 
  WORLD TRADE  
ORGANIZATION  TN/RL/W/155 
28 April 2004 
 
 (04-1895) 
Negotiating Group on Rules Original:   English 
  
 
SUBMISSION ON REGIONAL TRADE AGREEMENTS 
 
Paper by the ACP Group of States
 
  
 The following submission, dated 26 April 2004, is being circulated at the request of the ACP 
Group of States. 
_______________ 
 
DEVELOPMENTAL ASPECTS OF REGIONAL TRADE AGREEMENTS AND 
SPECIAL AND DIFFERENTIAL TREATMENT IN WTO RULES:  
GATT 1994 ARTICLE XXIV AND THE ENABLING CLAUSE 
 
Communication by the Mission of Botswana on Behalf of the ACP Group of States
 
  INTRODUCTION 
1. Economic integration, in the form of regi onal trade agreements (RTAs), is a core 
development strategy for African, Caribbean a nd Pacific States. The Group therefore attaches 
importance to the Doha work programme on WTO rules.  It will participate constructively in the work 
of the Negotiating Group on Rules with a view to "clarifying and improving disciplines and 
procedures under the existing WTO provisions applyi ng to regional trade agreements" while taking 
into account their "developmental aspects".
1 
2. To date the Negotiating Group on Rules has iden tified specific substantive and procedural 
systemic issues to be discussed on a priority b asis based on the "Compendium of issues related to 
regional trade agreements" (TN/RL/W/8/Rev.1) prepar ed by the Secretariat. The ACP Group of States 
note that several proposals, such as by the European Communities (TN/RL/W/14) and Turkey 
(TN/RL/W/32), address some of their concerns rega rding "developmental aspects" of RTAs. In the 
preparatory process leading to the Third WTO Mini sterial Conference, Jamaica submitted a proposal 
"to examine the relevant provisions of Article XXIV of GATT and Article  V of GATS relating to 
regional trade agreements in which developing coun tries are participating, with a view to providing 
these countries with adequate scope for absorbing th e adjustment costs of trade liberalization and 
ensuring that these agreements make a sustaine d contribution to their economic development" 
(WT/GC/W/369). 
 
I. DEVELOPMENTAL ASPECTS OF REGIONAL TRADE AGREEMENTS 
3. ACP Group of States consider that the clarification and improvement in WTO rules on the 
formation and operation of RTAs should support the development stra tegy of developing countries 
through regional integration by providing a s upportive multilateral framework. The multilateral rules 
                                                      
1 Doha Ministerial Declaration (WT/MIN(01)/DEC/1), paragraph 29. TN/RL/W/155 
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 should not pose unduly restrictive constraints on econo mic integration efforts of developing countries 
being pursued as part of their f undamental development strategy. 
4. The ACP Group of States are negotiating WTO co mpatible economic part nership agreements 
with the EU under the Cotonou Partnership Agre ement, as a building block for their regional 
integration processes and to the multilateral trading system. In this context, ACP Group of States 
consider that the outcome of the negotiations on WTO rules on RTAs shall explicitly provide the 
necessary differential and more favourable to devel oping countries' parties to RTAs with developed 
countries. 
5. Thus, the ACP Group of States submits that speci al and differential (S&D) treatment shall be 
made available to developing countries parti es to RTAs formed by developing and developed 
countries; so that WTO rules applying to RTAs ta ke due account of the developmental aspects of 
RTAs. It proposes clarifications and modifications  in the existing provisions of Article XXIV of 
GATT 1994 to incorporate S&D treatment for deve loping countries. The ACP Group of States also 
submits that the Enabling Clause currently prevailin g should be preserved in provide legal cover for 
South-South RTAs. 
 
II. RATIONALE FOR DIFFERENTIAL AND MORE FAVOURABLE TREATMENT 
FOR DEVELOPING COUNTRIE S IN GATT 1994 ARTICLE XXIV 
6. The existing GATT 1994 Article XXIV provisions do not take into account developmental 
aspects of RTAs entered into between developed a nd developing countries, i.e., between countries 
with significant differences in levels of deve lopment, and productive and export capacities and 
competitiveness. This is in large part because Article XXIV of GATT 1947 was negotiated at a time 
in history when there existed very few (if not no ) North-South RTAs. The only change to these GATT 
1947 rules occurred in the Understanding on the Interpretation of Artic le XXIV of GATT 1994, 
negotiated and accepted during the Uruguay Round. These changes clarified some aspects of the 
article, including the provision on trans ition period for interim agreements. 
7. Second, specific S&D treatment for developing countries' in North-South RTAs is absent 
from existing rules including in Article XXIV of GATT 1994, although S&D is a key principle and integral part of the legal architecture of WTO. 
8. Third, while there exists some de facto  flexibility under GATT Article XXIV arising from the 
ambiguity in terminology used therein, and in th e permissive practices evolved over the years of 
particularly the GATT history and now the WTO, there are no explicit provision on de jure  S&D 
treatment for developing countries in meeting the requirements set out in Article XXIV of GATT 
1994. Such de facto  flexibility cannot constitute nor substitute  for legally binding, operational and 
effective S&D provisions. The dispute settlement case on Turkey-Restriction on Imports of Textiles 
and Clothing  Products  limited the legal enforceab ility and scope of existing de facto  flexibility in 
Article XXIV of GATT 1994.
2 
9. Fourth, the lack of S&D in GATT Article XXIV stands at odds with Article V of GATS (a 
counterpart article to Article XXIV of GATT 1994)  dealing with economic integration agreements 
(EIAs) on trade in services, which explicitly provid es for S&D treatment for developing countries in 
the application of the criteria entailed in Article V:1 of GATS. Furthermore, the GATS recognizes a distinction between EIAs that may involve deve loped and developing countries on the one hand 
                                                     
 
2 Turkey-Restrictions on imports of textile and clothing products . Report of the Appellate Body , 22 
October 1999 (WT/DS34/AB/R), paragraphs 48 and 57.  TN/RL/W/155 
 Page 3 
 
 
 (Article V:3(a)), and those involving only developi ng countries (Article V:3(b)). In both, flexibility 
and more favourable treatment is  provided to developing countries. 
 
III. PROPOSAL 
10. In the light of the developmental aspects of RT As, and on the recognition of a deficiency in 
the legal structure of WTO rules applying to RT As, the ACP Group of States submits the following 
proposal: 
Members agree that S&D treatment for developi ng countries be formally and explicitly made 
available to developing countries in meeting cr iteria set out in paragraphs 5 to 8 of GATT 
Article XXIV in the context of regional agre ements entered into between developing and 
developed countries. 
11. Without prejudice to the right of ACP Group of States to submit additional proposals and 
clarifications, special and differential treatment  shall apply to the following procedural and 
substantive  requirements of Article XXIV of GATT 1994: 
 (i) Article XXIV:8(a)(i) and (b) ("substantially all the trade"): 
 
• With regard to duties, appropriate flex ibility shall be provided for developing 
countries in meeting the "substantially all the trade" requirement in respect of trade and product coverage, including in te rms of the application of favourable 
methodology and/or lower threshold le vels, if to be applied, in the 
measurement of trade and product coverage  of developing country parties to an 
RTA; 
• With regard to "other restrictive regulations of commerce", the term shall be 
interpreted in a flexible manner, so th at the right of developing countries to 
apply contingency protection measure s including safeguards and other non-
tariff measures (e.g. rules of origin) on intra regional trade is not unduly impeded, and that legal security and pred ictability is guaranteed for special and 
differential treatment measures in terms of asymmetry in rights and obligations 
of developed and developi ng country member under an RTA in respect of such 
non-tariff measures; 
(ii) Article XXIV:5(c) and paragraph 3 of  the 1994 Understanding ("reasonable period of 
time"): 
• The legal standing of interim agreements  during the transition period prior to 
effective application of provisions of  Article XXIV of GATT 1994 should be 
clarified to the effect that the substantive and procedural requirements of 
GATT Article XXIV 5-8 becomes appli cable to an RTA only after the 
transition period expires; 
• The modality for determining "exceptiona l circumstances" should be clarified 
so that a transition period longer than 10 years will be made legitimately and more easily available to developing countries; 
• The maximum length of the transition peri od permissible is to be established, 
the period should be determined in such a manner that is consistent with the TN/RL/W/155 
Page 4  
 
 trade, development and financial situat ion of developing countries, but in any 
case not less than 18 years; 
(iii) Article XXIV:7 and paragraphs 7-10 of the 1994 Understanding (Notification, 
reporting and review in the Committee on Regional Trade Agreements): 
• Due account shall be given to "developmental aspects" of RTAs involving 
developing countries in determining th eir conformity with Article XXIV. 
• There shall be streamlined, efficient and less onerous transparency and 
examination procedures of RTAs invol ving developing countries, which shall 
take due account of limited administra tive, human and financial capacities 
developing countries; 
(iv) Paragraph 12 of the 1994 U nderstanding (dispute settlement): 
• The relationship between the DSU and GATT Article XXIV, and jurisdictions 
of DSB and the CRTA, should be clarified,  so that the jurisdiction of the CRTA 
to determine WTO-compatibility of RTAs is not unduly overridden by the 
dispute settlement procedures and rulings. 
12. With regard to the Enabling Clause, the ACP Group of States proposes that: 
Members reaffirm the legal validity of th e Enabling Clause to cover regional trade 
arrangements entered into among developing count ries (i.e. South-South agreements) to the 
effect that developing countries' right to form such arrangements under the Enabling Clause 
are not undermined by paragraphs 5 to 9 of GATT Article XXIV. 
 
• Developing countries may enter into regional trade agreements among 
themselves for mutual elimination of trade barriers, in accordance with the 
provisions of the Enabling Clause, and 
 
• When developing countries notify RTAs under the Enabling Clause, it is the 
provisions of the Enabling Clause that excl usively apply in the determination of 
compliance with WTO rules. 
 
13. The importance of the Enabling Clause as a deve lopment milestone in the history of GATT 
and the WTO cannot be overemphasized. The Clause is an "acquis" in the legal architecture of WTO. 
The negotiations on RTA rules should not prejudice th e coverage of South-South agreement under the 
Enabling Clause. 
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