairy products
and edible oils. The potential "newcomers" include a number of more advanced
developing countries. A broadening of the commodity base is envisaged in order to
meet more adequately the specific food aid needs of many developing countries. In
addition, means are under consideration to improve the efficacy of food aid. Since
the 1995 Convention expires in June 1998, the members of the Food Aid Committee
decided in December 1997 to extend the current Convention for one year and to open
it for renegotiation. The negotiations will seek to increase the effectiveness of
food aid provided by donor governments, and to take account of the WTO Singapore
Ministerial Conference and of the World Food Summit with respect to least-
developed and net food-importing developing countries.

AG: Other provisions

Export restrictions

The Agreement on Agriculture requires Members which consider introducing new

export restrictions on foodstuffs to give due consideration to the effects of such
restrictions on importing Members' food security. Members, except developing
country Members which are not net exporters of the product concerned, must notify
the Committee on Agriculture before introducing new export restrictions on
foodstuffs, and must consult with affected Members if so requested. This
requirement, aimed at achieving increased reliability of access to world market
supply, is a corollary to the opening of markets required by the market access
provisions of the Agreement and the related specific commitments undertaken by
Members.

Peace clause

The Agreement in Agriculture contains a "due restraint" or "peace clause" (Article

13) which regulates the application of other WTO agreements to subsidies in
respect of agricultural products. The Article's provisions provide that Green Box
domestic support measures cannot be the subject of countervailing duty action or
other subsidy action under the WTO Agreement on Subsidies and Countervailing
Measures, nor can they be subject to actions based on non-violation nullification
or impairment of tariff concessions under the GATT. Other domestic support
measures which are in conformity with the provisions of the Agreement on
Agriculture may be the subject of countervailing duty actions, but due restraint
is to be exercised by Members in initiating such investigations. Further, in so
far as the support provided to individual products does not exceed that decided in
the 1992 marketing year, these measures are exempt from other subsidy action or
nullification or impairment action. Export subsidies conforming to the Agreement
on Agriculture are subject to countervailing duty actions, but here also due
restraint is to be exercised by Members in initiating such investigations.

The peace clause remains in effect for a period of nine years from the entry into
force of the WTO Agreement.

Resolving disputes

In the case of disputes involving provisions of the Agreement on Agriculture, the

general WTO dispute settlement procedures apply. Nevertheless, the Agreement also
provides for certain mechanisms that can be used by Members to address their
concerns without recourse to these procedures. In particular, the review process
of the Committee on Agriculture provides a forum for discussion and consultation.
This process is mainly based on the notifications and on a provision (Article
18.6) which allows any Member to raise at any time any matter relevant to the
implementation of the commitments under the reform program as set out in the
Agreement. There is also a counter-notification provision. Furthermore, the
working procedures of the Committee allow Members to request the Chairperson to
mediate in concerns that may arise between them. The use of instruments under the
auspices of the Committee on Agriculture does not prevent any Member from seeking
formal dispute settlement at any time.

Continuation clause

The commitments taken under the Agreement on Agriculture and within the Members'
schedules are part of an ongoing process. Already at the conclusion of the Uruguay
Round, Members agreed to hold further negotiations on agriculture commencing one
year before the end of the six-year implementation period (Article 20). These
negotiations will examine what further commitments are necessary to achieve the
long-term objective of substantial progressive reductions in support and
protection resulting in fundamental reform. The negotiations will also take into
account factors such as the experience gained during the implementation period,
the effects of Uruguay Round reduction commitments on world trade in agriculture,
non-trade concerns, special and differential treatment to developing country
Members and the objective to establish a fair and market-oriented agricultural
trading system.

Singapore Ministerial Conference

At the Singapore Ministerial Conference, Ministers agreed that the Committee on

Agriculture should continue to accord the highest priority to the review of the
implementation of the commitments. Moreover, Ministers specifically agreed to
continue the reform process in conformity with the timetable and all other
provisions contained in the continuation clause. They acknowledged that useful
experience was being gained by the Committee on Agriculture in reviewing the
implementation of existing commitments. They also called on the Committee to
further pursue (i) in 1997 and thereafter the assessment of compliance with
Uruguay Round commitments, taking into account the need for full and timely
compliance; and (ii) a process of analysis and information exchange, in accordance
with all relevant provisions of the Agreement on Agriculture. This work of the
Committee, which is ongoing, will allow Members to better understand the issues
involved and to identify their interests in respect of them before undertaking the
negotiations mandated by the continuation clause.
AG: Overview
Introduction

The Agreement on Agriculture, (the "Agreement"), came into force on 1 January

1995. The preamble to the Agreement recognizes that the agreed long-term objective
of the reform process initiated by the Uruguay Round reform program is to
establish a fair and market-oriented agricultural trading system. The reform
program comprises specific commitments to reduce support and protection in the
areas of domestic support, export subsidies and market access, and through the
establishment of strengthened and more operationally effective GATT rules and
disciplines. The Agreement provides for implementation of the program in an
equitable way among all Members, by including aspects relating to non-trade
concerns, including food security and the need to protect the environment, and by
providing for special and differential treatment for developing countries,
including a significant improvement in the opportunities and terms of access for
agricultural products of particular export interest to these Members.

Relationship with other WTO Agreements

All of the WTO agreements and understandings on trade in goods apply to

agriculture, including the GATT 1994 and WTO agreements on such matters as customs
valuation, import licensing procedures, pre-shipment inspection, emergency
safeguard measures, subsidies and technical barriers to trade. However, where
there is any conflict between these agreements and the Agreement on Agriculture,
the provisions of the Agreement on Agriculture prevail. The WTO Agreements on
Trade in Services and on Trade-Related Aspects of Intellectual Property rights are
also applicable to agriculture.

Product coverage

The Agreement defines in its Annex 1 agricultural products by reference to the

harmonized system of product classification. The definition covers not only basic
agricultural products such as wheat, milk and live animals, but the products
derived from them such as bread, butter and meat, as well as all processed
agricultural products such as chocolate and sausages. The coverage also includes
wines, spirits and tobacco products, fibers such as cotton, wool and silk, and raw
animal skins destined for leather production. Fish and fish products are not
included, nor are forestry products.

Rules and commitments

The Agreement on Agriculture establishes a number of generally applicable rules

with regard to trade-related agricultural measures, primarily in the areas of
border/import access measures, domestic support and export subsidies. These rules
relate to country-specific commitments to improve market access and reduce trade-
distorting subsidies. The commitments are contained in the individual country
schedules of the WTO Members and constitute an integral part of the GATT.

Implementation period

The implementation period for the country-specific commitments is the six-year

period commencing in 1995. However, developing countries have the flexibility to
implement their reduction and other specific commitments over a period of up to 10
years. Members had the choice of implementing their concessions and commitments on
the basis of calendar, marketing (crop) or fiscal years. A WTO Member's
implementation year for tariff reductions may thus differ from the one applied to
export subsidy reductions. For the purpose of the peace clause (see AG: Other
provisions), the implementation period is the nine-year period commencing in 1995.

Committee on Agriculture

The Agreement established a Committee on Agriculture. The Committee oversees the

implementation of the Agreement on Agriculture and affords Members the opportunity
of consulting on any matter relating to the implementation of commitments,
including rule-based commitments. For this purpose, the Committee usually meets
four times per year. Special meetings can be convened if necessary.

Agriculture

The WTO’s Agriculture Agreement was negotiated in the 1986–94 Uruguay Round and is
a significant first step towards fairer competition and a less distorted sector.
It includes specific commitments by WTO member governments to improve market
access and reduce trade-distorting subsidies in agriculture. These commitments are
being implemented over a six year period (10 years for developing countries) that
began in 1995.
Participants have agreed to initiate negotiations for continuing the reform
process one year before the end of the implementation period, i.e. by the end of
1999. These talks have now been incorporated into the broader negotiating agenda
set at the 2001 Ministerial Conference in Doha, Qatar.

Anti-dumping
If a company exports a product at a price lower than the price it normally charges
on its own home market, it is said to be “dumping” the product. Is this unfair
competition? The WTO agreement does not pass judgment. Its focus is on how
governments can or cannot react to dumping — it disciplines anti-dumping actions,
and it is often called the “Anti-dumping Agreement”.

Customs Valuation

For importers, the process of estimating the value of a product at customs

presents problems that can be just as serious as the actual duty rate charged. The
WTO agreement on customs valuation aims for a fair, uniform and neutral system for
the valuation of goods for customs purposes — a system that conforms to commercial
realities, and which outlaws the use of arbitrary or fictitious customs values.
The Committee on Customs Valuation of the Council for Trade in Goods (CGT) carries
out work in the WTO on customs valuation.

GATT and the Goods Council

The General Agreement on Tariffs and Trade (GATT) covers international trade in
goods. The workings of the GATT agreement are the responsibility of the Council
for Trade in Goods (Goods Council) which is made up of representatives from all
WTO member countries. The current chairperson is Amb. Yonov Frederick AGAH
(Nigeria).
The Goods Council has 10 committees dealing with specific subjects (such as
agriculture, market access, subsidies, anti-dumping measures and so on). Again,
these committees consist of all member countries.
Also reporting to the Goods Council are a working party on state trading
enterprises, and the Information Technology Agreement (ITA) Committee.

Information Technology Agreement

The Ministerial Declaration on Trade in Information Technology Products (ITA) was

concluded by 29 participants at the Singapore Ministerial Conference in December
1996. The number of participants has grown to 70, representing about 97 per cent
of world trade in information technology products. The ITA provides for
participants to completely eliminate duties on IT products covered by the
Agreement. Developing country participants have been granted extended periods for
some products.

the WTO agreements

The WTO’s agreements are often called the Final Act of the 1986 —1994 Uruguay
Round of trade negotiations. This is a summary of the agreements.

Introduction

“The Final Act Embodying the Results of the Uruguay Round of Multilateral Trade
Negotiations”, signed by ministers in Marrakech on 15 April 1994 is 550 pages long
and contains legal texts which spell out the results of the negotiations since the
Round was launched in Punta del Este, Uruguay, in September 1986. In addition to
the texts of the agreements, the Final Act also contains texts of Ministerial
Decisions and Declarations which further clarify certain provisions of some of the
agreements.
The Final Act covers all the negotiating areas cited in the Punta del Este
Declaration with two important exceptions. The first is the results of the “market
access negotiations” in which individual countries have made binding commitments
to reduce or eliminate specific tariffs and non-tariff barriers to merchandise
trade. These concessions are recorded in national schedules that form an integral
part of the Final Act. The second is the “initial commitments” on liberalization
of trade in services. These commitments on liberalization are also recorded in
national schedules.
Agreement Establishing the World Trade Organization
The agreement establishing the World Trade Organization (WTO) calls for a single
institutional framework encompassing the GATT, as modified by the Uruguay Round,
all agreements and arrangements concluded under its auspices and the complete
results of the Uruguay Round. Its structure is headed by a Ministerial Conference
meeting at least once every two years. A General Council oversees the operation of
the agreement and ministerial decisions on a regular basis. This General Council
acts as a Dispute Settlement Body and a Trade Policy Review Mechanism, which
concern themselves with the full range of trade issues covered by the WTO, and has
also established subsidiary bodies such as a Goods Council, a Services Council and
a TRIPs Council. The WTO framework ensures a “single undertaking approach” to the
results of the Uruguay Round — thus, membership in the WTO entails accepting all
the results of the Round without exception.

General Agreement on Tariffs and Trade 1994

Texts on the interpretation of the following GATT articles are included in the
Final Act:
Article II — Schedules of Concessions. Agreement to record in national schedules
“other duties or charges” levied in addition to the recorded tariff and to bind
them at the levels prevailing at the date established in the Uruguay Round
Protocol.
Understanding on the Interpretation of Article XVII — State-trading Enterprises.
Agreement increasing surveillance of their activities through stronger
notification and review procedures.
Understanding on the Interpretation of Articles XII and XVIII:B
Balance-of-payments provisions. Agreement that contracting parties imposing
restrictions for balance-of-payments purposes should do so in the least trade-
disruptive manner and should favor price-based measures, like import surcharges
and import deposits, rather than quantitative restrictions. Agreement also on
procedures for consultations by the GATT Balance-of-Payments Committee as well as
for notification of BOP measures.
Understanding on the Interpretation of Article XXIV — Customs Unions and Free-
Trade Areas. Agreement clarifying and reinforcing the criteria and procedures for
the review of new or enlarged customs unions or free-trade areas and for the
evaluation of their effects on third parties. The agreement also clarifies the
procedure to be followed for achieving any necessary compensatory adjustment in
the event of contracting parties forming a customs union seeking to increase a
bound tariff. The obligations of contracting parties in regard to measures taken
by regional or local governments or authorities within their territories are also
clarified.
Understanding on the Interpretation of Article XXV — Waivers. Agreement of new
procedures for the granting of waivers from GATT disciplines, to specify
termination dates for any waivers to be granted in the future, and to fix expiry
dates for existing waivers. The main provisions concerning the granting of waivers
are, however, contained in the Agreement on the WTO.
Understanding on the Interpretation of Article XXVIII — Modification of GATT
Schedules. Agreement on new procedures for the negotiation of compensation when
tariff bindings are modified or withdrawn, including the creation of a new
negotiating right for the country for which the product in question accounts for
the highest proportion of its exports. This is intended to increase the ability of
smaller and developing countries to participate in negotiations.
Understanding on the Interpretation of Article XXXV — Non-application of the
General Agreement. Agreement to allow a contracting party or a newly acceding
country to invoke GATT’s non-application provisions vis-à-vis the other party
after having entered into tariff negotiations with each other. The WTO Agreement
foresees that any invocation of the non-application provisions under that
Agreement must extend to all the multilateral agreements.

Uruguay Round Protocol GATT 1994

The results of the market access negotiations in which participants have made
commitments to eliminate or reduce tariff rates and non-tariff measures applicable
to trade in goods are recorded in national schedules of concessions annexed to the
Uruguay Round Protocol that forms an integral part of the Final Act.
The Protocol has five appendices: Appendix I Section A: Agricultural Products —
Tariff concessions on a Most-Favored Nation basis; Appendix I Section B:
Agricultural Products — Tariff Quotas; Appendix II:Tariff Concessions on a Most-
Favored Nation Basis on Other Products; Appendix III: Preferential Tariff — Part
II of Schedules (if applicable); Appendix IV: Concessions on Non-Tariff Measures —
Part III of Schedules; Appendix V: Agriculture Products: Commitments Limiting
Subsidization — Part IV of Schedules, Section I: Domestic Support: Total AMS
Commitments, Section II: Export Subsidies: Budgetary Outlay and Quantity,
Reduction Commitments Section III: Commitments Limiting the Scope of Export
Subsidies.
The schedule annexed to the Protocol relating to a Member shall become a Schedule
to the GATT 1994 relating to that Member on the day on which the Agreement
Establishing the WTO enters into force for that Member.
For non-agricultural products the tariff reduction agreed upon by each Member
shall be implemented in five equal rate reductions, except as may be otherwise
specified in a Member’s Schedule. The first such reduction shall be made effective
on the date of entry into force of the Agreement Establishing the WTO. Each
successive reduction shall be made effective on 1 January of each of the following
years, and the final rate shall become effective no later than the date four years
after the date of entry into force of the Agreement Establishing the WTO. However,
participants may implement reduction in fewer stages or at earlier dates than
those indicated in the Protocol, if they so wish.
For agricultural products, as defined in Article 2 of the Agreement on
Agriculture, the staging of reductions shall be implemented as specified in the
relevant parts of the schedules. Details are given in the section of this paper
concerning the Agricultural Agreement.
A related Decision on Measures in Favor of Least-Developed Countries establishes,
among other things, that these countries will not be required to undertake any
commitments and concessions which are inconsistent with their individual
development, financial and trade needs. Alongside other more specific provisions
for flexible and favorable treatment, it also allows for the completion of their
schedules of concessions and commitments in Market Access and in Services by April
1995 rather than 15 December 1993.

Agreement on Agriculture

The negotiations have resulted in four main portions of the Agreement; the
Agreement on Agriculture itself; the concessions and commitments Members are to
undertake on market access, domestic support and export subsidies; the Agreement
on Sanitary and Phytosanitary Measures; and the Ministerial Decision concerning
Least-Developed and Net Food-Importing Developing countries.
Overall, the results of the negotiations provide a framework for the long-term
reform of agricultural trade and domestic policies over the years to come. It
makes a decisive move towards the objective of increased market orientation in
agricultural trade. The rules governing agricultural trade are strengthened which
will lead to improved predictability and stability for importing and exporting
countries alike.
The agricultural package also addresses many other issues of vital economic and
political importance to many Members. These include provisions that encourage the
use of less trade-distorting domestic support policies to maintain the rural
economy, that allow actions to be taken to ease any adjustment burden, and also
the introduction of tightly prescribed provisions that allow some flexibility in
the implementation of commitments. Specific concerns of developing countries have
been addressed including the concerns of net-food importing countries and least-
developed countries.
The agricultural package provides for commitments in the area of market access,
domestic support and export competition. The text of the Agricultural Agreement is
mirrored in the GATT Schedules of legal commitments relating to individual
countries.
In the area of market access, non-tariff border measures are replaced by tariffs
that provide substantially the same level of protection. Tariffs resulting from
this “tariffication” process, as well as other tariffs on agricultural products,
are to be reduced by an average 36 per cent in the case of developed countries and
24 per cent in the case of developing countries, with minimum reductions for each
tariff line being required. Reductions are to be undertaken over six years in the
case of developed countries and over ten years in the case of developing
countries. Least-developed countries are not required to reduce their tariffs.
The tariffication package also provides for the maintenance of current access
opportunities and the establishment of minimum access tariff quotas (at reduced-
tariff rates) where current access is less than 3 per cent of domestic
consumption. These minimum access tariff quotas are to be expanded to 5 per cent
over the implementation period. In the case of “tariffied” products “special
safeguard” provisions will allow additional duties to be applied in case shipments
at prices denominated in domestic currencies below a certain reference level or in
case of a surge of imports. The trigger in the safeguard for import surges depends
on the “import penetration” currently existing in the market, i.e. where imports
currently make up a large proportion of consumption, the import surge required to
trigger the special safeguard action is lower.
Domestic support measures that have, at most, a minimal impact on trade (“green
box” policies) are excluded from reduction commitments. Such policies include
general government services, for example in the areas of research, disease
control, infrastructure and food security. It also includes direct payments to
producers, for example certain forms of “decoupled” (from production) income
support, structural adjustment assistance, direct payments under environmental
programs and under regional assistance programs.
In addition to the green box policies, other policies need not be included in the
Total Aggregate Measurement of Support (Total AMS) reduction commitments. These
policies are direct payments under production-limiting programs, certain
government assistance measures to encourage agricultural and rural development in
developing countries and other support which makes up only a low proportion (5 per
cent in the case of developed countries and 10 per cent in the case of developing
countries) of the value of production of individual products or, in the case of
non-product-specific support, the value of total agricultural production.
The Total AMS covers all support provided on either a product-specific or non-
product-specific basis that does not qualify for exemption and is to be reduced by
20 per cent (13.3 per cent for developing countries with no reduction for least-
developed countries) during the implementation period.
Members are required to reduce the value of mainly direct export subsidies to a
level 36 per cent below the 1986-90 base period level over the six-year
implementation period, and the quantity of subsidized exports by 21 per cent over
the same period. In the case of developing countries, the reductions are two-
thirds those of developed countries over a ten-year period (with no reductions
applying to the least-developed countries) and subject to certain conditions,
there are no commitments on subsidies to reduce the costs of marketing exports of
agricultural products or internal transport and freight charges on export
shipments. Where subsidized exports have increased since the 1986-90 base period,
1991-92 may be used, in certain circumstances, as the beginning point of
reductions although the end-point remains that based on the 1986-90 base period
level. The Agreement on Agriculture provides for some limited flexibility between
years in terms of export subsidy reduction commitments and contains provisions
aimed at preventing the circumvention of the export subsidy commitments and sets
out criteria for food aid donations and the use of export credits.
“Peace” provisions within the agreement include: an understanding that certain
actions available under the Subsidies Agreement will not be applied with respect
to green box policies and domestic support and export subsidies maintained in
conformity with commitments; an understanding that “due restraint” will be used in
the application of countervailing duty rights under the General Agreement; and
setting out limits in terms of the applicability of nullification or impairment
actions. These peace provisions will apply for a period of 9 years.
The agreement sets up a committee that will monitor the implementation of
commitments, and also monitor the follow-up to the Decision on Measures Concerning
the Possible Negative Effects of the Reform Program on Least-Developed and Net
Food-Importing Developing Countries.
The package is conceived as part of a continuing process with the long-term
objective of securing substantial progressive reductions in support and
protection. In this light, it calls for further negotiations in the fifth year of
implementation which, along with an assessment of the first five years, would take
into account non-trade concerns, special and differential treatment for developing
countries, the objective to establish a fair and market-oriented agricultural
trading system and other concerns and objectives noted in the preamble to the
agreement.

Agreement on Sanitary and Phytosanitary Measures

This agreement concerns the application of sanitary and phytosanitary measures —

in other words food safety and animal and plant health regulations. The agreement
recognizes that governments have the right to take sanitary and phytosanitary
measures but that they should be applied only to the extent necessary to protect
human, animal or plant life or health and should not arbitrarily or unjustifiably
discriminate between Members where identical or similar conditions prevail.
In order to harmonize sanitary and phytosanitary measures on as wide a basis as
possible, Members are encouraged to base their measures on international
standards, guidelines and recommendations where they exist. However, Members may
maintain or introduce measures which result in higher standards if there is
scientific justification or as a consequence of consistent risk decisions based on
an appropriate risk assessment. The Agreement spells out procedures and criteria
for the assessment of risk and the determination of appropriate levels of sanitary
or phytosanitary protection.
It is expected that Members would accept the sanitary and phytosanitary measures
of others as equivalent if the exporting country demonstrates to the importing
country that its measures achieve the importing country’s appropriate level of
health protection. The agreement includes provisions on control, inspection and
approval procedures.
Decision on Measures Concerning the Possible Negative Effects of the Reform
Program on Least-Developed and Net Food-Importing Developing Countries
It is recognized that during the reform program least-developed and net food-
importing developing countries may experience negative effects with respect to
supplies of food imports on reasonable terms and conditions. Therefore, a special
Decision sets out objectives with regard to the provision of food aid, the
provision of basic foodstuffs in full grant form and aid for agricultural
development. It also refers to the possibility of assistance from the
International Monetary Fund and the World Bank with respect to the short-term
financing of commercial food imports. The Committee of Agriculture, set up under
the Agreement on Agriculture, monitors the follow-up to the Decision.
Agreement on Textiles and Clothing

The object of this negotiation has been to secure the eventual integration of the
textiles and clothing sector — where much of the trade is currently subject to
bilateral quotas negotiated under the Multiform Arrangement (MFA) — into the GATT
on the basis of strengthened GATT rules and disciplines.
Integration of the sector into the GATT would take place as follows : first, on 1
January 1995; each party would integrate into the GATT products from the specific
list in the Agreement which accounted for not less than 16 per cent of its total
volume of imports in 1990. Integration means that trade in these products will be
governed by the general rules of GATT.
At the beginning of Phase 2, on 1 January 1998, products which accounted for not
less than 17 per cent of 1990 imports would be integrated. On 1 January 2002,
products which accounted for not less than 18 per cent of 1990 imports would be
integrated. All remaining products would be integrated at the end of the
transition period on 1 January 2005. At each of the first three stages, products
should be chosen from each of the following categories: tops and yarns, fabrics,
made-up textile products, and clothing.
All MFA restrictions in place on 31 December 1994 would be carried over into the
new agreement and maintained until such time as the restrictions are removed or
the products integrated into GATT. For products remaining under restraint, at
whatever stage, the agreement lays down a formula for increasing the existing
growth rates. Thus, during Stage 1, and for each restriction previously under MFA
bilateral agreements in force for 1994, annual growth should be not less than 16
per cent higher than the growth rate established for the previous MFA restriction.
For Stage 2 (1998 to 2001 inclusive), annual growth rates should be 25 per cent
higher than the Stage 1 rates. For Stage 3 (2002 to 2004 inclusive), annual growth
rates should be 27 per cent higher than the Stage 2 rates.
While the agreement focuses largely on the phasing-out of MFA restrictions, it
also recognizes that some members maintain non-MFA restrictions not justified
under a GATT provision. These would also be brought into conformity with GATT
within one year of the entry into force of the Agreement or phased out
progressively during a period not exceeding the duration of the Agreement (that
is, by 2005).
It also contains a specific transitional safeguard mechanism which could be
applied to products not yet integrated into the GATT at any stage. Action under
the safeguard mechanism could be taken against individual exporting countries if
it were demonstrated by the importing country that overall imports of a product
were entering the country in such increased quantities as to cause serious damage
— or to threaten it — to the relevant domestic industry, and that there was a
sharp and substantial increase of imports from the individual country concerned.
Action under the safeguard mechanism could be taken either by mutual agreement,
following consultations, or unilaterally but subject to review by the Textiles
Monitoring Body. If taken, the level of restraints should be fixed at a level not
lower than the actual level of exports or imports from the country concerned
during the twelve-month period ending two months before the month in which a
request for consultation was made. Safeguard restraints could remain in place for
up to three years without extension or until the product is removed from the scope
of the agreement (that is, integrated into the GATT), whichever comes first.
The agreement includes provisions to cope with possible circumvention of
commitments through transshipment, re-routing, false declaration concerning
country or place of origin and falsification of official documents.
The agreement also stipulates that, as part of the integration process, all
members shall take such actions in the area of textiles and clothing as may be
necessary to abide by GATT rules and disciplines so as to improve market access,
ensure the application of policies relating to fair and equitable trading
conditions, and avoid discrimination against imports when taking measures for
general trade policy reasons.
In the context of a major review of the operation of the agreement to be conducted
by the Council for Trade in Goods before the end of each stage of the integration
process, the Council for Trade in Goods shall by consensus take such decisions as
it deems appropriate to ensure that the balance of rights and obligations in this
agreement is not upset. Moreover, the Dispute Settlement Body may authorize
adjustments to the annual growth of quotas for the stage subsequent to the review
with respect to Members it has found not to be complying with their obligations
under this agreement.
A Textiles Monitoring Body (TMB) oversees the implementation of commitments and to
prepare reports for the major reviews mentioned above. The agreement also has
provisions for special treatment to certain categories of countries — for example,
those which have not been MFA members since 1986, new entrants, small suppliers,
and least-developed countries.

Agreement on Technical Barriers to Trade

This agreement will extend and clarify the Agreement on Technical Barriers to
Trade reached in the Tokyo Round. It seeks to ensure that technical negotiations
and standards, as well as testing and certification procedures, do not create
unnecessary obstacles to trade. However, it recognizes that countries have the
right to establish protection, at levels they consider appropriate, for example
for human, animal or plant life or health or the environment, and should not be
prevented from taking measures necessary to ensure those levels of protection are
met. The agreement therefore encourages countries to use international standards
where these are appropriate, but it does not require them to change their levels
of protection as a result of standardization.
Innovative features of the revised agreement are that it covers processing and
production methods related to the characteristics of the product itself. The
coverage of conformity assessment procedures is enlarged and the disciplines made
more precise. Notification provisions applying to local government and non-
governmental bodies are elaborated in more detail than in the Tokyo Round
agreement. A Code of Good Practice for the Preparation, Adoption and Application
of Standards by standardizing bodies, which is open to acceptance by private
sector bodies as well as the public sector, is included as an annex to the
agreement.

Agreement on Trade Related Aspects of Investment Measures

The agreement recognizes that certain investment measures restrict and distort
trade. It provides that no contracting party shall apply any TRIM inconsistent
with Articles III (national treatment) and XI (prohibition of quantitative
restrictions) of the GATT. To this end, an illustrative list of TRIMs agreed to be
inconsistent with these articles is appended to the agreement. The list includes
measures which require particular levels of local procurement by an enterprise
(“local content requirements”) or which restrict the volume or value of imports
such an enterprise can purchase or use to an amount related to the level of
products it exports (“trade balancing requirements”).
The agreement requires mandatory notification of all non-conforming TRIMs and
their elimination within two years for developed countries, within five years for
developing countries and within seven years for least-developed countries. It
establishes a Committee on TRIMs which will, among other things, monitor the
implementation of these commitments. The agreement also provides for
consideration, at a later date, of whether it should be complemented with
provisions
on investment and competition policy more broadly.

Agreement on Implementation of Article VI (Anti-dumping)

Article VI of the GATT provides for the right of contracting parties to apply
anti-dumping measures, i.e. measures against imports of a product at an export
price below its “normal value” (usually the price of the product in the domestic
market of the exporting country) if such dumped imports cause injury to a domestic
industry in the territory of the importing contracting party. More detailed rules
governing the application of such measures are currently provided in an Anti-
dumping Agreement concluded at the end of the Tokyo Round. Negotiations in the
Uruguay Round have resulted in a revision of this Agreement which addresses many
areas in which the current Agreement lacks precision and detail.
In particular, the revised Agreement provides for greater clarity and more
detailed rules in relation to the method of determining that a product is dumped,
the criteria to be taken into account in a determination that dumped imports cause
injury to a domestic industry, the procedures to be followed in initiating and
conducting anti-dumping investigations, and the implementation and duration of
anti-dumping measures. In addition, the new agreement clarifies the role of
dispute settlement panels in disputes relating to anti-dumping actions taken by
domestic authorities.
On the methodology for determining that a product is exported at a dumped price,
the new Agreement adds relatively specific provisions on such issues as criteria
for allocating costs when the export price is compared with a “constructed” normal
value and rules to ensure that a fair comparison is made between the export price
and the normal value of a product so as not to arbitrarily create or inflate
margins of dumping.
The agreement strengthens the requirement for the importing country to establish a
clear causal relationship between dumped imports and injury to the domestic
industry. The examination of the dumped imports on the industry concerned must
include an evaluation of all relevant economic factors bearing on the state of the
industry concerned. The agreement confirms the existing interpretation of the term
“domestic industry”. Subject to a few exceptions, “domestic industry” refers to
the domestic producers as a whole of the like products or to those of them whose
collective output of the products constitutes a major proportion of the total
domestic production of those products.
Clear-cut procedures have been established on how anti-dumping cases are to be
initiated and how such investigations are to be conducted. Conditions for ensuring
that all interested parties are given an opportunity to present evidence are set
out. Provisions on the application of provisional measures, the use of price
undertakings in anti-dumping cases, and on the duration of anti-dumping measures
have been strengthened. Thus, a significant improvement over the existing
Agreement consists of the addition of a new provision under which anti-dumping
measures shall expire five years after the date of imposition, unless a
determination is made that, in the event of termination of the measures, dumping
and injury would be likely to continue or recur.
A new provision requires the immediate termination of an anti-dumping
investigation in cases where the authorities determine that the margin of dumping
is de minims (which is defined as less than 2 per cent, expressed as a percentage
of the export price of the product) or that the volume of dumped imports is
negligible (generally when the volume of dumped imports from an individual country
accounts for less than 3 per cent of the imports of the product in question into
the importing country).
The agreement calls for prompt and detailed notification of all preliminary or
final anti-dumping actions to a Committee on Anti-dumping Practices. The agreement
will afford parties the opportunity of consulting on any matter relating to the
operation of the agreement or the furtherance of its objectives, and to request
the establishment of panels to examine disputes.

Agreement on Implementation of Article VII (Customs Valuation)

The Decision on Customs Valuation would give customs administrations the right to
request further information of importers where they have reason to doubt the
accuracy of the declared value of imported goods. If the administration maintains
a reasonable doubt, despite any additional information, it may be deemed that the
customs value of the imported goods cannot be determined on the basis of the
declared value, and customs would need to establish the value taking into account
the provisions of the Agreement. In addition, two accompanying texts further
clarify certain of the Agreement’s provisions relevant to developing countries and
relating to minimum values and importations by sole agents, sole distributors and
sole concessionaires.

Agreement on Reshipment Inspection

Reshipment inspection (PSI) is the practice of employing specialized private

companies to check shipment details — essentially price, quantity, quality — of
goods ordered overseas. Used by governments of developing countries, the purpose
is to safeguard national financial interests (prevention of capital flight and
commercial fraud as well as customs duty evasion, for instance) and to compensate
for inadequacies in administrative infrastructures.
The agreement recognizes that GATT principles and obligations apply to the
activities of reshipment inspection agencies mandated by governments. The
obligations placed on PSI-user governments include non-discrimination,
transparency, protection of confidential business information, avoidance of
unreasonable delay, the use of specific guidelines for conducting price
verification and the avoidance of conflicts of interest by the PSI agencies.
The obligations of exporting contracting parties towards PSI users include non-
discrimination in the application of domestic laws and regulations, prompt
publication of such laws and regulations and the provision of technical assistance
where requested.
The agreement establishes an independent review procedure — administered jointly
by an organization representing PSI agencies and an organization representing
exporters — to resolve disputes between an exporter and a PSI agency.

Agreement on Rules of Origin

The agreement aims at long-term harmonization of rules of origin, other than rules
of origin relating to the granting of tariff preferences, and to ensure that such
rules do not themselves create unnecessary obstacles to trade.
The agreement sets up a harmonization program, to be initiated as soon as possible
after the completion of the Uruguay Round and to be completed within three years
of initiation. It would be based upon a set of principles, including making rules
of origin objective, understandable and predictable. The work would be conducted
by a Committee on Rules of Origin (CRO) in the WTO and a technical committee
(TCRO) under the auspices of the Customs Cooperation Council in Brussels.
Much work was done in the CRO and the TCRO and substantial progress has been
achieved in the three years foreseen in the Agreement for the completion of the
work. However, due to the complexity of the issues the HWP could not be finalized
within the foreseen deadline. The CRO continued its work in 2000. In December
2000, the General Council Special Session agreed to set, as the new deadline for
completion of the remainder of the work, the Fourth Session of the Ministerial
Conference, or at the latest the end of 2001. The negotiating texts are contained
in documents G/RO/41 and G/RO/45.
Until the completion of the harmonization program, contracting parties would be
expected to ensure that their rules of origin are transparent; that they do not
have restricting, distorting or disruptive effects on international trade; that
they are administered in a consistent, uniform, impartial and reasonable manner,
and that they are based on a positive standard (in other words, they should state
what does confer origin rather than what does not).
An annex to the agreement sets out a “common declaration” with respect to the
operation of rules of origin on goods which qualify for preferential treatment.

Agreement on Import Licensing Procedures

The revised agreement strengthens the disciplines on the users of import licensing
systems — which, in any event, are much less widely used now than in the past —
and increases transparency and predictability. For example, the agreement requires
parties to publish sufficient information for traders to know the basis on which
licenses are granted. It contains strengthened rules for the notification of the
institution of import licensing procedures or changes therein. It also offers
guidance on the assessment of applications.
With respect to automatic licensing procedures, the revised agreement sets out
criteria under which they are assumed not to have trade restrictive effects. With
respect to non-automatic licensing procedures, their administrative burden for
importers and exporters should be limited to what is absolutely necessary to
administer the measures to which they apply. The revised agreement also sets a
maximum of 60 days for applications to be considered.

Agreement on Subsidies and Countervailing Measures

The Agreement on Subsidies and Countervailing Measures is intended to build on the

Agreement on Interpretation and Application of Articles VI, XVI and XXIII which
was negotiated in the Tokyo Round.
Unlike its predecessor, the agreement contains a definition of subsidy and
introduces the concept of a “specific” subsidy — for the most part, a subsidy
available only to an enterprise or industry or group of enterprises or industries
within the jurisdiction of the authority granting the subsidy. Only specific
subsidies would be subject to the disciplines set out in the agreement.
The agreement establishes three categories of subsidies. First, it deems the
following subsidies to be “prohibited”: those contingent, in law or in fact,
whether solely or as one of several other conditions, upon export performance; and
those contingent, whether solely or as one of several other conditions, upon the
use of domestic over imported goods. Prohibited subsidies are subject to new
dispute settlement procedures. The main features include an expedited timetable
for action by the Dispute Settlement body, and if it is found that the subsidy is
indeed prohibited, it must be immediately withdrawn. If this is not done within
the specified time period, the complaining member is authorized to take
countermeasures. (See the section on “Dispute Settlement” for details on the
procedures).
The second category is “actionable” subsidies. The agreement stipulates that no
member should cause, through the use of subsidies, adverse effects to the
interests of other signatories, i.e. injury to domestic industry of another
signatory, nullification or impairment of benefits accruing directly or indirectly
to other signatories under the General Agreement (in particular the benefits of
bound tariff concessions), and serious prejudice to the interests of another
member. “Serious prejudice” shall be presumed to exist for certain subsidies
including when the total ad valorem subsidization of a product exceeds 5 per cent.
In such a situation, the burden of proof is on the subsidizing member to show that
the subsidies in question do not cause serious prejudice to the complaining
member. Members affected by actionable subsidies may refer the matter to the
Dispute Settlement body. In the event that it is determined that such adverse
effects exist, the subsidizing member must withdraw the subsidy or remove the
adverse effects.
The third category involves non-actionable subsidies, which could either be non-
specific subsidies, or specific subsidies involving assistance to industrial
research and pre-competitive development activity, assistance to disadvantaged
regions, or certain type of assistance for adapting existing facilities to new
environmental requirements imposed by law and/or regulations. Where another member
believes that an otherwise non-actionable subsidy is resulting in serious adverse
effects to a domestic industry, it may seek a determination and recommendation on
the matter.
One part of the agreement concerns the use of countervailing measures on
subsidized imported goods. It sets out disciplines on the initiation of
countervailing cases, investigations by national authorities and rules of evidence
to ensure that all interested parties can present information and argument.
Certain disciplines on the calculation of the amount of a subsidy are outlined as
is the basis for the determination of injury to the domestic industry. The
agreement would require that all relevant economic factors be taken into account
in assessing the state of the industry and that a causal link be established
between the subsidized imports and the alleged injury. Countervailing
investigations shall be terminated immediately in cases where the amount of a
subsidy is de minims (the subsidy is less than 1 per cent ad valorem) or where the
volume of subsidized imports, actual or potential, or the injury is negligible.
Except under exceptional circumstances, investigations shall be concluded within
one year after their initiation and in no case more than 18 months. All
countervailing duties have to be terminated within 5 years of their imposition
unless the authorities determine on the basis of a review that the expiry of the
duty would be likely to lead to continuation or recurrence of subsidization and
injury.
The agreement recognizes that subsidies may play an important role in economic
development programs of developing countries, and in the transformation of
centrally-planned economies to market economies. Least-developed countries and
developing countries that have less than $1,000 per capita GNP are thus exempted
from disciplines on prohibited export subsidies, and have a time-bound exemption
from other prohibited subsidies. For other developing countries, the export
subsidy prohibition would take effect 8 years after the entry into force of the
agreement establishing the WTO, and they have a time-bound (though fewer years
than for poorer developing countries) exemption from the other prohibited
subsidies. Countervailing investigation of a product originating from a
developing-country member would be terminated if the overall level of subsidies
does not exceed 2 per cent (and from certain developing countries 3 per cent) of
the value of the product, or if the volume of the subsidized imports represents
less than 4 per cent of the total imports for the like product in the importing
signatory. For countries in the process of transformation from a centrally-planned
into a market economy, prohibited subsidies shall be phased out within a period of
seven years from the date of entry into force of the agreement.
In anticipation of the negotiation of special rules in the civil aircraft sector,
under the subsidies agreement, civil aircraft products are not subject to the
presumption that ad valorem subsidization in excess of 5 per cent causes serious
prejudice to the interests of other Members. In addition, the Agreement provides
that where repayment of financing in the civil aircraft sector is dependent on the
level of sales of a product and sales fall below expectations, this does not in
itself give rise to such presumption of serious prejudice.

Agreement on Safeguards

Article XIX of the General Agreement allows a GATT member to take a “safeguard”
action to protect a specific domestic industry from an unforeseen increase of
imports of any product which is causing, or which is likely to cause, serious
injury to the industry.
The agreement breaks major ground in establishing a prohibition against so-called
“grey area” measures, and in setting a “sunset clause” on all safeguard actions.
The agreement stipulates that a member shall not seek, take or maintain any
voluntary export restraints, orderly marketing arrangements or any other similar
measures on the export or the import side. Any such measure in effect at the time
of entry into force of the agreement would be brought into conformity with this
agreement, or would have to be phased out within four years after the entry into
force of the agreement establishing the WTO. An exception could be made for one
specific measure for each importing member, subject to mutual agreement with the
directly concerned member, where the phase-out date would be 31 December 1999.
All existing safeguard measures taken under Article XIX of the General Agreement
1947 shall be terminated not later than eight years after the date on which they
were first applied or five years after the date of entry into force of the
agreement establishing the WTO, whichever comes later.
The agreement sets out requirements for safeguard investigation which include
public notice for hearings and other appropriate means for interested parties to
present evidence, including on whether a measure would be in the public interest.
In the event of critical circumstances, a provisional safeguard measure may be
imposed based upon a preliminary determination of serious injury. The duration of
such a provisional measure would not exceed 200 days.
The agreement sets out the criteria for “serious injury” and the factors which
must be considered in determining the impact of imports. The safeguard measure
should be applied only to the extent necessary to prevent or remedy serious injury
and to facilitate adjustment. Where quantitative restrictions are imposed, they
normally should not reduce the quantities of imports below the annual average for
the last three representative years for which statistics are available, unless
clear justification is given that a different level is necessary to prevent or
remedy serious injury.
In principle, safeguard measures have to be applied irrespective of source. In
cases in which a quota is allocated among supplying countries, the member applying
restrictions may seek agreement with others. Members having a substantial interest
in supplying the product concerned. Normally, allocation of shares would be on the
basis of proportion of total quantity or value of the imported product over a
previous representative period. However, it would be possible for the importing
country to depart from this approach if it could demonstrate, in consultations
under the auspices of the Safeguards Committee, that imports from certain
contracting parties had increased disproportionately in relation to the total
increase and that such a departure would be justified and equitable to all
suppliers. The duration of the safeguard measure in this case cannot exceed four
years.
The agreement lays down time limits for all safeguard measures. Generally, the
duration of a measure should not exceed four years though this could be extended
up to a maximum of eight years, subject to confirmation of continued necessity by
the competent national authorities and if there is evidence that the industry is
adjusting. Any measure imposed for a period greater than one year should be
progressively liberalized during its lifetime. No safeguard measure could be
applied again to a product that had been subject to such action for a period equal
to the duration of the previous measure, subject to a non-application period of at
least two years. A safeguard measure with a duration of 180 days or less may be
applied again to the import of a product if at least one year had elapsed since
the date of introduction of the measure on that product, and if such a measure had
not been applied on the same product more than twice in the five-year period
immediately preceding the date of introduction of the measure.
The agreement envisages consultations on compensation for safeguard measures.
Where consultations are not successful, the affected members may withdraw
equivalent concessions or other obligations under GATT 1994. However, such action
is not allowed for the first three years of the safeguard measure if it conforms
to the provisions of the agreement, and is taken as a result of an absolute
increase in imports.
Safeguard measures would not be applicable to a product from a developing country
member, if the share of the developing country member in the imports of the
product concerned does not exceed 3 per cent, and that developing country members
with less than 3 per cent import share collectively account for no more than 9 per
cent of total imports of the product concerned. A developing country member has
the right to extend the period of application of a safeguard measure for a period
of up to two years beyond the normal maximum. It can also apply a safeguard
measure again to a product that had been subject to such an action after a period
equal to half of the duration of the previous measure, subject to a non-
application period of at least two years.
The agreement would establish a Safeguards Committee which would oversee the
operation of its provisions and, in particular, be responsible for surveillance of
its commitments.

General Agreement on Trade in Services

The Services Agreement which forms part of the Final Act rests on three pillars.
The first is a Framework Agreement containing basic obligations which apply to all
member countries. The second concerns national schedules of commitments containing
specific further national commitments which will be the subject of a continuing
process of liberalization. The third is a number of annexes addressing the special
situations of individual services sectors.
Part I of the basic agreement defines its scope — specifically, services supplied
from the territory of one party to the territory of another; services supplied in
the territory of one party to the consumers of any other (for example, tourism);
services provided through the presence of service providing entities of one party
in the territory of any other (for example, banking); and services provided by
nationals of one party in the territory of any other (for example, construction
projects or consultancies).
Part II sets out general obligations and disciplines. A basic most-favored-nation
(m.f.n.) obligation states that each party “shall accord immediately and
unconditionally to services and service providers of any other Party, treatment no
less favorable than that it accords to like services and service providers of any
other country”. However, it is recognized that m.f.n. treatment may not be
possible for every service activity and, therefore, it is envisaged that parties
may indicate specific m.f.n. exemptions. Conditions for such exemptions are
included as an annex and provide for reviews after five years and a normal
limitation of 10 years on their duration.
Transparency requirements include publication of all relevant laws and
regulations. Provisions to facilitate the increased participation of developing
countries in world services trade envisage negotiated commitments on access to
technology, improvements in access to distribution channels and information
networks and the liberalization of market access in sectors and modes of supply of
export interest. The provisions covering economic integration are analogous to
those in Article XXIV of GATT, requiring arrangements to have “substantial scrotal
coverage” and to “provide for the absence or elimination of substantially all
discrimination” between the parties.
Since domestic regulations, not border measures, provide the most significant
influence on services trade, provisions spell out that all such measures of
general application should be administered in a reasonable, objective and
impartial manner. There would be a requirement that parties establish the means
for prompt reviews of administrative decisions relating to the supply of services.

The agreement contains obligations with respect to recognition requirements

(educational background, for instance) for the purpose of securing authorizations,
licenses or certification in the services area. It encourages recognition
requirements achieved through harmonization and internationally-agreed criteria.
Further provisions state that parties are required to ensure that monopolies and
exclusive service providers do not abuse their positions. Restrictive business
practices should be subject to consultations between parties with a view to their
elimination.
While parties are normally obliged not to restrict international transfers and
payments for current transactions relating to commitments under the agreement,
there are provisions allowing limited restrictions in the event of balance-of-
payments difficulties. However, where such restrictions are imposed they would be
subject to conditions; including that they are non-discriminatory, that they avoid
unnecessary commercial damage to other parties and that they are of a temporary
nature.
The agreement contains both general exceptions and security exceptions provisions
which are similar to Articles XX and XXI of the GATT. It also envisages
negotiations with a view to the development of disciplines on trade-distorting
subsidies in the services area.
Part III contains provisions on market access and national treatment which would
not be general obligations but would be commitments made in national schedules.
Thus, in the case of market access, each party “shall accord services and service
providers of other Parties treatment no less favorable than that provided for
under the terms, limitations and conditions agreed and specified in its schedule”.
The intention of the market-access provision is to progressively eliminate the
following types of measures: limitations on numbers of service providers, on the
total value of service transactions or on the total number of service operations
or people employed. Equally, restrictions on the kind of legal entity or joint
venture through which a service is provided or any foreign capital limitations
relating to maximum levels of foreign participation are to be progressively
eliminated.
The national-treatment provision contains the obligation to treat foreign service
suppliers and domestic service suppliers in the same manner. However, it does
provide the possibility of different treatment being accorded the service
providers of other parties to that accorded to domestic service providers.
However, in such cases the conditions of competition should not, as a result, be
modified in favor of the domestic service providers.
Part IV of the agreement establishes the basis for progressive liberalization in
the services area through successive rounds of negotiations and the development of
national schedules. It also permits, after a period of three years, parties to
withdraw or modify commitments made in their schedules. Where commitments are
modified or withdrawn, negotiations should be undertaken with interested parties
to agree on compensatory adjustments. Where agreement cannot be reached,
compensation would be decided by arbitration.
Part V of the agreement contains institutional provisions, including consultation
and dispute settlement and the establishment of a Council on Services. The
responsibilities of the Council are set out in a Ministerial Decision.
The first of the annexes to the agreement concerns the movement of labor. It
permits parties to negotiate specific commitments applying to the movement of
people providing services under the agreement. It requires that people covered by
a specific commitment shall be allowed to provide the service in accordance with
the terms of the commitment. Nevertheless, the agreement would not apply to
measures affecting employment, citizenship, residence or employment on a permanent
basis. The annex on financial services (largely banking and insurance) lays down
the right of parties, notwithstanding other provisions, to take prudential
measures, including for the protection of investors, deposit holders and policy
holders, and to ensure the integrity and stability of the financial system.
However, a further understanding on financial services would allow those
participants who choose to do so to undertake commitments on financial services
through a different method. With respect to market access, the understanding
contains more detailed obligations on, among other things, monopoly rights, cross-
border trade (certain insurance and reinsurance policy writing as well as
financial data processing and transfer), the right to establish or expand a
commercial presence, and the temporary entry of personnel. The provisions on
national treatment refer explicitly to access to payments and clearing systems
operated by public entities and to official funding and refinancing facilities.
They also relate to membership of, or participation in, self-regulatory bodies,
securities or futures exchanges and clearing agencies.
The annex on telecommunications relates to measures which affect access to and use
of public telecommunications services and networks. In particular, it requires
that such access be accorded to another party, on reasonable and non-
discriminatory terms, to permit the supply of a service included in its schedule.
Conditions attached to the use of public networks should be no more than is
necessary to safeguard the public service responsibilities of their operators, to
protect the technical integrity of the network and to ensure that foreign service
suppliers do not supply services unless permitted to do so through a specific
commitment. The annex also encourages technical cooperation to assist developing
countries in the strengthening of their own domestic telecommunications sectors.
The annex on air-transport services excludes from the agreement’s coverage traffic
rights (largely bilateral air-service agreements conferring landing rights) and
directly related activities which might affect the negotiation of traffic rights.
Nevertheless, the annex, in its current form, also states that the agreement
should apply to aircraft repair and maintenance services, the marketing of air-
transport services and computer-reservation services. The operation of the annex
would be reviewed at least every five years.
In the final days of the services negotiations, three Decisions were taken — on
Financial Services, Professional Services and the Movement of Natural Persons. The
Decision on Financial Services confirmed that commitments in this sector would be
implemented on an MFN basis, and permits Members to revise and finalize their
schedules of commitments and their MFN exemptions six months after the entry into
force of the Agreement. Contrary to some media reports, the audio-visual and
maritime sectors have not been removed from the scope of the GATS.
Agreement on Trade Related Aspects of Intellectual Property Rights, Including
Trade in Counterfeit Goods
The agreement recognizes that widely varying standards in the protection and
enforcement of intellectual property rights and the lack of a multilateral
framework of principles, rules and disciplines dealing with international trade in
counterfeit goods have been a growing source of tension in international economic
relations. Rules and disciplines were needed to cope with these tensions. To that
end, the agreement addresses the applicability of basic GATT principles and those
of relevant international intellectual property agreements; the provision of
adequate intellectual property rights; the provision of effective enforcement
measures for those rights; multilateral dispute settlement; and transitional
arrangements.
Part I of the agreement sets out general provisions and basic principles, notably
a national-treatment commitment under which the nationals of other parties must be
given treatment no less favorable than that accorded to a party’s own nationals
with regard to the protection of intellectual property. It also contains a most-
favored-nation clause, a novelty in an international intellectual property
agreement, under which any advantage a party gives to the nationals of another
country must be extended immediately and unconditionally to the nationals of all
other parties, even if such treatment is more favorable than that which it gives
to its own nationals.
Part II addresses each intellectual property right in succession. With respect to
copyright, parties are required to comply with the substantive provisions of the
Berne Convention for the protection of literary and artistic works, in its latest
version (Paris 1971), though they will not be obliged to protect moral rights as
stipulated in Article 6bis of that Convention. It ensures that computer programs
will be protected as literary works under the Berne Convention and lays down on
what basis data bases should be protected by copyright. Important additions to
existing international rules in the area of copyright and related rights are the
provisions on rental rights. The draft requires authors of computer programs and
producers of sound recordings to be given the right to authorize or prohibit the
commercial rental of their works to the public. A similar exclusive right applies
to films where commercial rental has led to widespread copying which is materially
impairing the right of reproduction. The draft also requires performers to be
given protection from unauthorized recording and broadcast of live performances
(bootlegging). The protection for performers and producers of sound recordings
would be for no less than 50 years. Broadcasting organizations would have control
over the use that can be made of broadcast signals without their authorization.
This right would last for at least 20 years.
With respect to trademarks and service marks, the agreement defines what types of
signs must be eligible for protection as a trademark or service mark and what the
minimum rights conferred on their owners must be. Marks that have become well-
known in a particular country shall enjoy additional protection. In addition, the
agreement lays down a number of obligations with regard to the use of trademarks
and service marks, their term of protection, and their licensing or assignment.
For example, requirements that foreign marks be used in conjunction with local
marks would, as a general rule, be prohibited.
In respect of geographical indications, the agreement lays down that all parties
must provide means to prevent the use of any indication which misleads the
consumer as to the origin of goods, and any use which would constitute an act of
unfair competition. A higher level of protection is provided for geographical
indications for wines and spirits, which are protected even where there is no
danger of the public’s being misled as to the true origin. Exceptions are allowed
for names that have already become generic terms, but any country using such an
exception must be willing to negotiate with a view to protecting the geographical
indications in question. Furthermore, provision is made for further negotiations
to establish a multilateral system of notification and registration of
geographical indications for wines.
Industrial designs are also protected under the agreement for a period of 10
years. Owners of protected designs would be able to prevent the manufacture, sale
or importation of articles bearing or embodying a design which is a copy of the
protected design.
As regards patents, there is a general obligation to comply with the substantive
provisions of the Paris Convention (1967). In addition, the agreement requires
that 20-year patent protection be available for all inventions, whether of
products or processes, in almost all fields of technology. Inventions may be
excluded from patentability if their commercial exploitation is prohibited for
reasons of public order or morality; otherwise, the permitted exclusions are for
diagnostic, therapeutic and surgical methods, and for plants and (other than
microorganisms) animals and essentially biological processes for the production of
plants or animals (other than microbiological processes). Plant varieties,
however, must be protectable either by patents or by a sui generis system (such as
the breeder’s rights provided in a UPOV Convention). Detailed conditions are laid
down for compulsory licensing or governmental use of patents without the
authorization of the patent owner. Rights conferred in respect of patents for
processes must extend to the products directly obtained by the process; under
certain conditions alleged infringers may be ordered by a court to prove that they
have not used the patented process.
With respect to the protection of layout designs of integrated circuits, the
agreement requires parties to provide protection on the basis of the Washington
Treaty on Intellectual Property in Respect of Integrated Circuits which was opened
for signature in May 1989, but with a number of additions: protection must be
available for a minimum period of 10 years; the rights must extend to articles
incorporating infringing layout designs; innocent infringers must be allowed to
use or sell stock in hand or ordered before learning of the infringement against a
suitable royalty: and compulsory licensing and government use is only allowed
under a number of strict conditions.
Trade secrets and know-how which have commercial value must be protected against
breach of confidence and other acts contrary to honest commercial practices. Test
data submitted to governments in order to obtain marketing approval for
pharmaceutical or agricultural chemicals must also be protected against unfair
commercial use.
The final section in this part of the agreement concerns anti-competitive
practices in contractual licenses. It provides for consultations between
governments where there is reason to believe that licensing practices or
conditions pertaining to intellectual property rights constitute an abuse of these
rights and have an adverse effect on competition. Remedies against such abuses
must be consistent with the other provisions of the agreement.
Part III of the agreement sets out the obligations of member governments to
provide procedures and remedies under their domestic law to ensure that
intellectual property rights can be effectively enforced, by foreign right holders
as well as by their own nationals. Procedures should permit effective action
against infringement of intellectual property rights but should be fair and
equitable, not unnecessarily complicated or costly, and should not entail
unreasonable time-limits or unwarranted delays. They should allow for judicial
review of final administrative decisions. There is no obligation to put in place a
judicial system distinct from that for the enforcement of laws in general, nor to
give priority to the enforcement of intellectual property rights in the allocation
of resources or staff.
The civil and administrative procedures and remedies spelled out in the text
include provisions on evidence of proof, injunctions, damages and other remedies
which would include the right of judicial authorities to order the disposal or
destruction of infringing goods. Judicial authorities must also have the authority
to order prompt and effective provisional measures, in particular where any delay
is likely to cause irreparable harm to the right holder, or where evidence is
likely to be destroyed. Further provisions relate to measures to be taken at the
border for the suspension by customs authorities of release, into domestic
circulation, of counterfeit and pirated goods. Finally, parties should provide for
criminal procedures and penalties at least in cases of wilful trademark
counterfeiting or copyright piracy on a commercial scale. Remedies should include
imprisonment and fines sufficient to act as a deterrent.
The agreement would establish a Council for Trade-Related Aspects of Intellectual
Property Rights to monitor the operation of the agreement and governments’
compliance with it. Dispute settlement would take place under the integrated GATT
dispute-settlement procedures as revised in the Uruguay Round.
With respect to the implementation of the agreement, it envisages a one-year
transition period for developed countries to bring their legislation and practices
into conformity. Developing countries and countries in the process of
transformation from a centrally-planned into a market economy would have a five-
year transition period, and least-developed countries 11 years. Developing
countries which do not at present provide product patent protection in an area of
technology would have up to 10 years to introduce such protection. However, in the
case of pharmaceutical and agricultural chemical products, they must accept the
filing of patent applications from the beginning of the transitional period.
Though the patent need not be granted until the end of this period, the novelty of
the invention is preserved as of the date of filing the application. If
authorization for the marketing of the relevant pharmaceutical or agricultural
chemical is obtained during the transitional period, the developing country
concerned must offer an exclusive marketing right for the product for five years,
or until a product patent is granted, whichever is shorter.
Subject to certain exceptions, the general rule is that the obligations in the
agreement would apply to existing intellectual property rights as well as to new
ones.
Understanding on Rules and Procedures Governing the Settlement of Disputes
The dispute settlement system of the GATT is generally considered to be one of the
cornerstones of the multilateral trade order. The system has already been
strengthened and streamlined as a result of reforms agreed following the Mid-Term
Review Ministerial Meeting held in Montreal in December 1988. Disputes currently
being dealt with by the Council are subject to these new rules, which include
greater automaticity in decisions on the establishment, terms of reference and
composition of panels, such that these decisions are no longer dependent upon the
consent of the parties to a dispute. The Uruguay Round Understanding on Rules and
Procedures Governing the Settlement of Disputes (DSU) will further strengthen the
existing system significantly, extending the greater automaticity agreed in the
Mid-Term Review to the adoption of the panels’ and a new Appellate Body’s
findings. Moreover, the DSU will establish an integrated system permitting WTO
Members to base their claims on any of the multilateral trade agreements included
in the Annexes to the Agreement establishing the WTO. For this purpose, a Dispute
Settlement Body (DSB) will exercise the authority of the General Council and the
Councils and committees of the covered agreements.
The DSU emphasizes the importance of consultations in securing dispute resolution,
requiring a Member to enter into consultations within 30 days of a request for
consultations from another Member. If after 60 days from the request for
consultations there is no settlement, the complaining party may request the
establishment of a panel. Where consultations are denied, the complaining party
may move directly to request a panel. The parties may voluntarily agree to follow
alternative means of dispute settlement, including good offices, conciliation,
mediation and arbitration.
Where a dispute is not settled through consultations, the DSU requires the
establishment of a panel, at the latest, at the meeting of the DSB following that
at which a request is made, unless the DSB decides by consensus against
establishment. The DSU also sets out specific rules and deadlines for deciding the
terms of reference and composition of panels. Standard terms of reference will
apply unless the parties agree to special terms within 20 days of the panel’s
establishment. And where the parties do not agree on the composition of the panel
within the same 20 days, this can be decided by the Director-General. Panels
normally consist of three persons of appropriate background and experience from
countries not party to the dispute. The Secretariat will maintain a list of
experts satisfying the criteria.
Panel procedures are set out in detail in the DSU. It is envisaged that a panel
will normally complete its work within six months or, in cases of urgency, within
three months. Panel reports may be considered by the DSB for adoption 20 days
after they are issued to Members. Within 60 days of their issuance, they will be
adopted, unless the DSB decides by consensus not to adopt the report or one of the
parties notifies the DSB of its intention to appeal.
The concept of appellate review is an important new feature of the DSU. An
Appellate Body will be established, composed of seven members, three of whom will
serve on any one case. An appeal will be limited to issues of law covered in the
panel report and legal interpretations developed by the panel. Appellate
proceedings shall not exceed 60 days from the date a party formally notifies its
decision to appeal. The resulting report shall be adopted by the DSB and
unconditionally accepted by the parties within 30 days following its issuance to
Members, unless the DSB decides by consensus against its adoption.
Once the panel report or the Appellate Body report is adopted, the party concerned
will have to notify its intentions with respect to implementation of adopted
recommendations. If it is impracticable to comply immediately, the party concerned
shall be given a reasonable period of time, the latter to be decided either by
agreement of the parties and approval by the DSB within 45 days of adoption of the
report or through arbitration within 90 days of adoption. In any event, the DSB
will keep the implementation under regular surveillance until the issue is
resolved.
Further provisions set out rules for compensation or the suspension of concessions
in the event of non-implementation. Within a specified time-frame, parties can
enter into negotiations to agree on mutually acceptable compensation. Where this
has not been agreed, a party to the dispute may request authorization of the DSB
to suspend concessions or other obligations to the other party concerned. The DSB
will grant such authorization within 30 days of the expiry of the agreed time-
frame for implementation. Disagreements over the proposed level of suspension may
be referred to arbitration. In principle, concessions should be suspended in the
same sector as that in issue in the panel case. If this is not practicable or
effective, the suspension can be made in a different sector of the same agreement.
In turn, if this is not effective or practicable and if the circumstances are
serious enough, the suspension of concessions may be made under another agreement.

One of the central provisions of the DSU reaffirms that Members shall not
themselves make determinations of violations or suspend concessions, but shall
make use of the dispute settlement rules and procedures of the DSU.
The DSU contains a number of provisions taking into account the specific interests
of the developing and the least-developed countries. It also provides some special
rules for the resolution of disputes which do not involve a violation of
obligations under a covered agreement but where a Member believes nevertheless
that benefits are being nullified or impaired. Special decisions to be adopted by
Ministers in 1994 foresee that the Montreal Dispute Settlement Rules which would
otherwise have expired at the time of the April 1994 meeting are extended until
the entry into force of the WTO. Another decision foresees that the new rules and
procedures will be reviewed within four years after the entry into force of the
WTO.

Trade Policy Review Mechanism

An agreement confirms the Trade Policy Review Mechanism, introduced at the time of
the Mid-term Review, and encourages greater transparency in national trade policy-
making. A further Ministerial decision reforms the notification requirements and
procedures generally.
Decision on achieving greater coherence in global economic policy-making
This will set out concepts and proposals with respect to achieving greater
coherence in global economic policy-making. Among other things, the text notes
that greater exchange rate stability based on more orderly underlying economic and
financial conditions should contribute to “the expansion of trade, sustainable
growth and development, and the timely correction of external imbalances”. It
recognizes that while difficulties whose origins lie outside the trade field
cannot be redressed through measures taken in the trade field alone, there are
nevertheless interlinkages between the different aspects of economic policy.
Therefore, WTO is called upon to develop its cooperation with the international
organizations responsible for monetary and financial matters. In particular, the
Director-General of WTO is called upon to review, with his opposite numbers in the
World Bank and the International Monetary Fund, the implications of WTO’s future
responsibilities for its cooperation with the Bretton Woods institutions.

Government Procurement

The Final Act contains an agreement related to accession procedures to the

Government Procurement Agreement which is designed to facilitate the membership of
developing countries. It envisages consultations between the existing members and
applicant governments. These would be followed by the establishment of accession
working parties to examine the offers made by applicant countries (in other words,
the public entities whose procurement will be opened up to international
competition) as well as the export opportunities for the applicant country in the
markets of existing signatories.

The Uruguay Round

It took seven and a half years, almost twice the original schedule. By the end,
123 countries were taking part. It covered almost all trade, from toothbrushes to
pleasure boats, from banking to telecommunications, from the genes of wild rice to
AIDS treatments. It was quite simply the largest trade negotiation ever, and most
probably the largest negotiation of any kind in history.
At times it seemed doomed to fail. But in the end, the Uruguay Round brought about
the biggest reform of the world’s trading system since GATT was created at the end
of the Second World War. And yet, despite its troubled progress, the Uruguay Round
did see some early results. Within only two years, participants had agreed on a
package of cuts in import duties on tropical products — which are mainly exported
by developing countries. They had also revised the rules for settling disputes,
with some measures implemented on the spot. And they called for regular reports on
GATT members’ trade policies, a move considered important for making trade regimes
transparent around the world

A round to end all rounds?

The seeds of the Uruguay Round were sown in November 1982 at a ministerial meeting
of GATT members in Geneva. Although the ministers intended to launch a major new
negotiation, the conference stalled on agriculture and was widely regarded as a
failure. In fact, the work program that the ministers agreed formed the basis for
what was to become the Uruguay Round negotiating agenda.
Nevertheless, it took four more years of exploring, clarifying issues and
painstaking consensus-building, before ministers agreed to launch the new round.
They did so in September 1986, in Punta del Este, Uruguay. They eventually
accepted a negotiating agenda that covered virtually every outstanding trade
policy issue. The talks were going to extend the trading system into several new
areas, notably trade in services and intellectual property, and to reform trade in
the sensitive sectors of agriculture and textiles. All the original GATT articles
were up for review. It was the biggest negotiating mandate on trade ever agreed,
and the ministers gave themselves four years to complete it.
Two years later, in December 1988, ministers met again in Montreal, Canada, for
what was supposed to be an assessment of progress at the round’s half-way point.
The purpose was to clarify the agenda for the remaining two years, but the talks
ended in a deadlock that was not resolved until officials met more quietly in
Geneva the following April.
Despite the difficulty, during the Montreal meeting, ministers did agree a package
of early results. These included some concessions on market access for tropical
products — aimed at assisting developing countries — as well as a streamlined
dispute settlement system, and the Trade Review Mechanism Policy., and the which
provided for the first comprehensive, systematic and regular reviews of national
trade policies and practices of GATT members. The round was supposed to end when
ministers met once more in Brussels, in December 1990. But they disagreed on how
to reform agricultural trade and decided to extend the talks. The Uruguay Round
entered its bleakest period.
Despite the poor political outlook, a considerable amount of technical work
continued, leading to the first draft of a final legal agreement. This draft
“Final Act” was compiled by the then GATT director-general, Arthur Dunkel, who
chaired the negotiations at officials’ level. It was put on the table in Geneva in
December 1991. The text fulfilled every part of the Punta del Este mandate, with
one exception — it did not contain the participating countries’ lists of
commitments for cutting import duties and opening their services markets. The
draft became the basis for the final agreement.
Over the following two years, the negotiations lurched between impending failure,
to predictions of imminent success. Several deadlines came and went. New points of
major conflict emerged to join agriculture: services, market access, anti-dumping
rules, and the proposed creation of a new institution. Differences between the
United States and European Union became central to hopes for a final, successful
conclusion.
In November 1992, the US and EU settled most of their differences on agriculture
in a deal known informally as the “Blair House accord”. By July 1993 the “Quad”
(US, EU, Japan and Canada) announced significant progress in negotiations on
tariffs and related subjects (“market access”). It took until 15 December 1993 for
every issue to be finally resolved and for negotiations on market access for goods
and services to be concluded (although some final touches were completed in talks
on market access a few weeks later). On 15 April 1994, the deal was signed by
ministers from most of the 123 participating governments at a meeting in
Marrakech, Morocco.
The delay had some merits. It allowed some negotiations to progress further than
would have been possible in 1990: for example some aspects of services and
intellectual property, and the creation of the WTO itself. But the task had been
immense, and negotiation-fatigue was felt in trade bureaucracies around the world.
The difficulty of reaching agreement on a complete package containing almost the
entire range of current trade issues led some to conclude that a negotiation on
this scale would never again be possible. Yet, the Uruguay Round agreements
contain timetables for new negotiations on a number of topics. And by 1996, some
countries were openly calling for a new round early in the next century. The
response was mixed; but the Marrakech agreement did already include commitments to
reopen negotiations on agriculture and services at the turn of the century. These
began in early 2000 and were incorporated into the Doha Development Agenda in late
2001.

What happened to GATT?

The WTO replaced GATT as an international organization, but the General Agreement
still exists as the WTO’s umbrella treaty for trade in goods, updated as a result
of the Uruguay Round negotiations. Trade lawyers distinguish between GATT 1994,
the updated parts of GATT, and GATT 1947, the original agreement which is still
the heart of GATT 1994. Confusing? For most of us, it’s enough to refer simply to
“GATT”.

The post-Uruguay Round built-in agenda

Many of the Uruguay Round agreements set timetables for future work. Part of this
“built-in agenda” started almost immediately. In some areas, it included new or
further negotiations. In other areas, it included assessments or reviews of the
situation at specified times. Some negotiations were quickly completed, notably in
basic telecommunications, financial services. (Member governments also swiftly
agreed a deal for freer trade in information technology products, an issue outside
the “built-in agenda”.)
The agenda originally built into the Uruguay Round agreements has seen additions
and modifications. A number of items are now part of the Doha Agenda, some of them
updated.
There were well over 30 items in the original built-in agenda. This is a selection
of highlights:
1996
Maritime services: market access negotiations to end (30 June 1996, suspended to
2000, now part of Doha Development Agenda)
Services and environment: deadline for working party report (ministerial
conference, December 1996)
Government procurement of services: negotiations start
1997
Basic telecoms: negotiations end (15 February)
Financial services: negotiations end (30 December)
Intellectual property, creating a multilateral system of notification and
registration of geographical indications for wines: negotiations start, now part
of Doha Development Agenda
1998
Textiles and clothing: new phase begins 1 January
Services (emergency safeguards): results of negotiations on emergency safeguards
to take effect (by 1 January 1998, deadline now March 2004)
Rules of origin: Work program on harmonization of rules of origin to be completed
(20 July 1998)
Government procurement: further negotiations start, for improving rules and
procedures (by end of 1998)
Dispute settlement: full review of rules and procedures (to start by end of 1998)
1999
Intellectual property: certain exceptions to patentability and protection of plant
varieties: review starts
2000
Agriculture: negotiations start, now part of Doha Development Agenda
Services: new round of negotiations start, now part of Doha Development Agenda
Tariff bindings: review of definition of “principle supplier” having negotiating
rights under GATT Art 28 on modifying bindings
Intellectual property: first of two-yearly reviews of the implementation of the
agreement
2002
Textiles and clothing: new phase begins 1 January
2005
Textiles and clothing: full integration into GATT and agreement expires 1 January