. /.RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG53/M/1
22 March 1999
(99-1132)
Committee on Regional Trade Agreements
Twenty-First Session
EXAMINATION OF THE AGREEMENT BETWEEN THE EUROPEAN COMMUNITIES
AND THE PRINCIPALITY OF ANDORRA
Note on the Meeting of 10 February 1999
Chairman: Mr. Jean-Marie Noirfalisse (Belgium)
1. Under Agenda Item C.II of its Twenty-First  Session, as found in Airgram WTO/AIR/1014
and Corr. 1, dated 29 January and 9 February, respectively, the Committee on Regional Trade
Agreements (CRTA) took up examination of the Customs Union between the European Communities
(EC) and the Principality of Andorra.
2. The Chairman said that he was replacing Ambassador Carlos Pérez del Castillo during this
meeting on the Agreement, and he reminded the Committee that, during the previous meeting, the EC
representative had requested that the examination of this Agreement be postponed as it was being
renegotiated.  The representative of the United States had then requested that the item be kept on the
agenda of the next meeting so that an update could be provided.
3. The representative of the European Communities stated that while he had no new
information, as the discussion between the EC and the authorities of Andorra were continuing, his
delegation considered it appropriate that the Committee begin the process of looking at the
information already submitted.  Given that the observer delegation from Andorra was not present, he
said that there might be questions from the Committee that he would not be able to address.  He noted
that, apart from the notification, the Parties had also submitted the text of the Agreement and the
Standard Format (WT/REG53/3).  He emphasized the close economic, political, social and geographic
ties that linked the EC and Andorra, due to the physical location of Andorra to member states of the
EC.  Andorra had a long history as a Principality governed by co-princes who had been in authority
over Andorra for some seven hundred years, except for a short period during the French revolution.
Trade relations between France, Spain and Andorra had long historical links and had been governed
for many years by an exchange of letters signed in 1867.  These letters provided, in broad terms, for afree-trade area, perhaps before the concept had ever been categorized.  In 1986, when Spain acceded
to the EC, it became advisable to take account of the trade relations that were already in place
between France, Spain and Andorra.  As a result a customs union was negotiated and signed by an
exchange of letters in 1990.  It was this Agreement that had been notified to the Committee by the EC.
Andorra had also presented an application for a ccession to the WTO which was under review by a
separate body of the WTO.  A trade-policy memorandum had yet to be submitted, but would be
forthcoming and thereafter the process of accession would ensue.  In terms of the economic balance
between the EC and Andorra, it was very much a question of large and small; the population of the
European Union was 370 million and that of Andorra, according to his latest estimates, was 65,000;
inevitably, the trading relationship would reflect this fact.  As a mountainous Principality coveringonly 465 square kilometres, Andorra did not have its own currency; it had a currency union with
Spain, although the French currency also circulated freely.  In the area of merchandise trade, Andorra
imported more than it exported and that balance wa s visible in the trading relationship between the
EC and Andorra.  Much of the economic activity in Andorra rested on services, particularly tourism.WT/REG53/M/1
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He hoped that the key elements of the customs union had been reflected, accurately and
comprehensively, in the Standard Format document.  The Agreement provided for the elimination of
duties, charges and quotas in products falling und er Chapters 25-97 of the Harmonized System (HS).
In addition, products originating in Andorra and falling under HS Chapters 1-24 were exempt from
import duties when imported into the EC.  Two-party supplier Common External Tariff products inHS Chapters 25 upwards and products governed by trade regimes in areas such as anti-dumping and
countervailing duties vis-à-vis  third country products were covered by the customs union.  He would
be happy to respond to questions but said that some questions might require responses in writing or
collaboration with the authorities of Andorra before definitive answers could be provided.
4. The representative of the United States said that while he recognised the long history between
France and Spain, and then the EC, with the principality of Andorra, one of the most difficult issues
addressed in all reviews before the Committee related to the circumstances under which Members ofthe WTO were able to depart from the obligation to provide MFN treatment to other WTO Members.
Obviously, adherence to that obligation was central to the integrity of the WTO and it followed that
exceptions could only be tolerated under the specific conditions allowed by the WTO.  The
United States delegation supported trade integration in Europe and continued to support agreements
that were concluded in conformity with WTO rules.  However, as a major trading country outside thetrade preference system, his delegation placed great emphasis on the need to meet WTO requirements.
In that light, he had noticed that a number of agreements before the Committee omitted coverage of
an important sector of the economies in question.  He expressed concern that the Committee was,
again, reviewing an Agreement, in this case for a customs union, that excluded agriculture,
notwithstanding the obligation of WTO Members to observe the provisions of Article XXIV of GATT
1994.  He also expressed concern that while the Agreement was signed in 1990 and had entered into
force in 1991, it had only been notified to the WTO in 1998, despite the requirement that agreements
be promptly notified.  His delegation had a number of questions on the coverage of the Agreement; in
particular, the extent to which it provided for the reduction, as opposed to the elimination, of tariffs on
an preferential basis; and on the rules of origin regime, including cumulation across other preferentialtrade agreements.
5. The Committee took note of the comments made.
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