RESTRICTED
WORLD TRADE WT/COMTD/1/Add.2
9October 1995
ORGANIZATION(95-2976)
Original: Spanish/English Committee onTrade andDevelopment
SOUTHERN COMMON MARKET (MERCOSUR) AGREEMENT
Replies totheAdditional Questions andComments
Submitted totheWorking Party1
Addendum
Question 1.3(b)
1. CanStates Parties toMERCOSUR provide adescription ofthose non-tariff restrictions
which have been eliminated todatewithin theMERCOSUR orareintheprocess ofbeing
eliminated and,inaddition, alisting ofthose measures ofanon-tariff nature which arecurrently
subject toaharmonization process asmonitored bytheTrade Commission?
2. Could theStates Parties totheMERCOSUR indicate those non-tariff restrictions being
eliminated inresponse tothenewrequirements contained invarious Agreements, Understandings,
andDecisions implemented aspartoftheUruguay Round Agreements? (Inparticular, those
non-tariff measures which havebeeneliminated todateorareintheprocess ofelimination where
such elimination requires Parliamentary approval inresponse totherequirements outlined in
theAgreement onSanitary andPhytosanitary Measures andtheAgreement onTechnical Barriers
toTrade.)
Thelistofnon-tariffrestrictions(NTR)alreadyeliminatedbyMERCOSURcountriesisattached.
Thelistofrestrictions thatwillbeeliminated appears asAnnex IIofdocument WT/COMTD/1.
With regard tothemeasures subject toaharmonization process, Technical Committee No.8
oftheMERCOSUR Trade Commission (CCM) isfinalizing thework concerned.
Questions 1.9,1.10and6.1
1. Article 7oftheTreaty ofAsunción provides that"Intheareaoftaxes, charges andother
internal duties, products originating intheterritory ofoneState Party shall enjoy, intheother
States Parties, thesame treatment asdomestically produced products." Annex Iofthesame treaty
notes that"This concept doesnotcover feesandsimilar charges corresponding totheapproximate
costofservices rendered".
2. Could theStates Parties totheMERCOSUR clarify whether ornottheir exports tothe
Argentine Republic aresubject totheArgentinean statistical taxof3percent? Paragraph 1(a)
ofArticle VIIIoftheGATT provides that"fees andcharges ofwhatever character ...shall be
1Whenever feasible, additional questions andcomments were grouped under headings which refer tothe
numbering ofquestions indocument WT/COMTD/1, of2May 1995.WT/COMTD/1/Add.2
Page2
limited totheapproximate costofservices rendered". In1993Argentinean imports totalled $16,786
{world imports including MERCOSUR} versus $12,573 {world imports minus MERCOSUR
imports} based upon thec.i.f. value ofimports, inmillions ofdollars. Under thisscenario, a
statistical taxof3percentrepresents acharge ranging from $503,000,000 iflevied onallworld
imports to$377,000,000 ifbased onlyupon non-MERCOSUR imports.
3. CouldtheGovernmentoftheArgentineRepublicprovideanoutlineofthosecostsassociated
withmaintaining animport statistical base?
Article 7oftheTreaty ofAsunción applies withrespect toother feesandcharges. With the
formation oftheCustoms Union, intraregional trade isexcluded from theapplication ofother fees
andcharges.
The3percenttaxbound intheArgentinian offer corresponds to"other feesandcharges".
Questions 3.14and3.15
1. The"Understanding ontheInterpretation ofArticle XXIV oftheGeneral Agreement on
Tariffs andTrade 1994" provides thattheevaluation under Article XXIV: 5(a)shall be"based
upon anoverall assessment ofweighted average tariff rates andofcustoms duties collected. This
assessment shallbebased onimport statistics foraprevious representative period tobesupplied
bythecustoms union, onatariff linebasis andinvalues andquantities, broken down bythe
WTO country oforigin."
2. CanParties totheAgreement confirm whether ornotthese import statistics foraprevious
representative period have beenprovided totheWTO toenable discussions totakeplace under
therelevant provisions oftheGATT 1994 andArticle XXIV?
3. GiventhattheMERCOSURCommonExternalTariffwasimplementedon1January1995,
why have themembers notsubmitted Article XXVIII documentation totheWTO?
(Ref: "Understanding ontheInterpretation ofArticle XXIV oftheGeneral Agreement onTariffs
andTrade 1994" -paragraph 4.)When willthisbedone?
Asmentioned inthereply toquestion No.11indocument WT/COMTD/1, Annex Vtothat
document gives theresults obtained fromstudies carried outonthetradecreation ordiversion effects,
which show thepositive impact ofintegration oncreation oftrade withthirdcountries.
TheMERCOSUR States Parties arepreparing thestatistics asrequested.
Question 3.16
1. Under therequirements outlined inthe"Understanding ontheInterpretation of
Article XXIV oftheGeneral Agreement onTariffs andTrade 1994" (seeparagraph 11)Customs
unions "shall report periodically totheCouncil forTrade inGoods ...ontheoperation ofthe
relevant agreement. Anysignificant changes and/ordevelopments intheagreements should be
reported astheyoccur."
2. Have theParties totheAgreement reported anysignificant changes and/or developments
todatein1995 totheCouncil forTrade inGoods?
Before theMERCOSUR waspresented tothisWorking Party, thelatest measures approved
intheMERCOSUR were communicated totheWTO Secretariat forcirculation.WT/COMTD/1/Add.2
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Questions 12.2and12.3
1. Under theTreaty forAsunción canindividual States Parties totheMERCOSUR enter
individually intoseparate reciprocal preferential treaties withother countries, free-trade areas
orcustoms unions?
FormationoftheMERCOSURpresupposesthatpreferentialtradeagreementswithothercountries
havetobenegotiated bythemember countries together.
Agriculture
1. Will theMERCOSUR countries beadopting common agriculture programmes or
maintaining individual agricultural programmes? Ifthecountries areadopting common
programmes, what willbethenature ofthese programmes? Who willbeadministering these
programmes?
Ithasnotbeen envisaged sofarthattheMERCOSUR States Parties willadopt common
agricultural programmes.
2. Please provide detailed information onMERCOSUR members 'proposed "harmonization
ofthose measures which cannot beeliminated, asinthecaseoftechnical standards, animal and
plant health provisions, etc." Who willadminister these measures?
With regard tosanitary andphytosanitary measures thatpredate theadoption oftheUruguay
Round Agreements, theStates Parties haveadopted theMERCOSUR Agreement onSanitary and
Phytosanitary Measures (ACSAFIM) which incorporates therights andobligations oftheWTO
Agreement inthisfield.
TheACSAFIM isadministered bytheMERCOSUR Health Committee.
ThisCommittee consists ofrepresentatives oftheanimal andplant health services ofStates
Parties andconsists ofSub-committees forAnimal Protection andforPlant Protection. Thetwo
Sub-committees havestanding working groups forspecific areas whose members aretechnical experts
oftheservices oftheStates Parties.
Sanitary andphytosanitary measures willbeharmonized onthebasisoftheapplication ofthe
principles setoutintheACSAFIM andtheWTO SPSAgreement.
3. Who willassume responsibility forensuring compliance withthecommitments ofthe
MERCOSUR countries under theWTO Agreement onAgriculture (i.e.minimum andcurrent
access, export subsidies, internal support)? Specifically, willresponsibility forcompliance rest
withtheauthorities inindividual countries orwithsome supra-national body (i.e.aMERCOSUR
Secretariat)?
Each country isresponsible forimplementing itscommitments under theWTO Agreement
onAgriculture.WT/COMTD/1/Add.2
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4. Under theUruguay Round Agreement onAgriculture, Brazil hasnotified export subsidy
outlay andquantity reduction commitments foralarge number ofproducts. Uruguay hasalso
notified export subsidy commitments forthree products. Theother MERCOSUR Parties donot
appear tohave notified suchexport subsidies. Thismeans thatonlyBrazil andUruguay have
export subsidy entitlements fornotified products. CantheParties confirm thatthese individual
country commitments forexport subsidy reductions willbemaintained?
Yes. Seetheanswer totheprevious question.
InthecaseofArgentina andParaguay, thereisnocommitment forthereduction ofsubsidies;
theydonotatpresent haveanyexport subsidies.
5. Brazil hasnotified commitments withrespect todomestic support reductions, while the
other MERCOSUR countries donotappear tohave done so.CantheParties confirm thatthis
individual country commitment fordomestic support reduction willbemaintained?
With regard todomestic support policies Brazil didnotmake anyreduction commitments as
thedomestic support provided inthebaseperiod islower thanthatpermitted bythe"deminimis "clause
fordeveloping countries, thatistosay,aglobal measurement ofsupport value ofupto10percent
ofthevalue ofagricultural production.
6. Brazil seems tobetheonlyMERCOSUR country which hasestablished atariff ratequota,
inthiscaseforwheat. Please provide details onhowthisTRQ willbeadministered under a
common tariff.
Theexisting tariffquota forwheat inBrazil 'sschedule ofconcessions inGATT doesnotcome
from thetariffication process intheUruguay Round butrather aconcession thatalready existed in
Schedule III-Brazil prior totheUruguay Round. Assuchitwillbeexamined intheconsultations
under Article XXIV:6 inthesame wayastheother concessions ofthefourcountries thatpredate the
process offormation oftheCustoms Union.
Standards
TheMERCOSURAgreementdoesnotcontainanychaptersorarticlesonnon-tariffbarriers
suchasTechnical Barriers toTrade orSanitary andPhytosanitary Measures. Annex Vofthe
Agreement contains alistofSubgroups "forthepurposes ofcoordinating macroeconomic and
sectorial policies" which includes Subgroup 3:Technical Standards. According totheGATT
WPReport onMERCOSUR (L/4750), theSubgroup hasseveral working groups working on
harmonization ofstandards andregulations oftheParties. Thequestions below arewithregard
totheworking groups under Subgroup 3onTechnical Standards:
1. What istheselection process forareas forharmonization? Forexample, whodecides
andhowisitdecided?
Theareas forharmonization arethose regulations thatcould constitute technical barriers to
trade. Theregulations aredealtwithbysubject areaincommissions, sub-commissions andworking
groups.
Thecommissions areappointed bytheCommon Market Group.
Thesubject areas areanalysed anddiscussed inthesethreeforums under thegeneral guidelines
established bythenational coordinators ofWorking Subgroup No.3(SGT No.3)andwhen agreementWT/COMTD/1/Add.2
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isreached among thefourStates Parties aproposed recommendation isforwarded totheCommon
Market Group forpossible approval asaresolution. SGT No.3deals withtheharmonization of
Technical Regulations.
2. Istheword "standard" meant tocover mandatory government regulations? Arethe
harmonization initiatives under Subgroup 3restricted onlytogovernment regulations orarethey
alsotouching onvoluntary standards developed byindustry?
Until December 1994 theSubgroup borethetitle"Technical Standards", anddealtwithboth
mandatory government regulations andvoluntary standards. Asfrom1995thisSubgroup wasrenamed
theTechnical Regulations Subgroup; itandisintheprocess ofdrawing upitsprogramme ofwork,
which willbedevoted exclusively tomandatory technical standards.
3. What ismeant byharmonization? Does itmean thatonesingle standard orregulation
willbeadopted byallParties asintheEuropean Union?
TheharmonizationthathasbeencarriedoutwasinitiallybasedonthelegislationofStatesParties,
withthepurpose ofarriving atuniform provisions thatmeet therequirements oftheAgreement on
Technical Barriers toTrade andareapplied bothwithin theregion andintrade withthirdcountries.
Consequently, henceforth harmonization means thattheStates Parties willadopt mandatory standards
withthesame content.
4. What istheprocedure foradopting thedecisions ofthese working groups byindividual
signatory countries?
Resolutions areadopted bytheCommon Market Group andnotbytheWorking Groups. Each
country mayhavedifferent procedures fortheincorporation ofthese resolutions atthenational level.
5. Aretheworking groups adopting international standards intheir harmonization work
suchasrecommendations oftheCodex ortheISO?
Yes.
6. Whoparticipates inthese working groups? Forexample when thesubject ofharmonization
isgovernment regulations onPesticide Residues, arethediscussions onlybetween government
representatives? How doyoutakeintoaccount theinputs ofindustry orinterested individuals?
Theparticipants arerepresentatives ofgovernment bodies connected withtheissue under
consideration, whoarepermanently intouch withtheprivate sectors concerned bythesubject.
7. ArethefollowingagreementsreachedundertheSubgroup(mentionedunderparagraphs17
and18oftheWTO document L/7540) available fordissemination tointerested WTO Members:
- Agreement onharmonization andrecognition ofcertification andtesting services;
- Agreement onthesystem certifying quality inspectors;
- Agreement ontheconditions formutual recognition ofstructures forcertification,
accreditation oflaboratories andinspection bodies;
- Bases forthepreparation ofasingle listofenterprises certified bythecertification
structures oftheMERCOSUR countries;
- Mutual recognition ofcalibration services;
- Calibration services provided byMERCOSUR countries eligible forrecognition
bytheEuropean Community.WT/COMTD/1/Add.2
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Thepoints mentioned areintheprocess ofharmonization bytheIndustrial Quality Commission
andtheIndustrial andScientific Metrology Commission.
8. Arethevarious working groups under Subgroup 3open tonon-signatory countries?
Only participation ofsignatory countries isprovided for.
9. Were anynewworking groups ornewschedules fortheexisting working groups developed
since thedatewhen theschedule ofworking groups wassubmitted totheGATT (summer/fall
of1994).
Seethereply toquestion 2inthissection.
Trade remedies
1. Does MERCOSUR entail obligations (additional tothose applicable under theWTO
regarding theapplication ofanti-dumping/countervail?
2. WillMERCOSUR parties apply trade remedies tointra-MERCOSUR trade?
3. Arethere anydisciplines ontheuseofsubsidies between members ofMERCOSUR in
addition tothose which existunder theWTO?
4. WillMERCOSUR countries conduct anti-dumping/countervail investigations andtake
suchtrade remedy actions against non-MERCOSUR countries onacountry-by-country basis or
onabloc-basis?
5. How willexisting trade remedy actions against non-MERCOSUR parties bedealt with
(i.e.willanexisting anti-dumping action beextended totheMERCOSUR common market)?
6. Does MERCOSUR contain provisions ontheapplication ofcompetition laws between
member States. Ifso,doestheuseofcompetition lawsbetween partners substitute, inanyway,
foranti-dumping laws?
7. Isthere anagreement between MERCOSUR parties, which commits them touphold
obligations regarding anti-dumping, countervail andgovernment subsidies with respect to
MERCOSUR members andother countries which arenotparty totheagreement (i.e.isthere
anofficial MERCOSUR document which supplies theanswers totheprevious questions)?
8. Weunderstand thattheStates Parties toMERCOSUR restrict imports resulting from
unfair practices byapplying domestic trade remedy legislation. Isthislegislation usedagainst
other member countries? Ifnot,what system ispresently inplace todealwith"unfair" imports
from other member countries, nowthatthetransition period haspassed?
9. Weunderstand MERCOSUR intends tonegotiate acommon setofrules governing trade
remedies andsafeguard procedures. Would thisimply asetofharmonized rules ineachcountry
administered onanational basis, orwillthere beacentralized, collective administration? Could
theparties elaborate onthenature ofthese rules? When willthese common rules beestablished?
10. Ifacollective trade remedy administration isputinplace, howwilltrade problems among
member countries bedealt with? When willthese procedures beestablished?WT/COMTD/1/Add.2
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Thecommon regulations oncountervailing duties andanti-dumping measures havenotyetbeen
approved. Thedraft isatanadvanced stage, andisinlinewiththeWTO provisions inthisarea.
Forthetimebeing national legislations areapplied.
TheMERCOSUR Treaty hasnoprovisions ontheapplication ofcompetition lawsamong its
member States. Byadecision oftheCommon Market Group, theobjective exists ofestablishing a
competition statute, thepreparation ofwhich hasbeenentrusted toaTechnical Committee oftheTrade
Commission.
11. Weunderstand thatprovisions forsafeguard actions within MERCOSUR expired on
31December 1994. Hastheapplication ofthese clauses been prolonged orreplaced byother
provisions? How doStates Parties nowintend todealwiththepotential problem ofasurge of
imports from oneMERCOSUR country toanother ofanitemforwhich tariffs were recently
greatly reduced?
12. Doalltheconditions ofArticle 3ofAnnex IV(safeguard clauses) have tobemetforthe
special safeguard provisions tobetriggered?
13. What aretheapplicable tariffs onimports subject tosafeguard action?
14. Re:Article 4ofAnnex IV(safeguard clauses)
Howarequota levels established, i.e.based onhistoric import level? Would these quotas
apply forallMERCOSUR members?
15. TheEnglish version ofthesafeguard clause usestheterm"damage" and"serious damage"
torefer topotential injury emanating from increased levelofimports. Wasthemeaning ofthe
term "damage" meant tobeidentical tothe"serious injury" requirements found intheWTO
Agreement onSafeguards ordoesitrefer toalower injury threshold similar tothenotion of
"damage" found intheWTO Agreement onTextiles?
16. Article 3states thateach country shall beresponsible fordetermining theexistence of
damage orthreat thereof. Willthisdamage determination becarried outbygovernments or
byindependent agencies?
17. What istheinter-relationship between theMERCOSUR safeguard clauses andtheWTO
Agreement onSafeguards?
18. Which safeguards regime (MERCOSUR orWTO) willapply when theflowofincreased
imports originate from bothMERCOSUR andnon-MERCOSUR countries?
Thecommon regulations onsafeguards provide fortheapplication ofthemeasures agreed in
theUruguay Round andareinconformity withtheWTO Agreements. They areinthefinalstage
ofpreparation. The intraregional Safeguards Clause concerned theperiod thatended on
31December 1994 andisnolonger applicable.
Dispute settlement
1. Inthesettlement ofdisputes, onwhat basis doestheCommon Market Group evaluate
adispute andmake recommendations fortheresolution ofit?
2. Inthesettlement ofdisputes, domembers oftheCommon Market Group continue to
represent theinterests oftheir countries oraretheytoactinaneutral capacity? Forexample,WT/COMTD/1/Add.2
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isitpossible thattheCommon Market Group could findasolution, which parties tothedispute
findunacceptable?
3. Intheevent thattheCommon Market Group isunable tofindasolution andthedispute
isreferred totheCouncil, what istheprocess forresolving thedispute? CantheCouncil rule
onwhether acountry, incarrying outitsinvestigation ofaMERCOSUR partner 'strade practices,
made adetermination thatisinconsistent witheither thatcountry 'sdomestic legislation orany
requirements contained inMERCOSUR?
4. Intheevent ofadispute involving multiple parties, doestheCouncil consider thedispute
onabinational ormultinational basis?
5. Does theCouncil have theauthority tooverturn adecision made bythedomestic courts
ofoneoftheparties toMERCOSUR. Ifso,aretheCouncil 'srecommendations binding? Are
there avenues forappeal ofaCouncil recommendation?
6. Have theparties toMERCOSUR adopted apermanent dispute settlement system referred
toinAnnex III?Ifso,wewould appreciate further information onthisdispute settlement system.
7. WhatistherelationshipbetweentheWTOandMERCOSURdisputesettlementprocedures?
Dispute settlement inMERCOSUR isgoverned bytheBrasilia Protocol (seepoints 9.1and
9.2ofWT/COMTD/1).WhererelevanttheProtocolofOuroPretoisalsoapplicable.Theseinstruments
donotprovide fortheparticipation oftheCommon Market Council.
Rules ofprocedure
1. Aretherules ofprocedure fortheCommon Market Group publicly available? Ifso,could
acopy ofthese rules ofprocedure besupplied tomembers oftheWorking Party?
TheCommon Market Council (CMC) approved therulesofprocedure fortheCommon Market
Group (GMC) byDecision No.4/91, which isannexed hereto.2
Investment
1. Does/will MERCOSUR impose obligations additional tothose contained intheWTO on
thetreatment ofmember parties 'investment?
2. Would disputes overinvestment beevaluated bytheCommon Market Group?
3. Intheevent thattheCommon Market Group failstofindasolution foradispute over
investment, would thedispute bereferred totheCouncil oftheCommon Market?
MERCOSUR reached twoagreements onpromotion andreciprocal protection ofinvestments,
onegoverning investments fromwithin theregion andtheotherforinvestments fromoutside theregion.
Theagreements reached byMERCOSUR inthisareaalready provide foradispute settlement procedure
thatdoesnotinclude anyrolefortheCommon Market Group. TheProtocol, which governs investments
fromoutside theregion, provides forrecourse tointernational arbitration fordisputes arising between
aninvestor andaState Party.
2Copies ofthatDecision, inSpanish, areavailable inRoom No.3006.WT/COMTD/1/Add.2
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Financial services
1. Does/will MERCOSUR impose obligations regarding member parties 'treatment ofone
another 'sfinancial andother services additional tothose contained intheWTO?
2. Would disputes overfinancial andother services beevaluated bytheCommon Market
Group?
3. Intheevent thattheCommon Market Group failstofindasolution forafinancial or
other service dispute, would thedispute bereferred totheCouncil oftheCommon Market?
TheStates Parties havemade theiroffers individually intheUruguay Round. Asyetthere
isnoagreement ontradeinservices within MERCOSUR. Seethereply toquestion 13.1oftheoriginal
setofquestions indocument WT/COMTD/1.WT/COMTD/1/Add.2
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ANNEX
NON-TARIFF IMPORT RESTRICTION ELIMINATED BYMERCOSUR COUNTRIES
Argentina
1. Prior approval forimports ofpoultry andeggsforreproduction.
Decree No.4452/62, repealed byArticle 1ofDecree No.2199/90. Eliminated
2. Requirement ofastatistical/sanitary inspection certificate
fortobacco imports.
Decree No.12507 2215144. Repealed (derogation)
3. Restrictions onimports ofalfalfa seeds.
Resolution No.42/88. Repealed (derogation)
Brazil
1. Import prohibition onleisure/recreational vessels.
LawNo.2410 of29/01/1995.
DECEX Order No.8/91. Eliminated
2. Prior authorization forimports ofwheat flour.
SECEX Circular No.21/94 of30/03/1994. Eliminated
3. Prior approval forimports ofsugar, alcohol,
honey andmolasses.
LawNo.8117/90 andDecree No.99865/90. Repealed (derogation)
Paraguay
1. Import prohibition onvarious products.
Decree No.1869/94. Repealed (derogation)
Uruguay
1. Prior authorization forimports ofwheat flour.
Decree No.12/11/93. Repealed (derogation)