PREPARATORY COMMITTEE RESTRICTED
FOR THE PC/IPL/W/6
WORLD TRADE ORGANIZATION 7September 1994
(94-1823)
Original: English SUB-COMMITTEE ONINSTITUTIONAL ,
PROCEDURAL AND LEGAL MATTERS
TRANSITIONAL ARRANGEMENTS
Communication from Austria
Thefollowingcommunication,dated2September,hasbeenreceivedfromthePermanentMission
ofAustria withtherequest thatitbecirculated tomembers oftheSub-Committee.
___________
SomeinitialcommentstotheDiscussionPaperonTransitionalArrangements,dated18July1994,
arehereby presented.
Itistimely anduseful toundertake firststeps toclarify thecomplexities andthenecessities
forsolutions resulting fromtheinstitutional setupofGATT 1947, theTokyo Round Agreements and
theWTO Agreements aslegally distinct instruments before theentry intoforce oftheWTO.
Ascorrectly pointed outinparagraph 3oftheDiscussion Paper, these agreements maywell
co-exist forsome timewithdifferent participation. Although theoptions formembership described
inparagraph 3arecorrect inprinciple, itshould inaddition bepointed outthatitmight takesome
timeaftertheentry intoforce oftheWTO Agreement before countries, separate customs territories
andtheEU(hereinafter referred toascountries) decide definitely ontheirpreferred policy option.
According toArticle XIVoftheWTO Agreement, during atwoyearperiod theAgreement remains
openforacceptance, which inaccordance withitsArticle XIresults inoriginal membership. Some
countries maywishtotakeadvantage oftheseprovisions, forexample, tocomplete theirconstitutional
requirements. Other parties toGATT 1947 andtheWTO mayfeelreluctant towithdraw from
GATT 1947 during thisinterim time, although theirultimate aimmight beWTO membership only
ortheultimate replacement oftheGATT asaninstitution bytheWTO. Toincrease complexities some
countries -forexample, present observers toGATT 1947 -maybecome contracting parties of
GATT 1947 before orevenaftertheentry intoforce oftheWTO Agreement andnotallofthem
might -intheforeseeable future -beableandwilling toaccept theadditional obligations ofthe
WTO Agreement. Some countries mayalsomake theirdecision onjoining theWTO orleaving the
GATT 1947and/or Tokyo Round Agreements dependent onthecorresponding decision bytheirmain
trading partners.
Itwilltherefore notbeclearbefore theentry intoforce oftheWTO Agreement -orevenfor
some timethereafter -which distribution ofpossible combinations ofmembership intherespective
agreements wemayface. Thisshould beborne inmind when thepotential need fortransitional
arrangements isbeing discussed inthelaterparagraphs inorder toensure thatallpossible situations
aredulyconsidered andadequately dealt with. Itneeds further tobetaken intoaccount thatthe
Preparatory Committee and-aftertheentry intoforce -theWTO canonlyregulate these questions
asfarastheyfallintotheircompetence. Corresponding considerations anddecisions mayoften need
totakeplace inthecompetent bodies ofGATT 1947 andtheTokyo Round Agreements, which arePC/IPL/W/6
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legallydistinctandthusindependentfromtheWTOAgreementanditsinstitutionalstructures.Therefore,
whatever transitional measures thePreparatory Committee ortheWTO bodies maydecide totakeor
recommend, inmany cases theywould needcorresponding action intheGATT 1947 bodies andthe
bodies oftheTokyo Round Agreements; country representation inthesebodies maysignificantly differ
overthetime.
Regarding paragraph 4,lastsentence oftheDiscussion Paper, theexception fromthe60day
ruleforwithdrawal contained inArticle 9.6oftheAgreement onTrade inCivil Aircraft might be
worth noting. Inaddition, thought should begiven totheoverall question offitting thisAgreement
intotheGATT 1947/WTO context. TheAgreement onTrade inCivilAircraft inits1979form(BISD,
26S/162) assubsequently modified, rectified oramended, hasbeenintroduced intotheUruguay Round
Final ActofMarrakesh. Atthattimethequestion ofasimple adaption oftheoldtextwasdismissed
andnoamendments wereintroduced toitinorder tocorrespond totheWTO institutional environment,
given theongoing negotiations onanewAgreement onTrade inCivil Aircraft. Now thequestion
arises ifthere willbeanewagreement intimeorif-atleastforatransitional timeaftertheentry
intoforce oftheWTO Agreement -theexisting Agreement onTrade inCivil Aircraft, contained in
theUruguay Round package, should beamended tofitintothenewinstitutional setupoftheWTO.
Thiscould, however, imply toamend theAgreement onTrade inCivil Aircraft asitfigures asa
Plurilateral Trade Agreement under theWTO (notyetinforce) andnottoamend theidentical old
Tokyo Round Agreement assuch(atleastunless allparties tothatAgreement become Members of
theWTO from dayone).
Inparagraph 5oftheDiscussion Paper, thereference toArticle 59oftheVienna Convention
ontheLawofTreaties isformulated inawaythatitmaycreate thefalsehopethatindeed allparties
toalltheTokyo Round Agreements and/or theGATT 1947would -immediately orwithin averyshort
periodoftime-jointheWTOAgreement.That,however,isdifficulttoprejudgeatthepresentjuncture.
Paragraph 7oftheDiscussion Paper refers toArticle 30oftheVienna Convention ontheLaw
ofTreaties. However, thelanguage seems torefer primarily toArticle 30(3), whereas indeed any
ofthesituations regulated under Article 30(4) might occur. Themutual obligations ofanytwocountries
party toanyGATT instrument (i.e.either oneorbothofthem being party toGATT 1947, any
Tokyo Round Agreement and/or theWTO Agreement, anyofthePlurilateral Trade Agreements under
theWTO) maythushavetobeidentified ineachparticular case. Questions tobeanswered inthis
context might be:Towhich GATT/WTO-instruments arethecountries party? Arethecountries party
tothesameagreement(s)? Isthereanydouble-membership ofbothparties incorresponding instruments?
Ifso,aretheobligations under these instruments compatible? Iftheyarenotcompatible, which was
thelexposterior?
Thesituation isfurther complicated, astheWTO Agreement contains "Plurilateral Trade
Agreements", which arepartofthatAgreement onlyforthose Members oftheWTO thathaveaccepted
themandwhich arebinding onthose WTO Members only. Therefore eventwoWTO Members may
findthatbetween themexclusively thecorresponding Tokyo Round Agreements apply inthisparticular
respect.
With regard todispute settlement thesituation isslightly different from thatofsubstantive
obligations. Incases ofdouble-membership ofbothparties toadispute intheGATT 1947 andthe
WTO theDispute Settlement Understanding oftheWTO Agreement (DSU) largely prevents the
possibility offorum shopping although thesubstantive obligations oftwodouble-members might well
remain inparallel under theGATT 1947, theTokyo Round Agreement andunder theWTO
(comp. Article 23DSU). Thissituation is,however, lessclearwithregard toobligations under the
Plurilateral Trade Agreements andunder thecorresponding Tokyo Round Agreements. (When andPC/IPL/W/6
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howwillthecondition ofthelastparagraph ofAppendix ItotheDSU befulfilled ineachcase? This
seems particularly doubtful fortheAgreement onTrade inCivil Aircraft.)
Paragraph 8oftheDiscussion Paper contains animportant statement. Indeed there willbe
noGATT-obligations between contracting parties totheGATT 1947 orTokyo Round Agreements
notMembers oftheWTO ontheonehand, andMembers oftheWTO thatlefttheoldGATT-system
ontheother. Insuchatraderelationship bothsideswould notbeconstrained byanyGATT-obligations
andtherewould benodispute settlement mechanism (fornewcases atleast). Thissituation maywork
asanadditional incentive tobecome aWTO Member, butitmayalsoinhibit some WTO Members
from leaving theoldsystem oftheGATT 1947 andtheTokyo Round Agreements.
Paragraph 9oftheDiscussion Paper ondispute settlement procedures addresses primarily the
issue ofoldcases forwhich consultations were requested before theentry intoforce oftheWTO
Agreement. Inthisrespect particularly thetwofollowing casesmight require transitional arrangements.
Firstly, ifitwasdecided byallcontracting parties tooneoftheoldagreements toterminate that
agreement (asdiscussed inparagraph 5)nevertheless therespective institutions would needtobekept
inplace foratransitional period todealwitholdcases inorder tocomply withArticle 3,paragraph 11
oftheDSU. Secondly, thepossibility toleave GATT 1947 andalmost alloftheTokyo Round
Agreements atshort notice (60days) might require additional arrangements intworespects, namely:
(a) Maintaining thecompetence oftherespective bodies constituted under theGATT 1947 and
theTokyo Round Agreements tocontinue dealing withcases pertaining tonon-members:
Disputes between non-members anddisputes between non-members andmembers ofthat
Agreement maybeinvolved (ifonlythenon-member wasaparty totherespective agreement
when therequest forconsultations wasmade atatimepriortotheentry intoforceoftheWTO).
(b) Such non-parties totheoldagreement, Members totheWTO, would needtobeobliged to
continue tosubmit themselves todispute settlement inforaconstituted under agreements they
arenolonger party to.Particular attention would havetobegiven insuchanarrangement
tothenecessary adaptions ofdecision making ruleswithregard totheoldagreements inorder
toallow non-members totherespective agreements toparticipate incases ofdispute settlement
inwhich theyareaparty tothedispute, asiftheystillwereaparty tothatagreement. Itmight
alsoneed consideration which legal form suchprovisions fordispute settlement during a
transitional period oftimemight needtotakeinview oftheconstitutional requirements of
thevarious contracting parties. Inaddition, thequestion ofpossible legal consequences of
recommendations orrulings addressed tonon-members oftheGATT 1947oraTokyo Round
Agreement mayneedtobeaddressed. Should there, forexample, bealsoanyprovision to
giveeffect tothose recommendations orrulings under theWTO, particularly iftherespective
breach ofGATT rulespersists andbothparties tothedispute areMembers oftheWTO? Could
orshould therebeanyeffect ofdispute related recommendations onceoneoftheparties leaves
theoldtreaty iftheother party tothedispute isnotyetalsoaMember oftheWTO?
Inother words could orshould -forexample, intheabsence ofaninterim arrangement -a
Member totheWTO aftertheentry intoforce oftheWTO bepermitted toescape -asaresult of
withdrawing from theoldagreement(s) -consequences ofbreaches ofrules under GATT 1947 and
theTokyo Round Agreements ifthatconduct gaverisetoarequest forconsultations priortotheentry
intoforce oftheWTO, perhaps evenifthatconduct ismaintained? How would thatcorrespond to
theletter andspirit ofArticle 3,paragraph 11oftheDSU?
Paragraph 12oftheDiscussion Paper addresses theparallel requirements fordouble-members
tonotify andconsult under GATT 1947, theTokyo Round Agreements andtheWTO which might
indeed bedeemed cumbersome bysome ofthecontracting parties. Nevertheless, parties totheoldPC/IPL/W/6
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instruments notimmediately joining theWTO might wishtoreceive therelevant information andmight
wishtomaintain theirrighttoconsultations withsuchdouble-members aswellaswithanyother party
totheGATT 1947 oraTokyo Round Agreement. Ontheother hand, theWTO Agreement doesnot
presently provide foranyequivalent rights fornon-members. Conversely, WTO Members which left
theoldagreements might haveno(legitimate) interest injoining consultations withnon-members of
theWTO ornotification procedures extended tonon-members oftheWTO. Theparallelism isa
consequence ofthelegally distinct concept, thusonlylimited solutions could beenvisaged. Itmight,
forexample,becontemplatedtocreateamechanism,thatincaseofconsultationstakingplaceexclusively
among double-members, these could bemerged andconsidered asvalid forthepurposes ofboth
corresponding butlegally distinct agreements, under which consultations would have tobeheld.
Similarly, itcould beenvisaged thatincaseofnotifications ofdouble-members under thecorresponding
provisions oftwolegally distinct agreements themore detailed notification would beacceptable for
thepurposes ofbothagreements ifitwasavailable toallparties tobothagreements asprovided for
under theirrespective provisions andpractices.
Regarding paragraph 13oftheDiscussion Paper, where theparallel existence ofbodies and
procedures under GATT 1947, theTokyo Round Agreements andtheWTO Agreement isaddressed,
again thecomments toparagraph 3need tobeconsidered. AslongasGATT 1947 and/or the
Tokyo Round Agreements continue toexistandtheyhaveadifferent membership ascompared tothe
WTO, including parties thatarenotMembers oftheWTO, itmight indeed forthem andevenfor
double-membersbedesirabletomaintaincompetentbodiesandproceduresundertheGATT1947and/or
Tokyo Round Agreements thatareparallel tothose under theWTO. These bodies andprocedures
would continue toserve theirpurpose among non-members oftheWTO andbetween non-members
andMembers oftheWTO which arestillparties tothecorresponding oldagreement. Inthecaseof
aMember oftheWTO thatforitspurposes nolonger considers these procedures andbodies under
theGATT 1947 andtheTokyo Round Agreements asuseful, there isthealternative toleave those
agreements at60days'notice.
Paragraph 14oftheDiscussion Paper points tofouralternative choices. Alternatives (a)and
(b)would require decisions bythecompetent bodies oftheGATT 1947 and/or theTokyo Round
Agreements. Suchdecisions might, however, bedifficult toobtain aslongasthere areparties tothe
GATT1947thatarenotMembersoftheWTO.Someparticularinterest,whichasksfortheprolongation
ofaparallelism might alsoariseregarding Tokyo Round Agreements which correspond toPlurilateral
Trade Agreements under theWTO Agreement. Alternatives (c)and(d)suppose thattheoldagreements
remain inforce. Perhaps these preconditions forthefouralternatives should bepointed outmore
explicitly inthepaper too.
Paragraph15oftheDiscussionPapertakesuptheissueofreplacementofGATTasaninstitution
bytheWTO. Firstly, thiswould require adecision bytheGATT CONTRACTING PARTIES and
itwould seemuncertain whatshould bethefateofanycontracting partytotheGATT 1947notbecoming
Member oftheWTO, itsrights andduties. Secondly, some additional transitional measures might
simultaneously become necessary fortheTokyo Round Agreements. Although theyhaveadifferent
membership andarelegally distinct fromtheGATT 1947, theTokyo Round Agreements relyonthe
GATT asaninstitution andareserviced bytheGATT Secretariat, which would beabsorbed bythe
WTO.
Finally, itshould beremembered thatwhile some transitional measures might needtobein
place withtheentry intoforce oftheWTO Agreement, forother transitional arrangements itmight
bepremature todecide theirultimate shape before themembership intheWTO -andthusthepolitical
choice ofcountries andtheirlegislatures -becomes more apparent. Probably arrangements fordispute
settlement withregard tooldcases willfallintothefirstcategory, whereas decisions ondissolving
existing bodies andprocedures under theGATT 1947andtheTokyo Round Agreements andreplacingPC/IPL/W/6
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GATT asaninstitution bytheWTO might serve asexamples forthesecond category. There isa
consequential difference inurgency which thePreparatory Committee might wishtobaseitspriorities
on.Therefore, thefocus ofdeliberations might usefully bedirected attransitional measures which
ought tobeinplace atthetimeoftheentry intoforce oftheWTO Agreement orearly thereafter,
without, however, losing sight oftheremaining issues.