RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG/W/31
18 November 1998
(98-4602)
Committee on Regional Trade Agreements Original:  English
COMMUNICATION FROM HONG KONG, CHINA
An Illustrative List of Elements in Article XXIV Requiring Clarification
The following communication has been received from the Permanent Delegation of
Hong Kong, China with the request that th is document be distributed to all Members.
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Introduction
1. The assessment of conformity of regional trade agreements (RTAs) with the multilateral trade
system (MTS) is characterised by uncertainty.  Thus very few working parties examining RTAs have
been able to reach consensus.  This situation is unsatisfactory both for potential participants in RTAs,
because they cannot be confident that the RTA being prepared will be accepted as being in conformity
with the MTS, and for the conduct of the MTS, because its standing and acceptability depends on it
being a rule-based system.
2. RTAs can be beneficial for the MTS, so it is important that, on the one hand, potential
participants are not faced with uncertainty when they enter into RTAs and on the other hand, the MTS
derives the maximum benefit from RTAs.
3. Most preferential trade in goods within RTAs is covered by Article XXIV.  It would be
appropriate that the enhancement of the position of RTAs within the MTS should commence by an
examination of the elements of Article XXIV that require clarification in order to eliminate the
uncertainties associated herewith.
4. In this connection, we would like to share with Members our observations based on work
undertaken in the CRTA so far.  These should not be taken to prejudge the position of any delegation.
Illustrative List of Elements for Further Examination
5. Elements identified to date are as follows:
(i) Article XXIV:4
The uncertainty is whether this provision should be regarded as being in the nature of a
preamble or whether the injunction “not to raise barriers to the trade of (third parties)” can be
applied objectively.WT/REG/W/31
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(ii) Articles XXIV:5(a) and (b)
(a) Uncertainty arises from different methodologies for assessing the incidence of duties
(we note the Secretariat has been working on this area);
(b) uncertainty arises from the lack of an accepted methodology for assessing the
incidence of regulations of commerce;
(c) there is uncertainty whether the assessments of the incidence of duties and other
regulations of commerce should be combined or whether each represents a separate
obligation;
(d) there is uncertainty whether “on the whole” relates to duties and other regulations of
commerce or to contracting parties not parties (to the RTA), i.e., whether the
obligation relates to third parties taken together or to each individual third party; and
(e) uncertainty arises from the lack of an agreed interpretation of “other regulations of
commerce”, e.g., whether rules of origin are included.
(iii) Articles XXIV:7(a)
(a) Uncertainty arises from what is meant by “promptly”; and(b) uncertainty arises from the lack of consensus on what “information” is to be made
available.
(iv) Articles XXIV:8(a)(i) and (b)
(a) Uncertainty arises from lack of agreements on the “restrictive regulations of
commerce” that are to be eliminated between participants, which depends on the
coverage of the term and whether the exception list in brackets is exhaustive or
merely indicative; and
(b) uncertainty arises from the absence of criteria for assessing what constitutes
“substantially all the trade”.
(v) Article XXIV:8(a)(ii)
Uncertainty arises from the lack of objective criteria for assessing “substantially the same
duties and other regulations of commerce” and whether the necessity to comply with this
provision justifies the introduction of measures to which other WTO provisions might pertain.WT/REG/W/31
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Other Areas of Interest
6. There would be other elements in Article XXIV which require clarification, as, for example,
identified in the Secretariat annotated checklist (WT/REG/W/16).  Consideration could be given to
areas which are not explicitly covered by Article XXIV such as how to ensure openness of RTAs byway of accession and how to reduce trade disruption effects arising from the multiplicity of rules and
customs procedures of different RTAs.  It would also be appropriate to initiate further work on other
rules relevant to RTAs, in particular GATS Article V.
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